UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





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





For the
fiscal year ended December
31, 2008





o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF
      1934




Commission
File Number:  333-138806





MOGUL
ENERGY INTERNATIONAL, INC.


(Exact
name of registrant as specified in its charter)





Delaware
                  98-0461623(State
      or other jurisdiction ofincorporation
      or organization)
                  (IRS
      EmployerIdentification
      No.)








520
Pike Street, Suite 2210, Seattle, WA 98101


(Address
of principal executive offices)





(206)
357-4220


(Registrant's
telephone number)





SECURITIES
REGISTERED PURSUANT TO SECTION 12(B)


OF
THE EXCHANGE ACT:





None





SECURITIES
REGISTERED PURSUANT TO SECTION 12(G)


OF
THE EXCHANGE ACT:





Common
Stock


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
 Yes o   No x
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
 Yes o   No
x
 
 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 x   No o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§Sec.229.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
 Yes x   No o
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (Sec.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of the registrant’s knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. £
 
 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
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      accelerated filer £
                  Accelerated
      filer oNon-accelerated
      filer £
                  Smaller
      reporting company x(Do
      not check if a smaller reporting company)
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 
 Yes £   No
S








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
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates as of June 30, 2008, based on the average bid and asked price of
such common equity as quoted on the Over-the-Counter Bulletin Board (OTCBB) on
June 30, 2008 (average was $0.24), was $10,350,504.  For purposes of
this computation, all officers, directors, and 5 percent beneficial owners of
the registrant are deemed to be affiliates.  Such determination should
not be deemed an admission that such directors, officers, or 5 percent
beneficial owners are, in fact, affiliates of the registrant.




Indicate
the number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date.




As
of April 13, 2009, there were 57,445,987 common shares outstanding.




DOCUMENTS INCORPORATED BY
REFERENCE




List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).









Mogul
Energy International, Inc.


(an exploration stage
enterprise)




PART
I




Forward-Looking
Statements





This
Annual Report on Form 10-K contains forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.  These
statements relate to future events and/or our future financial
performance.  Generally, you can identify forward-looking statements
by terminology such as “intends,” "may", "should", "expects", "plans",
"anticipates", "believes", "estimates", "predicts", or "potential" or the
negative of these terms or other comparable terminology.  To the
extent that such statements are not recitations of historical fact, such
statements constitute forward-looking statements that, by definition, involve
risks and uncertainties.  These statements reflect only our current
expectations and involve known and unknown risks, uncertainties and other
factors, many of which are unforeseen, including the risks in Item 1A 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.  You should not place undue reliance on these
forward-looking statements.  These forward-looking statements are
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
section 21E of the Securities Exchange Act of 1934, as amended, and are intended
to be covered by the safe harbors created thereby.  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.





In this
Annual Report, unless otherwise specified, all references to "common shares"
refer to common shares in the capital of Mogul Energy International, Inc., and
the terms "we" "us" and "our" mean Mogul Energy International, Inc. (the
“Company” and “Registrant”).





ITEM 1.
            BUSINESS.





General
Development of Business





We are a
Delaware corporation formed on July 25, 2005, with our principal place of
business in the State of Washington.  We also maintain an office in
Vancouver, British Columbia and Toronto, Ontario, Canada.  We are an
independent oil and gas exploration company established to take advantage of the
low cost acquisition opportunities near other producing and proven oil fields.
Since our formation, we have engaged in only limited activities related to the
acquisition of our property rights and financing activities. To date, we have
not generated any operating revenues.  The address of our website is
www.mogulenergy.com.
Information on our website is not part of this report.





We are an
exploration company focused on exploration and acquisition of properties with
potential for hydrocarbon (oil and gas) development.  Our business
strategy is to conduct exploration on our current properties for hyrdrocarbons
and expand our business through development of those properties and, if
warranted, the acquisition and development of other properties that
have:





§
            Low
      entry cost as measured on a dollar per barrel for proven and potential
      reserves;


§
            Ready
      access to infrastructure allowing for production within a short time
      period without significant capital commitments;
  and


§
            Ready
      access to local and export markets without the need for immediate
      investment in pipeline construction
projects.





Initially,
we intend to use third-party providers to engage in most if not all of any oil
and gas producing activities in which we may engage if our properties reveal the
potential for such activity in the future.


1


Material
Asset Purchases and Sales





The
Company entered into an Agreement of Purchase and Sale (the “EWA Agreement”)
with Egypt Oil Holdings Ltd. (“Egypt Oil”), Sea Dragon Energy Inc. (“Sea
Dragon”), and Dover Investments Limited.  The EWA Agreement, effective
March 21, 2008, was part of a larger transaction (the “Transaction”) that closed
on April 24, 2008.  The Transaction ultimately resulted in the sale by
the Company to Sea Dragon of the Company’s 20% working interest in the East Wadi
Araba (EWA) Concession in the Gulf of Suez, in exchange for satisfaction of the
Company’s outstanding liabilities relating to the Company’s former drill program
on the EWA Concession, a cash payment to the Company of US$100,000, and equity
participation in Sea Dragon in the amount of four million (4,000,000)
shares.  For additional information please refer to the Company’s
Current Report on Form 8-K filed April 8, 2008.





See also
“ITEM 8B. OTHER INFORMATION” below.





Business
of the Issuer





The
Company is in the oil and gas exploration business.  Our business plan
is focused on a strategy for maximizing the long-term exploration and
development of our petroleum prospecting concessions in Saskatchewan, Canada. To
date, execution of our business plan has largely focused on the acquisition of
petroleum concessions in Canada and Egypt, as well two drilling programs in
Saskatchewan, and a drilling program on the EWA Concession in the Gulf of Suez.
We intend to establish a going forward exploration and development
plan.  In the near term, we are focusing on the Freehold Properties in
Saskatchewan, Canada.  Other than the acquisition of our property
interests, the prior drilling program on the Fairlight Prospect, the
drilling program on the EWA Concession, and the recent drilling program on the
Freehold Properties in Saskatchewan, we have not engaged in any substantive
business operations to date. We have engaged only in preliminary, exploratory activities,
review of data pertaining to our properties, and the establishment of initial
exploration plans.





Employees





In
addition to our directors and officers, as of April 13, 2009, we have three
total employees, all of which are full-time employees.  We hire
part-time employees and/or independent contractor consultants as required.
 We will continue to rely on independent contractors as needed.  If we
are successful in any future drilling programs, we may retain additional
employees or contractors.





ITEM
      1A.
            RISK
      FACTORS.





You
should carefully consider the risks described below, and the other information
contained in this Annual Report, before purchasing shares of our common stock.
Some of the risks and uncertainties we face are described below; however, the
risks and uncertainties described below are not the only risks and uncertainties
we face, and risks and uncertainties not listed herein may materially adversely
affect our business.  If any of the following risks actually occur,
our business, financial condition, or results or operations could be materially
adversely affected, the price of our common stock could decline, and you may
lose all or part of your investment therein.  You should acquire
shares of our common stock only if you can afford to lose your entire
investment.





Risks
Associated With Our Business





We
have a limited operating history which makes your evaluation of our business
difficult. We have incurred losses in recent periods for start-up efforts and
may incur losses in the future.





We were
organized on July 25, 2005, and have only recently acquired our interests in the
Canadian Property Interests in Saskatchewan.  For the period from July 25,
2005 (inception) to December 31, 2008, we incurred an operating loss of
$6,125,607. We expect to incur substantial operating losses for the
foreseeable future, as well.





We are in
the exploration stage of our business development. Other than the acquisition of
our property interests, the drilling program on the Fairlight Prospect, and the
drilling program on the EWA Concession, we have not engaged in any substantive
business operations to date. We have engaged only in preliminary, exploratory activities,
review of data pertaining to our properties, and the establishment of initial
exploration plans. Our preliminary exploratory activities have, to date,
resulted in one “dry-hole” drilled on the Fairlight Prospect, one under
evaluation, and one non-commercial hole drilled on the EWA Concession. We have a
very limited operating history upon which you can evaluate our business and
prospects.  Accordingly, you
should consider and evaluate our business prospects by considering the risks
associated with our early stage status and lack ofoperational
experience.


2


We
expect to face many of the typical challenges of a startup
business.





We were
only recently organized and have been in operation for just over three years.
Accordingly, a startup business like ours faces a number of challenges. For
example, engaging the services of qualified support personnel and related
consultants and other experts is very important in the oil and gas exploration
business, and there is keen competition for the services of these experts,
consultants, and support personnel. Equally important in the oil and gas
exploration business is the establishment of initial exploration plans for
drilling prospects, and the efficient analysis of relevant
information.  Establishing and maintaining budgets and appropriate
financial controls is also very important to a startup business. If we fail to
address one or more of these activities, or curb operating losses, our ability
to carry out our business plan may be materially impaired.





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





Numerous
risks affect our drilling activities, including the risk of drilling
non-productive wells or dry holes. To date, we have completed drilling on four
wells – three on the Fairlight Prospect and one on the EWA Concession – three
wells were non-commercial “dry holes,” and one on the Fairlight Prospect
has been suspended and is being evaluated.  The cost of drilling,
completing and operating wells, and of installing production facilities and
pipelines is often uncertain.  Also, our drilling operations could
diminish or cease due to a number of factors, including any of the
following:





•
            title
      problems;





•
            weather
      conditions;





•
            fires;





•
            explosions;





•
            blow-outs
      and surface cratering;





•
            uncontrollable
      flows of underground natural gas, oil and formation
  water;





•
            natural
      disasters;





•
            pipe
      or cement failures;





•
            casing
      collapses;





•
            embedded
      oilfield drilling and service
tools;





•
            abnormally
      pressured formations;





•
            environmental
      hazards such as natural gas leaks, oil spills, pipeline ruptures and
      discharges of toxic gases;





•
            noncompliance
      with governmental requirements; or





•
            shortages
      or delays in the delivery or availability of material, equipment or
      fabrication yards.





As a
result, we could incur substantial liabilities that could reduce or eliminate
the funds available for exploration, development or leasehold acquisitions, or
result in loss of equipment and properties.Given our
limited financial resources, the occurrence of any one or more of the foregoing
events would have a material adverse affect on our operations and the market
price of our common stock.




3





Our
foreign operations subject us to additional risks, including currency
fluctuations which may periodically affect our financial position and
results.


Our
property interests and operations in Canada are subject to the various risks
inherent in foreign operations. These risks include the following:





•
            currency
      restrictions and exchange rate
fluctuations;





•
            risks
      of increases in taxes and governmental royalties and renegotiation of
      contracts with governmental entities;
and





•
            changes
      in laws and policies governing operations of foreign-based
      companies.





We
maintain our accounts in US and Canadian currencies and are therefore subject to
currency fluctuations and such fluctuations may periodically affect our
financial position and results. We do not engage in currency hedging
activities.  United States laws and policies on foreign trade,
taxation and investment may also adversely affect our international operations.
In addition, if a dispute arises from foreign operations, foreign courts may
have exclusive jurisdiction over the dispute, or we may not be able to subject
foreign persons to the jurisdiction of United States courts.  There is
no assurance that the laws, regulations, policies or current administrative
practices of any government body, organization or regulatory agency in Canada or
any other jurisdiction, will not be changed, applied or interpreted in a manner
which will fundamentally alter the ability of our company to carry on our
business in Canada.





The
actions, policies or regulations, or changes thereto, of any government body or
regulatory agency, or other special interest groups, may have a detrimental
effect on us. Any or all of these situations may have a negative impact on our
ability to operate and/or our profitability in Canada.





We
may not be able to obtain sufficient drilling equipment and experienced
personnel to conduct our operations.





In
periods of increased drilling activity resulting from high commodity prices,
demand exceeds availability for drilling rigs, drilling vessels, supply boats
and personnel experienced in the oil and gas industry in general, and the
offshore oil and gas industry in particular. This may lead to difficulty and
delays, especially in light of our limited resources and operations, in
consistently obtaining services and equipment from vendors, obtaining drilling
rigs and other equipment at favorable rates, and scheduling equipment
fabrication at factories and fabrication yards. This, in turn, may lead to
projects being delayed or experiencing increased costs.





Third
party operators of the properties in which we have an interest may act in ways
that are not in our best interests.





Except in
regards to the Freehold Properties, we do not act as the operator with respect
to the properties in which we have an interest. Other companies may operate all
or a portion of the oil and natural gas properties in which we have an interest.
As a result, we have limited influence over operations on some of those
properties or their associated costs. Our limited influence on non-operated
properties could result in the following:




•
            the
      operator may initiate exploration or development projects on a different
      schedule than we prefer;





•
            the
      operator may propose to drill more wells or build more facilities on a
      project than we have funds for, which may mean that we cannot participate
      in those projects or share in a substantial share of the revenues from
      those projects; and





•
            if
      the operator refuses to initiate an exploration or development project, we
      may not be able to pursue the
project.





Any of
these events could significantly affect our anticipated exploration and
development activities and the economic value of those properties to us as well
as the market price, if any, of our common stock.





The success of our business depends upon our ability to find, develop
and acquire oil and gas reserves.





To date
we have not established reserves on any of our properties; in fact, of the four
wells on which we completed drilling, three were “dry holes,” and one is under
evaluation.  We now plan on implementing further exploratory
activities on our Freehold Properties in the future. There is, however, no
guarantee that such exploratory activities will lead to the identification of
additional drill sites or, if identified and wells are drilled, that we will
find reserves that we can economically produce. Future drilling activities will
subject us to many risks, including the risk that we will not find commercially
productive reservoirs. Drilling for oil and natural gas can be unprofitable, not
only as a result of dry holes, which we have experienced, but also from
productive wells that do not produce sufficient oil to return a profit. Also,
title problems, weather conditions, governmental requirements and shortages
or delays in the delivery of equipment and services can delay our drilling
operations or result in their cancellation. The cost of drilling, completing and
operating wells is often uncertain, and not all wells produce oil and gas. As a
result, we may not recover all or any portion of our investment.


4


If we do not establish reserves and or obtain additional financing, we
may not be able to satisfy our substantial capital requirements and may be
required to cease or curtail our operations.





If we
identify additional drilling targets, we require substantial capital to continue
our drilling program with respect to the Freehold Properties and EWA Concession.
In addition, our ongoing capital requirements consist primarily of the following
items:




•
            funding
      our 2009 capital and exploration
budget;





•
            other
      allocations for acquisition, development, production, exploration and
      abandonment of oil and natural gas
reserves.




If we
cannot generate sufficient cash flow from operations or raise funds externally
in the amounts and at the times needed, we may not be able to discover reserves
or meet our financial obligations.  If we are unable to obtain such
financing when needed, on commercially reasonable terms, we may be required to
cease or curtail our operations which could have a materially adverse impact on
the market price of our stock.





The
potential profitability of oil and gas ventures depends upon factors beyond the
control of our company.  A decline in oil and gas prices will
adversely affect our ability to obtain additional financing we will require in
order to undertake our future drilling activities.





To date
we have funded our capital requirements primarily from the offer and sale of our
equity securities through the offer and sale of our common stock.  We
will need to raise additional capital to fund any future drilling
activities.  Our ability to do so may be adversely affected by any
decrease of prices of, and demand for, natural gas and oil. Historically, the
markets for natural gas and oil have been volatile and this volatility is likely
to continue in the future. The potential profitability of oil and gas properties
is dependent upon many factors beyond our control.  Prices for natural
gas and oil may fluctuate widely in response to relatively minor changes in the
supply of and demand for natural gas and oil, market uncertainty and a variety
of additional factors that are beyond our control, such as:




•
            the
      price of foreign imports;





•
            overall
      domestic and global economic
conditions;





•
            political
      and economic conditions or hostilities in oil producing regions, including
      the Middle East;





•
            the
      ability of the members of the Organization of Petroleum Exporting
      Countries to agree to and maintain oil price and production
      controls;





•
            weather
      conditions;





•
            domestic
      and foreign governmental
regulations;





•
            development
      of alternate technologies; and





•
            the
      price and availability of alternative
fuels.




