UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C.20549





FORM
10-KSB





ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



FOR
FISCAL YEAR ENDED DECEMBER 31, 2007.



000-131224

Commission
File Number



DYNAMIC
NATURAL RESOURCES, INC.

(Name
of small business issuer in its charter)



|Nevada                                             | 20-4028175                           
|-------------------------------------------------- | -------------------------------------
|(State or other
				jurisdiction of incorporation) | (IRS Employer
				Identification No.)



78
South Street

Wrentham,
MA 02093

508
463 6290

(Address
and telephone number of principal executive offices)



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



Securities
registered under Section 12(g) of the Exchange Act: Common Stock, par
value $0.0001



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



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 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].



The
registrant's revenues for the year ended December 31, 2007 were
$2,013.



The
aggregate market value of the voting and nonvoting common equity held
by non-affiliates of the Registrant, computed by reference to the
closing sale price of such common equity as quoted on the Over the
Counter Electronic Bulletin Board of $0.06 per share as of December
31, 2006 was $785,695.00.



As of
February 15, 2008, the registrant had 25,790,477 shares of common
stock, par value $0.0001 per share, outstanding.

-1-



DYNAMIC
NATURAL RESOURCES, INC.

FORM
10-KSB REPORT INDEX



|                                                                                                                                                       | Page No.
|------------------------------------------------------------------------------------------------------------------------------------------------------ | --------
|Part
			I                                                                                                                                              |         
|Item
			1. Description of Business                                                                                                                     | 3       
|Item
			2. Description of Property                                                                                                                     | 12      
|Item
			3. Legal Proceedings                                                                                                                           | 12      
|Item
			4. Submission of Matters to a Vote of Securities Holders                                                                                       | 12      
|                                                                                                                                                       |         
|Part
			II.                                                                                                                                            |         
|Item
			5. Market for Common Equity and Related Stockholder Matters                                                                                    | 13      
|Item
			6. Management’s Discussion and Analysis of Financial
			Condition and Results of Operations                                                    | 13      
|Item
			7. Financial Statements                                                                                                                        | 17      
|Item
			8. Changes in and Disagreements with Accountants on Accounting and
			Financial Disclosures                                                    | 29      
|Item
			8A. Controls and Procedures                                                                                                                    | 29      
|                                                                                                                                                       |         
|Part
			III.                                                                                                                                           |         
|Item
			9. Directors, Executive Officers, Promoters, Control Persons and
			Corporate Governance; Compliance with Section 16(a) of the
			Exchange Act | 30      
|Item
			10.Executive Compensation                                                                                                                      | 32      
|Item
			11. Security Ownership of Certain Beneficial Owners and Management                                                                             | 33      
|Item
			12. Certain Relationships and Related Transactions, and Director
			Independence                                                               |         
|Item
			13. Exhibits                                                                                                                                   | 35      
|Item
			14. Principal Accountant Fees and Services                                                                                                     | 35      
|                                                                                                                                                       |         
|Signatures                                                                                                                                             | 36      
|Index
			to Exhibits                                                                                                                                   | 37      





-2-





PART I



Forward
Looking Statements. Certain of the statements included in this
annual report on Form 10-KSB, including those regarding future
financial performance or results or that are not historical facts,
are “forward-looking” statements as that term is defined
in Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as
amended. The words “expect,” “plan,”
“believe,” “anticipate,” “project,”
“estimate,” and similar expressions are intended to
identify forward-looking statement. .Dynamic Natural Resources, Inc.
(referred to herein, with its predecessors and subsidiaries, as
“Dynamic”, “we”, “us”, and “our”)
cautions readers that these statements are not guarantees of future
performance or events and such statements involve risks and
uncertainties that may cause actual results and outcomes to differ
materially from those indicated in forward-looking statements. Some
of the important factors, risks and uncertainties that could cause
actual results to vary from forward-looking statements include:



| | • | the level of utilization of our
			pipelines;                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | availability and cost of
			capital;                                                                                                                                                                   
| | • | actions or inactions of third
			party operators for properties where we have an interest;                                                                                                             
| | • | the risks associated with
			exploration;                                                                                                                                                              
| | • | the level of production from
			oil and gas properties that we have interests in;                                                                                                                      
| | • | gas and oil price volatility;                                                                                                                                                                          
| | • | uncertainties in the estimation
			of proved reserves, in the projection of future rates of
			production, the timing of development expenditures and the amount
			and timing of property abandonment;
| | • | regulatory developments; and                                                                                                                                                                           
| | • | general economic conditions.                                                                                                                                                                           



