U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-KSB**





[X]
      ANNUAL REPORT UNDER SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      fiscal year ended December 31, 2006





OR





[
      ]
      TRANSITION UNDER SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      transition period from ________ to ________








**CONSOLIDATED
      OIL & GAS, INC.**


(Exact
      name of registrant as specified in its charter)




Nevada
              (state
                of
              incorporation)
            000-51667
              (Commission
                File Number)
            91-2008446
              (IRS
                Employer
              I.D.
                Number)




316
      Main
      Street, Suite L


Humble,
      TX 77338


(281)
      446-7122


____________________________________________________


(Address
      and telephone number of registrant's principal


executive
      offices and principal place of business)








Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act:




**Common
      Stock, $0.001 par value**





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. [ ]





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








Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will 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-KSB
      or any amendment to this Form 10-KSB. [X]





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





State
      issuer’s revenues for its most recent fiscal year: $1,734,203





State
      the
      aggregate market value of the 12,816,957 voting and non-voting common equity
      held by non-affiliates computed by reference to the $0.0775 average bid and
      asked price of such common equity, as of May 17, 2007: $993,314.





As
      of May
      17, 2007, there were 32,816,957 shares of the Registrant's Common Stock, par
      value $0.001 per share, outstanding.





DOCUMENTS
      INCORPORATED BY REFERENCE





If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the Form 10-KSB (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) of the Securities Act of 1933 (“Securities Act”). The listed
      documents should be clearly described for identification purposes (e.g., annual
      report to security holders for fiscal year ended December 24, 1990).
      None





Transitional
      Small Business Disclosure Format (check one): Yes [  ] No [X]


ii


**TABLE
      OF CONTENTS**





PageItem
                1
            Description
                of Business
            1Business
                Development
            1Business
                of Consolidated Oil & Gas, Inc.
            1Item
                2
            Description
                of Property
            5Item
                3
            Legal
                Proceedings
            10Item
                4
            Submission
                of Matters to a Vote of Security Holders
            10Item
                5
            Market
                for Common Equity and Related Stockholder Mattersand
                Small Business Issuer Purchases ofEquity
                Securities
            10Holders
            11Dividends
            11Securities
                Authorized for Issuance Under EquityCompensation
                Plans
            11Recent
                Sales of Unregistered Securities
            11Item
                6
            Management’s
                Discussion and Analysis
            12Results
                of Operations
            12Liquidity
                and Sources of Liquidity
            17Off-Balance
                Sheet Arrangements
            18Item
                7
            Financial
                Statements
            19Item
                8
            Changes
                in and Disagreements with Accountants onAccounting
                and Financial Disclosure
            37Item
                8A
            Controls
                and Procedures
            37Item
                8B
            Other
                Information
            37Item
                9
            Directors,
                Executive Officers, Promoters, Control Persons andCorporate
                Governance; Compliance with Section 16(a)of
                the Exchange Act
            37Compliance
                with Section 16(a) of the Securities Exchange Act
            39Board
                Meetings and Committees; Annual Meeting Attendance
            40Shareholder
                Communications
            40Code
                of Ethics
            40




iii




Item
                10
            Executive
                Compensation
            41Summary
                Compensation Table
            41Outstanding
                Equity Awards at Fiscal Year-End
            41Director
                Compensation
            41Employment
                Contracts
            41Item
                11
            Security
                Ownership of Beneficial Owners and Managementand
                Related Stockholder Matters
            41Changes
                in Control
            42Item
                12
            Certain
                Relationships and Related Transactions, andDirector
                Independence
            42Item
                13
            Index
                to Exhibits
            42Item
                14
            Principal
                Accountants Fees and Services
            44Signatures
            
            44








iv





**Item
      1** **.**   **Description
      of Business.**





**Business
      Development**





We
      were
      incorporated in Nevada on August 18, 1999. Our name then was Iowa Industrial
      Technologies, Inc. On August 27, 2003 we merged with another Nevada corporation,
      Consolidated Oil & Gas, Inc., which had been incorporated in Nevada on
      November 12, 1999. We were the surviving corporation in the merger and changed
      our name to Consolidated Oil & Gas, Inc.





**Business
      of Consolidated Oil & Gas, Inc.**





We
      explore for and produce oil and gas that we sell to oil and gas gatherers.
      The
      gas sometimes is sold directly to the public utility companies. We do our
      exploration with working interest partners and oil and gas companies that wish
      to invest in the oil and gas business. A working interest partner buys a percent
      in a project or well and receives a share of the monthly net revenue of that
      well (gross revenue less royalties, taxes and operating expenses) based on
      his
      percentage of ownership in the well or project. If a well experiences a net
      loss
      for a month, a working interest partner is billed for his percentage share
      of
      the costs of operating the well in excess of the revenues received. In all
      of
      the projects we have, we are the operating working interest partner and the
      other working interest partners have no involvement in the management of the
      well or project. The working interest partner receives a recordable assignment
      for his share of the well or project. The share of revenues and expenses of
      the
      working interest partners is not included in the revenue and expenses of our
      company.





We
      own
      equipment to both drill new wells and to work-over old wells. A new well is
      to
      find a location and drill a new well from the ground to the depth at which
      various types of geological studies indicate one may find oil or gas. To
      work-over a well is to locate an existing well bore (hole previously drilled
      and
      completed) which either is no longer productive or is lagging in production
      and
      do the necessary repairs to either put it back in production or to increase
      the
      production already there.





Our
      past
      strategy has been to find wells that need to be worked-over and to apply
      advanced technology to create additional production from these wells. Following
      are some examples of advanced technology which is in use today that were not
      in
      use when these wells previously produced.





1.
      Nitrogen clean out process, which is to pump nitrogen down the well bore to
      get
      the gases acting again to create new production.





2.
      Use of
      coil tubing units to clean out lateral lines on the well bores.





3.
      Use of
      cased logging technology with advanced computer enhancement to identify
      potential producing zones of oil and gas.





1


4.
      Use of
      horizontal drilling techniques which may not have been available when the
      original well was drilled. This is to shoot a horizontal line out from the
      vertical well bore to gain production from a larger area under the
      ground.





5.
      New
      fracturing technology that exerts horizontal fractures in the
      formation.





We
      plan
      to identify undeveloped prospects and drill new wells in 2007 as well as
      continue our re-entry operations. In late 2005 and early 2006, we have leased
      1,255 acres in South Texas on which 10 drilling locations have been identified.
      By leasing this property, we mean we have acquired certain rights to the
      minerals under the property from the mineral owners. When we lease a property
      we
      have from one to two years to gain production from that property and then the
      lease is held in perpetuity as long as there is commercial production from
      the
      property. The owner of the mineral rights, whom we lease the property from,
      gets
      a royalty from whatever production we get from the property. The royalties
      usually run 16% to 25% of the gross revenue (net of state oil & gas taxes)
      from the production. We are in the process of completing the leases of the
      mineral rights of approximately 1,500 acres in the same area in which we already
      have leases. We have identified another 10 drilling sites on this acreage.
      We
      have completed negotiations with mineral owners of 612 acres of this tract
      of
      land. If we are successful in acquiring this tract of mineral interests we
      anticipate paying a 25% royalty to the mineral owners. We will need
      approximately $100,000 to complete the purchase of these mineral leases. We
      have
      not identified the source of these funds. We will have to seek loans, equity
      placements, or sell off working interests in projects we acquire to be able
      to
      complete these purchases. There can be no assurance that we will be able to
      raise the funds necessary for the projects and mineral leases we are attempting
      to acquire.





Three
      of
      the wells on the above mentioned leases have been completed. One of those wells
      has been declared a dry hole. We are still testing the other two wells to
      determine if commercial quantities of oil or gas can be produced from these
      wells. To complete a well means to drill the hole, test the productions zones,
      set and cement casing to the depth of the hole and to set tubing in the hole
      for
      production any other equipment necessary for the production of oil and gas
      from
      the well. Completing a well does not mean that we will be successful in
      producing oil and/or gas from the well. After completion it is necessary to
      perforate a well in the zones that tests indicate a possibility of oil or gas.
      Perforating is to blast a hole through the tubing and casing, into the formation
      to see if oil or gas comes to you. Depending on results, you may or may not
      start to see commercial quantities of oil or gas for production and other steps
      may be taken, such as fracturing (blasting sand or other substances into the
      formation to loosen the crevices that oil or gas may be trapped in). If you
      are
      successful in getting commercial quantities of oil and gas, above ground
      equipment will be necessary to begin production.





Beginning
      in late 2003 with a tightening of the availability of oil field equipment,
      we
      began looking for leases with workover possibilities on which we could take
      advantage of the use of our own equipment. As a result we acquired several
      leases with workover possibilities in the South Texas and West Texas areas.
      (“Workover possibilities” means that an examination of the electronic logs that
      were obtained when a well was first drilled and an examination of its production
      history suggest that an application of the new technology described above could
      revive the well and make it productive.) After acquiring a lease it is our
      practice to find a partner to put up the project’s development money for a
      working interest in the project. (The term “working interest” applies to parties
      that must bear the costs of drilling and operating a well, as distinguished
      from
      the owners of “royalty interests” who bear no costs but share in the
      production.) To date we have paid to the entities putting up the development
      money 100% of the working interest revenue in the projects until payout. After
      payout to the provider of the development money, we will participate in the
      working interest revenues at amounts varying from 20% to 50%. In future projects
      we plan to share in revenues from the first dollar with our working interests
      partners in proportion to our ownership. We charge the project for the use
      of
      our workover equipment at a rate not to exceed the going rate in the
      area.





2


In
      2005
      we raised $1,477,000 and spent $1,398,000 on six such projects. In 2006 we
      did
      not raise any additional money for such projects but spent additional $286,000
      on the projects started in 2004 and 2005. In 2006 we raised $1,712,736 for
      drilling three new wells and spent $1,742,300 for the development of those
      wells.





**Distribution
      Methods**





We
      distribute oil and gas that we produce through oil and gas gathering companies
      with the gas sometimes being sold directly to public utility
      companies.





Our
      distribution agreements for oil provide for an oil wholesaler to pick up oil
      from our tanks and pay us according to the market prices at the time the oil
      is
      picked up at our tanks. There is a great demand for oil and there are several
      companies we can have pick the oil up. We have no long-term contracts with
      any
      one company.





Our
      distribution agreements for gas provide for us to tap into the distribution
      line
      of a gas distribution company, and we are paid for our gas at the market price
      at the time of delivery less any transportation charge from the gas transmission
      company. These charges can range from 5% to 30% of the market value of the
      gas
      depending on the need of the particular transmission company.





**Competitive
      Business Conditions**





Because
      of historic high prices for oil and gas, there are many companies competing
      for
      the leasehold rights to good oil and gas prospects. And, because so many
      companies are again exploring for oil and gas, there is a shortage of equipment
      available to do drilling and workover projects.





We
      believe we have an advantage over many small companies, because we own our
      own
      drilling and workover equipment and do not have to wait for contract equipment
      and crews, which are in short supply at the current time.





One
      way
      we compete with other exploration or development companies is our practice
      of
      allowing our investors to recoup their entire investments in our wells before
      we
      attain the right to share in the production from the wells.





3


**Source
      and Availability of Raw Materials**





Other
      than drilling mud, we have no significant raw materials. However, we make use
      of
      numerous oil field service companies in the drilling or workover of wells.
      We
      operate now only in Texas, where there are numerous oil field service companies.
      Some of the better known ones are Halliburton and Schlumberger.





**Dependence
      on One or a Few Customers**





There
      is
      a ready market for the sale of crude oil or natural gas. We sell our production
      to many different purchasers, most of whom pay similar prices that vary with
      the
      international spot market prices.





**Patents,
      Trademarks, Royalties, Etc.**





We
      have
      no patents, trademarks, licenses, concessions, or labor contracts. We pay
      royalties to mineral owners and owners of overriding royalties on oil and gas
      leases. These royalties range from 16.67% to 30%. The leases are good and
      royalties are owed as long as there is production on the property.





**Government
      Approvals**





We
      are
      required to get approval from the Texas Railroad Commission before work can
      begin on any well and before production can be sold. We have all of the required
      permits on the properties currently in operation.





**Existing
      or Probable Governmental Regulations**





We
      currently are active only in Texas. Developing and operating oil and gas
      properties in Texas is highly regulated by the Texas Railroad Commission. Other
      states have their own agencies that regulate this industry, and in some areas
      of
      exploration and production, the United States government regulates the
      industry.





Regulations,
      whether State or Federal, control numerous aspects of drilling and operating
      oil
      or gas wells, including the care of the environment, the safety of the workers
      and the public, and the relations with the owners and occupiers of the surface
      lands within or near the leasehold acreage. The effect of these regulations,
      whether State or Federal, is invariably to increase the cost of
      operations.