If we are
unable to obtain such financing when needed, on commercially reasonable terms,
we may be required to cease or curtail our operations which could have a
materially adverse impact on the market price of our
stock.   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.  Moreover, 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.


5


We
will continue to pursue acquisitions and dispositions which if consummated could
adversely affect our cash flow and liquidity.





We will
continue to seek opportunities to generate value through the purchase and sale
of properties. We examine potential transactions on a regular basis, depending
on market conditions, available opportunities and other factors. Dispositions of
portions of our existing business or properties would be intended to result in
the realization of immediate value but would consequently result in lower cash
flows over the longer term unless the proceeds are reinvested in more productive
assets.





We
face competition from a large number of companies many of which have resources
far in excess of ours.





The oil
and gas industry is highly competitive. We compete with major and independent
oil and natural gas companies as well as smaller companies who are better
financed than we are, for property acquisitions. We also compete for equipment
and labor required for us to develop and exploit our properties. Many of our
competitors have substantially greater financial and other resources than we do.
As a result, those competitors may be better able to withstand sustained periods
of unsuccessful drilling. In addition, larger competitors may be able to absorb
the burden of any changes in applicable laws and regulations more easily than we
can, which would adversely affect our competitive position. These competitors
may be able to pay more for exploratory prospects and productive oil and natural
gas properties and may be able to define, evaluate, bid for and purchase a
greater number of properties and prospects than we can. Our ability to explore
for oil and natural gas prospects and to acquire additional properties in the
future will depend on our ability to conduct operations and to evaluate and
select suitable properties and transactions in this highly competitive
environment. Moreover, the oil and natural gas industry itself competes with
other industries in supplying the energy and fuel needs of industrial,
commercial and other consumers. Increased competition causing oversupply or
depressed prices could greatly affect our operational revenues.





Oil
and gas operations, including our contemplated drilling activities, 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.





Our oil
and gas operations in Canada (and previously Egypt) are subject to 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 local laws and
regulations which seek to maintain health and safety standards by regulating the
design and use of drilling methods and equipment. Various permits from
government bodies are required for drilling operations to be conducted; no
assurance can be given that such permits will be received. Environmental
standards imposed by local authorities may be changed and any such changes may
have material adverse effects on our activities. Moreover, compliance with such
laws may cause substantial delays or require capital outlays in excess of those
anticipated, thus causing an adverse effect on us. Additionally, we may be
subject to liability for pollution or other environmental damages which we may
elect not to insure against due to prohibitive premium costs and other reasons.
To date we have not been required to spend any material amount on compliance
with environmental regulations. However, we may be required to do so in future
and this may affect our ability to expand or maintain our operations.





If
we do not adequately manage the risks associated with conducting business in
foreign countries our business operations will suffer.





A part of
our business strategy is to seek to acquire and develop leases and operations in
foreign countries. If we are able to implement such strategy, we may experience
difficulty in managing international operations as a result of technical
problems, distance, language and cultural differences. There are significant
risks inherent in doing business on an international level, such as, political
and economic instability, civil unrest, crime, unexpected changes in regulatory
requirements, trade barriers, difficulties in staffing and managing foreign
operations, fluctuations in foreign currency exchange rates, longer payment
cycles, problems in collecting amounts due, difficulty in enforcing contracts,
seasonal fluctuation in business activity and potential adverse tax
consequences. If any of such risks materialize we may have little or no ability
to manage them or avert any consequences there from and our business may suffer
as a result.


6


We
have not established any reserves on any of our properties.  As our
properties are in the exploration stage there can be no assurance that we will
establish commercial discoveries on our properties.





Although
we have drilled exploratory wells on the EWA Concession and on the Fairlight
Prospect (three of which were “dry holes,” and one of which is under
evaluation), we have not established any reserves on any of
properties.  Exploration for economic reserves of oil and gas is
subject to a number of risk factors. 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.





We
do not currently maintain insurance against potential losses and unexpected
liabilities.





Our
operations are subject to inherent casualty risks such as blowouts, fires,
explosions and marine hazards. If any such event occurred, we could be subject
to substantial financial losses due to personal injury, property damage,
environmental discharge, or suspension of operations. The impact on us of one of
these events could be significant. We do not presently have any insurance
coverage as to such potential casualties and, even if we were to obtain such
insurance coverage, there is no assurance that such coverage will be adequate to
protect us against all operational risks.





Although
we may purchase insurance at levels we believe to be customary for a company of
our size in our industry, we are not fully insured against all risks incident to
our business. For some risks, we may not obtain insurance if we believe the cost
of available insurance is excessive relative to the risks presented. In
addition, pollution and environmental risks generally are not fully insurable.
If a significant accident or other event occurs and is not fully covered by
insurance, it could adversely affect our operations and financial
condition.





We
are dependent on retaining our senior management and key personnel and the loss
of any of our key management personnel would have an adverse impact on future
development and could impair our ability to succeed.





To a
large extent, we depend on the services of the founders of the company, and
other senior management, advisors, joint partners and personnel. These
individuals have critical and unique knowledge of our operations that facilitate
the evaluation and acquisitions of existing and potential properties in
Canada.  We face competition for qualified personnel from numerous
industry sources, and there can be no assurance that we will be able to attract
and retain qualified personnel on acceptable terms.  We do not have
key man insurance on any of our employees.  The loss of these
experienced personnel could have a material adverse impact on our financial
condition or operations, including our ability to compete in
Canada.  Except as to Mr. Pratt, we do not have any formal agreements
with these individuals nor do we maintain any insurance against the loss of
services by any of these individuals.





We
will be required to rely upon services provided to us by third
parties.





We expect
to be totally dependent upon third-party providers to enable us to engage in all
of our business activities. Such parties may include, but may not be limited to,
consultants engaged to provide reserve calculations, seismic interpretation and,
to the extent required, third party drilling contractors. Accordingly, we will
be required to establish and maintain strategic relationships with a wide array
of third party providers in order to engage in any meaningful business activity.
If we are unable to establish and maintain relationships with such third party
providers our business prospects will be impaired.





Our
write-downs of the carrying values of oil and natural gas properties may
adversely affect our earnings.





We are in
the early stages of the exploration and development of unproven properties in
Canada. We have adopted the “full cost method” of
accounting for acquisition, exploration and assessment of exploration
properties. Early exploration and the costs including rights to explore,
geological and geophysical studies, exploratory drilling and activities in
relation to evaluating the technical and feasibility and commercial viability of
extracting the oil and gas from the target properties are reasonably viewed
necessary to evaluate and determine probable and proven reserves on the
properties.


7


We
currently have a full-cost pools in Canada. Depletion and amortization of the
full-cost pools will be computed using the units of production method based on
proven reserves, if any, as determined by the aforementioned
activities.





In
accordance with the full cost method of accounting, all costs associated with
oil and gas property development and investment are capitalized on a
project-by-project basis pending determination of the feasibility of the
project. Costs incurred include appropriate technical and administrative
expenses but not general overheads. Investments in unproven properties and major
development projects are not amortized until proven reserves associated with the
projects can be determined. If an oil and gas property development project is
successful, the related expenditures will be transferred to tangible assets and
amortized over the estimated life of the reserves on a unit of production
method. Where a project is abandoned or considered to be of no further
commercial value to the company, the related costs will be written
off.





Unevaluated
oil and gas costs are assessed at each period end and where there are
indications of impairment the related costs will be written off. The
recoverability of unevaluated oil and gas costs is dependent upon the discovery
of economically recoverable reserves, our ability to obtain necessary financing
to complete the development of reserves and future profitable production or
proceeds from the disposition of recoverable reserves.





Terrorist
attacks and threats or actual war may negatively affect our business, financial
condition and results of operations.





Our
business is affected by general economic conditions and fluctuations in consumer
confidence and spending, which can decline as a result of numerous factors
outside of our control, such as terrorist attacks and acts of war. Recent
terrorist attacks in the United States of America, as well as events occurring
in response to or in connection with them, including future terrorist attacks
against United States targets, rumors or threats of war, actual conflicts
involving the United States of America or its allies, or military or trade
disruptions impacting our suppliers or our customers, may adversely impact our
operations. Strategic targets such as energy-related assets may be at greater
risk of future terrorist attacks than other targets in the United States of
America. These occurrences could have an adverse impact on energy prices,
including prices for our natural gas and crude oil production. In addition,
disruption or significant increases in energy prices could result in
government-imposed price controls. It is possible that any or a combination of
these occurrences could have a material adverse effect on our business,
financial condition and results of operations.





We
will require additional financing to sustain our operations and without it we
will not be able to continue operations.  Our ability to obtain such
additional funding will determine our ability to continue as a going concern.
Our financial statements do not include any adjustments that might result from
the outcome of this uncertainty.





There is
substantial doubt about our ability to continue as a going concern due to the
losses incurred since inception, our accumulated deficit, and lack of
revenues.Our
company has a limited operating history and is considered in the development
stage. The success of our company is significantly dependent on a successful
drilling, completion and production program. Our company’s operations will be
subject to all the risks inherent in the establishment of a developing
enterprise and the uncertainties arising from the absence of a significant
operating history. No assurance can be given that we may be able to operate on a
profitable basis. We are in the development stage and potential investors should
be aware of the difficulties normally encountered by enterprises in the
development stage. There can be no assurance that our business plan will prove
successful, and no assurance that we may be able to operate profitably, if at
all.





There is
no assurance that actual cash requirements will not exceed our estimates, in
which case we will require additional financing to further explore and if
warranted bring our properties into commercial operation, finance working
capital, and pay for operating expenses and capital requirements until we
achieve a positive cash flow.  There can be no assurance that, if
required, any such financing will be available upon terms and conditions
acceptable to us, if at all. Our inability to obtain additional financing in a
sufficient amount when needed and upon terms and conditions acceptable to us
could have a materially adverse effect upon our company. We will need funds
sufficient to meet our immediate needs and will require further funds to finance
the development of our company. There can be no assurance that such funds will
be available or available on terms satisfactory to us. If additional funds are
raised by issuing equity securities, further dilution to existing or future
shareholders is likely to result. If adequate funds are not available on
acceptable terms when needed, we may be required to delay, scale back or
eliminate the development of our company.  All or a portion of our
interest in our properties may be lost if we are unable to obtain significant
additional financing, as we are required to make significant expenditures on the
exploration and development of our properties.  Inadequate funding
could also impair our ability to compete in the marketplace, which may result in
the dissolution of our company.


8


Because
of the early stage of development and the nature of our business, our securities
are considered highly speculative.





Our
securities must be considered highly speculative, generally because of the
nature of our business and the early stage of our development. We are engaged in
the business of exploring and, if warranted, developing commercial reserves of
oil and gas. Our properties are in the exploration stage only and are without
known reserves of oil and gas, and there can be no assurance that we will
establish commercial discoveries on our properties.  We have not
generated any revenues nor have we realized a profit from our operations to date
and there is little likelihood that we will generate any revenues or realize any
profits in the short term. Any profitability in the future from our business
will be dependent upon locating and developing economic reserves of oil and gas,
which itself is subject to numerous risk factors as set forth herein. Since we
have not generated any revenues, we will have to raise additional monies through
the sale of our equity securities or debt in order to continue our business
operations.





Our
management team does not have extensive experience in public company matters,
which could impair our ability to comply with legal and regulatory
requirements.





Our
management team has had limited U.S. public company management experience or
responsibilities, which could impair our ability to comply with legal and
regulatory requirements, such as the Sarbanes-Oxley Act of 2002 and applicable
federal securities laws including filing on a timely basis required reports and
other required information. Our management may not be able to implement and
affect programs and policies in an effective and timely manner that adequately
respond to increased legal or regulatory compliance and reporting requirements
imposed by such laws and regulations. Our failure to comply with such laws and
regulations could lead to the imposition of fines and penalties and further
result in the deterioration of our business.





Our
compliance with changing laws and rules regarding corporate governance and
public disclosure may result in additional expenses to us which, in turn, may
adversely affect our ability to continue our operations.





Keeping
abreast of, and in compliance with, changing laws, regulations and standards
relating to corporate governance and public disclosure, including the
Sarbanes-Oxley Act of 2002, new SEC regulations and, in the event we are ever
approved for listing on either NASDAQ or a registered exchange, NASDAQ and stock
exchange rules, will require an increased amount of management attention and
external resources. We intend to continue to invest all reasonably necessary
resources to comply with evolving standards, which may result in increased
general and administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance activities. This
could have an adverse impact on our ongoing operations.





Our
proposed business raises potential conflicts of interests between certain of our
officers and directors and us.





Certain
of our directors are or may become directors of other oil and gas companies and,
to the extent that such other companies may participate in ventures in which we
may participate, our directors may have a conflict of interest in negotiating
and concluding terms regarding the extent of such participation by us and such
other companies. In addition, directors may present potential prospects to such
other companies rather than presenting the opportunities to us. We have not
established any mechanisms regarding the resolution of any such conflict if it
were to arise; accordingly, there is no assurance that any such conflict will be
resolved in a manner that would not be adverse to our interest.





Moreover,
since our inception, we have acquired our property interests from entities
controlled by or in which certain of our shareholders and directors have or may
have an interests. We did not seek to obtain an independent evaluation of the
fairness of the terms and conditions related to our acquisition of these
properties. Such terms and conditions may prove to be financially more onerous
than if we had acquired such properties from unrelated third parties; and,
ultimately may result in the loss of our interests in such
properties.





9




We
have agreements in respect of our properties, but our properties may be subject
to prior unregistered agreements, or transfers which have not been recorded or
detected through title searches, and are subject to a governmental right of
participation, resulting in a possible claim against any future revenues
generated by such properties.


We have
agreements with respect to our oil and gas properties and we believe our
interests are valid and enforceable, although we have not obtained an opinion of
counsel or any similar form of title opinion to that effect.  These
agreements do not guarantee title against all possible claims. The properties
may be subject to prior unregistered agreements, or transfers which have not
been recorded or detected through title research.  If the interests in
our properties are challenged, we may have to expend funds defending any such
claims and may ultimately lose some or all of any revenues generated from the
properties if we lose our interest in such properties.





A
majority of our directors and officers are located outside the United States,
with the result that it may be difficult for investors to enforce within the
United States any judgments obtained against us or any of our directors or
officers.





A
majority of our directors and officers are nationals and/or residents of
countries other than the United States, and all or a portion of such persons’
assets are located outside the United States. As a result, it may be difficult
for investors to enforce within the United States any judgments obtained against
us or our officers or directors, including judgments predicated upon the civil
liability provisions of the securities laws of the United States or any state
thereof. Consequently, you may be effectively prevented from pursuing remedies
under United States federal securities laws against our directors or
officers.





Risks
Related to our Common Stock





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 100,000,000 shares of common
stock, each with a par value of $0.001. In the event that we are required to
issue any that 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.





We
do not intend to pay dividends for the foreseeable future.





We
currently intend to retain future earnings, if any, to support the development
and expansion of our business and do not anticipate paying cash dividends in the
foreseeable future. Our payment of any future dividends will be at the
discretion of our board of directors after taking into account various factors,
including but not limited to our financial condition, operating results, cash
needs, growth plans and the terms of any credit agreements that we may be a
party to at the time. Accordingly, investors must rely on sales of their common
stock after price appreciation, which may never occur, as the only way to
realize their investment. Investors seeking cash dividends should not purchase
the shares offered by the Selling Shareholders pursuant to this
prospectus.





We
may conduct further offerings in the future in which case your shareholdings
will be diluted.