Additional
factors that could cause actual results to differ materially from
those indicated in the forward-looking statements are discussed under
the caption “Risk Factors”. Readers are cautioned not to
place undue reliance on these forward-looking statements which speak
only as of the date hereof. We undertake no duty to update these
forward-looking statements. Readers are urged to carefully review and
consider the various disclosures made by us which attempt to advise
interested parties of the additional factors which may affect our
business, including the disclosures made under the caption
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in this report.



Item 1.
Description of Business



The
Company



Dynamic
Natural Resources, Inc. was incorporated in the State of Nevada on
November 29, 2005. Formerly Value Consulting, Inc., the Company
changed its name to Dynamic Natural Resources in September, 2007.
Dynamic Natural Resources was created to pursue an interest in the
burgeoning oil and gas market.  Dynamic Natural Resources
Inc. is pursuing oil producing assets in the Illinois basin.



Our
principal executive office is located at 78 South Street Wrentham, Ma
02093, and our telephone number is 508 463 6290. We currently have
two employees, both officers of the Company, and work primarily
through independent contractors to operate and manage our lease
interests. Our common stock is traded on the OTCBB under the ticker
symbol “DYNI”. Our website address is
www.dynamicnaturalresources.com.



Certain
terms that are commonly used in the oil and gas industry, including
terms that define our rights and obligations with respect to our
properties, are defined in the “Glossary of Certain Oil and Gas
Terms” of this Form 10-KSB.



Company
Strategy



At the
present time, we do not plan to finance our oil and gas acquisitions
and drilling activities solely through our own resources.
Consequently, we identify prospects or production to acquire and
drill prospects, and seek other industry investors who are willing to
participate in these activities with us. We frequently retain a
promotional interest in these prospects, but generally we finance a
portion (and sometimes a significant portion) of the acquisition and
drilling costs.



-3-





Where we
acquire an interest in acreage on which exploration or development
drilling is planned, we will seldom assume the entire risk of
acquisition or drilling. Rather, we prefer to assess the relative
potential and risks of each prospect and determine the degree to
which we will participate in the exploration or development drilling.
Generally, we have determined that it is more beneficial to invite
industry participants to share the risk and the reward of the
prospect by financing some or all of the costs of drilling
contemplated wells. In such cases, we may retain a carried working
interest, a reversionary interest, or may be required to finance all
or a portion of our proportional interest in the prospect. Although
this approach reduces our potential return should the drilling
operations prove successful, it also reduces our risk and financial
commitment to a particular prospect.



Conversely,
we may from time to time participate in drilling prospects offered by
other persons if we believe that the potential benefit from the
drilling operations outweighs the risk and the cost of the proposed
operations. This approach allows us to diversify into a larger number
of prospects at a lower cost per prospect, but these operations are
generally more expensive than operations where we offer the
participation to others.



Dynamic
Natural Resources is identifying acquisition targets in the well
service arena that produce significant gross margin while expanding
our ability to develop and maintain our leaseholds.



Recent
Developments



In
October 2007 the Company entered in a Letter of Intent with a well
service company for the purchase of its assets.



In
November of 2007 the Company retained the investment banking firm
Wilshire Capital to procure financing for its growth



In
November of 2007 the company began negotiations with a second target
that has oil producing assets, drilling capabilities, well service,
and distribution components.  Our investment banking firm
has been advised to act on this matter.



Oil and
Gas Exploration and Production Activities



We began
focusing our efforts on the oil and gas market in 2006. Although we
have not produced significant revenues, we have begun to acquire
properties. We have continued to seek oil and gas exploration and
production activities, which include the exploration, acquisition,
development, operation and, when appropriate, disposition of oil and
gas properties.



The
leasehold interests we hold in properties are subject to royalty,
overriding royalty and interests of others. In the future, our
properties may become subject to burdens and encumbrances typical to
oil and gas operators, such as liens incident to operating agreements
and current taxes, development obligations under oil and gas leases
and other encumbrances.