The
      costs
      of complying with the Texas Railroad Commission include a permit for drilling
      a
      well before beginning a project, which is usually around $500. Other compliance
      matters have to do with keeping property free of oil spills and the plugging
      of
      wells when they no longer produce. If oil spills are not cleaned up on a timely
      basis fines can range from just a few dollars to as high as five thousand
      dollars. The Company has people who visit the properties on a daily basis to
      be
      certain there are no mishaps which are not corrected promptly. The other
      significant cost of compliance with the Texas Railroad Commission is the
      plugging of wells after their useful life. This is usually a small amount
      ($2,500 to $5,000) per well. In most instances there is pumping equipment and
      pipe which can be salvaged to offset most if not all of that cost. Plugging
      a
      well consists of pumping cement into the well bore sufficient to prevent any
      oil
      and gas zone from ever leaking and contaminating the fresh water supply.





4


**Costs
      and Effects of Compliance with Environmental Laws**





There
      is
      a cost in complying with environmental laws that is associated with each well
      that is drilled or operated, which cost is added to the cost of the operation.
      Each well will have an additional cost associated with plugging and abandoning
      the well when it is no longer commercially viable. The estimated costs of
      dismantlement and abandonment of depleted wells are estimated to be relatively
      immaterial in amount and we believe the salvage value of the equipment on the
      wells will be sufficient in amount to cover any such costs.





**Number
      of Employees**





We
      have
      seventeen full-time employees.





**Item
      2** **.**   **Description
      of Property.**





We
      lease
      approximately 1,000 square feet of modern office space as corporate
      headquarters, consisting of a large conference room, three offices and a storage
      room. We also have a field office consisting of approximately 600 square feet
      of
      modern office space and a 4,000 square foot shop. The lease expired December
      31,
      2006 and is on a month-to-month basis. Our monthly rent is $800.





We
      own
      interests in oil and gas leases in Texas on some of which leases there are
      producing oil and gas wells in which we own part or none of the working
      interest. Our aggregate interests are set forth below.





Productive
                Wells
            
            Non-Productive
                WellsCounty
            
            Gross
                Wells
            
            Net
                Wells
            
            Gross
                Wells
            
            Net
                WellsZavala:Gas
            
            
            1
            
            
            0.7
            
            
            -
            
            
            -Oil
            
            
            
            
            
            
            
            
            3
            
            
            .2325Frio:Oil
            
            
            1
            
            
            0.1875
            
            
            -
            
            
            -Medina:Gas
            
            
            4
            
            
            0(1)
            
            
            -
            
            
            -Dimmit:Oil
            
            
            9
            
            
            4.05(2)
            
            
            -
            
            
            -





5





Developed
                AcreageCounty
            
            Gross
                Acreage
            
            Net
                AcreageZavala:Gas
            
            
            40
            
            
            28Oil
            
            
            1183
            
            
            275Frio:Oil
            
            
            80
            
            
            15Medina:Gas
            
            
            356
            
            
            0(1)Dimmit:Oil
            
            
            1,998
            
            
            799.2





Additional
      information on these leases is as follows.





Lease
            Date
            Expiration
            County
            Royalty
            Gross
                AcresName
            Entered
            
            LocationGlasscock
            Mar.-00
            HBP
            Zavala
            30%
            40Schweer/Valenzuela
            Aug-04
            HBP
            Medina
            20%
            356VWD
            Dec-04
            HBP
            Dimmit
            28%
            1,378Rod
                Ranch
            May-05
            HBP
            Dimmit
            28%
            620Lena
                Buerger
            Apr-05
            HBP
            Frio
            18%
            80House-LaPryor(3)
            Oct-05
            1
                well every
              six
                months,
              then
                HBP
            Zavala
            22%
            434Grelle(3)
            Jan-06
            3
                yrs to
              produce,
              then
                HBP
            Zavala
            20%
            749Gros
                Ventre
            Jun-06
            Spud
                by
              Jan
                31, 2007,
              then
                HBP
            Zavala
            27%
            620House-Catulla
            Feb-06
            Three
                Years,
              then
                HBP
            LaSalle
            16.67%
            608





The
      above
      schedule is a summary of the leases we own. All of the leases are with
      individuals who have no affiliations with the company. They are all located
      within the state of Texas in the counties indicated. When we indicate the
      expiration as HPD, it means the well is “held by production”. This means that
      the lease is in existence as long as there is production from wells on the
      property and the mineral owners are receiving royalty checks.




6





(1)
            We
                own no interest in any of the wells in Medina County, but through
                a
                wholly-owned subsidiary we own a seven-mile-long pipeline that is
                connected to the producing wells and from the operations of which
                we
                charge a transmission fee to the working interest owners of the
                wells.





(2)
            Our
                working interest in these wells is a 45-perent interest that is contingent
                and vests upon the other working interest owners receiving from production
                their approximately $450,000 investment in the wells. As of February
                28,
                2007 the other working interest owners had received $69,713 in production
                revenues.





(3)
            Two
                wells have been drilled on the house property and one well has been
                drilled on the Grelle property. We are attempting to complete the
                wells to
                commercial production but have not yet been able to do
                so.





Undeveloped
      Acreage


As
      of
      February 28, 2007





County
            Gross
                Acres
            Net
                AcresZavala
            620
            589LaSalle
            608
            608





Gross
      wells are the total number of oil and gas wells in which we have an interest.
      Net wells are the ratio of our interest to the total wells. ( **Example:** If we
      own a well which we have sold off 30% interest to other working interest owners,
      then we have 70% left as a net well. That means we have 1 gross well and .7
      net
      wells.)





The
      same
      example holds true for gross and net acreage.





Productive
      wells are the wells we have that are producing oil and/or natural gas. A
      non-productive well is a well which has a well bore and has not been shut-in
      (cemented in and capped). This well bore may or may not be some time in the
      future be a candidate for a work-over. Dry wells are wells which have been
      drilled and there are no oil and gas shows on the logs. No oil or gas will
      ever
      be produced from a dry well.





Exploratory
      wells are wells which are drilled in a non-proven field. Geological studies
      may
      indicate the existence of oil or gas but there has not been any proof by
      previous drilling in the field. Developmental wells are wells drilled or
      reworked in a field where there are previous discoveries of oil and natural
      gas.
      These wells have a much higher probability of being successful than exploratory
      wells.





Developed
      acreage is acreage in which we have leased the mineral rights for oil & gas
      and have drilled or re-worked wells. Undeveloped acreage is acreage we have
      leased but have not yet drilled wells. It is available for future drilling
      programs.





7





**Drilling
      Activity**





The
      following table sets forth, for each of the last three fiscal years by
      geographic areas in Texas, the number of net productive and dry exploratory wells
      drilled and the number of net productive and dry development wells
      drilled.





Net
                Exploratory
              Wells
                Drilled
            
            Net
                Development
              Wells
                DrilledCounty
            
            Productive
            
            Dry
            
            Productive
            
            DryMedina:2006
            
            
            0
            
            
            0
            
            
            0
            
            
            02005
            
            
            0
            
            
            0
            
            
            0
            
            
            02004
            
            
            0
            
            
            0
            
            
            4
            
            
            1Jackson:2006
            
            
            0
            
            
            0
            
            
            0
            
            
            02005
            
            
            0
            
            
            0
            
            
            0
            
            
            12004
            
            
            0
            
            
            0
            
            
            0
            
            
            1Dimmit:2006
            
            
            0
            
            
            0
            
            
            0
            
            
            02005
            
            
            0
            
            
            0
            
            
            9
            
            
            02004
            
            
            0
            
            
            0
            
            
            0
            
            
            0Zavala:2006
            
            
            0
            
            
            3
            
            
            0
            
            
            02005
            
            
            0
            
            
            0
            
            
            0
            
            
            02004
            
            
            0
            
            
            0
            
            
            0
            
            
            0San
                Jacinto:2006
            
            
            0
            
            
            0
            
            
            0
            
            
            02005
            
            
            0
            
            
            0
            
            
            0
            
            
            02004
            
            
            0
            
            
            0
            
            
            0
            
            
            2Frio:2006
            
            
            0
            
            
            0
            
            
            0
            
            
            02005
            
            
            0
            
            
            0
            
            
            1
            
            
            02004
            
            
            0
            
            
            0
            
            
            0
            
            
            0LaSalle:2006
            
            
            0
            
            
            0
            
            
            0
            
            
            02005
            
            
            0
            
            
            0
            
            
            0
            
            
            12004
            
            
            0
            
            
            0
            
            
            0
            
            
            0





**Present
      Activities**





We
      had
      almost completed a five-well program in 2004 in Medina County, Texas in which
      we
      sold off 100% of the working interest ownership to sixteen individuals, with
      our
      company remaining the operator of the wells. This lease was signed in July
      2004
      and consists of approximately 356 acres. Terms of the lease call for a 20%
      royalty to be paid to the mineral owners whom we have the lease with. The lease
      is good until there is no longer production from the property. The working
      interest owners have $625,217 invested in the property. We have no investment
      in
      this property. Through our subsidiary, Sabinal Resources, Inc., we constructed
      a
      seven-mile pipeline to the property which we retained and will charge a
      transmission fee to the working interest. There is no contract for this
      arrangement.





8


We
      are
      the managing working interest owner in a project in Dimmitt County, Texas which
      consists of four leases with nine existing well bores. The leases were signed
      in
      December of 2004 and May of 2005 with individual owners of the mineral rights.
      The leases call for a royalty payment of 20% to 28% on the production of oil
      and
      gas from the property. The leases remain in effect for as long as oil and/or
      gas
      is produced from the property. These well bores have been entered and currently
      produce a total of 150-200 barrels of oil per month. Tests show gas production
      should total 300-400 mcf a day total from these wells when gas lines are
      completed and the wells are on line. We retain a working interest of 45% in
      these wells after a payout of $450,000 to our working interest partner. The
      working interest partner has received payment of $75,000 to date. The working
      interest partner has invested $450,000 in the project and we have invested
      an
      additional $344,018. There is enough acreage for ten new wells if production
      proves to be as anticipated.





We
      have
      produced the Leta Glascock Well in Zavala County for over four years. Gross
      revenues from this well have been running $2,000 - $3,000 a month. The lease
      was
      signed in November of 2001 and is good as long as there is production from
      the
      property. There is a 30% royalty payable to the mineral owners with whom we
      have
      the lease. We are the operating working interest owner with a 70% working
      interest and one other individual has a 30% working interest in the project.
      A
      total of $36,000 was invested in this well. We invested $16,000 and the 30%
      working interest partner invested $21,000. We have existing production in Zavala
      County on a well that is operating with an experimental down-hole pump.
      Production is nominal from this well.





We
      drilled three wells on the House and Grelle leases in 2006 and are currently
      attempting to complete these wells to commercial production. We have declared
      these wells as dry holes on our financial statements but are still attempting
      procedures which may bring the wells to commercial production.





We
      obtained the Gros Ventre lease in 2006 and spudded it in before the due date
      on
      the leases. We are attempting to raises approximately $600,000 to drill and
      complete this well. We have 3-D seismic and other geological data which indicate
      this to be a very viable prospect.





We
      have
      leased in 2006 additional acreage in Zavalla and LaSalle counties with 1,228
      acres.





**Delivery
      Commitments**





We
      are
      not obligated to provide a fixed and determinable quantity of oil or natural
      gas
      in the near future under existing contracts or agreements. Further, during
      the
      last three years we had no significant delivery commitments.




9


**Item
      3** **.**   **Legal
      Proceedings.**





Neither
      our company nor any of its property is a party to, or the subject of, any
      material pending legal proceedings other than ordinary, routine litigation
      incidental to our business.





**Item
      4** **.**   **Submission
      of Matters to a Vote of Security Holders.**





There
      were no matters submitted to a vote of the stockholders of our company during
      2006 through the solicitation of proxies or otherwise.





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





Our
      common stock trades on the OTC Bulletin Board under the stock symbol “CSLG”. The
      high and low bid for the fourth quarter of 2006 when it was approved for trading
      on the OTC Bulletin Board was $.10 and $.60. This quotation reflects
      inter-dealer prices, without retail mark-up, mark-down or commission and may
      not
      represent actual transactions.





On
      August
      27, 2003 our company, then named Iowa Industrial Technologies, Inc., merged
      with
      another Nevada corporation, which was named Consolidated Oil & Gas, Inc. Our
      company was the surviving entity in the merger, and we renamed our company
      “Consolidated Oil & Gas, Inc.”





Iowa
      Industrial Technologies, Inc. was subject to the periodic reporting requirements
      of the Securities Exchange Act of 1934 by reason of its having filed, on June
      25, 2001, a Form 10-SB with the Commission. However, it was severely delinquent
      in its reporting requirements, having filed only two quarterly reports on Form
      10-QSB since it became subject to filing requirements. When the August 2003
      merger became effective and the surviving company changed its name to its
      present name, it failed to file any disclosures with the Commission on a Form
      8-K, as it was required to do, that would inform the public about the merger
      and
      the new line of business of the company.