Since our
inception, we have relied on such equity sales of our common stock to fund our
operations. We may conduct further equity offerings in the future to finance our
current projects or to finance subsequent projects that we decide to undertake.
If common stock is issued in return for additional funds, the price per share
could be lower than that paid by our current stockholders. We anticipate
continuing to rely on equity sales of our common stock in order to fund our
business operations. If we issue additional stock, your percentage interest in
us will be diluted. The result of this could reduce the value of your
stock.





We
may issue preferred stock which may have greater rights than our common
stock.





We are
permitted in our charter to issue up to 10,000,000 shares of
preferred stock. Currently no preferred shares are issued and outstanding;
however, we can issue shares of our preferred stock in one or more series and
can set the terms of the preferred stock without seeking any further approval
from our common shareholders. Any preferred stock that we issue may rank ahead
of our common stock in terms of dividend priority or liquidation premiums and
may have greater voting rights than our common stock. In addition, such
preferred stock may contain provisions allowing them to be converted into shares
of common stock, which could dilute the value of common stock to current
shareholders and could adversely affect the market price, if any, of our common
stock.


10


Our
common stock is a "penny stock," and because "penny stock” rules will apply, you
may find it difficult to sell the shares of our common stock you acquired in
this offering.





Our
common stock is a “penny
stock,” as that term is defined under Rule 3a51-1 of the Securities
Exchange Act of 1934. Generally, a "penny stock" is a common
stock that is not listed on a securities exchange and trades on the OTCBB for
less than $5.00 a share. Prices in our stock often are not available to buyers
and sellers and the market may be very limited. Penny stocks in start-up
companies are among the riskiest equity investments. Broker-dealers who sell
penny stocks must provide purchasers of these stocks with a standardized
risk-disclosure document prepared by the U.S. Securities & Exchange
Commission. The document provides information about penny stocks and the nature
and level of risks involved in investing in the penny stock market. A broker
must also give a purchaser, orally or in writing, bid and offer quotations and
information regarding broker and salesperson compensation, make a written
determination that the penny stock is a suitable investment for the purchaser,
and obtain the purchaser's written agreement to the purchase. Many brokers
choose not to participate in penny stock transactions. Because of the penny
stock rules, there is less trading activity in penny stocks and you are likely
to have difficulty selling your shares.





ITEM
      1B.
            UNRESOLVED
      STAFF COMMENTS.





None.





ITEM
      2.
            PROPERTIES.





Our
principal office is located at 520 Pike Street, Suite 2210, Seattle, Washington,
USA 98101.  We also have administrative offices located at 207 West
Hastings Street, #1111, Vancouver, British Columbia, Canada V6B 1H7, and Suite
201, 47 Colburne St., Toronto, Ontario, Canada M5E 1P8.   These
offices are leased.  We lease office space in Seattle, Washington,
from The Law Office of Mussehl & Khan, a law firm in which one of our former
officers and a former director are partners. The lease payments are currently
$400 per month. The office lease may be terminated by either party upon 30 days
notice to the other.  The Vancouver location is leased for CDN$450 per
month ($625 as of Sept. 1, 08), renewable annually.  The Toronto
location is leased for CDN$3,954 per month.  Our premises are adequate
for our current operations, and we do not anticipate that we will acquire or
lease additional premises in the foreseeable future. See Note 5 to Financial
Statements.





All of
our oil and gas properties are located in the United States and
Canada.  As of December 31, 2008, we held petroleum leases in one
major area, as follows:  a one hundred percent (100%) interest in
approximately 9,300 acres situated in South East Saskatchewan acquired under
sixty-eight (68) separate freehold oil and gas leases (the “Freehold
Properties”).  The Company sold its former twenty percent (20%)
working interest in the East Wadi Araba (EWA) Concession located in the Gulf of
Suez, Arab Republic of Egypt (the “EWA Concession”), as discussed
herein.





We
recently completed a drilling program on the Freehold Properties.  The
drilled well has been cased and the results of the drilling program are being
evaluated.  We previously drilled a dry well on Saskatchewan P&NG
Lease PN 46794 (“the Fairlight Prospect”).  Our fifty percent (50%)
interest in the Fairlight Prospect has expired and has not been
renewed.  Because of the Fairlight Prospect’s proximity to our
Freehold Properties, we believe that the information gathered from our drilling
activities on the Fairlight Prospect will be of assistance in planning our
exploration and drilling activities on the Freehold Properties.





We do not
have any reserves on our properties.




ITEM
      3.
            LEGAL
      PROCEEDINGS.





We
currently know of no material active or pending legal proceedings in which the
Company is a party, or of which any of our property is the
subject.  Nor is the Company involved as a plaintiff in any material
active or pending litigation. We know of no material active or pending legal
proceedings in which any of our directors, officers, or affiliates, or any
registered beneficial shareholder, is an adverse party to us or has a material
interest adverse to our interest.


11


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





None
during the period of this report.








PART
II





ITEM
      5.
            MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES.





Market
Information





Our
common stock currently trades on the Over-the-Counter Bulletin Board (OTCBB)
under the symbol “MGUY, and on the Frankfort Stock Exchange under the symbol
BKX”  As of April 13, 2009, there were 57,445,987 common shares
issued and outstanding.





Our stock
began trading on the OTCBB on July 11, 2007.  Following are the high
and low sales prices by quarter since that time:





OTC Bulletin Board Sales Prices
      for MGUYQuarter
      Ended
                            
                            High
                            
                            
                            LowSeptember
      30, 2007
                            
                            
                            0.56
                            
                            
                            
                            0.10December
      31, 2007
                            
                            
                            0.20
                            
                            
                            
                            0.09March
      31, 2008
                            
                            
                            0.20
                            
                            
                            
                            0.12June
      30, 2008
                            
                            
                            0.28
                            
                            
                            
                            0.13September
      30, 2008
                            
                            
                            0.26
                            
                            
                            
                            0.10December
      31, 2008
                            
                            
                            0.17
                            
                            
                            
                            0.03March
      31, 2009
                            
                            
                            0.07
                            
                            
                            
                            0.02





The
closing price of our stock on April 13, 2009 was $0.06.





Holders





As of
December 31, 2008, there were at least 80 shareholders of record of the
Company’s common stock.  The number of shareholders of record was
determined from the records of our transfer agent and does not include
beneficial owners of common stock whose shares are held in the names of various
security brokers, dealers, and registered clearing agencies.  The
transfer agent and registrar for our common stock is Holladay Stock Transfer,
Inc., located at 2939 North 67th Place,
Scottsdale, Arizona 85251 [Tel: (480) 481-3940, Fax: (480)
481-3941].





Dividends





To date
the Company has not declared or paid cash dividends on our capital stock and
does not anticipate paying any cash dividends in the foreseeable future, but
intends to retain its capital resources for reinvestment in its business. Any
future determination to pay cash dividends will be at the discretion of the
Board of Directors and will be dependent upon our financial condition, results
of operations, capital requirements and other factors as the board of directors
deems relevant. Our Board of Directors has the right to authorize the issuance
of preferred stock, without further stockholder approval, the holders of which
may have preferences over the holders of the common stock as to payment of
dividends.





Securities
Authorized for Issuance Under Equity Compensation Plans





The
Company’s Board of Directors approved a 2007 Stock Incentive Plan on or about
August 8, 2007, which authorized the issuance to management and employees of up
to 4,000,000 shares of the Company’s common stock.  To date, the Board
has approved the issuance of options to purchase 2,250,000 of the Company’s
common stock at a price of $0.30 per share, expiring August 7,
2012.  The options vest sequentially over a one-year period that
commenced on August 8, 2007.


12


Recent
Sales of Unregistered Securities





There
have been no recent sales of unregistered securities since the Company’s last
report of such sales in the Current Report on Form 8-K filed on June 16,
2008.




Purchases
of Equity Securities by the Issuer and Affiliated Purchasers






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







ITEM
      6.
            SELECTED
      FINANCIAL DATA.





The
Company is a “smaller reporting company,” as defined by Rule 229.10(f)(1)
(Regulation S-K), and is not required to provide information under this
item.








ITEM
      7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.





Plan
of Operation





We do not
anticipate any significant changes to the number of employees.





Cash
Requirements





We will
require additional funds to satisfy the terms under our agreement to acquire a
40% interest in Excelaron LLC.  Further cash requirements will be
necessary should the Company undertake completion of its suspended well drilled
in Southeastern Saskatchewan and for general operating
expenses.  These funds may be raised through equity financing, debt
financing, the sale of assets, or other sources, which may result in further
dilution in the equity ownership of our shares. There is no assurance that we
will be able to maintain operations at a level sufficient for an investor to
obtain a return on his investment in our common stock. Further, we may continue
to be unprofitable.





Over the
next twelve months we intend to use all available funds to evaluate a further
drilling program on the Freehold Properties and meet our obligations under our
agreement with Excelaron LLC.





As at
December 31, 2008, we had total assets of $1,483,608 as compared to $718,080 at
December 31, 2007.  Working capital at December 31, 2008 was $924,346
(working capital at December 31, 2007 ­– $706,010).





As at
year-ended December 31, 2008, we had current liabilities of $559,262 in current
liabilities relative to current liabilities of $1,424,090 at December 31,
2007.  Our total liabilities decreased by approximately
$864,828.  The disposition of our 20% working interest in the EWA
Concession reduced our accounts payable by $759,000.  We also repaid
all loans to shareholders and related parties resulting in a further decrease of
accounts payable of approximately $270,000.  Current accounts payable
consist of new payables arising as a result of the drilling program and have
been incurred in the months of November and December of 2008.





Year
      ended
                      December 31,2008
                    
                    
                    Year
      ended
                      December 31,2007ExpensesGeneral
      & AdministrationInternet
      and telephone
                    
                    
                    18,451
                    
                    
                    
                    10,282Professional
      fees
                    
                    
                    372,062
                    
                    
                    
                    156,582Rent
                    
                    
                    62,881
                    
                    
                    
                    11,279Employee
      stock options
                    
                    
                    175,500
                    
                    
                    
                    117,000Travel
      & Promotion
                    
                    
                    298,258
                    
                    
                    
                    140,595Wages
                    
                    
                    280,487
                    
                    
                    
                    184,446Other
                    
                    
                    167,122
                    
                    
                    
                    118,399Total
      General and administration expenses
                    
                    
                    1,374,762
                    
                    
                    
                    738,584Impairment
      on resource properties
                    
                    
                    1,692,049
                    
                    
                    
                    1,302,177Gain
      on disposition EWA
                    
                    
                    1,287,072
                    
                    
                    
                    -


13


For the
year-ended, 2008 total general and administrative costs were $1,374,762 compared
to $738,584 in the prior year.  Internet and Telephone charges
increased 79% as a result of increased communications costs associated with the
set-up of offices in Toronto, Ontario, Canada.  Professional fees also
increase from $156,582 in the prior year to $372,062 in
2008.  Professional fees related to consulting for geological and
geophysical expenses for work towards the drilling program in
Saskatchewan and due diligence work on potential projects, fees for legal
advice related to the possible redomicile of the Company from Delaware, legal
advice relating to potential projects, as well as general legal work. The
company also pays consulting fees for marketing and monies to certain officers
and directors of the company for their services.  Rent expenses have
increased by $51,602 due to the office space leased in Toronto.  The
remaining stock options vested during 2008.  Travel and Promotions
costs increased to $298,258 for 2008 compared to $140,595 in the prior
year.  Travel and promotions costs increased as management looked to
acquire international projects in Africa that were not
undertaken.  Wages increased to $280,487 in 2008 compared to $184,446
in 2007 as the company hired additional staff and increased pay to the key
executives.





The
Company assessed the results of its Saskatchewan drilling program at year end
and wrote-down all lease costs and cost to acquire the leases as impaired; in
addition, the cost of drilling the second well which resulted in a dry-hole was
also written-down as impaired along with other costs not associated with the
first well which has been suspended pending further
evaluation.





We
disposed of our interest in the EWA Concession, involving a transfer to the
Company of 400,000 shares of Sea Dragon Energy Inc., plus an additional
3,600,000 shares that were placed in escrow, totaling 4,000,000 shares. The
Company has deferred any gain recognition on the 3,600,000 shares held in escrow
until the time the escrow provisions are met.  Management believes
that the terms of the escrow for these shares will be met on July 31, 2009.
Management anticipates that the release of these shares from escrow and the
forgiveness of cash calls payable will improve its liquidity in 2009 through
sale of common shares of Sea Dragon.





The cash
outflow for operations in 2008 increased to $1,023,118, compared to $444,223 in
the prior year.





Cash used
in investing activities has increase to $849,318, compared to $584,825 in 2007,
due to the drilling program embarked on at the end of 2008.





Cash
generated from financing activities was $2,565,172, compared to $1,264,701 for
2007.  Cash increased during the year as a result of the issuance of
further equity.





Milestones





Subject
to the availability of sufficient funds, we hope to achieve the following
milestones in the exploration and development of our Freehold Properties over
the next twelve months:





•
            Evaluate
      the outcome of the recent drilling of the wells on the Freehold Properties
      to obtain information that will assist the company in making future
      decisions about exploration and development.  Evaluate future
      properties for further exploration.





Subject
to the availability of sufficient funds, we hope to achieve the following
milestone with respect to our recent agreement with Excelaron LLC (see
discussion under Item 9B Other Information and elsewhere herein):





•
            Meet
      the investment into Excelaron of $2,300,000 to obtain a 40% Members
      Percentage Interest (“Interest”) in Excelaron, as per the terms of
      the Agreement. The Agreement provides that the Company is to invest
      $2,300,000 in Excelaron over the period ending October 1, 2009 in
      defined payments.


14


Selected
Annual Financial Information





2008
                    
                    
                    2007Cash
                    
                    
                    845,251
                    
                    
                    
                    227,226Investments
                    
                    
                    556,707
                    
                    
                    
                    -Working
      capital
                    
                    
                    924,346
                    
                    
                    
                    (706,010
                    )Total
      assets
                    
                    
                    1,919,120
                    
                    
                    
                    1,997,378Shareholders'
      equity
                    
                    
                    1,359,858
                    
                    
                    
                    573,288Share
      capital
                    
                    
                    7,072,281
                    
                    
                    
                    4,503,068Weighted
      average common shares outstanding
                    
                    
                    50,314,446
                    
                    
                    
                    37,449,327Retained
      loss
                    
                    
                    (6,125,607
                    )
                    
                    
                    (4,354,221
                    )Cash
      flow from operations
                    
                    
                    (1,023,118
                    )
                    
                    
                    (444,223
                    )Net
      loss
                    
                    
                    (1,771,386
                    )
                    
                    
                    (2,040,761
                    )Total
      equity
                    
                    
                    1,359,858
                    
                    
                    
                    573,288Loss
      per share
                    
                    
                    (0.04
                    )
                    
                    
                    (0.05
                    )





The
Company currently operates in one segment the oil and gas exploration
business.  Our continuing business activities are concentrated in
geographic area; Southeastern Saskatchewan, Canada and in the State of
California, U.S.A.  The Company discontinued its exploration
activities in the Arab Republic of Egypt through the disposition of its 20%
working interest in the East Wadi Araba Concession (“EWA Concession”) on April
25, 2008.