-4-







The
following is a description of our oil and gas exploration and
production assets and activities:



The
Earhart Lease —In September of 2007 the company acquired a
97% working interest in an oil lease located in Illinois. The lease,
called the “Earhardt Lease” is situated on 80 acres of
land, located in Edwards County. There are currently 2 wells on the
lease. These wells will be put back online by reworking as necessary,
and installing pumping units on the existing wells. No production has
been generated by the lease to date.



The
White Lease —In July of 2007 the company acquired a 37%
working interest in an oil lease located in Illinois. The lease,
called the “White Lease” is situated on 40 acres of land,
located in Edwards County. There is currently 1 well on the lease.
This well was put back online by reworking the well as necessary, and
rehabbing the pumping unit. The well produced about 120 barrels of
oil when a subsequent problem shut the well down. In the near the
well will return to production.



The
Kelsey Pierce, School and Weber Leases —In August of 2007
the company acquired working interests in other oil leases located in
Illinois. The leases, called the “Kelsey Pierce Lease”,
“Weber Lease” and the “School Lease” are in
Edwards County. There are currently 7 wells on the leases. Three of
the wells have been put back online by reworking the wells as
necessary, and rehabbing the pumping units as needed.



The
Hinderlighter lease-  In December of 2007 the Company
acquired 100 percent working interest in the Hinderliter lease. This
lease has two wells located on it that were drilled in the early
1990’s. The lease consists of 80 acres located in Edwards
County, IL. The operator controls 1/8 carried interest, and the
landowner hold 3/16 carried interest.



Employees



We
currently have two employees, both officers of the Company, and work
primarily through independent contractors to operate and manage our
lease interests.



Customers



Once
producing, we will sell oil and gas to various customers at the
market price.



Our
current revenue stream is paid to us by our operator, therefore, we
currently have no customers exceeding 10% of revenues.



Competition



All
segments of our business are highly competitive. Vigorous competition
occurs among oil, gas and other energy sources, and between
producers, transporters, and distributors of oil and gas. Our oil and
natural gas business competes for the acquisition of oil and natural
gas properties with numerous entities, including major oil companies,
independent oil and natural gas concerns and individual producers and
operators, primarily on the basis of the price to be paid for such
properties. Many of these competitors are large, well-established
companies and have financial and other resources substantially
greater than ours, which give them an advantage over us in evaluating
and obtaining properties and prospects. Our ability to acquire
additional pipelines and oil and natural gas properties and to
discover reserves in the future will depend upon our ability to
evaluate and select suitable properties and consummate transactions
in a highly competitive environment. There is also competition for
the hiring of experienced personnel to manage and operate our assets.
Several highly competitive alternative transportation and delivery
options exist for current and potential customers of our traditional
gas and oil gathering and transportation business. Competition also
exists with other industries in supplying the energy and fuel needs
of consumers.

-5-

Markets

The
availability of a ready market for oil and natural gas, and the
prices of oil and natural gas, depend upon a number of factors, which
are beyond our control. These include, among other things:

| | • | the level of domestic production;                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | actions taken by foreign oil and
			gas producing nations;                                                                                                                                                                                           
| | • | the availability of pipelines with
			adequate capacity;                                                                                                                                                                                             
| | • | lightering, transshipment and
			other means of transportation;                                                                                                                                                                                      
| | • | the availability and marketing of
			other competitive fuels;                                                                                                                                                                                        
| | • | fluctuating and seasonal demand
			for oil, natural gas and refined products; and                                                                                                                                                                    
| | • | the extent of governmental
			regulation and taxation (under both present and future
			legislation) of the production, importation, refining,
			transportation, pricing, use and allocation of oil, gas, refined
			products and alternative fuels.

In view of
the many uncertainties affecting the supply and demand for crude oil,
natural gas and refined petroleum products, it is not possible to
predict accurately the prices or marketability of the oil and natural
gas produced for sale or prices chargeable for transportation and
storage services, which we provide. Our sale of natural gas is
generally made at the market prices at the time of sale. Therefore,
even though we sell natural gas to major purchasers, we believe other
purchasers would be willing to buy our natural gas at comparable
market prices.



Governmental
Regulation

The
production, processing, marketing, and transportation of oil and gas
by us are subject to federal, state and local regulations which can
have a significant impact upon our operations.