By
      reason
      of the above, in September 2004 the Commission issued an Order Instituting
      Proceedings to revoke the registration of our company under the Securities
      Exchange Act of 1934. On December 17, 2004 after a hearing the Commission issued
      its Initial Decision, revoking such registration, which decision became final
      on
      January 28, 2005. After filing a 10-SB with the SEC we were approved by them
      to
      again trade our stock on July
      15,
      2006 .
      We were
      not approved for trading by NASD until the fourth quarter of 2006.





Our
      common stock had been trading since July 2004, on the Pink Sheets on an
      unsolicited basis only, under the stock symbol “CSLO”. In June 2005 N.A.S.D.
      changed the stock symbol of our company to “CSLG.” On October 21, 2005, N.A.S.D.
      Regulation, a NASDAQ-owned entity that performs certain regulatory functions
      regarding the Pink Sheets, in response to its receipt from the Commission of
      its
      Order revoking the registration of our common stock, caused our stock symbol
      to
      be cancelled and no longer able to be accessed electronically. As far as we
      know, there was been no trading in our stock since that date until we were
      again
      approved for trading.. During the period between January 1, 2005 and October
      21,
      2005, we observed on the pink sheets quotation system that our stock traded
      between $0.10 and $1.07.





10


**Holders**





As
      of May
      16, 2007 there were approximately 142 holders of record of our Common
      Stock.





**Dividends**





We
      have
      paid no dividends to our common stockholders and do not plan to pay dividends
      on
      our Common Stock in the foreseeable future. We currently intend to retain any
      earnings to finance future growth.





**Securities
      Authorized for Issuance Under Equity Compensation
      Plans.**





We
      have
      no compensation plans under which equity securities are authorized for
      issuance.





**Recent
      Sales of Unregistered Securities**





During
      the last three years, Consolidated Oil & Gas, Inc. issued shares of its
      Common Stock to the persons listed below transactions summarized as
      follows:





Information
      concerning sales of stock from 2004 through May 12, 2006 is set forth in the
      Company’s Form 10-SB filed July 11, 2006 (SEC File No. 000-51667) and is
      incorporated by reference to such document. Sales since that date are as
      follows:





**Date
                of**
              **Purchase**
            
            **Person**
            
            **Number**
              **Of
                Shares**
            
            **Total**
              **Purchase**
              **Price**
            
            **Consideration**05-06
                through 08-06
            
            
            10
                persons
            
            
            211,250
            
            $
            21,125
            
            $
            21,125
                Cash08-31-06
            
            
            James
                Harris
            
            
            30,000
            
            
            3,000
            
            
            Consulting
                Services08-31-06
            
            
            2
                persons
            
            
            55,000
            
            
            5,500
            
            $
            5,500
                Cash10-13-06
            
            
            Steven
                Wood
            
            
            50,000
            
            
            5,000
            
            
            Well
                Services10-06
                through 12-06
            
            
            19
                persons
            
            
            798,333
            
            
            91,250
            
            $
            91,250
                Cash11-13-06
            
            
            Brittney
                L Sonaga
            
            
            2,000
            
            
            200
            
            
            Consulting
                Services11-14-06
            
            
            24
                persons
            
            
            624,000
            
            
            62,400
            
            
            Investment
                in Wells12-28-06
            
            
            Carlton
                Wood
            
            
            40,000
            
            
            4,000
            
            
            Well
                Services





In
      all
      instances of the above sales, the sales were made under the exemption from
      registration provided by Regulation D, Rule 506. The purchasers were either
      officers or directors of our company, were accredited investors with whom we
      had
      a preexisting relationship or in less than ten instances were non-accredited
      investors with whom we had a preexisting relationship and to whom we delivered
      offering materials that complied with the disclosure requirements of a Form
      SB-2
      including audited financial statements. The sales were not accompanied by any
      public solicitation or public advertising. The sales were made by officers
      of
      our company who received no compensation, director or indirect, for effecting
      the sales.





11


**Item
      6** **.**   **Management’s
      Discussion and Analysis.**





The
      following table sets forth, as a percentage of sales, an analysis of several
      line-items of our Statement of Operations.





For
                the Years Ended
              December
                312005
            
            2006Revenues
            
            
            100
            
            
            100Cost
                of Revenues
            
            
            84
            
            
            101Gross
                Margin
            
            
            16
            
            
            (1
            )General,
                Selling and Administrative Expenses
            
            
            22
            
            
            22Exploration
                and Dry Hole Costs
            
            
            -
            
            
            19Interest
            
            
            1
            
            
            7Net
                Income (Loss)
            
            
            (7
            )
            
            (49
            )





**Results
      of Operations**





**Sales**





Revenues
      of $1,917,894 in fiscal year (FY) 2006 were slightly higher than revenues of
      $1,701,893 in FY 2005.





The
      sources of revenue for 2005 and 2006 are as follows:





Increase
                or2005
            
            2005
            
            (Decrease)Gas
                and oil sales
            
            $
            33,890
            
            $
            21,467
            
            $
            (12,423
            )Contract
                drilling revenue
            
            
            1,665,994
            
            
            1,896,427
            
            
            230,433Other
                income
            
            
            2,009
            
            
            -
            
            
            (2,009
            )Total
                Revenue
            
            $
            1,701,893
            
            $
            1,917,894
            
            $
            216,001





Gas
      and
      oil sales are primarily from one well in which we have a 70% working interest.
      Sales from this well were les by $12,423 in 2006 as compared to 2005. The
      decreases are because of lower gas prices in 2006 as compared to 2005 and also
      due to a slight decline in production from the well. Oil and gas sales are
      only
      from our share of the working interest ownership in a property. We only record
      the income and expenses from the working interest portion of the wells we own.
      Example: If we sell off 60% of the working interest in a well, we only record
      40% of the revenue after royalties as oil and gas sales on our books. The
      royalty portion of the income and the other 60% of the working interest portion
      is recorded as a liability on our balance sheet. Likewise we only record 40%
      of
      the expense as lease operating expense with the balance being recorded as a
      receivable on our balance sheet. These items are netted for reporting
      purposes.





12


Contract
      drilling revenue is the revenue derived from the sale of working interests
      in
      the properties which we develop. The company typically buys the mineral rights
      to a property and then sells off portions of that property in working interest
      to other buyers. The working interest revenue is used to develop the property.
      If the cost of developing a property is less than what a working interest owner
      paid for his working interest, we make a profit on this facet of our business.
      At the time of a sale of a working interest in a property, it is unknown whether
      a profit or a loss will result from the drilling activity. We always add a
      contingency amount to our calculations of what the costs will be and an
      additional amount for our promotion of the project. This is standard practice
      in
      the industry.





Contract
      drilling revenue increased $230,433 in 2006 over the sales in 2005. In 2006
      the
      company was drilling new wells while in 2005, we were doing workovers of old
      existing wells which is usually not as costly. We drilled three wells in the
      first half of 2006 and spent the rest of the year attempting to complete them
      to
      produce commercial quantities of oil. We were attempting to get commercial
      production from these wells before raising additional money to drill more wells.





Other
      income in 2005 was a gain from the sale of a truck and from the sale of some
      scrap metal on the properties.





**Cost
      of Sales and Gross Margin**





The
      cost
      of sales of $1,936,057 in FY 2006 was 1.3 times the cost of sales of $1,438,989
      in FY 2005. The cost increase is primarily due costs associated with attempting
      to complete the wells drilled after some engineering problems. Gross margin
      (loss) of ($18,163) in FY 2006 - (1%) of sales - compares with gross margin
      of
      $262,909 in FY 2005 - 16% percent of sales. The decrease in gross margin in
      FY
      2006 over FY 2005 was because extra costs associated with attempting to complete
      the wells drilled after some engineering problems. The company also kept most
      of
      its drilling crew on in working on some previously abandoned wells, without
      any
      revenue coming in. This was so when we resumed drilling activities, we would
      still have a trained crew to which is very hard to find in the oil fields.





13


**COSTS
      and EXPENSES** **** for
      2005
      and 2006 are as follows.





Increase
                or2005
            
            2006
            
            (Decrease)Lease
                operating expenses
            
            $
            32,211
            
            $
            10,066
            
            $
            (22,145
            )Cost
                of developing leases
            
            
            1,406,778
            
            
            1,925,991
            
            
            519,213General
                and administrative
            
            
            374,046
            
            
            427,338
            
            
            53,292Exploration
                and dry hole costs
            
            
            -
            
            
            358,800
            
            
            358,800Interest
                expense
            
            
            15,861
            
            
            145,013
            
            
            129,152Total
                Costs and Expenses
            
            $
            1,828,896
            
            $
            2,867,208
            
            
            1,038,012





**Lease
      operating expenses** are
      costs related to generating gas and oil sales. These expenses are for such
      things as utilities, maintenance, and operating labor for well sites. The
      decrease in operating costs in 2006 compared to 2005 was because in 2005, the
      company did a workover (major repair) on the gas well which was producing income
      in hopes of extending the life of the well.





**Cost
      of developing leases** is the
      costs associated with buying a lease and working over an old well with the
      hope
      of either lengthening its life or increasing its production or both or the
      costs
      of drilling a new well. In 2005 all of the costs are associated with working
      over old wells while in 2006 nearly all of the costs are associated with
      drilling three new wells. Major categories of these expenses are as follows:





Increase
                or2005
            
            2006
            
            (Decrease)Lease
                purchases
            
            $
            43,308
            
            $
            6,705
            
            $
            (36,603
            )Equipment
                rent
            
            
            183,508
            
            
            114,967
            
            
            (68,541
            )Labor
            
            
            342,183
            
            
            611,439
            
            
            269,256Materials
                & supplies
            
            
            203,140
            
            
            399,368
            
            
            196,228Contract
                work
            
            
            189,569
            
            
            404,503
            
            
            214,934Repairs
                to equipment
            
            
            66,620
            
            
            29,671
            
            
            (36,949
            )Selling
                costs
            
            
            309,173
            
            
            250,349
            
            
            (58,824
            )Depreciation
                on equipment
            
            
            69,277
            
            
            108,989
            
            
            39,712Total
                Costs and Expenses
            
            $
            1,406,778
            
            $
            1,925,991
            
            $
            519,213





**Lease
      purchases** represents the amount of upfront money paid to acquire a lease. In some
      instances a mineral owner will allow you to obtain a lease only for the future
      royalties he will receive and in other cases the mineral owner will require
      an
      up front lease fee (sometime called a lease bonus) as well as future royalties
      based on production. The amount of fees paid in 2006 was $36,603 less than
      that
      paid in 2005 because we were able to obtain most of our leases without paying
      the lease bonus.





14


**Equipment
      rent** is
      the
      amount spent for renting equipment to do tasks that we do not own equipment
      for
      or for which our equipment is not available to do. We spent $68,541 more renting
      equipment in 2005 than in 2006. In late 2005 and early 2006 we increased the
      amount of equipment we owned reducing the amount of equipment we were required
      to rent.





**Labor** is the
      amount spent for labor of people who worked for the company. It also includes
      cost associated with the people such as taxes and living expense while working
      on the projects. It does not include the salaries of the administrative staff.
      The labor expense increase from $342,183 in 2005 to $611,439 in 2006, an
      increase of $269,256 was because we added an additional drilling crew in 2006
      to
      operate our new equipment. The reason the total labor was so much higher in
      relation to sales in 2006 than in 2005 was because when our workload decreased
      due to lack of funds, we kept our crews working on maintenance, etc. By doing
      this we will have experienced crews available when we have funds available
      to
      resume drilling. Experienced crews are difficult to find in the oil patch in
      today’s environment.





**Materials
      & supplies** is
      the
      amount spent on various materials to work on the projects. This can include
      pipe, pumps, tanks, chemicals, pumping units, water, drilling fluids and various
      other materials used to drill or re-work a well. The amount spent for these
      type
      of items increased $196,228 from the $203,140 spent in 2005. In 2005 the company
      did mostly workover jobs while in 2006 the company drilled mostly new wells.
      When drilling a new well, you have the cost of casing, tubing, above ground
      equipment, drilling fluids and other items which are many times already present
      when doing a workover job.





**Contract
      work** is the
      amount spent on outside contractors to do work which we are not set up to do
      or
      do not have the manpower or equipment to accomplish. This cost increased from
      $189,569 in 2005 to $404,503 in 2006 or an increase of $214,934. These cost
      increased due to the nature of work being performed in 2006 as compared to
      2005.
      When drilling new wells you additional costs include mud logging, cement crews
      for casing installation and additional perforating.





**Repairs
      to equipment** is the
      cost of repairing equipment owned by us. This cost decreased from $66,620 in
      2005 to $29,671 in 2006 or a decrease of $33,999 from 2005. The major reason
      for
      this decrease is because we had some equipment vandalized in 2005 which cot
      approximately $25,000 for repairs.





**Selling
      costs** are the
      expenses incurred in the selling of working interest in the wells and is made
      up
      mostly of commissions. We were advised in the middle of 2006 that we could
      not
      pay commissions on the sale of working interest unless the interests were sold
      by a registered broker dealer. After that time we quit paying commissions and
      all sales are made only to accredited investors by company officers with no
      commissions being paid.