The
Company disposed of its interest in the EWA Concession in order to focus on its
Canadian assets and release our obligations related to cash calls due and
payable to Sea Dragon Energy related to unsuccessful exploration activity
undertaken on the concession in 2007. The Company entered into
an  Agreement of Purchase and Sale with Egypt Oil Holdings Ltd. (Egypt
Oil), Sea Dragon Energy Inc. (Sea Dragon) and Dover Investments
Ltd.  The Agreement, with an effective date of March 21, 2008, was
part of a larger transaction (the “Transaction”) that closed on April 24,
2008.  The Transaction resulted in the sale of the Company’s 20%
working interest in the EWA Concession Agreement (Concession) to Sea Dragon in
exchange for satisfaction of the Company’s outstanding “Cash calls payable”
($759,306) related to the Company’s drilling program on the Concession, a cash
payment of $100,000 CDN plus 4,000,000 shares of Sea Dragon’s common stock,
valued at an estimated $0.15 per share based on a recent share offering of Sea
Dragon, a publicly traded Company.  Ninety percent of Sea Dragon’s
shares received by the Company for this transaction have been placed in
escrow.  The terms of the escrow call for the  release of
these shares on the earlier of: (i) the Company announcing the drilling results
of the second exploratory well drilled on the Concession (note 5); or (ii) July
31, 2009.





The
Company raised net proceeds of $2,448,213 during the year-ended in 2008 to be
used to fund an exploration program on the Company’s leases located in South
Eastern Saskatchewan and for general operating activities.





The
Company commenced an exploration program in 2008 on its leased properties
located in eastern Saskatchewan.  The first well encountered a heavily
oil stained, marginal reservoir, within the Bakken interval.  This
well has been suspended.  A determination has not been made regarding
the extent of oil reserves, if any, or the classification of
same.  Further analysis is expected to be completed in
2009.  A second well was drilled and abandoned after encountering a
wet zone at the Bakken reservoir level.





The
Company’s exploration program previously announced for its South Eastern
Saskatchewan properties has changed significantly. Further exploration in
Saskatchewan has been postponed as the Company evaluates the results of the
wells drilled to date.  Due to expiration of the leased property, a
lack of cash and lower oil prices than anticipated, the Company has realized an
impairment charge of $1,203,247 related to the expiration of substantially all
leased property assets and their related acquisition costs previously
capitalized on the balance sheet as Exploration and Evaluation.  A
further impairment charge of $412,134 has been recognized for the dry hole and
other related costs of the 2008 exploration.  The suspended well costs
have been recorded as a capitalized asset pending determination of reserves, if
any.





On
February 12, 2009, we entered into an agreement with Excelaron LLC wherein Mogul
Energy may acquire a 40% membership interest in Excelaron LLC, a California
based company.  Excelaron LLC is in the process of developing oil and
gas leases located in the state of California.  The terms of the
agreement stipulate that in exchange for an investment into Excelaron of
$2,300,000, the Company is to obtain a 40% Members Percentage Interest
(“Interest”) in Excelaron.  The Agreement provides the invested funds
are to be used primarily by Excelaron for oil and gas exploration
activities.  The Agreement provides that the 40% interest is to be
issued upon payment of the first installment of $175,000 which has been
paid.  Further, the Agreement provides that the Company is to invest
$2,300,000 in Excelaron over  the period ending October 1, 2009 in
defined payments.


15


Purchase
of Significant Equipment





We do not
intend to purchase any significant equipment (excluding oil and gas activities)
over the next twelve months ending December 31, 2009.





Going
Concern





We have
suffered recurring losses from operations. The continuation of our company as a
going concern is dependent upon our company attaining and maintaining profitable
operations and raising additional capital. The financial statements do not
include any adjustment relating to the recovery and classification of recorded
asset amounts or the amount and classification of liabilities that might be
necessary should our company discontinue operations.





Due to
the uncertainty of our ability to meet our current operating expenses and the
capital expenses noted above, in their report on the annual financial statements
for the period ended December 31, 2008, our independent auditors included an
explanatory paragraph regarding concerns about our ability to continue as a
going concern. Our financial statements for the period ended December 31, 2008,
contain additional note disclosures describing the circumstances that lead to
this disclosure by our independent auditors.





The
continuation of our business is dependent upon us raising additional financial
support. The issuance of additional equity securities by us could result in a
significant dilution in the equity interests of our current stockholders.
Obtaining commercial loans, assuming those loans would be available, will
increase our liabilities and future cash commitments.





There are
no assurances that we will be able to obtain further funds required for our
continued operations. As noted herein, we are pursuing various financing
alternatives to meet our immediate and long-term financial requirements. There
can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis,
we will be unable to conduct our operations as planned, and we will not be able
to meet our other obligations as they become due. In such event, we will be
forced to scale down or perhaps even cease our operations.





Recently
Issued Accounting Standards





In July
2006, the FASB issued FASB Interpretation No. 48,“Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statements No. 109” . FIN 48
clarifies the accounting for uncertainty in income taxes by prescribing a
two-step method of first evaluating whether a tax position has met a more likely
than not recognition threshold and second, measuring that tax position to
determine the amount of benefit to be recognized in the financial statements.
FIN 48 provides guidance on the presentation of such positions within a
classified statement of financial position as well as on derecognition, interest
and penalties, accounting in interim periods, disclosure, and transition. FIN 48
is effective for fiscal years beginning after December 15, 2006. The adoption of
this statement in fiscal 2007 did not have a material effect on our company's
financial statements.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS 157 is to increase consistency and comparability in fair value
measurements and to expand disclosures about fair value measurements. SFAS 157
defines fair value, establishes a framework for measuring fair value in
Generally Accepted Accounting Principles (GAAP), and expands disclosures about
fair value measurements. SFAS 157 applies under other accounting pronouncements
that require or permit fair value measurements and does not require any new fair
value measurements. The provisions of SFAS 157 are effective for fair value
measurements made in fiscal years beginning after November 15, 2007. We are
currently evaluating the impact of adopting SFAS No. 157 but do not expect that
it will have a material effect on our financial statements.





In
September 2006, the FASB issued SFAS 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 requires employers to
recognize the over funded 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 requires 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. The provisions of SFAS 158 are effective for employers
with publicly traded equity securities as of the end of the fiscal year ending
after December 15, 2006. The adoption of this statement did not have a material
effect on our company's future reported financial position or results of
operations.


16


In
February 2007, the Financial Accounting Standards Board (FASB) issued SFAS 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. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments
in Debt and Equity Securities ” applies to all entities with
available-for-sale and trading securities. SFAS No. 159 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
provision of SFAS No. 157, “Fair Value Measurements”.





We do not
expect that any of these recently issued accounting standards have a material
effect on our company’s financial statements.





Application
of Critical Accounting Policies





Our
audited financial statements and accompanying notes are prepared in accordance
with Generally Accepted Accounting Principles (GAAP) used in the United States.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
application of accounting policies. We believe that understanding the basis and
nature of the estimates and assumptions involved with the following aspects of
our financial statements is critical to an understanding of our financials. See
Note 2 to the Financial Statements under ITEM 8.





Oil
and Gas Properties





We follow
the full cost method of accounting for our oil and gas operations. Under this
method, all cost incurred in the acquisition, exploration and development of oil
and gas properties are capitalized in one cost center, including certain
internal costs directly associated with such activities. Proceeds from sales of
oil and gas properties are credited to the cost center with no gain or loss
recognized unless such adjustments would significantly alter the relationship
between capitalized costs and proved oil and gas reverses.





If
capitalized costs, less related accumulated amortization and deferred income
taxes, exceed the “full cost ceiling”, the excess is expensed in the period such
excess occurs. The “full cost ceiling” is determined based on the present value
of estimated future net revenues attributable to proved reserves, using current
product prices and operating costs at the balance sheet date plus the lower of
cost and fair value of unproved properties within the cost center.





Costs of
oil and gas properties are amortized using the unit-of-production method based
upon estimated proven oil and gas reserves upon the commencement of production.
The significant unproven properties are excluded from the costs subject to
depletion.





As at
December 31, 2008, we do not have any proved reserves.





Stock
Based Compensation





We
implemented the following new critical accounting policy related to our
stock-based compensation.  Beginning August 8, 2007, we began accounting
for Stock options under the provisions of Financial Accounting Standards No. 123
(revised 2004), “Share-Based Payment” (FAS 123(R)), which requires the
recognition of the fair value of stock-based compensation. Under the fair value
recognition provisions for FAS 123(R), stock-based compensation cost is
estimated at the grant date based on the fair value of the awards expected to
vest and recognized as expense ratably over the requisite service period of the
award. We were already using the fair value method under SFAS 123 and the main
difference is the estimation of forfeitures in order to estimate the awards not
expected to vest. We have used the Black-Scholes valuation model to estimate
fair value of our stock-based awards which requires various judgmental
assumptions including estimating stock price volatility and expected life. Our
computation of expected volatility is based upon historical volatility. In
addition, we consider many factors when estimating expected life, including
types of awards and historical experience.





Off-balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.





ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





The
Company is a “smaller reporting company,” as defined by Rule 229.10(f)(1)
(Regulation S-K), and is not required to provide information under this
item.


17


ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA.








Mogul
Energy International, Inc.


(an
exploration stage company)








Financial
Statement Index








IndexBalance
      Sheets
                F-2Statements
      of Operations
                F-3Statement
      of Shareholders’ Equity
                F-4Statements
      of Cash Flows
                F-5Notes
      to the Financial Statements
                F-7





Report
of Independent Registered Public Accounting Firm





Shareholders
and Board of Directors


Mogul
Energy International, Inc.


(an
exploration stage company)


Seattle,
WA





We have
audited the accompanying balance sheets of Mogul Energy International, Inc., a
Delaware corporation, as of December 31, 2008 and December 31, 2007, and the
related statements of operations, shareholders' equity and cash flows for the
years then ended, and for the period from July 25, 2005 (inception) to December
31, 2008. 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
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.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.   We believe that our audit provides a reasonable
basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Mogul Energy International, Inc.
(an exploration stage company) as of December 31, 2008 and December 31, 2007,
and the results of its operations and its cash flows for the years then ended,
and for the period from July 25, 2005 (inception) to December 31, 2008 in
conformity with accounting principles generally accepted in the United States of
America.





The
accompanying financial statements referred to above have been prepared assuming
that the Company will continue as a going concern.  As discussed in
Note 2 to the financial statements, the Company is in the exploration stage, has
not yet achieved profitable operations and is dependent on its ability to raise
capital from stockholders or other sources to sustain operations. These factors,
along with other matters set forth in Note 2, raise substantial doubt that the
Company will be able to continue as a going concern.  Management’s
plan to address these matters is disclosed in Note 2.  The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.





Jorgensen
& Co.


(a
registered pubic accounting firm)





/s/
Jorgensen & Co.


April 8,
2009


Bellevue,
Washington







Mogul
Energy International, Inc.


(an
exploration stage company)


Balance
Sheets


(expressed
in U.S. dollars)






December 31,2008
                                              
                                              
                                              December 31,2007Assets:CurrentCash
                                              
                                              $
                                              845,251
                                              
                                              
                                              $
                                              227,226Receivable
                                              
                                              
                                              52,169
                                              
                                              
                                              
                                              35,744Subscriptions
      receivable
                                              
                                              
                                              -
                                              
                                              
                                              
                                              454,824Investment
      - held for sale
                                              
                                              
                                              556,444
                                              
                                              
                                              
                                              -Prepaid
      and Deposits
                                              
                                              
                                              29,744
                                              
                                              
                                              
                                              286Total
      current assets
                                              
                                              
                                              1,483,608
                                              
                                              
                                              
                                              718,080Non-currentEquipment
      – net
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,055Exploration
      and evaluation
                                              
                                              
                                              435,512
                                              
                                              
                                              
                                              1,278,243Total
      Assets
                                              
                                              $
                                              1,919,120
                                              
                                              
                                              $
                                              1,997,378Current
      Liabilities:Accounts
      payable
                                              
                                              $
                                              559,262
                                              
                                              
                                              $
                                              465,942Cash
      call payable – exploration
                                              
                                              
                                              -
                                              
                                              
                                              
                                              680,033Due
      to officers and directors
                                              
                                              
                                              -
                                              
                                              
                                              
                                              178,125Loans
      from shareholders
                                              
                                              
                                              -
                                              
                                              
                                              
                                              99,990Total
      current liabilities
                                              
                                              $
                                              559,262
                                              
                                              
                                              $
                                              1,424,090Contingencies
      and commitments
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Shareholders’
      Equity:Deficit
      accumulation during exploration stage
                                              
                                              $
                                              (6,125,607
                                              )
                                              
                                              $
                                              (4,354,221
                                              )Common stock Authorized:
      100,000,000 shares,$0.0001
      par value. Outstanding:57,445,987 shares, and 42,367,597sharesfor
      12/31/08 and 12/31/07, respectively
                                              
                                              
                                              5,744
                                              
                                              
                                              
                                              4,236Additional
      paid-in capital
                                              
                                              
                                              7,066,537
                                              
                                              
                                              
                                              4,498,832Warrants
      & Options:
                                              
                                              
                                              571,704
                                              
                                              
                                              
                                              462,624Preferred:
      10,000,000 shares authorized, none issued
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Foreign
      exchange adjustment
                                              
                                              
                                              (112,894
                                              )
                                              
                                              
                                              (38,183
                                              )Other
      comprehensive income (loss)
                                              
                                              
                                              (45,626
                                              )
                                              
                                              
                                              -Total
      Shareholders’ Equity
                                              
                                              
                                              1,359,858
                                              
                                              
                                              
                                              573,288Total
      Shareholders’ Equity and Liabilities
                                              
                                              $
                                              1,919,120
                                              
                                              
                                              $
                                              1,997,378






The Notes
are an integral part of the Financial Statements


F-2


Mogul
Energy International, Inc.


(an
exploration stage company)


Statements
of Operations


For
the Years Ended December 31, 2008 and 2009 and


For
the Period July 25, 2005 (inception) to December 31, 2008


(expressed
in U.S. dollars)






Year
      Ended
                      December 31,2008
                    
                    
                    Year
      Ended
                      December 31,2007
                    
                    
                    Cumulative
      from
                      July 25,
      2005
                      (inception)
      to
                      December 31,2008Expenses:General
      and administrative
                    
                    $
                    (1,374,762
                    )
                    
                    $
                    (738,584
                    )
                    
                    $
                    (2,842,088
                    )Impairment
                    
                    
                    (1,692,049
                    )
                    
                    
                    (1,302,177
                    )
                    
                    
                    (3,758,944
                    )Other
      income and expensesGain
      on disposition exploration property
                    
                    
                    1,287,072
                    
                    
                    
                    -
                    
                    
                    
                    1,287,072Interest
      Revenue
                    
                    
                    8,354
                    
                    
                    
                    -
                    
                    
                    
                    8,354Settlement
      of lawsuit
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (820,000
                    )Net
      (loss) for the periods
                    
                    $
                    (1,771,386
                    )
                    
                    $
                    (2,040,761
                    )
                    
                    $
                    (6,125,607
                    )Basic
      earnings (loss) per share
                    
                    $
                    (0.04
                    )
                    
                    
                    (0.05
                    )Weighted
      average common shares outstanding
                    
                    
                    50,314,446
                    
                    
                    
                    37,449,327








The Notes
are an integral part of the Financial Statements


F-3


Mogul
Energy International, Inc.