Our
activities with respect to exploration, development and production of
oil and natural gas and storage of oil and natural gas are subject to
stringent environmental regulation by local, state and federal
authorities, including the U.S. Environmental Protection Agency
(“EPA”). Such regulation has increased the cost of
planning, designing, drilling, operating and in some instances,
abandoning wells and related equipment. Similarly, such regulation
has also increased the cost of design, construction, and operation of
crude oil and natural gas pipelines and processing facilities.
Although we believe that compliance with existing environmental
regulations will not have a material adverse affect on operations or
earnings, there can be no assurance that significant costs and
liabilities, including civil and criminal penalties, will not be
incurred. Moreover, future developments, such as stricter
environmental laws and regulations or claims for personal injury or
property damage resulting from our operations, could result in
substantial costs and liabilities. It is not anticipated that, in
response to such regulation, we will be required in the near future
to expend amounts that are material relative to our total capital
structure.

The
Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”) imposes liability, without regard to fault or
the legality of the original conduct, on responsible parties with
respect to the release or threatened release of a “hazardous
substance” into the environment. Responsible parties, which
include the present owner or operator of a site where the release
occurred, the owner or operator of the site at the time of disposal
of the hazardous substance, and persons that disposed or arranged for
the disposal of a hazardous substance at the site, are liable for
response and remediation costs and for damages to natural resources.
Petroleum and natural gas are excluded from the definition of
“hazardous substances”; however, this exclusion does not
apply to all materials used in our operations. At this time, neither
we nor any of our predecessors have been designated as a potentially
responsible party under CERCLA.

The
federal Resource Conservation and Recovery Act (“RCRA”)
and its state counterparts regulate solid and hazardous wastes and
impose civil and criminal penalties for improper handling and
disposal of such wastes. EPA and various state agencies have
promulgated regulations that limit the disposal options for such
wastes. Certain wastes generated by our oil and gas operations are
currently exempt from regulation as “hazardous wastes,”
but in the future could be designated as “hazardous wastes”
under RCRA or other applicable statutes and therefore may become
subject to more rigorous and costly requirements.

We
currently own or lease, or have in the past owned or leased, various
properties used for the exploration and production of oil and gas or
used to store and maintain equipment regularly used in these
operations. Although our past operating and disposal practices at
these properties were standard for the industry at the time,
hydrocarbons or other substances may have been disposed of or
released on or under these properties or on or under other locations.
In addition, many of these properties have been operated by third
parties whose waste handling activities were not under our control.
These properties and any waste disposed of thereon may be subject to
CERCLA, RCRA, and state laws which could require us to remove or
remediate wastes and other contamination or to perform remedial
plugging operations to prevent future contamination.

-6-

In
addition, various federal, state and local laws and regulations
covering the discharge of materials into the environment,
occupational health and safety issues, or otherwise relating to the
protection of public health and the environment, may affect our
operations, expenses and costs. The trend in such regulation has been
to place more restrictions and limitations on activities that may
impact the general or work environment, such as emissions of
pollutants, generation and disposal of wastes, and use and handling
of chemical substances. It is not anticipated that, in response to
such regulation, we will be required in the near future to expend
amounts that are material relative to our total capital structure.
However, it is possible that the costs of compliance with
environmental and health and safety laws and regulations will
continue to increase. Given the frequent changes made to
environmental and health and safety regulations and laws, we are
unable to predict the ultimate cost of compliance.



Risk
Factors



We are
primarily dependent on revenues from our working interests in three
oil and gas producing properties.

We have
yet to produce revenues and currently hold an interest in three oil
and gas properties, which did not generate revenues in 2006.



The
geographic concentration of our assets may have a greater effect on
us as compared to other companies.

All of our
assets are located in the Illinois basin because our assets are not
as diversified geographically, as many of our competitors, our
business is subject to local conditions more than other, more
geographically diversified companies. Any regional event, including
price fluctuations, natural disasters and restrictive regulations
that increase costs may adversely impact our business more than if
our assets were geographically diversified.



If we
are not able to generate sufficient funds from our operations and
other financing sources, we may not be able to finance our
operations.

We have
historically needed substantial amounts of cash to fund our working
capital requirements. Low commodity prices, production problems,
declines in production, disappointing drilling results and other
factors beyond our control could reduce our funds from operations. As
a result we may have to seek debt and equity financing to meet our
working capital requirements. Furthermore, we have incurred losses in
the past that may affect our ability to obtain financing. In
addition, financing may not be available to us in the future on
acceptable terms or at all. In the event additional capital is not
available, we may be forced to sell some of our assets on unfavorable
terms or on an untimely basis.