**Depreciation
      on equipment** is
      the
      depreciation taken on the equipment owned by us. It increased by $39,712 in
      2006
      over 2005 from $69,277 to 108,989. This was because we purchased and put in
      service a new drilling rig and the equipment that goes with it in early
      2006.





15


**General,
      Selling and Administrative Expenses**





General,
      selling and administrative expenses of $389,907 in FY 2005 were $194,907 (100%)
      higher than general, selling and administrative expenses of $195,023 in FY
      2004.
      The increase is attributable to the increase in activity in 2005 over 2004
      and
      gearing up for additional activity in 2006.





**GENERAL
      AND ADMINISTRATIVE** expense
      for 2005 and 2006 are as follows.





Increase
                or2005
            
            2006
            
            (Decrease)Consulting
            
            $
            43,528
            
            $
            59,884
            
            $
            16,356Auto
            
            
            40,445
            
            
            38,337
            
            
            (2,108
            )Payroll
            
            
            121,427
            
            
            96,436
            
            
            (24,991
            )Office
            
            
            98,257
            
            
            81,124
            
            
            (17,133
            )Professional
                fees
            
            
            37,003
            
            
            129,683
            
            
            92,680Travel
            
            
            17,748
            
            
            17,074
            
            
            (674
            )Depreciation
            
            
            15,638
            
            
            4,800
            
            
            (10,838
            )Total
                General and Administrative
            
            $
            374,046
            
            $
            427,338
            
            $
            53,292





**Consulting
      expenses** are
      for
      hiring people to locate properties, advise on the likelihood of properties
      having oil and other miscellaneous outside consultants. We spent more money
      on
      looking for new locations in 2006 than in 2005.





**Auto
      expense** is the
      expense related to the operation of autos and trucks and also includes any
      leased autos and mileage paid to employees for the operation of their personal
      vehicles.





**Payroll** decreased
      from $121,427 in 2005 to $96,436 in 2006, a decrease of $(24,991). This was
      because we started charging some employee salaries directly to jobs in 2006
      where it could be identified.





**Office
      expenses** decreased from $98,257 in 2005 to $81,124 in 2006, a decrease of ($17,133).
      These expenses include supplies, insurance, computer maintenance, recording
      fees, software maintenance and most other G & A items not classified
      elsewhere.




**Professional
      fees** increased $92,680 to $129,683 in 2006 from $37,003 . The increase was mainly
      attributable to legal fees and audit fees related to our 10-SB filing in 2006
      and additional legal and accounting fees for the SEC reporting requirements
      after the 10-SB was accepted.




**Travel** expenses
      for travel to review activities at the sites and entertainment for customers
      and
      working interest partners.





16


**Depreciation** is **** on
      office
      furniture and fixtures, computers and company vehicles. The reduction in 2006
      as
      compared to 2005 is because in 2006 we started charging the depreciation on
      field trucks to cost of operations.





**EXPLORATION
      AND DRY HOLE COSTS** are the
      percent of drilling costs for wells which were retained by the company. As
      of
      year-end, no commercial production had been attained on the wells so we wrote
      off these costs as dry holes. The company is still spending minimal amounts
      on
      the advice of engineers and may or may not get production from two of the
      wells.





**INTEREST
      EXPENSE** increased from $15,861 in 2005 to $145,013 in 2006 or an increase of $129,152.
      This is because we took out a short-term note of $100,000 (increased in early
      2006 to $200,000) for an equipment purchase in late 2005 at an interest rate
      of
      4% per month (48% annual). We were in a cash crunch when the note was due and
      at
      times were required to pay as much as 25% interest per month (300% annual)
      to
      extend the note. We retired this note on July 7, 2006 and have obtained
      financing to replace this note at an annual rate of 12% interest.




**Net
      Income (Loss)**





We
      suffered a net loss of $949,314 in FY 2006 and a net loss of $127,003 in FY
      2005. The increase in net loss is attributable primarily to a gross profit
      loss
      of $18,163 in FY 2006 compared to gross profit of $262,904 in FY 2005. We also
      had an increase in general and administrative expenses of $53,292, exploration
      and dry hole costs of 358,800 and an increase in interest expense of $129,152.
      All of this amounted to our loss being $822,311 greater in 2006 than in
      2005.





We
      financed our FY 2006 loss of $949,314 primarily through an increase of $185,173
      in current liabilities, an increase in notes payable of $382,503, issuances
      of
      $345,097 worth of common stock for cash and services and cash contributions
      from
      shareholders of $63,000. The cash contribution from shareholders is treated
      as
      additional paid-in capital and has no payback requirement. A portion of these
      funds was used to purchase new equipment and leases of $337,819.





**Liquidity
      and Sources of Liquidity**





We
      do not
      have capital sufficient to meet our cash needs during the next twelve months,
      including the costs of compliance with the continuing reporting requirements
      of
      the Securities Exchange Act of 1934. We will have to seek loans, equity
      placements, and sell off working interests in projects we acquire to cover
      such
      costs. While we have been successful in such activities in the past, there
      can
      be no assurance that we will be able to continue to obtain additional funds,
      which may impact our ability to continue as a going concern. The accompanying
      financial statements do not include any adjustments related to the
      recoverability and classification of assets or the amounts and classifications
      of liabilities that might be necessary should we be unable to continue
      operations as a going concern.





No
      commitments to provide additional funds have been made by management or other
      stockholders. Accordingly there can be no assurance that any additional funds
      will be available to the company to allow it to acquire and develop additional
      properties or cover its expenses as they may be incurred.





17


Should
      our cash assets prove to be inadequate to meet our operational needs, we might
      seek to compensate providers of services by issuances of stock in lieu of
      cash.





**NOTES
      PAYABLE** at
      December 31, 2006 are as follows:





12
                % Note payable to an individual, due July 1, 2008
            
            $
            365,0009.25%
                Note payable to a bank, due September 29, 2008secured
                by a truck, payable $1,000 quarterlyplus
                interest
            
            
            6,5687.9%
                Note payable to an equipment manufacturer,payable
                in monthly installment of $378 includinginterest
                through December 26, 2008
            
            
            9,0879.2%
                Note payable to an equipment manufacturer,payable
                in monthly installments of $257 includinginterest
                through April 6, 2008
            
            
            5,9868.0%
                Note payable to an equipment manufacturer,payable
                in monthly installments of $379 includinginterest
                through December 31, 2011
            
            $
            18,864$
            405,505




**Off-Balance
      Sheet Arrangements**





Our
      company has not entered into any transaction, agreement or other contractual
      arrangement with an entity unconsolidated with us under which we have





·
            an
                obligation under a guarantee
                contract,


·
            a
                retained or contingent interest in assets transferred to the
                unconsolidated entity or similar arrangement that serves as credit,
                liquidity or market risk support to such entity for such
                assets,


·
            any
                obligation, including a contingent obligation, under a contract that
                would
                be accounted for as a derivative instrument,
                or


*·*
            any
                obligation, including a contingent obligation, arising out of a variable
                interest in an unconsolidated entity that is held by us and material
                to us
                where such entity provides financing, liquidity, market risk or credit
                risk support to, or engages in leasing, hedging or research and
                development services with us.




18





**Payments
                Due by Period****Contractual**
              **Obligations**
            **Total**
            **Less
                Than**
              **1
                Year**
            **1-3
                Years**
            **3-5
                Years**
            **More
                Than**
              **5
                Years**Long-Term
                DebtObligations
            405,505
            13,842
            387,300
            4,363
            0Capital
                LeaseObligations
            0
            0
            0
            0
            0Operating
                Lease Obligations
            0
            0
            0
            0
            0Other
                Long-Term
              Liabilities
                Reflected on
              Our
                Balance Sheet
              Under
                GAAP
            0
            0
            0
            0
            0Total
            405,505
            13,842
            387,300
            4,363
            0








**Item
      7** **.**   **Financial
      Statements.**


**Page**Report
                of Independent Registered Public Accounting Firm
            20Balance
                Sheets at December 31, 2006 and 2005
            21Statements
                of Operations for the Years EndedDecember
                31, 2006 and 2005
            23Statement
                of Change in Stockholders’ Equity for the Years EndedDecember
                31, 2006 and 2005
            24Statements
                of Cash Flows for the Years EndedDecember
                31, 2006 and 2005
            25Notes
                to Financial Statements
            27






19


**Killman,
        Murrell** **&** **Company, P.C.**
 **Certified
        Public Accountants**
 
 **1931
                  E. 37****th****Street, Suite 7**
              **3300
                  N. A Street, Bldg. 4, Suite 200**
              **2626
                  Royal Circle****Odessa,
                  Texas 79762**
              **Midland,
                  Texas 79705**
              **Kingwood,
                  Texas 77339****(432)
                  363-0067**
              **(432)
                  686-9381**
              **(281)
                  359-7224****Fax
                  (432) 363-0376**
              **Fax
                  (432) 684-6722**
              **Fax
                  (281) 359-7112**
 
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 To
        the
        Board of Directors and Stockholders
 Consolidated
        Oil and Gas, Inc.
 Humble,
        Texas
 
 We
        have
        audited the accompanying balance sheets of Consolidated Oil and Gas, Inc.
        as of
        December 31, 2006 and 2005 and the related statements of operations,
        stockholders’ equity, and cash flows for the years then ended. These financial
        statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these financial statements based
        on
        our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. The company is not required
        to
        have, nor were we engaged to perform, an audit of its internal control over
        financial reporting. Our audit included consideration of internal control
        over
        financial reporting as a basis for designing audit procedures that are
        appropriate in the circumstances, but not for the purpose of expressing an
        opinion on the effectiveness of the company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, assessing the accounting principles used and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audits provide 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 Consolidated Oil and Gas, Inc.
        as
        of December 31, 2006 and 2005, and the results of its operations and its
        cash
        flows for the years then ended, in conformity with United States generally
        accepted accounting principles.
 
 The
        accompanying financial statements have been prepared assuming that Consolidated
        Oil and Gas, Inc. will continue as a going concern. As discussed in Note
        6 to
        the financial statements, Consolidated Oil and Gas, Inc. has suffered recurring
        losses from operations and its limited capital resources raise substantial
        doubt
        about its ability to continues as a going concern. Management’s plans in regard
        to these matters are described in Note 6. The financial statements do not
        include any adjustments that might result from the outcome of this
        uncertainty.
 
 */s/
        Killman, Murrell & Company, P.C.*
 
 KILLMAN,
        MURRELL & COMPANY, P.C.
 May
        18,
        2007
 Odessa,
        Texas


20




**BALANCE
        SHEETS**







December
                31,2005
            
            2006**ASSETS****CURRENT
                ASSETS**
            
            $
            159,328
            
            $
            16,946CashAccounts
                receivable -Oil
                and gas
            
            
            14,952
            
            
            10,639Joint
                interest billings
            
            
            9,382
            
            
            -Other
            
            
            5,000
            
            
            3,000Inventory,
                at cost
            
            
            28,346
            
            
            18,383Total
                Current Assets
            
            
            217,008
            
            
            48,968**PROPERTY
                AND EQUIPMENT**Oil
                and gas properties
            
            
            225,711
            
            
            98,132Equipment
            
            
            915,466
            
            
            1,379,964Furniture
                and fixtures
            
            
            22,160
            
            
            23,0601,163,337
            
            
            1,501,156Less
                accumulated depreciation
            
            
            (449,497
            )
            
            (592,818
            )Net
                Property and Equipment
            
            
            713,840
            
            
            908,338Total
                Assets
            
            $
            930,848
            
            $
            957,306






21




**CONSOLIDATED
        OIL & GAS, INC.**


**BALANCE
        SHEETS**
 **(CONTINUED)**
 **LIABILITIES
        AND STOCKHOLDERS' EQUITY**
  December
                  31,2005
              
              2006**CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              169,023
              
              $
              672,404Accrued
                  expenses
              
              
              35,005
              
              
              31,328Joint
                  interest billings
              
              
              -
              
              
              6,660Billings
                  in excess of costs and estimated earningson
                  uncompleted wells
              
              
              168,415
              
              
              99,613Deferred
                  revenue
              
              
              175,000
              
              
              25,000Current
                  portion of long-term debt
              
              
              116,231
              
              
              13,842Total
                  Current Liabilities
              
              
              663,674
              
              
              848,847**LONG-TERM
                  LIABILITIES**Shareholder
                  payable
              
              
              6,000
              
              
              6,000Long
                  -term debt, net of current maturities
              
              
              9,160
              
              
              391,663Commitments
                  and contingencies
              
              
              -
              
              
              -Total
                  Liabilities
              
              
              678,834
              
              
              1,246,510**STOCKHOLDERS'
                  EQUITY**Common
                  Stock, $.001 par value, 100,000,000 sharesauthorized,
                  30,215,638 and 32,592,957 shares issuedand
                  outstanding at December 31, 2005 and2006,
                  respectively
              