(an
exploration stage company)


Statement
of Shareholders’ Equity


(expressed
in U.S. dollars)






Number
      of Common shares
                          
                          
                          Par
      Value
                          
                          
                          Additional
      Paid in Capital
                          
                          
                          Warrants
      & Options
                          
                          
                          Other
      Compre. Income
                          
                          
                          Deficit
      Accumulated During Exploration Stage
                          
                          
                          TotalsShares
      issued at $0.001
                          
                          
                          29,264,310
                          
                          
                          $
                          2,926
                          
                          
                          $
                          26,338
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          29,264Shares
      issued at $0.15
                          
                          
                          590,000
                          
                          
                          
                          59
                          
                          
                          
                          88,441
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          88,500Shares
      issued at $0.40
                          
                          
                          717,500
                          
                          
                          
                          72
                          
                          
                          
                          286,928
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          287,000Net
      (loss) for period
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          
                          
                          
                          
                          -
                          
                          
                          
                          (136,919
                          )
                          
                          
                          (136,919
                          )12/31/2005
      balances
                          
                          
                          30,571,810
                          
                          
                          
                          3,057
                          
                          
                          
                          401,707
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (136,919
                          )
                          
                          
                          267,845Shares
      issued at $0.40
                          
                          
                          2,665,000
                          
                          
                          
                          267
                          
                          
                          
                          1,065,734
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,066,001Units
      (Shares & warrants) at $0.40
                          
                          
                          1,250,000
                          
                          
                          
                          125
                          
                          
                          
                          437,375
                          
                          
                          
                          62,500
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          500,000Net
      (loss) for the year
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (2,176,540
                          )
                          
                          
                          (2,176,540
                          )12/31/2006
      balances
                          
                          
                          34,486,810
                          
                          
                          
                          3,449
                          
                          
                          
                          1,904,816
                          
                          
                          
                          62,500
                          
                          
                          
                          -
                          
                          
                          
                          (2,313,459
                          )
                          
                          
                          (342,694
                          )Shares
      for lawsuit @$0.40
                          
                          
                          2,000,000
                          
                          
                          
                          200
                          
                          
                          
                          799,800
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          800,000Shares
      for cash
                          
                          
                          2,045,334
                          
                          
                          
                          204
                          
                          
                          
                          280,879
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          281,083Subscribed
      shares @$0.18
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          462,324
                          
                          
                          
                          
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          462,324Shares
      and opt for debt for cash
                          
                          
                          3,366,667
                          
                          
                          
                          337
                          
                          
                          
                          1,168,663
                          
                          
                          
                          267,500
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,436,500Shares
      and opt for services
                          
                          
                          468,786
                          
                          
                          
                          46
                          
                          
                          
                          116,350
                          
                          
                          
                          132,624
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          249,020Deferred
      Compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (234,000
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (234,000
                          )Translation
      adjustment
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (38,183
                          )
                          
                          
                          -
                          
                          
                          
                          (38,183
                          )Net
      (loss) for the year
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (2,040,762
                          )
                          
                          
                          (2,040,762
                          )12/31/2007
      balances
                          
                          
                          42,367,597
                          
                          
                          
                          4,236
                          
                          
                          
                          4,498,832
                          
                          
                          
                          462,624
                          
                          
                          
                          (38,183
                          )
                          
                          
                          (4,354,221
                          )
                          
                          
                          573,288Warrant
      expiration
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          62,500
                          
                          
                          
                          (62,500
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Shares
      cancelled
                          
                          
                          (178,077
                          )
                          
                          
                          (18
                          )
                          
                          
                          
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (18
                          )Subscribed
      shares @ $0.18
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (462,324
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (462,324
                          )Shares
      issued @ $0.18
                          
                          
                          2,526,800
                          
                          
                          
                          253
                          
                          
                          
                          462,071
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          462,324Shares
      issued at $0.15
                          
                          
                          2,383,000
                          
                          
                          
                          238
                          
                          
                          
                          349,468
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          349,706Shares
      issued for services
                          
                          
                          166,667
                          
                          
                          
                          17
                          
                          
                          
                          24,983
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          25,000Broker
      warrants @ $0.15
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          12,212
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          12,212Shares
      issued at $0.20
                          
                          
                          6,300,000
                          
                          
                          
                          630
                          
                          
                          
                          1,259,372
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,260,002Shares
      issued at $0.25
                          
                          
                          3,800,000
                          
                          
                          
                          380
                          
                          
                          
                          949,620
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          950,000Broker
      warrants @ $0.20
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          108,990
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          108,990Broker
      warrants @ $0.25
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          50,378
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          50,378Deferred
      Compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          234,000
                          
                          
                          
                          
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          234,000Share
      issuance costs
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (341,577
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (341,577
                          )Shares
      issues @ $0.37
                          
                          
                          80,000
                          
                          
                          
                          8
                          
                          
                          
                          29,592
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          29,600Translation
      adjustment
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (74,711
                          )
                          
                          
                          -
                          
                          
                          
                          (74,711
                          )Unrealized
      gain on marketable equity securities
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (45,626
                          )
                          
                          
                          -
                          
                          
                          
                          (45,626
                          )Net
      (loss) for the year
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (1,771,386
                          )
                          
                          
                          (1,771,386
                          )12/31/2008
      balances
                          
                          
                          57,445,987
                          
                          
                          $
                          5,744
                          
                          
                          $
                          7,066,537
                          
                          
                          $
                          571,704
                          
                          
                          $
                          (158,520
                          )
                          
                          $
                          (6,125,607
                          )
                          
                          $
                          1,359,858








The Notes
are an integral part of the Financial Statements


F-4


Mogul
Energy International, Inc.


(an
exploration stage company)


Statements
of Cash Flows


For
the Years Ended December 31, 2008 and 2009 and


For
the Period July 25, 2005 (inception) to December 31, 2008


(Expressed
in U.S. dollars)






Year
      Ended
                      December 31,2008
                    
                    
                    Year
      Ended
                      December 31,2007
                    
                    
                    Cumulative
      from
                      7/25/05
                      (inception)to
                      12/31/08Operating
      ActivitiesNet
      (loss) for periods
                    
                    $
                    (1,771,386
                    )
                    
                    $
                    (2,040,761
                    )
                    
                    $
                    (6,125,607
                    )Adjustments
      to reconcile net loss to net cash provided by operating
      activities:Depreciation
      expense (office)
                    
                    
                    1055
                    
                    
                    
                    2,070
                    
                    
                    
                    6,209Impairment
                    
                    
                    1,692,049
                    
                    
                    
                    1,302,177
                    
                    
                    
                    3,758,946Shares
      and options for services
                    
                    
                    274,083
                    
                    
                    
                    249,020
                    
                    
                    
                    523,103Gain
      on disposition of exploration property
                    
                    
                    (1,287,072
                    )
                    
                    
                    -
                    
                    
                    
                    (607,039
                    )Changes
      in non-cash working capitalAccounts
      payables ( decrease) increase
                    
                    
                    93,320
                    
                    
                    
                    71,106
                    
                    
                    
                    559,262GST
      receivable increase
                    
                    
                    (16,425
                    )
                    
                    
                    (7,548
                    )
                    
                    
                    (51,902
                    )Prepaid
                    
                    
                    (29,458
                    )
                    
                    
                    (286
                    )
                    
                    
                    (29,744
                    )Payable
      settlement
                    
                    
                    19,467
                    
                    
                    
                    -
                    
                    
                    
                    19,467Litigation
      payable
                    
                    
                    -
                    
                    
                    
                    (20,000
                    )
                    
                    
                    -Cash
      used in operating activities
                    
                    $
                    (1,024,366
                    )
                    
                    $
                    (444,223
                    )
                    
                    $
                    (1,947,304
                    )Investing
      ActivitiesCash
      held in escrow/trust
                    
                    
                    -
                    
                    
                    
                    604,479
                    
                    
                    
                    -Equipment
      purchase
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (6,209
                    )Exploration
      and evaluation
                    
                    
                    (849,318
                    )
                    
                    
                    (1,189,304
                    )
                    
                    
                    (4,194,459
                    )Cash
      used for investing activities
                    
                    $
                    (849,318
                    )
                    
                    $
                    (584,825
                    )
                    
                    $
                    (4,200,668
                    )Financing
      ActivitiesDue
      to officers and directors
                    
                    
                    (178,125
                    )
                    
                    
                    (26,415
                    )
                    
                    
                    -Cash
      call payable - exploration
                    
                    
                    -
                    
                    
                    
                    680,033
                    
                    
                    
                    -Loans
      from shareholders
                    
                    
                    (99,990
                    )
                    
                    
                    (80,000
                    )
                    
                    
                    -Proceeds
      from subscriptions receivable
                    
                    
                    462,324
                    
                    
                    
                    -
                    
                    
                    
                    462,324Shares
      and options for debt for cash
                    
                    
                    -
                    
                    
                    
                    410,000
                    
                    
                    
                    -Proceeds
      from sale of equity securities
                    
                    
                    2,380,963
                    
                    
                    
                    281,083
                    
                    
                    
                    6,642,811Cash
      from financing activities
                    
                    $
                    2,565,172
                    
                    
                    $
                    1,264,701
                    
                    
                    $
                    7,105,135Foreign
      exchange adjustment
                    
                    
                    (74,711
                    )
                    
                    
                    (38,183
                    )
                    
                    
                    (113,161
                    )Increase
      in cash during periods
                    
                    
                    692,736
                    
                    
                    
                    235,653
                    
                    
                    
                    958,412Cash
      beginning of periods
                    
                    
                    227,226
                    
                    
                    
                    29,756
                    
                    
                    
                    -Cash
      at end of periods
                    
                    $
                    845,251
                    
                    
                    $
                    227,226
                    
                    
                    $
                    845,251Interest
      and taxes paid during period
                    
                    None
                    
                    
                    None
                    
                    
                    None








The Notes
are an integral part of the Financial Statements


F-5




Statements
of Cash Flows - continued


Supplemental
Disclosures of Non Cash Transactions






For
      year
                      Ended
                      12/31/08
                    
                    
                    For
      year
                      Ended
                      12/31/07Issued
      2,000,000 shares of common stock to settle lawsuit
                    
                    
                    
                    
                    $
                    800,000Issued
      290,709 shares of common stock as payment for services
                    
                    
                    
                    
                    $
                    50,396Issued
      1,366,669 shares of common stock and options to repay shareholders
      loans
                    
                    
                    
                    
                    $
                    410,000Issued
      2,000,000 shares of common stock for Resource Property
                    
                    
                    
                    
                    $
                    800,000Addition
      of marketable equity securities in EWA exchange
                    
                    $
                    602,070Decrease
      in cash call payable in EWA exchange transaction
                    
                    $
                    (680,033
                    )








The Notes
are an integral part of the Financial Statements


F-6


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





NOTE
1 - Organization and Nature of Business





Mogul
Energy International, Inc. (Company) was formed as a Delaware corporation on
July 25, 2005 to engage in the business of oil and gas
exploration.  The Company’s business activities included financing and
acquiring drilling prospects and exploration for oil and gas.





The
Company acquires low entry cost exploration prospects, as measured on a dollar
per barrel for proven and potential reserves in proximity to producing oil
fields, and exploring for oil and gas reserves.




NOTE
2 - Accounting Policies





Financial
Statement Presentation and Going Concern





The
Company is considered an exploration stage corporation because it has had no
revenues from its intended principal business and has not yet achieved
commercial production.





The
Company has working capital deficiency, a history of operating losses, and a
$6,125,607 accumulated deficit through December 31, 2008.  This, and
other factors, raise substantial doubt about the ability of the Company to
continue as a going concern.  Management plans to address these
matters through the sale of additional shares of its common stock and/or
additional borrowings to finance the Company’s operations and to achieve
profitable operations through successful exploration and development of oil and
gas properties.





Although
there is no assurance that the Company will be successful in these actions.
However, management believes that it will be able to secure the necessary
financing to continue operations for the foreseeable
future.  Accordingly, these financial statements do not reflect
adjustments to the carrying value of assets and liabilities, the reported
expenses and balance sheet classifications used that would be necessary if the
going concern assumption were not appropriate.  Such adjustments would
be material and would have an adverse effect on the ability of the Company to
continue as a going concern.





Use
of Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires use of estimates and assumptions. These estimates
and assumptions affect the reported amounts of assets and liabilities and
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Because of various factors affecting future costs and operations, actual results
could differ from estimates. Critical accounting policies and estimates used in
the preparation of the financial statements relate to the accounting for
impairments and carrying amounts of exploration properties including the
realizable value of capitalized resource properties for exploration and
evaluation costs. Future operations will be affected to the extent there are
material differences between the estimated and actual amounts.





Oil
and Gas Properties





The
Company utilizes the full-cost method of accounting for the exploration of its
oil and gas properties. Under this method, the Company capitalizes all costs
associated with acquisition, exploration and development of oil reserves,
including leasehold acquisition costs, geological and geophysical expenditures,
lease rentals on undeveloped properties, directly related overhead costs and
related asset retirement costs and costs of drilling exploratory productive and
non-productive wells into full cost pools on a country-by-country basis. At
December 31, 2008 the Company currently has one full-cost pool located in
Canada.


F-7


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





Once
commercial production is achieved the Company will apply a ceiling test
quarterly to the capitalized costs in its full cost pools. Amounts in excess of
the ceiling test limits are charged to operations as impairment expense in the
period of the test until proven reserves are available. The ceiling test limits
such cost to the estimated present value, using a ten percent discount rate, of
the future net revenue from any proved reserves, based on the existing economic
and operating conditions. Specifically, the ceiling test is calculated so that
capitalized cost, less accumulated depletion and related deferred income tax, do
not exceed an amount (the ceiling) equal to the sum of: (A) The present value of
estimated future net revenue computed by applying current prices of any oil and
gas reserves (with consideration of price changes only to the extent provided by
contractual arrangements) to estimated future production of proved oil and gas
reserves as of the date of the latest balance sheet presented, less estimated
future expenditures (based on current cost) to be incurred in developing and
producing the proved reserves computed using a discount factor of ten percent
and assuming continuation of existing economic conditions; plus (B) the cost of
property not being amortized; plus (C) the lower of cost or estimated fair value
of unproven properties included in the costs being amortized; less (D) income
tax effects related to differences between the book and tax basis of the
property.





For
unproven properties, the Company excludes from capitalized costs subject to
depletion, all costs directly associated with the acquisition and evaluation of
the unproved property until it is determined whether or not proved reserves can
be assigned to the property. Until such a determination is made, the Company
assesses the property at least annually to ascertain whether impairment has
occurred. In assessing impairment the Company considers factors such as
historical experience and other data such as primary lease terms of the
property, average holding periods of unproved property, and geographic and
geologic data. The Company adds the amount of impairment assessed to the cost to
be amortized subject to the ceiling test





Oil and gas property costs are considered tangible assets consistent
with the views set forth in Emerging Issues Task Force Issue
04-02.





The
Company did not apply a ceiling test in 2007 or 2008 because it is in the
exploration stage and no proven reserves have been established.





Cost
centers in the exploration stage are assessed at each reporting date to
determine whether it is likely that the net costs, in aggregate, may be
recoverable in the future.  Costs considered unlikely to be recovered
are charged to earnings during the period.  Impairment charges of
$1,692,049 and $1,302,177 were recorded for the years ended December 31, 2008
and 2007, respectively.  The impairment expense for 2008 related to
properties in Saskatchewan Canada, and for 2007 for properties located in
Egypt.




Revenue
Recognition





The
Company will recognize petroleum and natural gas revenues from its interests in
producing wells as petroleum and natural gas is produced and sold from these
wells and ultimate collection is reasonably assured.





Cash





Cash,
demand deposits and investment securities with maturities of no more than 90
days are considered cash for financial reporting purposes.





Investment
Held for Sale





The Company holds
4,000,000 common shares of Sea Dragon Energy Inc. , a Canadian company trading
on the TSX Venture exchange under the symbol SDX. This investment is
accounted for as held for sale. Any changes in the market value of these shares
are reflected in the Other Comprehensive Income balance sheet account. Of these
shares, 3,600,000 are held in escrow, the Company expects these common shares
will be released from escrow on or before July 9, 2009.   See
Note 4.


F-8


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





Goods
and Services Tax Receivables (GST)





The
Company’s GST receivable was $35,744 at December 31, 2007 and $52,169 at
December 31, 2008.  This receivable relates to the Goods and Services
Tax (Canada). The Company anticipates the full amount to be refunded within 12
months of the balance sheet date. Due to the nature of this receivable
management does not consider an allowance for uncollectible to be
necessary





Abandonment
Costs





Liabilities
for costs to abandon exploration properties are estimated and reflected in the
financial statements in the period that exploratory drilling activities commence
with a corresponding amount added to exploration costs. The amount recognized is
the present value of the estimated future expenditure determined in accordance
with local conditions and requirements. Change in the present value of the
estimated expenditure is reflected as an adjustment to the provision and the
capitalized exploration costs. A provision for abandonment costs is recognized
at the commencement of production, or in the period the decision is made to
abandon unsuccessful properties.