We face
strong competition from larger companies that may negatively affect
our ability to carry on operations.

We operate
in a highly competitive industry. Our competitors include major
integrated oil companies, substantial independent energy companies,
affiliates of major interstate and intrastate pipelines and national
and local gas gatherers, many of which possess greater financial and
other resources than we do. Our ability to successfully compete in
the marketplace is affected by many factors including:

| | • |  | most of our competitors have
			greater financial resources than we do, which gives them better
			access to capital to acquire assets; and                                                                                                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • |  | we often establish a higher
			standard for the minimum projected rate of return on invested
			capital than some of our competitors since we cannot afford to
			absorb certain risks. We believe this puts us at a competitive
			disadvantage in acquiring oil and gas properties.

Oil and
gas prices are volatile and a substantial and extended decline in the
price of oil and gas would have a material adverse effect on us.

The
tightening of natural gas supply and demand fundamentals has resulted
in higher, but extremely volatile natural gas prices, and this
volatility in natural gas prices is expected to continue. Our
revenues, profitability, operating cash flow and our potential for
growth are largely dependent on prevailing oil and natural gas
prices. Prices for oil and natural gas are subject to large
fluctuations in response to relatively minor changes in the supply
and demand for oil and natural gas, uncertainties within the market
and a variety of other factors beyond our control. These factors
include:

| | • |  | weather conditions in the United
			States;                            
| | - |  | -----------------------------------------------------------------------
| | • |  | the condition of the United States
			economy;                         
| | • |  | the actions of the Organization of
			Petroleum Exporting Countries;   
| | • |  | governmental regulation;                                               
| | • |  | political stability in the Middle
			East, South America and elsewhere;
| | • |  | the foreign supply of oil and
			natural gas;                          
| | • |  | the price of foreign imports; and                                      
| | • |  | the availability of alternate fuel
			sources.                         

-7-

In
addition, low or declining oil and natural gas prices could have
collateral effects that could adversely affect us, including the
following:

| | • |  | reducing the exploration for and
			development of oil and gas reserves;               
| | - |  | ---------------------------------------------------------------------------------------
| | • |  | increasing our dependence on
			external sources of capital to meet our cash needs; and
| | • |  | generally impairing our ability to
			obtain needed capital.                           

Reserve
estimates depend on many assumptions that may prove to be inaccurate.
Any material inaccuracies in our reserve estimates or underlying
assumptions could cause the quantities and net present value of our
reserves to be overstated.

Estimating
reserves of oil and gas is complex. The process relies on
interpretations of available geologic, geophysical, engineering and
production data. The extent, quality and reliability of this data can
vary. The process also requires certain economic assumptions, some of
which are mandated by the SEC regarding oil and natural gas prices,
drilling and operating expenses, capital expenditures, taxes and
availability of funds. The accuracy of a reserve estimate is a
function of:

| | • |  | the quality and quantity of
			available data;               
| | - |  | -------------------------------------------------------------
| | • |  | the interpretation of that data;                             
| | • |  | the accuracy of various mandated
			economic assumptions; and
| | • |  | the judgment of the persons
			preparing the estimate.       

The proved
reserve information set forth in this report is based on estimates we
prepared. Estimates prepared by others might differ materially from
our estimates.

Actual
quantities of recoverable oil and gas reserves, future production,
oil and gas prices, taxes, development expenditures and operating
expenses most likely will vary from our estimates. Any significant
variance could materially affect the quantities and net present value
of our reserves. In addition, we may adjust estimates of proved
reserves to reflect production history, results of exploration and
development and prevailing oil and gas prices. Our reserves also may
be susceptible to drainage by operators on adjacent properties.

The
present value of future net cash flows will most likely not equate to
the current market value of our estimated proved oil and gas
reserves. In accordance with SEC requirements, we base the estimated
discounted future net cash flows from proved reserves on prices and
costs in effect at December 31. Actual future prices and costs
may be materially higher or lower than the prices and costs we used.



We
cannot control the activities on properties we do not operate.