              
              30,216
              
              
              32,591Additional
                  paid-in capital
              
              
              1,003,481
              
              
              1,409,203Retained
                  (deficit)
              
              
              (781,683
              )
              
              (1,730,997
              )Total
                  Stockholders' Equity
              
              
              252,014
              
              
              (289,203
              )Total
                  Liabilities and Stockholders' Equity
              
              $
              930,848
              
              $
              957,307






22


**CONSOLIDATED
        OIL & GAS, INC.**
 **STATEMENTS
        OF OPERATIONS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 and 2006**
  2005
              
              2006**Revenues**Gas
                  and oil sales
              
              $
              33,890
              
              $
              21,467Contract
                  drilling revenue
              
              
              1,665,994
              
              
              1,896,427Other
                  income
              
              
              2,009
              
              
              -Total
                  Revenues
              
              
              1,701,893
              
              
              1,917,894**Costs
                  and Expenses**Lease
                  operating expenses
              
              
              32,211
              
              
              10,066Cost
                  of developing leases
              
              
              1,406,778
              
              
              1,925,991General
                  and administrative
              
              
              374,046
              
              
              427,338Exploration
                  and dry hole costs
              
              
              -
              
              
              358,800Interest
                  expense
              
              
              15,861
              
              
              145,013Total
                  Costs and Expenses
              
              
              1,828,896
              
              
              2,867,208Loss
                  Before Income Taxes
              
              
              (127,003
              )
              
              (949,314
              )**Provision
                  for Income Taxes**
              
              
              -
              
              
              -**Net
                  (Loss)**
              
              $
              (127,003
              )
              $
              (949,314
              )Basic
                  and Diluted Loss Per Share
              
              $
              (0.01
              )
              $
              (0.02
              )Weighted
                  Average Common Shares Outstanding
              
              
              29,898,000
              
              
              29,711,000






23




**CONSOLIDATED
        OIL & GAS, INC.**
  **STATEMENTS
        OF STOCKHOLDERS' EQUITY**
 **YEARS
        ENDED DECEMBER 31, 2005 AND 2006**
  Common
                  Stock
              
              AdditionalNumber
                  of
              
              
              
              Paid-In
              
              RetainedShares
              
              Amount
              
              Capital
              
              (Deficit)
              
              TotalBalance,
                  December 31, 2004
              
              
              49,506,000
              
              $
              49,506
              
              $
              789,891
              
              $
              (654,680
              )
              $
              184,717Stockholder
                  cashcontributions
              
              
              -
              
              
              -
              
              
              5,000
              
              
              -
              
              
              5,000Sale
                  of common stock
              
              
              355,138
              
              
              355
              
              
              92,345
              
              
              -
              
              
              92,700Common
                  stock issuedfor
                  services
              
              
              184,500
              
              
              185
              
              
              37,915
              
              
              -
              
              
              38,100Note
                  payavle convertedto
                  common stock
              
              
              20,000
              
              
              20
              
              
              14,980
              
              
              -
              
              
              15,000Common
                  stock issuedfor
                  oil and gas lease
              
              
              150,000
              
              
              150
              
              
              29,850
              
              
              -
              
              
              30,000Stock
                  options issued
              
              
              -
              
              
              -
              
              
              13,500
              
              
              -
              
              
              13,500Return
                  of shares bycontrolling
                  shareholder
              
              
              (20,000,000
              )
              
              (20,000
              )
              
              20,000
              
              
              -
              
              
              -Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (127,003
              )
              
              (127,003
              )Balance,
                  December 31, 2005
              
              
              30,215,638
              
              
              30,216
              
              
              1,003,481
              
              
              (781,683
              )
              
              252,014Stockholder
                  cashcontributions
              
              
              -
              
              
              -
              
              
              63,000
              
              
              -
              
              
              63,000Sale
                  of common stock
              
              
              2,224,547
              
              
              2,225
              
              
              308,300
              
              
              -
              
              
              310,525Common
                  stock issuedfor
                  services
              
              
              142,000
              
              
              142
              
              
              26,058
              
              
              -
              
              
              26,200Common
                  stock issuedfor
                  oil and gas lease
              
              
              3,572
              
              
              4
              
              
              3,568
              
              
              -
              
              
              3,572Common
                  stock issuedfor
                  equipment purchase
              
              
              7,200
              
              
              5
              
              
              4,795
              
              
              -
              
              
              4,800Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (949,314
              )
              
              (949,314
              )Balance,
                  December 31, 2006
              
              
              32,592,957
              
              $
              32,592
              
              $
              1,409,202
              
              $
              (1,730,997
              )
              $
              (289,203
              )




24


**CONSOLIDATED
        OIL & GAS, INC.**


**STATEMENTS
        OF CASH FLOWS**
  Years
                  EndedDecember
                  31,2005
              
              2006**Cash
                  Flows From Operating Activities**Net
                  (Loss)
              
              $
              (127,003
              )
              $
              (949,314
              )Adjustments
                  to reconcile net income lossto
                  net cash provided by operating activities:Depreciation
              
              
              84,682
              
              
              143,321Common
                  stock issued for services
              
              
              38,100
              
              
              26,200Common
                  stock issued for oil and gas leaseincluded
                  in cost of developing leases
              
              
              30,000
              
              
              3,572Stock
                  option for services
              
              
              13,500
              
              
              -Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (22,305
              )
              
              15,695Net
                  change in billings related to costs andestimated
                  earnings on uncompleted wells
              
              
              3,923
              
              
              (68,802
              )Inventory
              
              
              (28,346
              )
              
              9,963Other
                  assets
              
              
              500
              
              
              -Accounts
                  payable
              
              
              89,256
              
              
              503,381Accrued
                  liabilities
              
              
              9,040
              
              
              2,983Deferred
                  revenues
              
              
              130,250
              
              
              (150,000
              )Net
                  Cash Flows Provided by Operating Activities
              
              
              221,597
              
              
              (463,001
              )**Cash
                  Flows From Investing Activities**Purchase
                  of oil and gas productionequipment
                  and leases
              
              
              (74,183
              )
              
              (332,119
              )Purchase
                  of equipment, furniture and fixtures
              
              
              (235,873
              )
              
              (900
              )Net
                  Cash Used by Investing Activities
              
              
              (310,056
              )
              
              (333,019
              )**Cash
                  Flows From Financing Activities**Notes
                  payable
              
              
              100,000
              
              
              258,999Payments
                  on notes payable
              
              
              (17,678
              )
              
              21,114Payments
                  on shareholder liability
              
              
              (24,585
              )
              
              -Cash
                  contributions from shareholders
              
              
              5,000
              
              
              63,000Proceeds
                  from sale of common stock
              
              
              92,700
              
              
              310,525Net
                  Cash Provided by Financing Activities
              
              
              155,437
              
              
              653,638**Change
                  in Cash Balance**
              
              
              66,978
              
              
              (142,382
              )**Cash
                  at Beginning of Period**
              
              
              92,350
              
              
              159,328**Cash
                  at End of Period**
              
              $
              159,328
              
              $
              16,946






25




**CONSOLIDATED
        OIL & GAS, INC.**
 **STATEMENTS
        OF CASH FLOWS**
 **(CONTINUED)**
  Years
                  EndedDecember
                  31,2005
              
              2006**Supplemental
                  Disclosure of Cash Flow Information**Cash
                  paid during the period for:Interest
              
              $
              9,245
              
              $
              132,458Income
                  taxes
              
              $
              -
              
              $
              -**Non
                  Cash Investing and Financing Activities**Common
                  stock issued for services
              
              $
              38,100
              
              $
              26,200Common
                  stock issued for oil and gas lease
              
              $
              30,000
              
              $
              3,572Stock
                  option for common stock
              
              $
              13,500
              
              $
              -Common
                  Stock issued for equipment
              
              $
              28,069
              
              $
              4,800Note
                  payable payment made with common stock
              
              $
              15,000
              
              $
              -




26




**CONSOLIDATED
      OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      1: Company Organization and Summary of Significant Accounting
      Policies**





Organization





Consolidated
      Oil & Gas, Inc. (the “Company”) was incorporated under the laws of the State
      of Nevada on November 17, 1999 to promote and carry on any lawful business
      for
      which a corporation may be incorporated under the laws of the State of Nevada.
      On November 22, 1999, Sabinal Resources, Inc. (“Sabinal”) was incorporated under
      the laws of the State of Texas and became a wholly owned inactive subsidiary
      of
      the Company on May 1, 2003. Sabinal is the nominal owner of a seven mile
      pipeline but all operations of the pipeline were carried out by the
      Company.





The
      Company’s principal activity is exploration for oil and gas in the State of
      Texas. The company obtains undeveloped drilling rights or purchases wells that
      either previously were plugged and abandoned, shut-in or whose production has
      declined to or below a break-even point. Once the leases are secured, the
      Company sells up to one hundred per cent (100%) of the working interest in
      the
      wells to individual investors or other oil and gas enterprises. The Company
      owns
      a pipeline that will begin to deliver gas to purchasers in early
      2007.





The
      Company has a total of 100,000,000 ($.001 par value) common shares authorized
      with 30,215,638 and 32,592,957 common shares issued and outstanding as of
      December 31, 2005 and 2006 respectively.





Basis
      of Presentation





The
      financial statements and notes are representations of the Company’s management
      who are responsible for their integrity and objectivity. The Company’s
      accounting policies conform to accounting principles generally accepted in
      the
      United States of America and have been consistently applied in the preparation
      of these financial statements.





Cash
      and Cash Equivalents





The
      Company considers all highly liquid investments with maturities of three months
      or less on the date of purchase, to be cash equivalents.





Equipment,
      Furniture and Fixtures





Equipment,
      furniture and fixtures are state at cost. Maintenance and repairs are charged
      to
      expense as incurred. Expenditures, which extend the physical or economic life
      of
      the assets, are capitalized and depreciated. Depreciation is provided using
      the
      straight-line method over the estimated useful live of five to ten years. The
      depreciation expense for the years ended December 31, 2004 and 2005 were $71,503
      and $84,682 respectively.





Federal
      Income Tax





The
      Company has adopted the provisions of Financial Accounting Standards Board
      Statement No. 109, Accounting for Income Taxes. The Company accounts for income
      taxes pursuant to the provisions of the Financial Accounting Standards Board
      Statement No. 109, “Accounting for Income Taxes”, which requires an asset and
      liability approach to calculating deferred income taxes. The asset and liability
      approach requires the recognition of deferred tax liabilities and assets for
      the
      expected future tax consequences of temporary differences between the carrying
      amounts and the tax basis of assets and liabilities.





(Continued)
 27





**CONSOLIDATED
      OIL & GAS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**DECEMBER
      31, 2005 AND 2006**





**NOTE
      1: Company Organization and Summary of Significant Accounting Policies
      (Continued)**





Use
      of
      Estimates





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosures on
      contingent assets and liabilities at the date of the financial statements,
      and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.





Inventory





Inventory
      at December 31, 2005 included production pipe and a pump and at December 31,
      2006 a pump valued at historical cost, using the specific identification method
      of valuation.





Oil
      and Gas Properties





Oil
      and
      gas investments are accounted for by the successful efforts method of
      accounting. Accordingly, the costs incurred to acquire property (proved and
      unproved), all development costs, and successful exploratory costs are
      capitalized, whereas the costs of unsuccessful exploratory wells are expensed.
      In cases where the Company provides contract drilling services related to oil
      and gas properties in which it has an ownership interest, costs incurred are
      capitalized as stated above except to the extent such costs represent the
      Company’s share of the gross profit it earns for its contract drilling
      services.





Depletion
      of capitalized oil and gas well costs is provided using the units of production
      method based on estimated proved developed oil and gas reserves of the
      respective oil and gas properties.





The
      estimated costs of dismantlement and abandonment of depleted wells, net of
      estimated salvage values, is considered to be immaterial in amount and
      therefore, no accrual for such costs are included in these financial
      statements.





Oil
      and
      gas reserve information and other required disclosures related to oil and gas
      operations has been omitted, due to the limited revenues derived from such
      activity.





Revenue
      Recognition





The
      amounts collected from investors for projects is treated first as a recovery
      of
      the lease cost of unproved property and has no impact on the statements of
      operations.





The
      remaining amount collected from investors represents compensation for drilling
      commitments; therefore, the drilling commitment revenue is recognized using
      the
      percentage-of-completion method, measured by the percentage of total direct
      drilling costs incurred to date to estimated total direct drilling costs for
      each well. This method is used because management considers expended direct
      costs to be the best available measure of progress on the
      commitment.





Costs
      include all direct material, labor and sub-contract costs and those indirect
      costs related to performance, such as indirect labor, supplies, tools,
      depreciation and repair costs. General and administrative costs are charged
      to
      expense as incurred. Provisions for estimated losses on uncompleted wells are
      made in the period in which such losses are determined. Changes in job
      performance, job conditions and estimated profitability, may result in revisions
      to costs and income and are recognized in the period in which the revisions
      are
      determined.