As of
December 31, 2008, the Company had no production, or proven or probable reserves
or related abandonment costs.





Foreign
Exchange Rate





The
Company’s functional and  reporting currency is the United States
Dollar.  Transactions denominated in foreign currencies are translated
into US dollars at the rate of exchange in effect at the date of the
transaction.  Monetary assets and liabilities denominated in foreign
currencies have been translated into US dollars at the rate of exchange in
effect at the balance sheet date with the impact reflected as the cumulative
translation adjustment in the equity section of the balance sheet, a foreign
exchange translation adjustment gain of $74,711 was recorded.  The
gain resulting from translation is included in the determination of income.
Losses from currency transactions of $29,782 were recognized in 2008 and were
accounted for as an increase of general and administrative expenses during
2008.  A gain of $1,903 was recorded as a reduction to general and
administrative expenses for 2007.





Flow-through
shares





The
Company finances a portion of its exploration and development activities through
the issuance of its common shares subject to certain flow-through provisions of
the Canadian income tax law.  Under the terms of the flow-through
share agreements, the resource expenditures deductions for income tax purposes
are renounced to investors in accordance with the appropriate income tax
legislation (Canadian Income Tax Act).





Stock-based
Compensation





The
Company follows the fair value method of valuing stock option grants and other
stock based compensation.  Under this method, the compensation cost
attributable to stock options and other stock-based compensation issued to
employees, contractors, officers and directors of the Company is measured at
fair value at the date of grant and expensed over the vesting period of the
options or when the services are provided, with a corresponding increase to
warrants and options.  The Company calculates the fair value of stock
options using an option pricing model.  Upon the exercise of the stock
options or other stock based compensation the consideration paid together with
the amount previously recognized in warrants and options is recorded as an
increase in share capital.


F-9


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





Income
Taxes





The
Company accounts for income taxes in accordance with the Statement of Financial
Accounting Standards No. 109, which requires, among other things, that the
Company can provide a net deferred tax asset or liability equal to the expected
future tax benefit or expense of temporary reporting differences between book
and tax accounting and any available operating loss carry-forward. Because of
the uncertainties surrounding the realization of any economic benefit related to
the deferred net loss carry-forward, no allowance account has been established
so that no future benefit is reflected as an asset at December 31,
2008.





Share
Issue Costs





Finder’s
fees and commissions paid to agents and underwriters incurred on the issuance of
shares are charged directly to share additional paid-in capital.





NOTE
3 - Capital Stock





Common
Stock





On
December 31, 2007 the company issued 4,472,134 flow-through common shares at
$0.18 per share pursuant to the income tax laws of Canada (Income Tax Act,
Canada).  Total proceeds of the offering were $804,984.  The
related tax impact has been recorded and renounced to shareholders on a look
back basis for 2007.  Share issuance costs were $83,977.  In
connection with the issuance the company granted 241,106 finders’ fee
warrants.  Of these, 106,055 have terms that allow the holder to
purchase one common share of the company for $0.20  and one warrant
per common share for a period of two years.  The fair value of the
warrants was estimated at $8,124 calculated using the Black-Scholes method: risk
free rate 3.05%, share price $0.18, strike price $0.20, volatility 83% and
dividend yield 0.00.





On
December 31, 2007 the company issued 100,000 shares at $0.15 per
common  share for total proceeds of $15,000.





During
the quarter ended March 31, 2008 the Company issued 2,383,000 shares of its
common stock at $0.15 per share, related costs totalled
$16,795.   In connection with the offering 135,051 finders’ fee
warrants were granted allowing the holder to purchase one common share of the
company for one Class B warrant and $0.15.  The warrants had a fair
market value of $12,212 calculated using the Black-Scholes model: risk free rate
3.05%, share price $0.18, strike price $0.15, volatility 83% and dividend yield
0.00.





During
the period ended June 30, 2008 the Company issued a total of 3,800,000
flow-through common shares, pursuant to the income tax laws of Canada (Income
Tax Act, Canada).  Through a series of closings: 2,800,000, 400,000,
and 600,000 closed on  June2, June 5 and June 11, 2008 respectively at
$0.25 per flow-through common share for proceeds of $950,000.  The
related tax impact will be recorded when the qualifying transaction expenditures
are renounced to shareholders.   In addition, the company also
issued 2,300,000 common shares as follows: on June 2 and 4,000,000 common shares
and on June 11, 2008 for a total of 6,300,000 shares of its common stock at
$0.20 per share for total proceeds of $1,260,000.  Share issuance
costs associated with the two classes of financings that closed in June amounted
to $102,444 in cash and finder’s fee warrants granted as follows:





·
            52,500
      warrants each of which allows the holder to purchase one common share of
      the Company for $0.20 per share expiring on December 20,
      2009.  The fair market value of the warrants was $11,807
      calculated using the Black-Scholes method: risk free rate 2.71%, share
      price $0.225, strike price $0.20, volatility 520% and dividend yield
      $0.00.





·
            224,000
      warrants each of which allows the holder to purchase one common share of
      the Company for $0.20 per share expiring on June 11, 2010.  The
      fair market value of the warrants was $57,378 calculated using the
      Black-Scholes method: risk free rate 2.71%, share price $0.225, strike
      price $0.20, volatility 520% and dividend yield
  $0.00.


F-10


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





·
            432,500
      warrants each of which allows the holder to purchase one common share of
      the Company for $0.20 per share expiring on December 20,
      2009.  The fair market value of the warrants was $97,183
      calculated using the Black-Scholes method: risk free rate 2.71%, share
      price $0.225, strike price $0.20, volatility 520% and dividend yield
      $0.00





Warrant
and Options





The
following are details related to warrants issued by the company to
shareholders:





December 31, 2008
                          
                          
                          December 31, 2007Shares
                          
                          
                          Weighted
      Average
                            Exercise
      Price
                          
                          
                          Shares
                          
                          
                          Weighted
      Average
                            Exercise
      PriceOutstanding
      warrants at beginning of the period
                          
                          
                          1,991,667
                          
                          
                          
                          .43
                          
                          
                          
                          625,000
                          
                          
                          $
                          0.50Warrants
      Granted
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,366,667
                          
                          
                          $
                          0.40ExercisedForfeitedExpired
                          
                          
                          (625,000
                          )
                          
                          
                          .50Outstanding
      at the end of period
                          
                          
                          1,366,667
                          
                          
                          $
                          0.40
                          
                          
                          
                          1,991,667
                          
                          
                          $
                          0.43





Fair
Value Assumptions – The fair value of warrants and options granted is estimated
on the date granted using the Black-Scholes option pricing model with following
weighted average assumptions used for the grants:





1.
            For
      the period ended September 30, 2007, risk free interest rates ranging from
      3.73% to 4%, expected dividend yields of zero, expected life ranging from
      two years, and expected volatility ranging from 2% to
  51%.





2.
            For
      the year ended December 31, 2006 the valuation of the warrants was
      estimated on a reasonability test as the stock was not publicly traded at
      that time.





The
following are details related to warrants issued by the company as finders’
fees:





December 31, 2008Shares
                  
                  
                  Weighted
      Averag
                    Exercise
      PriceOutstanding
      warrants at beginning of period
                  
                  
                  950,106
                  
                  
                  $
                  0.20Warrants
      grantedExercisedForfeitedExpiredOutstanding
      at the end of period
                  
                  
                  950,106
                  
                  
                  $
                  0.20





1.
            For
      the period ended June 30, 2008, risk free rate was 2.71%, expected
      dividend yield was zero, expected life ranged from 18 months to 2 years,
      and expected volatility of 520%.




F-11


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





2.
            For
      the period ended December 31, 2007, risk free rate was 3.05%, expected
      dividend yield of zero, expected life of 2 years, and expected volatility
      of 82%.





A summary
of the status of the warrants under various agreements follows for the year
ended December 31, 2008:





Warrants
      Outstanding
                            
                            
                            Warrants
      ExercisableRange
      of Exercise Prices
                            
                            
                            Number
      Outstanding
                            
                            
                            Weighted
      Average Remaining Contractual Life (years)
                            
                            
                            Weighted
      Average Exercise Price
                            
                            
                            Number
      Exercisable
                            
                            
                            Weighted
      Average Remaining Contractual Life (years)$0.15
      to $0.40
                            
                            
                            
                            2,316,773
                            
                            
                            
                            .823
                            
                            
                            $
                            0.32
                            
                            
                            
                            2,316,773
                            
                            
                            
                            .823





For year
ended December 31, 2007





Warrants
      Outstanding
                            
                            
                            Warrants
      ExercisableRange
      of Exercise Prices
                            
                            
                            Number
      Outstanding
                            
                            
                            Weighted
      Average Remaining Contractual Life (years)
                            
                            
                            Weighted
      Average Exercise Price
                            
                            
                            Number
      Exercisable
                            
                            
                            Weighted
      Average Remaining Contractual Life (years)$0.15
      to $0.40
                            
                            
                            
                            1,472,722
                            
                            
                            
                            1.27
                            
                            
                            $
                            0.37
                            
                            
                            
                            1,474,473
                            
                            
                            
                            1.27





Employee
Stock Option Plan





On August
7th,
2007 the Company granted 2,250,000options to Directors and employees of the
Company.  These options vest at a rate of 20% per
quarter.  These options were fully vested as of August 7th,
2008.





The
following table summarizes the continuity of the Company’s stock
options:




December 31, 2008Options
                    
                    
                    Weighted
      Average Exercise PriceOptions
      outstanding
                    
                    
                    2,250,000
                    
                    
                    $
                    0.30Exercised
                    
                    
                    -
                    
                    
                    
                    -Forfeited
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at the end of period
                    
                    
                    2,250,000,
                    
                    
                    $
                    0.30




The fair
value of the options was calculated using the Black Scholes method: risk free
rate 3.73%, share price $0.28, strike price $0.30, volatility 51% and dividend
yield 0.00.





Compensation
charges associated with the employee stock option plan in the amount of $175,500
are included in the statement of operations for the year ended December 31,
2008.


F-12


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





Preferred
Stock





The
Company’s Articles of Incorporation authorize its Board of Directors, without
approval from the common shareholders, to issue 10,000,000 shares of preferred
stock in any series, rights and preferences as determined by the Board.
Preferred shares may be issued that: have greater voting rights than the common
stock, diluting the value of any outstanding shares of common
stock.





NOTE
4 - Oil and Gas Properties





Disposition
of EWA Concession Agreement 20% Working





On March
21, 2008, the Company entered into an Agreement of Purchase and Sale with Egypt
Oil Holdings Ltd. (Egypt Oil), Sea Dragon Energy Inc. (Sea Dragon) and Dover
Investments Ltd.  The Agreement, with an effective date of March 21,
2008, was part of a larger transaction (the “Transaction”) that closed on April
24, 2008.  The Transaction resulted in the sale of the Company’s 20%
working interest in the EWA Concession Agreement (Concession) to Sea Dragon in
exchange for satisfaction of the Company’s outstanding “Cash calls payable”
($759,306) related to the Company’s drilling program on the Concession, a cash
payment of $100,000 CDN plus 4,000,000 shares of Sea Dragon’s common stock,
valued at an estimated $0.15 per share based on a recent share offering of Sea
Dragon, a publicly traded Company.  Ninety percent of Sea Dragon’s
shares received by the Company for this transaction have been placed in
escrow.  The terms of the escrow call for the  release of
these shares on the earlier of: (i) the Company announcing the drilling results
of the second exploratory well drilled on the Concession (note 5); or (ii) July
31, 2009.





A further
$76,667 capitalized prior to April 25, 2008 and subsequently assessed as
impaired.  The corresponding accounts payable were assumed by EOH as a
part of the Purchase and Sale agreement with Egypt Oil and Sea
Dragon.





Saskatchewan
Exploration Program





The
Company commenced an exploration program in 2008 on its leased properties
located in eastern Saskatchewan.





The first
well encountered a heavily oil stained, marginal reservoir, within the Bakken
interval.  This well has been suspended,  At December 31,
2008 a determination cannot be made about the extent of oil reserves that should
e classified as proved reserves as a result pending further analysis expected to
be completed in 2009.





The
second well has been abandoned after encountering a wet zone at the Bakken
reservoir level.  Reclamation costs associated with the abandoned well
were estimated to be $26,186 and were classified to accounts payable and charged
as impaired.





The
Company’s exploration program previously announced. has changed
significantly.  Further exploration in Saskatchewan has been postponed
as the Company evaluates the results of the wells drilled to date.





Due to
expiration of the leased property, a lack of cash and falling oil prices the
Company has realized an impairment charge of $1,203,247 related to the
expiration of substantially all leased property assets and their related
acquisition costs previously capitalized on the balance sheet as Exploration and
Evaluation.  A further impairment charge of $412,134 has been
recognized for the dry hole and other related costs of the 2008
exploration.  The suspended well costs have been recorded as a
capitalized asset pending determination of reserves.


F-13


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





NOTE
5 - Commitments





Office
Lease





The
Company rents office space in Seattle, Washington on a month-to-month basis for
$400 per month, and $450 per month for office space in Vancouver, British
Columbia, Canada.





In
November, 2008, the Company entered into a 13 months lease for office space in
Toronto, Ontario Canada at a net monthly cost of $3,954 Canadian Funds
(approximately $US3,250).  This lease expires November,
2009.





NOTE
6 - Contingencies





Environmental
Uncertainties





The
Company may be exposed to financial risks in the oil and gas exploration
business for pollution or hazards against which it cannot adequately insure or
which it may elect not to insure. Incurring any such liability may have a
material adverse effect on our financial position and operations.





Flow-through
financing





The
Company must meet its obligations linked to the financing on a flow-through
basis.  The Company raised a total of $804,984 in 2007 and $950,000 in
2008 on a flow-though basis.  These amount has
been  renounced to investors on a look-back basis.  At
December 31, 2008 the company estimated that is has spent approximately $847,647
on qualified capital exploration expenditures leaving a commitment of
approximately $907,337 that is required to be spent on exploration in Canada in
2009.  Should the Company not meet this commitment it may have to
adjust the amount of capital exploration expenses renounced to investors and/or
be subject to penalties assessed by the Canadian Customs and Revenue
Agency.





Governmental
Regulations and Licensing





In order
to drill for, recover, transport or sell any gas or oil from the properties
subject to the Company’s drilling rights, the Company will generally be required
to obtain additional licenses and permits and enter into agreements with various
landowners and/or government authorities. The issuance of these permits
and


licenses
generally will be contingent upon the consent of the governmental authority
having jurisdiction over the property, which entities have broad discretion in
determining whether or not to grant such authority. These licenses, permits, and
agreements will generally contain numerous restrictions and require payment of
development and exploration fees and royalties typically based on the
recoverable reserves or expenditures. The amount of any such fee and royalties
and other terms will determine in part, the commercial viability of any
extraction prospect.





NOTE
7 - Loss Per Share





Loss per
share is calculated using the weighted average number of shares issued during
the relevant period. The weighted average number of common shares was 50,314,446
for the period ended December 31, 2008.




NOTE
8 - Net Operating Loss Carry-forward





At
December 31, 2008, the Company had an estimated net operating loss (NOL)
carry-forward of approximately $3,000,000 available to reduce any future taxable
income (after adjusting for amounts related to Canadian investor flow-through
capital and share based compensation).   The NOL carry-forward
begins to expire in 2025 and will fully expire in 2028. Because management is
unable to determine that it is more likely than not that the Company will
realize the tax benefit related to the NOL carry-forward, by having taxable
income, a valuation allowance has been established at the balance sheet date to
reduce the tax benefit asset value to zero.