Currently,
other companies operate or control the development of the oil and gas
properties in which we have an interest. As a result, we depend on
the operator of the wells or leases to properly conduct lease
acquisition, drilling, completion and production operations. The
failure of an operator, or the drilling contractors and other service
providers selected by the operator to properly perform services, or
an operator’s failure to act in ways that are in our best
interest, could adversely affect us, including the amount and timing
of revenues, if any, we receive from our interests.

We may
own substantially less than a 50% working interest in our
prospects and will therefore engage in joint operations with other
working interest owners. Since we own or control less than a majority
of the working interest in a prospect, decisions affecting the
prospect could be made by the owners of a majority of the working
interest. For instance, if we are unwilling or unable to participate
in the costs of operations approved by a majority of the working
interests in a well, our working interest in the well (and possibly
other wells on the prospect) will likely be subject to contractual
“non-consent penalties.” These penalties may include, for
example, full or partial forfeiture of our interest in the well or a
relinquishment of our interest in production from the well in favor
of the participating working interest owners until the participating
working interest owners have recovered a multiple of the costs which
would have been borne by us if we had elected to participate, which
often ranges from 400% to 600% of such costs.



We have
pursued, and intend to continue to pursue, acquisitions. Our business
may be adversely affected if we cannot effectively integrate acquired
operations.

One of our
business strategies has been to acquire operations and assets that
are complementary to our existing businesses. Acquiring operations
and assets involves financial, operational and legal risks. These
risks include:

| | • |  | inadvertently becoming subject to
			liabilities of the acquired company that were unknown to us at the
			time of the acquisition, such as later asserted litigation matters
			or tax liabilities;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • |  | the difficulty of assimilating
			operations, systems and personnel of the acquired businesses; and                                                                                                 
| | • |  | maintaining uniform standards,
			controls, procedures and policies.                                                                                                                                



-8-

Competition
from other potential buyers could cause us to pay a higher price than
we otherwise might have to pay and reduce our acquisition
opportunities. We are often out-bid by larger, better capitalized
companies for acquisition opportunities we pursue. Moreover, our past
success in making acquisitions and in integrating acquired businesses
does not necessarily mean we will be successful in making
acquisitions and integrating businesses in the future.



Operating
hazards, including those peculiar to the marine environment, may
adversely affect our ability to conduct business.



Our
operations are subject to inherent risks normally associated with
those operations, such as:



| | • |  | pipeline ruptures;                                                                                           
| | - |  | -------------------------------------------------------------------------------------------------------------
| | • |  | sudden violent expulsions of oil,
			gas and mud while drilling a well, commonly referred to as a
			blowout;
| | • |  | a cave in and collapse of the
			earth’s structure surrounding a well, commonly referred to
			as cratering; 
| | • |  | explosions;                                                                                                  
| | • |  | fires;                                                                                                       
| | • |  | pollution; and                                                                                               
| | • |  | Other environmental risks.                                                                                   



If any of
these events were to occur, we could suffer substantial losses from
injury and loss of life, damage to and destruction of property and
equipment, pollution and other environmental damage and suspension of
operations. Our offshore operations are also subject to a variety of
operating risks peculiar to the marine environment, such as
hurricanes or other adverse weather conditions and more extensive
governmental regulation. These regulations may, in certain
circumstances, impose strict liability for pollution damage or result
in the interruption or termination of operations.



Compliance
with environmental and other government regulations could be costly
and could negatively impact our operations.



Our
operations are subject to numerous laws and regulations governing the
discharge of materials into the environment or otherwise relating to
environmental protection. These laws and regulations may:



| | • |  | require the acquisition of a
			permit before operations can be commenced;                                                                                     
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • |  | restrict the types, quantities and
			concentration of various substances that can be released into the
			environment from drilling and production activities;
| | • |  | limit or prohibit drilling and
			pipeline activities on certain lands lying within wilderness,
			wetlands and other protected areas;                         
| | • |  | require remedial measures to
			mitigate pollution from former operations, such as plugging
			abandoned wells and abandoning pipelines; and                   
| | • |  | impose substantial liabilities for
			pollution resulting from our operations.                                                                                 



The recent
trend toward stricter standards in environmental legislation and
regulation is likely to continue. The enactment of stricter
legislation or the adoption of stricter regulations could have a
significant impact on our operating costs, as well as on the oil and
gas industry in general.