The
      asset
“costs and estimated earnings in excess of billings on uncompleted contracts,”
represents revenues recognized in excess of amounts billed. The liability
“billings in excess of costs and estimated earnings on uncompleted contracts,”
represents billings in excess of revenues recognized.





(Continued)
 28


**CONSOLIDATED
      OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      1: Company Organization and Summary of Significant Accounting Policies** ( **Continued)**





Revenue
      Recognition of Sale of Leases (Continued)





Excess
      costs and billings are as follows:





Years
      Ended


Years
                  EndedDecember
                  31,2005
              
              2006Costs
                  Incurred on uncompleted wells
              
              $
              305,317
              
              $
              1,899,492Estimated
                  loss
              
              
              (31,282
              )
              
              (21,480
              )274,035
              
              
              1,878,012Less
                  Billings to date
              
              
              442,450
              
              
              1,977,625$
              (168,415
              )
              $
              (99,613
              )




The
      above
      amounts are included in the accompanying balance sheets as follows:





December
                  31,2005
              
              2006Costs
                  and estimated earnings in excess ofbillings
                  on uncompleted wells
              
              $
              _
              
              $
              −Billings
                  in excess of costs and estimatedearnings
                  on uncompleted wells
              
              
              (168,415
              )
              
              (99,613
              )$
              (168,415
              )
              $
              (99,613
              )


Deferred
      Revenues





The
      Company sells the leases and collects the funds prior to the start of the
      drilling. The collected funds are recorded as deferred revenues until such
      time
      as the drilling begins.





Comprehensive
      Income





Statement
      of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive
      Income,” establishes standards for reporting and display of comprehensive
      income, its components and accumulated balances. Comprehensive income is defined
      to include all changes in equity except those resulting from investments by
      owners and distributions to owners. Among other disclosures, SFAS No. 130
      requires that all items that are required to be recognized under current
      accounting standards as components of comprehensive income be reported in a
      financial statement that is displayed with the same prominence as other
      financial statements. The Company does not have comprehensive income items
      requiring disclosure of comprehensive income.





Impairment
      of Long-Lived Assets





In
      accordance with SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets,* long
      lived assets such as oil and gas properties and equipment are reviewed for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of an asset may not be recoverable. Recoverability of assets
      to
      be held and used





(Continued)
 29





**CONSOLIDATED
      OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      1: Company Organization and Summary of Significant Accounting Policies** ( **Continued)**





Impairment
      of Long-Lived Assets (Continued)





is
      measured by a comparison of the carrying amount of an asset to estimated
      undiscounted future cash flows expected to be generated by the asset. If the
      carrying amount of an asset exceeds its estimated future cash flows, an
      impairment charge is recognized by the amount by which the carrying amount
      of
      the asset exceeds the fair value of the asset. Assets to be disposed of would
      be
      separately presented in the balance sheet and reported at the lower of the
      carrying amount of the fair value less costs to sell, and are no longer
      depreciated. The assets and liabilities of a disposed group classified as held
      for sale would be presented separately in the appropriate asset and liability
      sections of the balance sheet.





Net
      Loss Per Share





Basic
      and
      diluted net loss per share information is presented under the requirements
      of
      SFAS No. 128, Earnings Per Share. Basic net loss per share is computed by
      dividing the net loss by the weighted average number of shares of common stock
      out standing for the year. Diluted net loss per share reflects the potential
      dilution of securities by adding other common stock equivalents, including
      stock
      options, shares subject to repurchase, warrants and convertible debentures,
      in
      the weighted-average number of common shares outstanding for a period, if
      dilutive. All potentially dilutive securities have been excluded from the
      computation, as their effect is anti-dilutive.





The
      weighted average number of common shares outstanding for 2005 was reduced by
      the
      20,000,000 shares of common stock returned to the Company in December 30,
      2005.





Contingencies





Certain
      conditions may exist as of the date the financial statements are issued, which
      may result in a loss to the Company but which will only be resolved when one
      of
      more future events occur or fail to occur. The Company’s management and its
      legal counsel assess such contingent liabilities, and such assessment inherently
      involves an exercise of judgment. In assessing loss contingencies related to
      legal proceedings that are pending against the Company or unasserted claims
      that
      may result in such proceedings, the Company’s legal counsel evaluates the
      perceived merits of any legal proceedings or unasserted claims as well as the
      perceived merits of t he amount of relief sought or expected to be sought
      therein.





If
      the
      assessment of a contingency indicates that it is probable that a material loss
      has been incurred and the amount of the liability can be estimated, the
      estimated liability would be accrued in the Company’s financial statements. If
      the assessment indicates that a potentially material loss contingency is not
      probable but is reasonably possible, or is probable but cannot be estimated,
      then the nature of the contingent liability, together with an estimate of the
      range of possible loss if determinable and material, would be
      disclosed.





Loss
      contingencies considered remote are generally not disclosed unless they involve
      guarantees, in which case the guarantees would be disclosed.





Commitments





The
      Company leases its corporate office space on a month to month basis, for $800
      per month.





Concentrations
      of Credit Risk and Fair Value of Financial Instruments





The
      Company maintains cash balances at financial institutions which at times, exceed
      federally insured amounts. The Company has not experienced any material losses
      in such accounts. Cash balances in excess of federally insured limits at
      December 31, 2005 and 2006 are $159,000 and $-0-, respectively.





(Continued)
 30


**CONSOLIDATED
      OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      1: Company Organization and Summary of Significant Accounting Policies** ( **Continued)**





Concentrations
      of Credit Risk and Fair Value of Financial Instruments
      (Continued)





The
      carrying amounts of cash and cash equivalents, current receivables, accounts
      payable and accrued liabilities approximate fair value due to the short-term
      nature of these instruments. The carrying amounts of the Company’s borrowings at
      December 31, 2005 and 2006, approximate their fair value.





Recent
      Accounting Pronouncements




In
      February 2007, the Financial Accounting Standards Boards (“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 provides
      companies with an option to report selected financial assets and liabilities
      at
      fair value. This statement is effective for fiscal years beginning after
      November 15, 2007 with early adoption permitted. The Company is currently
      assessing the impact of SFAS No. 159 on its consolidated financial position
      and
      results of operations.






In
      July
      2006, the FASB issued Interpretation No. 48 (FIN 48) “Accounting for Uncertainty
      in Income Taxes,” which prescribes a recognition threshold and measurement
      process for recording in the financial statements uncertain tax positions taken
      or expected to be taken in a tax return. Additionally, FIN 48 provides guidance
      on the derecognition, classification, accounting in interim periods and
      disclosure requirements for uncertain tax positions. The provisions of FIN
      48
      will be effective for the Company beginning January 1, 2007. The Company is
      in
      the process of determining the effect, if any, the adoption of FIN 48 will
      have
      on its financial statements.






In
      September 2006, the FASB issued SFAS No. 157 (SFAS 157) “Fair Value
      Measurements.” SFAS 157 establishes a framework for measuring fair value in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. The provisions of SFAS 157 will be effective for the Company
      beginning January 1, 2007. The Company is in the process of determining the
      effect, if any, the adoption of SFAS 157 will have on its financial
      statements.






In
      September 2006, the Securities and Exchange Commission issued SAB No. 108
“Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements.” SAB No. 108 addresses
      quantifying the financial statement effects of misstatements, specifically,
      how
      the effects of prior year uncorrected errors must be considered in quantifying
      misstatements in the current year financial statements. The provisions of SAB
      No. 108 are effective in the current fiscal year for the Company. The adoption
      of SAB No. 108 did not have a material impact on the Company’s financial
      statements.






In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
      statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles, and requires additional disclosures
      about fair value measurements. This statement does not require any new fair
      value measurements, but the application of this statement could change current
      practices in determining fair value. The Company plans to adopt this guidance
      effective January 1, 2008. The Company is currently assessing the impact of
      SFAS
      No. 157 on the Company’s consolidated financial position and results of
      operations.






In
      September 2006, the staff of the Securities and Exchange Commission (“SEC”)
      issued Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of
      Prior Year Misstatements when Quantifying Misstatements in Current Year
      Financial Statements.”. The interpretations in this SAB express the staff’s
      views regarding the process of quantifying financial statement misstatements.
      Specifically, the SEC staff believes that registrants must quantity the impact
      on current period financial statements of correcting all misstatements,
      including both those occurring in the current period and the





(Continued)
 31
 **CONSOLIDATED
        OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      1: Company Organization and Summary of Significant Accounting Policies** ( **Continued)**





Recent
      Accounting Pronouncements (continued)




effect
      of
      reversing those that have accumulated from prior periods. This SAB should be
      applied beginning with the first fiscal year ending after November 15, 2006,
      with early adoption encouraged. Since the Company’s method for quantifying
      financial statement misstatements already considers those occurring in the
      current period and the effect of reversing those that have accumulated from
      prior periods, the adoption of SAB No. 108 had no effect to the financial
      position or results of operations of the Company.




In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Instruments.” This statement provides an election, on an instrument by
      instrument basis, to measure at fair value an entire hybrid financial instrument
      that contains an embedded derivative requiring bifurcation, rather than
      measuring only the embedded derivative on a fair value basis. This statement
      also eliminates an exception from the requirement to bifurcate an embedded
      derivative feature from beneficial interests in securitized financial assets.
      The Company has used this exception for investments the Company has made in
      securitized financial assets in the normal course of operations, and thus has
      not previously had to consider whether such investments contain an embedded
      derivative. The new requirement to identify embedded derivatives in beneficial
      interests will be applied on a prospective basis only to beneficial interests
      acquired, issued, or subject to certain remeasurement conditions after the
      adoption of the guidance. The Company expects to adopt this guidance effective
      January 1, 2007. The Company’s adoption of this guidance is not expected to have
      a material effect on the Company’s consolidated financial position or results of
      operations.




In
      November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1, “The Meaning of
      Other-Than-Temporary Impairment and its Application to Certain Investments.”
This FSP provides impairment models for determining whether to record impairment
      losses associated with investments in certain equity and debt securities,
      primarily by referencing existing accounting guidance. It also requires income
      to be accrued on a level-yield basis following an impairment of debt securities,
      where reasonable estimates of the timing and amount of future cash flows can
      be
      made. The Company adopted this guidance effective January 1, 2006, and it did
      not have a material effect on the Company’s consolidated financial position or
      results of operations.




In
      June
      2005, the FASB issued Statement No. 133 Implementation Issue No. B39, “Embedded
      Derivatives: Application of Paragraph 13(b) to Call Options That are Exercisable
      Only by the Debtor.” Implementation Issue No. B39 indicates that debt
      instruments where the right to accelerate the settlement of debt can be
      exercised only by the debtor do not meet the criteria of Paragraph 13(b) of
      Statement No. 133, and therefore should not individually lead to such options
      being considered embedded derivatives. Such options must still be evaluated
      under paragraph 13(a) of Statement No. 133. This implementation guidance is
      effective for the first fiscal quarter beginning after December 15, 2005. The
      Company’s adoption of this guidance effective January 1, 2006 did not have a
      material effect on the Company’s consolidated financial position or results of
      operations as the guidance is consistent with the Company’s existing accounting
      policy.




In
      May
      2005, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 154
“Accounting Changes and Error Corrections” (“SFAS No. 154”), which replaces APB
      Opinion No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting Accounting
      Changes in Interim Financial Statements”, which requires that a voluntary change
      in accounting principle be applied retrospectively to all prior period financial
      statements presented, unless it is impractical to do so. SFAS No. 154 also
      provides that a change in method of depreciating or amortizing a long-lived
      non-financial asset be


(Continued)
 32
 **CONSOLIDATED
          OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      1: Company Organization and Summary of Significant Accounting Policies** ( **Continued)**





Recent
      Accounting Pronouncements (continued)





accounted
      for as a change in estimate effected by a change in accounting principle, and
      also provides that correction of errors in previously issued financial
      statements should be termed a “restatement”. SFAS No. 154 is effective for
      fiscal years beginning after December 14, 2005. We do not believe the adoption
      of SFAS No. 154 will have a material impact on our financial
      statement.





**NOTE
      2: RELATED PARTY TRANSACTIONS**





The
      following summarizes the shareholders payable as of December 31, 2005 and
      2006:





2005
            
            2006Balance
                beginning of year
            
            $
            30,585
            
            $
            6,000Advances
            
            
            -
            
            
            -Payments
            
            
            (24,585
            )
            
            -Balance
                end of year
            
            $
            6,000
            
            $
            6,000





The
      balance is unsecured debt of the Company.