F-14


Mogul
Energy International, Inc.


Notes
to the December 31, 2008 and 2007 Financial Statements





NOTE
9 – Subsequent Events





On
February 12, 2009 the Company entered into an agreement with Excelaron LLC
(“Excelaron”), California company, whereby Excelaron has agreed to permit the
Company to subscribe for a 40% Members Percentage Interest in
Excelaron.  The subscription of this interest is contingent upon the
Company making a $2,300,000 capital contribution to be used to acquire and
develop oil and gas lease agreements that Excelaron has entered
into.  These leases are located in California.





NOTE 10 - Capitalized costs relating
to the oil and gas acquisitions and exploration activity





CanadaCosts atDec. 31,
      2006
                        
                        $
                        441,106Lease
      property acquisition costs
                        
                        
                        800,000Less
      impairment during 2007
                        
                        
                        (37,860)Costs atDecember 31,
      2007
                        
                        $
                        1,203,246Additions
      during 2008:
                        
                        
                        -Exploration
                        
                        $
                        832,035Lease
      property acquisition costs
                        
                        
                        15,612Less
      accumulated depreciation, depletion, amortization and
      impairment
                        
                        
                        (1,615,381)Net
      book value December 31, 2008
                        
                        $
                        435,512





EgyptCost atDec. 31,
      2006
                                    
                                    $
                                    150,013Additions:
                                    
                                    
                                    -Exploration
      costs capitalized
                                    
                                    
                                    1,189,304Less
      Impairment during 2007
                                    
                                    
                                    (1,264,317
                                    )Provided
      during the period
                                    
                                    
                                    -Net
      book value December 31, 2007
                                    
                                    $
                                    75,000Additions
      in 2008:
                                    
                                    
                                    76,667Less
      Impairment during 2008
                                    
                                    
                                    (76,667
                                    )Provided
      during the period
                                    
                                    
                                    (75,000
                                    )Net
      book value December 31, 2008
                                    
                                    $
                                    -


F-15




ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.




None.




ITEM
      9A.
            CONTROLS
      AND PROCEDURES.





Management’s
evaluation of disclosure controls and procedures
 
 As
required under the Exchange
Act, we evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, as of the end of the period covered by
this report, being December 31, 2008. We are responsible for establishing and
maintaining adequate internal controls and procedures for the financial
reporting of our company. Disclosure control and procedures are the controls and
other procedures that are designed to ensure that we record, process, summarize
and report in a timely manner the information that we must disclose in reports
that we file with or submit to the SEC.  Our management has concluded,
based on their evaluation, that as of December 31, 2008, as the result of the
material weaknesses described below, our disclosure controls and procedures were
ineffective in providing reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes.
 
 Management’s
report on internal control over financial reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with US GAAP.  Management has
concluded that there are material weaknesses in both the design and operation of
the Company’s internal controls and procedures for financial
reporting.  A material weakness, as defined by SEC rules, is a control
deficiency, or combination of control deficiencies, such that there is a
reasonable possibility that a material misstatement of the annual or interim
financial statements will not be prevented or detected on a timely
basis.  The material weaknesses in internal control over financial
reporting that were identified include:
 
 i.
              there
      is a lack of adequate segregation of duties in our accounting and
      financial reporting functions;
 ii.
              there
      is a lack of entity wide controls, including no audit committee, and a
      failure to maintain formalized accounting policies and
      procedures;
 iii.
              senior management has not
      established and maintained a “proper tone” as to internal control over
      financial reporting;
 iv.
              there
      may be a lack of sufficient controls relating to user access security
      levels in our accounting software to restrict access to certain financial
      applications only to employees requiring access to complete their job
      functions.
 
 As a
result of the existence of these material weaknesses as of December 31, 2008,
management has concluded that we did not maintain effective internal control
over financial reporting as of December 31, 2008.
 
 While we
believe our financial statements included in this Annual Report present fairly,
in all material respects, our financial condition, results of operations and
cash flows for the periods presented, as a result of the material weaknesses in
our internal control over financial reporting, there is a reasonable possibility
that material misstatements of the financial statements including disclosures
will not be prevented or detected on a timely basis.
 
 This
Annual Report does not include an attestation report of the company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management’s report in this annual report.
 
 Remediation
 
 We will
engage an independent accounting firm to advise us in respect of our internal
controls over financial reporting, and to provide accounting counsel on various
matters relating thereto.  We will continue to implement further
improvements to our internal controls as they are identified.  We will
use the criteria and framework set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) in the publication Internal Control-Integrated
Framework, an
integrated framework for the evaluation of internal controls, for the evaluation
of our internal controls in the future. Senior management will continue to
consult with external experts to assist with the accounting for complex and
non-routine accounting transactions.
 
 Changes
to Internal Controls and Procedures Over Financial Reporting
 
 There
have been no changes in our internal control over financial reporting during our
fiscal year that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting, except as
discussed herein.




ITEM
      9B.
            OTHER
      INFORMATION.





On
February12, 2009, the Company entered in to
an  Agreement  (the “Agreement”) with Excelaron, LLC, a
California Company (hereafter “Excelaron”)  a company engaging in oil
and gas exploration activities, whereby in exchange for an investment into
Excelaron of $2,300,000, the Registrant is to obtain a 40% Members Percentage
Interest (“Interest”) in Excelaron.  The Agreement provides that the
invested funds are to be used primarily by Excelaron for oil and gas exploration
activities.  For additional information please refer to the Company’s
Current Report on Form 8-K filed February 19, 2009.


18




PART
III








ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.





Directors,
Executive Officers, Promoters and Control Persons





The
following table and text set forth the names and ages of all directors and
officers of the Company as of the date of this report. The Board of Directors is
comprised of only one class. All of the directors will serve until the next
annual meeting of shareholders and until their successors are elected and
qualified, or until their earlier death, retirement, resignation or removal.
Executive officers serve at the discretion of the Board of Directors, and are
appointed to serve by the Board of Directors. Also provided herein are brief
descriptions of the business experience of each director and executive officer
during the past five years and an indication of directorships held by each
director in other companies subject to the reporting requirements under the
federal securities laws.





Directors and
Officersas at
December 31, 2008:





Name
                    Age
                    Position
                    Held Position Since(approx)Naeem
      Tyab
                    42
                    Director
      and President
                    September
      29, 2005Ernie
      Pratt
                    58
                    Director
                    October
      2, 2006William
      Smith
                    60
                    Director
      and CFO
                    June
      19, 2008 – March 10, 2009Former
      Directorsand
      Officers:Robert
      C. Mussehl
                    70
                    Director
                    Aug.
      11, 2005 – June 18, 2008Sohail
      S. K. Kiani
                    46
                    Executive
      Vice President
                    Sept.
      29, 2005 – July 3, 2008Mohammad
      Khan
                    31
                    Treasurer
                    Sept.
      29, 2005 – April 25,
2008





Business
Experience and Educational Background





The
following represents a summary of the five year business history of each of the
above-named individuals for the last five years:





Mr. Naeem Tyab – Director and
President





Mr. Tyab
has been the president and a director of the Company since September 29, 2005.
Between April 2002 and prior to his appointment as president of our Company Mr.
Tyab acted as an independent consultant to a number of public and private oil
and gas companies in relation to their financing and acquisition activities.
Prior thereto and from December 1997 to March 2002, Mr. Tyab was involved in the
venture capital and investment banking industry in his capacity as a registered
representative for a Canadian based securities dealer.





Mr.
Ernie Pratt - Director





During
the past 5 years Mr. Pratt has acted as President of Lateral Development Group
Ltd., a technical consulting company focused on Canadian and International oil
and gas exploration projects. Mr. Pratt has in excess of 32 years experience in
development and management of oil and gas exploration and development programs
in Canadian frontier areas, in western Canada and internationally. Mr. Pratt
graduated from the University of Alberta with a Masters of Science Degree with
specialization in Geology. He is a member of the Association of Professional
Engineers, Geologists and Geophysicists of Alberta and the American Association
of Petroleum Geologists.





William
Smith – Director and Chief Financial Officer (CFO)





Mr.
William Smith was appointed as a director and Chief Financial Officer (CFO) of
the Company on June 19, 2008.  Mr. Smith, age 59, was appointed by the
Company’s board of directors to fill the vacancy created by the resignation of
departing director, Mr. Mussehl.  Mr. Smith received the Certified
Management Accountant (CMA) designation in 1991.  For the past
approximately 16 years, Mr. Smith, who is a resident of Canada, has been
providing treasury and financial management accounting consulting services to a
variety of companies.  During this time, he has held a variety of
senior financial analyst and controller positions.  He also owns an
information technology company providing networked IT solutions for small
businesses and maintains a private tax practice.


19




Mr.
Robert C. Mussehl - Director





Since
2004 Mr. Mussehl
has been a principal partner in the law firm of Mussehl and Khan, located in
Seattle, Washington. Mr. Mussehl’s practice involves the representation of
injured persons, medical negligence and sports law. For the prior three years,
from 2000 to 2003, Mr. Mussehl practiced personal injury law with Mussehl and
Rosenberg in Seattle, Washington. Mr. Mussehl holds a B.A. in
Political Science from American University in Washington, DC and a J.D. from
American University School of Law.





Mr. Sohail S. K. Kiani- Executive Vice President





Mr. Kiani
has been the executive vice president of the Company since September 29, 2005.
For the previous four years Mr. Kiani has been an independent financial services
consultant specializing in the energy sector. In addition, from July 2001 to
October 2005, Mr. Kiani was a director and executive vice president for Oracle
Energy Corp. (TSX:V). Mr. Kiani graduated from the University of Massachusetts
with a Bachelor degree.





Mohammad
Khan - Treasurer





Since 2004, Mr. Khan has been
a principal partner in the law firm of Mussehl and Khan located in Seattle,
Washington. Mr. Khan's practice involvescorporate law and business
immigration. From 2003
to 2004, Mr. Khan practiced law with the firm of Choquette Law Group, in
Seattle, Washington. From1999 to 2002, Mr. Khan attended Seattle University
School of Law in Seattle, Washington where he obtained his J.D. Mr. Khan also
holds a B.A. in History from University of Washington.





Length
of Office





All
directors hold office until the next annual meeting of stockholders and their
successors have been duly elected and qualified. There are no agreements with
respect to the election of directors. As of the date hereof, no director has
accrued any expenses or compensation. Officers are appointed annually by the
board of directors and each executive officer serves at the discretion of the
board of directors.





Family
Relationships





There are
no family relationships among any of our directors, executive officers and other
key personnel other than Naeem Tyab and Mohammad Khan (former officer) who are
cousins.  Mr. Parvez Tyab, who owns the largest number of our issued
and outstanding shares, is Naeem Tyab’s brother and Mohammad Khan’s
cousin.





Involvement
in Certain Legal Proceedings





During
the past five years none of our directors, executive offices, promoters or
control persons was:





·
            the
      subject of 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;


·
            convicted
      in a criminal proceeding or is subject to a pending criminal proceeding
      (excluding traffic violations and other minor
  offenses);


·
            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


·
            found
      by a court of competent jurisdiction (in a civil action), the Commission
      or the Commodity Futures Trading Commission to have violated a federal or
      state securities or commodities
law.





Compliance
with Section 16(a) of the Act




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.




20




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
December 31, 2008, 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 FormsNaeem
      Tyab
              0
              0
              0Parvez
      Tyab
              0
              0
              0Ernie
      Pratt
              0
              0
              1(1)William
      Smith
              1
              1
              0Sohail
      Kiani
              0
              0
              1(1)Robert
      Mussehl
              1(2)
              0
              0Mohammad
      Khan
              0
              0
              1(1)





(1)
            As
      of the date of this report, these persons had not filed a Form 5 - Annual
      Statement of Beneficial Ownership of Securities with respect to the 2008
      fiscal year.





(2)
            Mr.
      Mussehl reported on his last Form 5 that he is no longer subject to
      Section 16.








Code
of Ethics





The
Company has adopted a Code of Ethics designed to deter wrongdoing and to promote
honest and ethical conduct, full, fair, accurate, timely and understandable
disclosure in its reports to the U.S. Securities and Exchange Commission, and
other public communications.  The Code of Ethics promotes compliance
with applicable governmental laws, rules and regulations.  The Code of
Ethics applies to the Company’s officers, directors, persons performing similar
functions, and employees.  Upon request, the Company will provide
without charge any person with a copy of the Code of Ethics.  Requests
may be made in writing to the Company by mail sent to any of its
offices.  A copy of the Company’s Code of Ethics is attached hereto as
Exhibit 14.1.





Directors





Our Board
of directors consisted of three members as at December 31, 2008. Directors stand
for election at our annual meeting of shareholders. Pursuant to our Bylaws, any
vacancy occurring in the Board of directors, including a vacancy created by an
increase in the number of directors, may be filled by the shareholders or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of directors. A director elected to fill a vacancy shall
hold office only until the next election of directors by the shareholders. If
there are no remaining directors, the vacancy shall be filled by the
shareholders.





At a
meeting of shareholders, any director or the entire Board of directors may be
removed, with or without cause, provided the notice of the meeting states that
one of the purposes of the meeting is the removal of the director. A director
may be removed only if the number of votes cast to remove him exceeds the number
of votes cast against removal.





There
have been no changes to the procedures by which security holders may recommend
nominees to the Company’s board of directors.





Committees





All
proceedings of the board of directors for the year ended December 31, 2008, were
conducted by resolutions consented to in writing by the board of directors and
filed with the minutes of the proceedings of the directors. Our company
currently does not have nominating or audit committees or committees performing
similar functions nor does our company have a written nominating 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 board of directors.  The
Company does have a Compensation Committee currently comprised of three persons,
including Naeem Tyab, Ernie Pratt, and an employee of the
Company.  The Compensation Committee does not currently have a
charter.


21


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 407(d)(5) of Regulation
S-K, 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 the NASD
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 board of directors of our company does not believe that
it is necessary to have an audit committee because management believes that the
functions of an audit committee can be adequately performed by the 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 given the stage of our development and the
fact that we have not generated any positive cash flows from operations to
date.





ITEM
      11.
            EXECUTIVE
      COMPENSATION.





The
following table summarizes the compensation of our President (Principal
Executive Officer) and other officers and directors who received compensation
during the period from July 25, 2005 (inception) to December 31,
2008.