Our
operations could result in liability for personal injuries, property
damage, oil spills, discharge of hazardous materials, remediation and
clean-up costs and other environmental damages. We could also be
liable for environmental damages caused by previous property owners.
As a result, substantial liabilities to third parties or governmental
entities may be incurred which could have a material adverse effect
on our financial condition and results of operations. We maintain
insurance coverage for our operations, including limited coverage for
sudden and accidental environmental damages, but we do not believe
that insurance coverage for all environmental damages that occur over
time or complete coverage for sudden and accidental environmental
damages is available at a reasonable cost. Accordingly, we may be
subject to liability or may lose the privilege to continue to operate
on substantial portions of our properties if certain environmental
damages occur.



The OPA
imposes a variety of regulations on “responsible parties”
related to the prevention of oil spills. The implementation of new,
or the modification of existing, environmental laws or regulations,
including regulations promulgated pursuant to the OPA, could have a
material adverse impact on us.



We Lost
Money in 2007



We have
incurred net losses from operations in 2007. Our net loss for the
fiscal year ended December 31, 2007 was $554,527 and as of December
31, 2007 we had an accumulated deficit of $608,751. While we expect
to become profitable in 2008, we can not guarantee profitability. We
expect our operating expenses to continue to increase as we attempt
to build our brand, expand our customer base and make acquisitions.
While we expect to be profitable in 2008, to become profitable, we
must increase revenue substantially and achieve and maintain positive
gross margins. We may not be able to increase revenue and gross
margins sufficiently to achieve profitability.

-9-



We
Require Additional Capital to Fund Our Current Operations and to Make
Acquisitions. We May Have to Curtail Our Business if we Cannot Find
Adequate Funding



The
expansion and development of our business will require significant
additional capital, which we may be unable to obtain on suitable
terms, or at all. We currently have no legally binding commitments
with any third parties to obtain any material amount of additional
equity or debt financing. If we are unable to obtain adequate funding
on suitable terms, or at all, we may have to delay, reduce or
eliminate some or all of our advertising, marketing, acquisition
activity, general operations or any other initiatives.



Our
Principal Stockholders, Officers and Directors Own a Controlling
Interest in Our Voting Stock and Investors Will Not Have Voice in Our
Management



Our
officers, directors and stockholders with greater than 5% holdings
will, in the aggregate, beneficially own approximately 52% of our
outstanding common stock. As a result, these stockholders, acting
together, will have the ability to control substantially all matters
submitted to our stockholders for approval, including:

| | • |  | election of our board of
			directors;                                                                                                             
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | • |  | removal of any of our directors;                                                                                                                   
| | • |  | amendment of our certificate of
			incorporation or bylaws; and                                                                                    
| | • |  | adoption of measures that could
			delay or prevent a change in control or impede a merger, takeover
			or other business combination involving us.

As a
result of their ownership and positions, our directors and executive
officers collectively are able to influence all matters requiring
stockholder approval, including the election of directors and
approval of significant corporate transactions. In addition, sales of
significant amounts of shares held by our directors and executive
officers, or the prospect of these sales, could adversely affect the
market price of our common stock. Management's stock ownership may
discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of us, which in turn could
reduce our stock price or prevent our stockholders from realizing a
premium over our stock price.



The
Application of the “Penny Stock Regulation” Could Harm
the Market Price of Our Common Stock

Our
securities may be deemed a penny stock. Penny stocks generally are
equity securities with a price of less than $5.00 per share other
than securities registered on certain national securities exchanges
or quoted on the NASDAQ Stock Market, provided that current price and
volume information with respect to transactions in such securities is
provided by the exchange or system. Our securities may be subject to
"penny stock rules" that impose additional sales practice
requirements on broker−dealers who sell such securities to
persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouse). For
transactions covered by these rules, the broker−dealer must
make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure
schedule prescribed by the Commission relating to the penny stock
market. The broker−dealer also must disclose the commissions
payable to both the broker−dealer and the registered
representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information
on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker−dealers to
sell our securities and may have the effect of reducing the level of
trading activity and price of our common stock in the secondary
market.



Because
we do not intend to pay any cash dividends on our common stock, our
Shareholders will not be able to receive a return on their
shares unless they sell them.