**NOTE
      3: NOTES PAYABLE AND LONG-TERM DEBT**





Note
      payables are comprised of the following:


December
                31,2005
            
            2006Note
                payable to an individual with a stated interestamount
                of $12,000, interest and principal dueFebruary
                8, 2006, secured by equipment
            
            $
            100,000
            
            $
            -12
                % Note payable to an individual, due July 1, 2008
            
            
            -
            
            
            365,0009.25%
                Note payable to a bank, due September 29, 2008secured
                by a truck, payable $1,000 quarterlyplus
                interest
            
            
            12,568
            
            
            6,5687.9%
                Note payable to an equipment manufacturer,payable
                in monthly installment of $378 includinginterest
                through January 26,2005
            
            
            12,823
            
            
            9,0879.2%
                Note payable to an equipment manufacturer,payable
                in monthly installments of $257 includinginterest
                through April 6, 2008
            
            
            -
            
            
            5,9868.0%
                Note payable to an equipment manufacturer,payable
                in monthly installments of $379 includinginterest
                through December 31, 2011
            
            
            -
            
            
            18,864




(Continued)
 33





**CONSOLIDATED
      OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      3: NOTES PAYABLE AND LONG-TERM DEBT (Continued)**





December
                31,2005
            
            2006Total
            
            $
            125,391
            
            $
            405,505Less
                current portion
            
            
            (116,231
            )
            
            (13,842
            )Long-term
                debt
            
            $
            9,160
            
            $
            391,663





The
      following summarizes future note payments:




Years
                Ending
            
            Amount2007
            
            $
            $13,8422008
            
            
            378,5422009
            
            
            4,7292010
            
            
            4,0292011
            
            
            4,363$
            405,505





**NOTE
      4: INCOME TAXES**





The
      income tax benefit differs from the amount computed at the federal statutory
      rate of 34% as follows:





Year
                Ended December 31,2005
            
            2006Expected
                Tax Benefit of Loss From Operations
            
            $
            43,181
            
            $
            322,767Non-Deductible
                Expenses
            
            
            -Change
                in Valuation Allowance
            
            
            (43,181
            )
            $
            (322,767
            )$
            -
            
            $
            −


Temporary
      differences, which give rise to deferred tax assets and liabilities are as
      follows:





Year
                Ended December 31,2005
            
            2006Deferred
                Tax Liability:Depreciation
            
            $
            (29,743
            )
            $
            (44,159
            )Deferred
                Tax Assets:Net
                Operating Loss
            
            
            150,733
            
            
            487,916Expenses
            
            
            323
            
            
            323Valuation
                Allowance
            
            
            (121,313
            )
            
            (444,080
            )Net
                Deferred Tax Assets (Liabilities)
            
            $
            −
            
            $
            −







(Continued)
 34


**CONSOLIDATED
      OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      4: INCOME TAXES (Continued)**





The
      valuation allowance offsets the net deferred tax asset for which there is no
      assurance of recovery. The change in the valuation allowance for the years
      ended
      December 31, 2005 and 2006 totaled $43,181 and $322.767, respectively. The
      net
      operating loss carryforward begins to expire in year 2023. The valuation
      allowance will be evaluated at the end of each year, considering positive and
      negative evidence about whether the deferred tax asset will be realized. At
      that
      time, the allowance will either be increased or reduced; reduction could result
      in the complete elimination of the allowance if positive evidence indicates
      that
      the value of the deferred tax assets is no longer impaired and the allowance
      is
      no longer required.





**NOTE
      5: COMMON STOCK**





On
      June
      15, 2004, the Company and its shareholders approved a 2 for 1 forward split
      of
      the Company’s common stock. This split has been reflected in the accompanying
      financial statements as if it occurred on December 31, 2003.





The
      following summarizes common stock activity for the year ended December 31,
      2005:





§
            355,138
                shares of common stock were sold by the Company for $92,700 cash
                (sales
                prices ranged from $0.15 to $0.66 per
                shares)


§
            184,500
                shares of common stock were issued for services rendered valued at
                $38,100


§
            20,000
                shares of common stock were issued to an individual as payment for
                the
                remaining $15,000 due on a note
                payable


§
            150,000
                shares of common stock were issued to oil and gas lease owners for
                the Rod
                Lease and were valued at $30,000


§
            an
                individual agreed to purchase 150,000 shares of the Company’s common stock
                for $45,000 and was given a one year option, that the vested immediately,
                to purchase an additional 150,000 shares of the Company’s common stock at
                seventy percent (70%) of the fair market price of the shares on the
                date
                of exercise. The value of the option was determined to be $13,500
                and was
                recognized as an expense in the accompanying financial statements
                for the
                year ended December 31, 2005


§
            20,000
                shares of common stock owned by an existing shareholders was given
                to an
                individual for services rendered and was valued at
                $5,000





The
      Company’s common stock issued for services was valued at the most recent sales
      price of the common stock, as this was the more reliable measure of the fair
      value of the services.





At
      December 31, 2005, the Company has outstanding fully vested options to purchase
      150,000 shares of its common stock for a price of seventy percent (70%) of
      the
      fair market value on the date of exercise. This option will expire on September
      15, 2006.





On
      December 30, 2005, the controlling shareholder of the Company returned to the
      Company 20,000,000 shares of its common stock.





(Continued)
 35


**CONSOLIDATED
      OIL & GAS, INC.**





**NOTES
      TO FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2006**





**NOTE
      5: COMMON STOCK (Continued)**





The
      following summarizes common stock activity for the year ended December 31,
      2006:





§
            1,576,047
                shares of common stock were sold by the Company for $242,875 cash
                (sales
                prices ranged from $0.10 to $0.67 per
                shares)


§
            166,500
                shares of common stock were issued for services rendered valued at
                $31,450. The value of services received was based upon invoices received
                from the recipient regarding how many shares would be a fair exchange
                for
                the value of the services described in the invoices. Each recipient
                had
                his own view of the fair value of the Company’s common, which traded in a
                thin market.


§
            624,000
                shares of common stock were issued for payback to investors for a
                dry well
                valued at $62,400.


§
            7,200
                shares of common stock were issued for equipment purchased valued
                at
                $4,800


§
            3,572
                shares of common stock were issued for an oil and gas leased valued
                at
                $3,572 and expensed to the cost of developing that lease





The
      common shares issued in both years are restricted under Section
      144.





**NOTE
      6: GOING CONCERN**





The
      Company’s financial statements are prepared using generally accepted accounting
      principles applicable to a going concern, which contemplates the realization
      of
      assets and liquidation of liabilities in the normal course of business. The
      Company has not established revenues sufficient to cover its operating costs
      and
      has recognized cumulative losses of $1,730,997 from inception of the Company
      and
      these factors raise substantial doubt about its ability to continue as a going
      concern. The Company will continue with its effort to raise funds from
      individual investors.




36




**Item
      8** **.**   **Changes
      in and Disagreements with Accountants on** **Accounting
      and Financial Disclosure.**





During
      the two most recent fiscal years or any later interim period, our principal
      independent accountant has not resigned, declined to stand for reelection or
      been dismissed.





**Item
      8A** **.** **Controls
      and Procedures.**





**Evaluation
      of Disclosure controls and procedures.** The
      Company carried out an evaluation, under the supervision and with the
      participation of the Company’s management, including the Company’s Chief
      Executive Officer and Chief Financial Officer, of the effectiveness of the
      design and operation of the Company’s disclosure controls and procedures as of
      the end of the period covered by this report. Based upon that evaluation, the
      Chief Executive Officer and Chief Financial Officer concluded that the Company’s
      disclosure controls and procedures are effective and provide reasonable
      assurances that the information the Company is required to disclose in the
      reports it files or submits under the Securities Exchange Act of 1934 is
      recorded, processed, summarized and reported within the time period required
      by
      the Commission’s rules and forms. Further, the Company’s officers concluded that
      its disclosure controls and procedures are also effective to ensure that the
      information required to be disclosed in the reports that it files or submits
      under the Exchange Act is accumulated and communicated to its management,
      including its Chief Executive Officer and Chief Financial Officer, to allow
      timely decisions regarding required disclosure. There were no significant
      changes in the Company’s internal control over financial reporting during the
      period covered by this report that have materially affected, or are reasonably
      likely to materially affect our internal controls over financial
      reporting.





**Item
      8B** **.**  **Other
      Information.**





There
      is
      no information that was required to be disclosed on Form 8-K during the fourth
      quarter of 2006 that was not reported.





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





The
      directors and executive officers currently serving the company are as
      follows:





**Held**
            **Term****Person**
            **Office**
            **Since**
            **Expires**James
                Carl Yeatman, 59
            Director,
                CEO
            05-03
            6-07Douglas
                A. Newman, 59
            Director,
                CFO
            06-05
            6-07Carl
                Glenn, 54
            Director,
                VP
            03-05
            6-07Leslie
                P. Legrand, 63
            Director,
                Secretary
            05-03
            6-07





37


The
      directors named above will serve until the next annual meeting of the company’s
      stockholders. Thereafter, directors will be elected for one-year terms at the
      annual stockholder’s meeting. Officers will hold their positions at the pleasure
      of the board of directors, absent any employment agreement, of which none
      currently exists or is contemplated. There is no arrangement or understanding
      between the directors and officers of the company and any other person pursuant
      to which any director or officer was or is to be selected as a director or
      officer.





Mr.
      Yeatman, Mr. Newman and Mr. Glenn devote 100% of their time to the company.
      Mr.
      Legrand devotes time to the company’s affairs on an “as needed” basis, but less
      than 1-2 hours per month.





**Biographical
      Information** ****





**James
      C. Yeatman** **.** Mr.
      Yeatman has a BS decree in banking and finance from Mississippi State
      University. From 1974 to 1978 Mr. Yeatman developed a loan brokerage company
      and
      built houses in Mississippi and under the name Realty Services of Greater
      Jackson developed a residential subdivision in Jackson, Mississippi. From 1978
      to 1999, Mr. Yeatman was a consultant to small cap companies where projects
      he
      worked with included mining, wind energy, gaming and commercial developments.
      From 1999 to 2003 he was CEO of a company also named Consolidated Oil and Gas
      Co. that in 2003 was merged into the company now named Consolidated Oil and
      Gas,
      Inc. From 2003 to the present, Mr. Yeatman has been CEO, president and a
      director of the issuer. Mr. Yeatman is employed full time by our
      company.





**Douglas
      A. Newman** **.** Mr.
      Newman was in private practice as a CPA from 1974 through 1985. From 1985 until
      1989 he was CFO and a director for Wedding Information Network, Inc., which
      was
      a NASDAQ-listed company. From 1990 until 1997 Mr. Newman was CFO and a director
      of Hospital Rehabilitation Services, Inc., a provider of physical therapy
      services in Tennessee. From 1998 until 2002 Mr. Newman was CFO and a director
      of
      Lone Wolf Energy, Inc., a Bulletin Board-traded company. In 2002, after selling
      his interest in Lone Wolf, Mr. Newman worked as a business consultant, mostly
      to
      small SEC and oil industry related companies. By small companies, he worked
      with
      companies that had less than $10 million in annual sales. He became employed
      with our company in 2005 and devotes 100 percent of his time on the affairs
      of
      our company.





**Leslie
      P. LeGrand** **.** Mr.
      LeGrand is a graduate of the University of Texas Law School, Austin, Texas.
      He
      has been in private practice in Houston, Texas since 1984. Prior to this Mr.
      LeGrand served as General Counsel and Chief Operating Officer of Laketon Asphalt
      Refining. His knowledge of energy regulation, property acquisition, and
      environmental issues is an asset to Consolidated Oil & Gas, Inc. He is on
      call for consultation of legal matters of the company. In 2006 he devoted less
      than forty hours in this capacity.





**Carl
      Glenn** **.** Mr.
      Glenn worked as a roughneck for Mobil Oil Corporation in the Texas Gulf region
      from 1981 to 1990. From 1990 to 1994 he worked as a roughneck for Glenda
      Petroleum Company. A roughneck is a member of the drilling crew on an oil
      drilling rig. In 1994 he joined the Texas Railroad Commission Oil & Gas
      Division as a petroleum engineer where he was employed through 2004. Mr. Glenn
      joined our company in early 2005. He devotes 100 percent of his time on the
      affairs of our company.





38


**Family
      Relationships**





There
      are
      no family relationships among directors, executive officers, or persons
      nominated or chosen by the company to become directors or executive
      officers.





**Involvement
      in Certain Legal Proceedings**





No
      director, person nominated to become a director, executive officer, promoter
      or
      control persons of our company has been involved during the last five years
      in
      any of the following events that are material to an evaluation of his ability
      or
      integrity:





·
            Bankruptcy
                petitions 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.





·
            Conviction
                in a criminal proceeding or being subject to a pending criminal proceeding
                (excluding traffic violations and other minor
                offenses).





·
            Being
                subject to any order, judgment or decree, not subsequently reversed,
                suspended or vacated, of any court of competent jurisdiction, permanently
                or temporarily enjoining, barring or suspending or otherwise limiting
                his
                involvement in any type of business, securities or banking activities,
                or





·
            Being
                found by a court of competition jurisdiction (in a civil action),
                the
                Securities and Exchange Commission or the Commodities Futures Trading
                Commission to have violated a federal or state securities or commodities
                law, and the judgment has not been reversed, suspended or
                vacated.