SUMMARY
      COMPENSATION TABLEName
      and
                                                                                    
                                                                                    Year
                                                                                    
                                                                                    
                                                                                    Salary
                                                                                    
                                                                                    
                                                                                    Bonus
                                                                                    
                                                                                    
                                                                                    Stock
      Awards
                                                                                    
                                                                                    
                                                                                    Option
      Awards
                                                                                    
                                                                                    
                                                                                    Non-Equity
      Incentive Plan Compensation
                                                                                    
                                                                                    
                                                                                    Nonqualified
      Deferred Compensation Earnings
                                                                                    
                                                                                    
                                                                                    All
      Other Compensation
                                                                                    
                                                                                    
                                                                                    Totalprincipal position
                                                                                    
                                                                                    (12/31)
                                                                                    
                                                                                    
                                                                                    ($)
                                                                                    
                                                                                    
                                                                                    ($)
                                                                                    
                                                                                    
                                                                                    ($)
                                                                                    
                                                                                    
                                                                                    ($)*
                                                                                    
                                                                                    
                                                                                    ($)
                                                                                    
                                                                                    
                                                                                    ($)
                                                                                    
                                                                                    
                                                                                    ($)
                                                                                    
                                                                                    
                                                                                    ($)Naeem
      Tyab
                                                                                    
                                                                                    2005
                                                                                    
                                                                                    
                                                                                    $
                                                                                    24,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    24,000Director
                                                                                    
                                                                                    2006
                                                                                    
                                                                                    
                                                                                    $
                                                                                    72,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    72,000President
                                                                                    
                                                                                    2007
                                                                                    
                                                                                    
                                                                                    $
                                                                                    72,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    52,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    124,000[Note
      1]
                                                                                    
                                                                                    2008
                                                                                    
                                                                                    
                                                                                    $
                                                                                    144,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    78,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    222,000Ernie
      Pratt
                                                                                    
                                                                                    2005
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0Director
                                                                                    
                                                                                    2006
                                                                                    
                                                                                    
                                                                                    $
                                                                                    6,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    18,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    24,000[Note
      2]
                                                                                    
                                                                                    2007
                                                                                    
                                                                                    
                                                                                    $
                                                                                    23,300
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    11,600
                                                                                    
                                                                                    
                                                                                    $
                                                                                    13,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    47,9002008
                                                                                    
                                                                                    
                                                                                    $
                                                                                    22,420
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    19,500
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    41,920William
      Smith
                                                                                    
                                                                                    2008
                                                                                    
                                                                                    
                                                                                    $
                                                                                    27,033
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    22,000DirectorCFO[Note
      3]Sohail
      S. K. Kiani
                                                                                    
                                                                                    2005
                                                                                    
                                                                                    
                                                                                    $
                                                                                    16,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    16,000Executive
      Vice
                                                                                    
                                                                                    2006
                                                                                    
                                                                                    
                                                                                    $
                                                                                    8,483
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    8,483President
                                                                                    
                                                                                    2007
                                                                                    
                                                                                    
                                                                                    $
                                                                                    2,863
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    2,863[Note
      4]
                                                                                    
                                                                                    2008
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0Robert
      C. Mussehl
                                                                                    
                                                                                    2005
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0Director
                                                                                    
                                                                                    2006
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0[Note
      5]
                                                                                    
                                                                                    2007
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    02008
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0Mohammad
      Khan
                                                                                    
                                                                                    2005
                                                                                    
                                                                                    
                                                                                    $
                                                                                    14,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    14,000Treasurer
                                                                                    
                                                                                    2006
                                                                                    
                                                                                    
                                                                                    $
                                                                                    42,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    42,000[Note
      6]
                                                                                    
                                                                                    2007
                                                                                    
                                                                                    
                                                                                    $
                                                                                    21,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    21,0002008
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0





Note 1 – compensation
effective as of September 29, 2005. As of December 31, 2008, Naeem Tyab has
options to purchase 1,000,000 shares of the Company’s common
stock.  All of these options have vested.  Effective January
1, 2009, the Board has agreed that Mr. Tyab’s annual salary will be CDN$120,000
(Canadian currency) during the 2009 fiscal year.


Note 2 – compensation
effective as of October 2, 2006.   Mr. Pratt was given stock
compensation in 2006 and 2007 totaling 80,000 shares of the Company’s common
stock. As of December 31, 2008, Ernie Pratt has options to purchase 250,000
shares of the Company’s common stock.  All of these options have
vested.


Note 3 – compensation
effective as of June 19, 2008.


Note 4 – compensation period
between September 29, 2005 and July 3, 2008.


Note 5 – compensation period
between August 11, 2005 and June 18, 2008.


Note 6 – compensation period
between September 29, 2005 and April 25, 2008.





*The assumptions upon which
the valuation of options is based are discussed in NOTE 3 to the Financial
Statements under Item 8.


22


Compensation
of Directors and Officers





We
reimburse our directors for expenses incurred in connection with attending board
meetings.





Except as
set forth above, we have no formal or written plan for compensating our
directors or officers for their service in their capacity as directors or
officers.  Directors and officers may receive stock options to
purchase common shares from time-to-time as awarded by our board of directors
based on proposals by the compensation committee. 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. Our board of
directors may award special remuneration to any director undertaking any special
services on our behalf other than services ordinarily required of a
director.








ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.




The
following table provides the names and addresses of each person known to own
directly or beneficially more than 5% of the outstanding common stock (as
determined in accordance with Rule 13d-3 under the Exchange Act) as of March 31,
2009, and the stock owned by our officers and directors, individually and as a
group. Except as otherwise indicated, all shares are owned
directly.





Security
Ownership of Certain Beneficial Owners





Name
      and Address of
                                    Beneficial
      Owner
                                  
                                  Shares
                                  
                                  
                                  Percent(1)Parvez
      Tyab
                                    Shareholder
                                    1112
      – 207 West Hasting Street
                                    Vancouver,
      B.C., Canada
                                    V6B
      1H7
                                  
                                  
                                  10,000,000
      (2)
                                  
                                  
                                  
                                  17.4%





(1) Based
on 57,445,987shares of common stock
outstanding as of April 13, 2009.


(2)
Includes 9,000,000 shares held in the name of Parvez Tyab and 1,000,000 held by
Mogul Energy Ltd., which shares Mr. P. Tyab is deemed to beneficially
own.


23


Security
Ownership of Management





Name
      and Address of
                                            Beneficial
      Owner
                                          
                                          Shares
                                          
                                          
                                          Percent(1)Naeem
      Tyab
                                          
                                          
                                          1,638,889
      (2)
                                          
                                          
                                          
                                          2.9%Sohail
      Kiani
                                          
                                          
                                          500,000
                                          
                                          
                                          
                                          0.9%Ernie
      Pratt
                                          
                                          
                                          80,000
      (3)
                                          
                                          
                                          
                                          0.1%Robert
      Mussehl
                                          
                                          
                                          0
      (4)
                                          
                                          
                                          
                                          0.0%William
      Smith
                                          
                                          
                                          0
      (5)
                                          
                                          
                                          
                                          0.0%Mohammad
      Khan
                                          
                                          
                                          2,100,000
                                          
                                          
                                          
                                          3.7%All
      Officers and Directors as a group (5 persons)
                                          
                                          
                                          4,318,889
                                          
                                          
                                          
                                          7.5%





(1)
            Based
      on 57,445,987shares of common
      stock outstanding as of April 13,
2009.


(2)
            Naeem
      Tyab has the right to acquire 1,000,000 shares pursuant to an option grant
      on August 8, 2007.


(3)
            Ernie
      Pratt has the right to acquire 250,000 shares pursuant to an option grant
      on August 8, 2007.


(4)
            Based
      on Form 4 and Form 5 data, Mr. Mussehl disposed of 50,000 shares in fiscal
      year 2008.


(5)
            Based
      on Form 4 and Form 5 data, Mr. Smith acquired 5,000 shares in fiscal year
      2008, and disposed of them in fiscal year
2009.





Securities
Authorized for Issuance Under Equity Compensation Plans





The
Company adopted a 2007 Stock Incentive Plan (the “Plan”) which has not
previously been approved by the Company’s shareholders.  The Plan
provides for the issuance of options to purchase 4,000,000 shares of the
Company’s common stock at an exercise price of $0.30.  As of December
31, 2008, the Company had issued options to purchase 2,250,000 shares under the
Plan, and options to purchase 1,750,000 shares of common stock remain available
for future issuance under the Plan.  Options awarded under the Plan
vest over one-year.  The options awarded by the Company to date were
all made on August 8, 2007, and expire on August 7, 2012.








ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE.





Transactions
with Related Persons, Promoters, and Certain Control Persons





The
following “Certain Relationships and Related Transactions” represent material
transactions in which any related person had or will have a direct or indirect
material interest, which are known to the Company’s current management
team.  There may however be various other material transactions
regarding the Company which the Company’s current management is not aware
of.  We have no policy regarding entering into transactions with
affiliated parties, except as described in our Code of Ethics.





On
February 12, 2009, the Company entered into an Agreement (the “Agreement”) with
Excelaron LLC (“Excelaron”), a California limited liability company, whereby
Excelaron has agreed to permit the Company to subscribe for a 40% Members
Percentage Interest in Excelaron.  The subscription of this interest
is contingent upon the Company making a $2,300,000 capital contribution to be
used to acquire and develop oil and gas lease agreements that Excelaron has
entered into.  The Agreement provides there are three other Members of
Excelaron aside from Mogul, whose relative Interests in  Excelaron are
stated to be Barisan Energy, Ltd. 4%,  United Hydrocarbon Corporation,
21%, and AOC  No 2, Ltd. 35%, and the Registrant, assuming it provides
all investments required 40%.


24


The
President of the Company, Naeem Tyab, and his brother, Parvez Tyab, the
Company’s largest shareholder, are both also shareholders of United Hydrocarbon
Corporation (“UHC”).  The majority shareholder of UHC is William
Divine, a vice-president of the Company. The current principal manager of
Excelaron is also President of AOC.





Director
Independence




Our
directors are not independent.  This determination of director
independence was made using the definition of “independent director” contained
under Rule 4200(a)(15) of the Rule of National Association of Securities
Dealers.




ITEM
      14.
            PRINCIPAL
      ACCOUNTING FEES AND SERVICES.




Audit
Fees




Our
independent registered public accounting firm billed us $42,765 and $25,201.47
for the fiscal years ended December 31, 2008, and 2007, respectively, for audit
related professional services.  These services included audit of our
annual financial statements, review of our quarterly interim financial
statements on Form 10-Q, and services in connection with statutory and
regulatory filings.  This category also includes the review of interim
financial statements and services in connection with registration statements and
other filings with the Securities and Exchange Commission.




Tax
Fees




The
aggregate fees billed by our independent registered public accounting firm for
professional services rendered for tax compliance, tax advice, and tax planning
services were $1,500 and $0 for the fiscal year ended December 31, 2008 and
2007, respectively.




All
Other Fees




Our
independent registered public accounting firm did not bill us for other services
during fiscal years ended December 31, 2008 and 2007.








PART
IV





ITEM
      15.
            EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES.







(a)
            Financial
      Statements and Schedules




The
financial statements are set forth under Item 8 of this Annual Report on Form
10-K.  Financial statement schedules have been omitted because they
are either not required, not applicable, or the information is otherwise
included.




25




(b)
            Exhibits




ExhibitNumber
                
                Description(3)
                
                (i)
      Articles of Incorporation; and (ii) Bylaws3.1
                
                Certificate
      of Incorporation (1)*3.2
                
                By-laws
      (1)*3.3
                
                Form
      of Registration Rights Agreement with the Selling Shareholders
      (1)*3.4
                
                Form
      of Subscription Agreement ($0.001) (2)*3.5
                
                Form
      of Subscription Agreement ($0.15) (2)*3.6
                
                Form
      of Subscription Agreement ($0.40) dated for reference July 28, 2005
      (2)*3.7
                
                Form
      of Subscription Agreement($0.40) dated for reference October 31, 2005
      (2)*3.8
                
                Form
      of Subscription Agreement ($0.40) dated for reference January 19, 2006
      (2)*3.9
                
                Form
      of Flow Through Subscription Agreement ($0.40) dated for reference
      February 8, 2006 (2)*3.10
                
                Form
      of Subscription Agreement for Unit Offering dated for reference April 11,
      2006 (2)*3.11
                
                Form
      of Subscription Agreement ($0.15) dated for reference December 12, 2007
      (incorporated by reference from our Current Report on Form 8-K filed on
      February 15, 2008)*3.12
                
                Form
      of Flow Through Subscription Agreement ($0.18) dated for reference
      December 12, 2007 (incorporated by reference from our Current Report on
      Form 8-K filed on February 15, 2008)*(4)
                
                Instruments
      Defining the Rights of Security Holders4.1
                
                2007
      Stock Incentive Plan (incorporated by reference from our Current Report on
      Form 8-K filed on August 10, 2007)*(5)
                
                Opinion
      re Legality5.1
                
                Opinion
      of Sierchio Greco & Greco, LLP (3)*(10)
                
                Material
      Contracts10.1
                
                A
      Binding Farm-Out Agreement East Wadi Araba Concession dated August 6, 2005
      (1)*10.2
                
                A
      Binding Joint Venture Agreement - Egypt dated August 7, 2005
      (1)*10.3
                
                Farm-Out
      Agreement dated September 29, 2005 (1)*10.4
                
                Farm-out
      Agreement dated November 8, 2005 (1)*10.5
                
                Assignment
      Agreement-East Wadi Araba Concession dated December 9, 2005
      (1)*10.6
                
                Assignment
      Agreement dated December 9, 2005 (1)*10.7
                
                Amendment
      to Binding Farm-Out Agreement East Wadi Araba Concession-Egypt dated March
      30, 2006 (1)*10.8
                
                Assignment
      Agreement dated April 4, 2006 (1)*10.9
                
                Concession
      Agreement for Petroleum Exploration and Exploitation (the "Concession Agreement")
      between Dover, the Arab Republic of Egypt and the Egyptian General
      Petroleum Corporation (“EGPC”) dated July 18,
      2002 (1)*10.10
                
                East
      Wadi Araba Concession - Gulf of Suez, Egypt Amending Agreement dated April
      13, 2006 (1)*10.11
                
                Deed
      of Assignment submitted May 30, 2006 (1)*10.12
                
                A
      Binding Agreement dated April 14, 2005 (1)*10.13
                
                Agreement
      dated October 2, 2006 with Ernie Pratt (2,3)*10.14
                
                Office
      Lease Agreement as amended (2)*10.15
                
                Promissory
      note dated April 1, 2006 in the aggregate amount of $113,791.35
      (2)*10.16
                
                Assignment
      Agreement dated January 24, 2007 (2)*10.17
                
                Letter
      of Intent dated July 30, 2007 (incorporated by reference from our Current
      Report on Form 8-K filed on August 7, 2007)*10.18
                
                Form
      of Stock Option Agreement (incorporated by reference from our Current
      Report on Form 8-K filed on August 10, 2007)*(14)
                
                Code
      of Ethics14.1
                
                Code
      of Ethics(23)
                
                Consents
      of Experts and Counsel23.1
                
                Consent
      of Sierchio Greco & Greco, LLP (included in Exhibit 5.1)
      (3)*23.2
                
                Consent
      of Jorgensen & Co. (incorporated by reference from our Registration
      Statement on Form SB-2/A filed on May 8,
      2007)  (1,2,3,4)*23.3
                
                Consent
      of Chapman Petroleum Engineering Ltd. (1,2,3,4)*(31)
                
                Certifications31.1
                
                Certification
      of Principal Executive Officer pursuant to Section 30231.2
                
                Certification
      of Principal Financial and Accounting Officer pursuant to Section
      30232.1
                
                Certification
      of Principal Executive Officer and Principal Financial and Accounting
      Officer pursuant to Section 1350(99)
                
                Additional
      Exhibits99.1
                
                List
      of Freehold Properties Leases (1)*99.2
                
                Evaluation
      of Resource Potential East Wadi Araba Concession, Offshore Gulf of Suez,
      Egypt (1)*99.3
                
                Settlement
      Agreement dated January 24, 2007
(2)*





*
Previously filed.





1 Filed
with our Registration Statement on Form SB-2 on November 17, 2006, and
incorporated herein by reference.


2 Filed
with our Registration Statement on Form SB-2/A on February 6, 2007, and
incorporated herein by reference.


3 Filed
with our Registration Statement on Form SB-2/A on March 29, 2007, and
incorporated herein by reference.


4 Filed
with our Registration Statement on Form SB-2/A on April 25, 2007, and
incorporated herein by reference.


26


SIGNATURES





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





MOGUL
ENERGY INTERNATIONAL, INC.








/s/ Naeem
Tyab





By: Naeem
Tyab, President


(Principal
Executive Officer)





Dated:  April
15, 2009








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





/s/ Naeem
Tyab





By: Naeem
Tyab, Director and President


(Principal
Executive Officer)





Dated:  April
15, 2009





/s/ Ernie Pratt





By: Ernie
Pratt, Director





Dated:  April
15, 2009






27