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





Based
      solely upon a review of forms 3 and 4 furnished to the company under rule
      16a-3(e) of the Securities Exchange Act during its most recent fiscal year
      and
      Forms 5 furnished to the company with respect to its most recent fiscal year
      and
      any written representations received by the company from persons required to
      file such forms, the following persons - either officers, directors or
      beneficial owners of more than ten percent of any class of equity of the company
      registered pursuant to Section 12 of the Securities Exchange Act - failed to
      file on a timely basis reports required by Section 16(a) of the Securities
      Exchange Act during the most recent fiscal year or prior fiscal
      years.




39





No.
                of FailuresNo.
                of`
            
            No.
                of Transactions
            
            to
                File aLate
                Reports
            
            Not
                Timely Reported
            
            Required
                ReportJames
                Carl Yeatman
            
            
            0
            
            
            0
            
            
            0Douglas
                A Newman
            
            
            0
            
            
            0
            
            
            0Carl
                Glenn
            
            
            0
            
            
            0
            
            
            0Leslie
                P LeGrand
            
            
            0
            
            
            0
            
            
            0





**Board
      Meetings and Committees; Annual Meeting Attendance**





Our
      board
      of directors met 67 times during the last fiscal year. No director attended
      fewer than 75 percent of the meetings. We have no policy with regard to
      directors’ attendance at annual meetings of shareholders. We failed to hold our
      annual meeting of shareholders during 2006.





We
      have
      no nominating or compensation committees; the full board of directors performs
      all the functions such committees would perform if we were a larger company
      and
      had such committees. All directors believe it is appropriate not to have such
      committees, due to the small size of our company, the fact that we have only
      four directors, and the fact that it is difficult at our stage of creating
      a
      viable business to get any person willing to serve as a director.





We
      have
      no policy with regard to the consideration of any director candidate recommended
      by security holders. No such candidate has ever been recommended by a security
      holder.





We
      have
      an audit committee composed of one director, Doug Newman, who is our audit
      committee financial expert but is not independent, as independence for audit
      committee members is defined by Nasdaq.





The
      functions of a compensation committee are performed by the board of directors.
      Our president and CEO, James Yeatman, recommends the amount or form of executive
      and director compensation. To date, his recommendations have been accepted
      by
      the board of directors after discussion of the recommendations.





**Shareholder
      Communications**





We
      did
      not have a formal process for security holders to send communications to the
      directors. Our board feels this is appropriate, as the directors will consider
      any communications sent by security holders to the board of directors or to
      an
      individual directors.





**Code
      of Ethics**





We
      have
      adopted a Code of Ethics that applies to our chief executive officer, chief
      financial officer, and - should we acquire such - principal accounting officer
      or controller or persons performing similar functions and it is filed as Exhibit
      14 to this Form 10-KSB.





40


**Item
      10** **.**  **Executive
      Compensation.**





The
      following information concerns the compensation of the named executive officers
      for each of the last two completed fiscal years. There were no officers paid
      $100,000 or more in the last two fiscal years.





**Summary
      Compensation Table**





**Name
                and**
              **Principal**
              **Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock**
              **Awards**
              **($)**
            
            **Option**
              **Awards**
              **($)**
            
            **Nonequity**
              **Incentive
                plan**
              **Compensation
                ($)**
            
            **Nonqualified**
              **Deferred**
              **Compensation**
              **Earnings
                ($)**
            
            **All
                Other**
              **Compensation**
              **($)**
            
            **Total
                ($)**James
                Carl Yeatman
            
            
            2006
            
            
            42,600
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            42,600James
                Carl Yeatman
            
            
            2005
            
            
            22,200
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            22,200





**Outstanding
      Equity Awards at Fiscal Year-End**





As
      of the
      end of fiscal year 2006, there were no unexercised options, no stock that has
      not vested, and no equity incentive plan awards for any executive officer of
      the
      company.





**Director
      Compensation**





The
      directors of Consolidated Oil & Gas, Inc. and its subsidiaries did not
      receive any compensation in 2006 for their services as directors.





**Employments
      Contracts**





We
      have
      no employment contracts.





**Item
      11** **.**  **Security
      Ownership of Beneficial Owners and Management and Related Stockholder
      Matters.**





The
      following table shows information as of May 1, 2007 with respect to each
      beneficial owner of more than five percent of each class of voting stock of
      the
      company and to each of the officers and directors of the company individually
      and as a group:




41





Person
            
            Office
            
            Amount
                and Nature
              of
                Beneficial Owner
            
            Percent
              of
                SharesJames
                Carl Yeatman, 59
              316
                Main Street, Suite L
              Humble,
                TX 77338
            
            
            CEO,
                President, Director
            
            
            20,000,000
            
            
            60.9Douglas
                A. Newman, 59
              316
                Main Street, Suite L
              Humble,
                TX 77338
            
            
            CFO,
                Director
            
            
            0
            
            
            0Leslie
                P. LeGrand, 62
              316
                Main Street, Suite L
              Humble,
                TX 77338
            
            
            Secretary,
                Director
            
            
            0
            
            
            0Carl
                Glenn, 53
              316
                Main Street, Suite L
              Humble,
                TX 77338
            
            
            Vice
                President, Director
            
            
            0
            
            
            0Officers
                and directors as
              A
                group (5 persons)
            
            
            
            
            
            20,000.000
            
            
            60.9





**Changes
      in Control**





There
      are
      no arrangements that may result in a change in control of our
      company.





**Item
      12** **.**  **Certain
      Relationships and Related Transactions, and Director
      Independence.**





There
      have been no transactions during the last two years, or proposed transactions,
      to which we were or are to be a party in which any of the following persons
      had
      or is to have a direct or indirect material interest:





·
            any
                officer or director;





·
            any
                nominee for election as a director;





·
            any
                beneficial owner of more than five percent of our voting
                securities;





·
            any
                member of the immediate family of any of the above
                persons.





**Director
      Independence**





None
      of
      our directors is an independent director. We apply Nasdaq’s definition of
      independence.





**Item
      13** **.**  **Index
      to Exhibits.**





The
      following exhibits are filed as a part of this Form 10-KSB Annual
      Report:




42





**Exhibit
                No****.**
            
            **Description**3(i)
            
            Articles
                of Incorporation of Iowa Industrial Technologies, Inc. (new name
                Consolidated Oil & Gas, Inc.)*3(ii)
            
            Articles
                of Merger between Iowa Industrial Technologies, Inc. (the surviving
                entity) and Consolidated Oil & Gas, Inc. (the merging entity). These
                Articles change the name of the surviving company to Consolidated
                Oil
                & Gas, Inc.***3(iii)
            
            Bylaws
                of Iowa Industrial Technologies, Inc. (now named Consolidated Oil
&
                Gas, Inc.)**10
            
            Assignment
                of Oil, Gas and Mineral Leases and Bill of Sale from RCI Energy to
                Consolidated Oil & Gas, Inc. dated August 1, 2000.+10.1
            
            Representative
                Operating/Working Interest Owner Agreement++10.2
            
            Promissory
                Note and Bill of Sale dated November 9, 2005++14
            
            Code
                of Ethics for CEO and Senior Financial Officers16
            
            Letter
                of March 8, 2006 of Clyde Bailey PC agreeing with the statements
                made in
                this Form 10-SB by Consolidated Oil & Gas, Inc., concerning
                Consolidated’s change of principal independent
                accountants.***


*  Previously
      filed on June 25, 2001 as Exhibit 2.1 to Form 10-SB of Iowa Industrial
      Technologies, Inc. (new name Consolidated Oil & Gas, Inc.), EDGAR Accession
      Number 0001015402-01-501621; incorporated herein.





**  Previously
      filed on June 25, 2001 as Exhibit 2.2 to Form 10-SB of Iowa Industrial
      Technologies, Inc. (new name Consolidated Oil & Gas, Inc.), EDGAR Accession
      Number 0001015402-01-501621; incorporated herein.





***Previously
      filed on March 10, 2006, with Form 10-SB, Commission File No. 000-51667, EDGAR
      Accession Number 0001010549-06-000133; incorporated herein.





+  Previously
      filed on May 23, 2006, as Exhibit 10 to Form 10-QSB, Commission File No.
      000-51667, EDGAR Accession Number 0001010549-06-000344; incorporated
      herein.





++  Previously
      filed on June 21, 2006, with Amendment No. 3 to Form 10-SB, Commission File
      No.
      000-51667, EDGAR Accession Number 0001010549-06-000400; incorporated
      herein.





43


**Item
      14** **.**  **Principal
      Accountants Fees and Services.**





**Audit
      Fees.** Our
      principal independent accountant billed us, for each of the last two fiscal
      years, the following aggregate fees for its professional services rendered
      for
      the audit of our annual financial statements and review of financial statements
      included in our Form 10-QSB reports or other services normally provided in
      connection with statutory and regulatory filings or engagements for those two
      fiscal years:





Fiscal
                Year ended December 31, 2006
            
            $
            55,463Fiscal
                Year ended December 31, 2005
            
            $
            0





**Audit-Related
      Fees.** Our
      principal independent accountant billed us, for each of the last two fiscal
      years, the following aggregate fees for assurance and related services
      reasonably related to the performance of the audit or review of our financial
      statements and not reported above under “Audit Fees”:





Fiscal
                Year ended December 31, 2006
            
            $
            -0-Fiscal
                Year ended December 31, 2005
            
            $
            -0-





**Tax
      Fees.** Our
      principal independent accountant billed us, for each of the last two fiscal
      years, the following aggregate fees for professional services rendered for
      tax
      compliance, tax advice and tax planning.





Fiscal
                Year ended December 31, 2006
            
            $
            -0-Fiscal
                Year ended December 31, 2005
            
            $
            -0-





**All
      other fees.** Our
      principal independent accountants billed us, for each of the last two fiscal
      years, the following aggregate fees for products and services provided by it,
      other than the services reported in the above three categories:





Fiscal
                Year ended December 31, 2006
            
            $
            -0-Fiscal
                Year ended December 31, 2005
            
            $
            -0-





**SIGNATURES**





Pursuant
      to the requirements of Section 12 of the Securities Exchange Act of 1934, the
      registrant has duly caused this registration statement to be signed on its
      behalf by the undersigned, thereunto duly authorized.





CONSOLIDATED
                OIL & GAS, INC.By:
                */s/
                James C.
                Yeatman*James
                C. Yeatman, President and CEO





May
      18,
      2007





44


**CONSOLIDATED
      OIL & GAS, INC.**


Commission
      File No. **000-51667**





**EXHIBIT
      INDEX**





**FORM
      10-KSB**


**For
      the year ended December 31, 2006**





The
      following exhibits are filed, by incorporation by reference, as part of this
      Form 10-KSB-Annual Report:





**Exhibit
                No.**
            
            **Description**3(i)
            
            Articles
                of Incorporation of Iowa Industrial Technologies, Inc. (new name
                Consolidated Oil & Gas, Inc.)*3(ii)
            
            Articles
                of Merger between Iowa Industrial Technologies, Inc. (the surviving
                entity) and Consolidated Oil & Gas, Inc. (the merging entity). These
                Articles change the name of the surviving company to Consolidated
                Oil
                & Gas, Inc.***3(iii)
            
            Bylaws
                of Iowa Industrial Technologies, Inc. (now named Consolidated Oil
&
                Gas, Inc.)**10
            
            Assignment
                of Oil, Gas and Mineral Leases and Bill of Sale from RCI Energy to
                Consolidated Oil & Gas, Inc. dated August 1, 2000.+10.1
            
            Representative
                Operating/Working Interest Owner Agreement++10.2
            
            Promissory
                Note and Bill of Sale dated November 9, 2005++14
            
            Code
                of Ethics for CEO and Senior Financial Officers16
            
            Letter
                of March 8, 2006 of Clyde Bailey PC agreeing with the statements
                made in
                this Form 10-SB by Consolidated Oil & Gas, Inc., concerning
                Consolidated’s change of principal independent
                accountants.***


*  Previously
      filed on June 25, 2001 as Exhibit 2.1 to Form 10-SB of Iowa Industrial
      Technologies, Inc. (new name Consolidated Oil & Gas, Inc.), EDGAR Accession
      Number 0001015402-01-501621; incorporated herein.





**  Previously
      filed on June 25, 2001 as Exhibit 2.2 to Form 10-SB of Iowa Industrial
      Technologies, Inc. (new name Consolidated Oil & Gas, Inc.), EDGAR Accession
      Number 0001015402-01-501621; incorporated herein.





***Previously
      filed on March 10, 2006, with Form 10-SB, Commission File No. 000-51667, EDGAR
      Accession Number 0001010549-06-000133; incorporated herein.





+  Previously
      filed on May 23, 2006, as Exhibit 10 to Form 10-QSB, Commission File No.
      000-51667, EDGAR Accession Number 0001010549-06-000344; incorporated
      herein.





++  Previously
      filed on June 21, 2006, with Amendment No. 3 to Form 10-SB, Commission File
      No.
      000-51667, EDGAR Accession Number 0001010549-06-000400; incorporated
      herein.