We intend
to retain any future earnings to finance the development and
expansion of our business. We do not anticipate paying any cash
dividends on our Common Stock in the foreseeable future. Unless we
pay dividends, our Shareholders will not be able to receive a return
on their shares unless they sell them. There is no assurance that
Shareholders will be able to sell shares when desired or that when
they chose to do so, that they will receive a return on their
investment in the Common Stock.

-10-





As a
public company, our administrative costs will be significantly higher
than they are now, which will make it more difficult for us to be
profitable and cash flow positive. Difficulties in complying with the
Sarbanes-Oxley Act and other legal and accounting requirements
applicable to public companies could affect our market value.



As a
public company, we incur significant legal, accounting and other
expenses that we did not incur as a private company. In addition, the
Sarbanes-Oxley Act of 2002, as well as new rules subsequently
implemented by the Commission, have imposed various new requirements
on public companies, including requiring changes in corporate
governance practices. Our management and other personnel will need to
devote a substantial amount of time to these compliance requirements.
Moreover, these rules and regulations will increase our legal and
financial compliance costs and will make some activities more
time-consuming and costly. Expenses as a result of our being a public
company include additional amounts for legal and accounting services,
transfer agent fees, additional insurance costs, printing and filing
fees and fees for investor and public relations.



We may,
in the future, issue additional common shares, which would reduce
investors' percent of ownership and may dilute our share value.



Our
corporate charter authorizes the issuance of 100,000,000 shares of
Common Stock. The future issuance of Common Stock may result in
substantial dilution in the percentage of our Common Stock held by
our then existing shareholders. We may value any Common Stock issued
in the future on an arbitrary basis. The issuance of Common Stock for
future services or acquisitions or other corporate actions may have
the effect of diluting the value of the shares held by our investors,
and might have an adverse effect on any trading market for our Common
Stock.



Glossary
of Certain Oil and Gas Terms



The
following are abbreviations and definitions of certain terms commonly
used in the oil and gas industry.

Back-in
After Payout Interest.A contractual right of a non-participating
partner to participate in a well or wells after the wells have
produced enough for the participating partners to recover their
capital costs of drilling, completing, and operating the wells.

Bbl.One stock tank barrel, or 42 U.S. gallons liquid volume, used in
reference to oil or other liquid hydrocarbons.

Bcf.One billion cubic feet of gas.

Btu or
British Thermal Unit.The quantity of heat required to raise the
temperature of one pound of water by one degree Fahrenheit.

Condensate.Liquid hydrocarbons associated with the production of a primarily
gas reserve.

Development
Well.A well drilled within the proved area of a gas or oil
reservoir to the depth of a stratigraphic horizon known to be
productive.

Exploratory
Well.A well drilled to find and produce gas or oil in an
unproved area, to find a new reservoir in a field previously found to
be productive of gas or oil in another reservoir or to extend a known
reservoir.

Field.An area consisting of a single reservoir or multiple reservoirs
all grouped on or related to the same individual geological
structural feature and/or stratigraphic condition.

Leasehold
Interest.The interest of a lessee under an oil and gas lease.

Mbbls.One thousand barrels of oil or other liquid hydrocarbons.

Mcf.One thousand cubic feet of gas.

Mcfe.One thousand cubic feet equivalent, determined using the ratio of
six Mcf of gas to one barrel of oil, condensate or gas liquids.

MMbtu.One million British Thermal Units.

MMcf.One million cubic feet of gas.

MMcfe.One million cubic feet equivalent, determined using the ratio of
six Mcf of gas to one Bbl of oil, condensate or gas liquids.

Net
Revenue Interest.The percentage of production to which the owner
of a working interest is entitled.

-11-





Nonoperating
Working Interest.A working interest, or a fraction of a working
interest, in a lease where the owner is not the operator of the
lease.

Overriding
Royalty.An interest in oil and gas produced at the surface, free
of the expense of production that is in addition to the usual royalty
interest reserved to the lessor in an oil and gas lease.

Prospect.A specific geographic area which, based on supporting geological,
geophysical or other data and also preliminary economic analysis
using reasonably anticipated prices and costs, is deemed to have
potential for the discovery of oil, gas or both.

Proved
Developed Reserves.Reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.
Proved developed reserves are further categorized into two
sub-categories, proved developed producing reserves and proved
developed non-producing reserves.

Proved
Developed Producing.Reserves sub-categorized as producing are
expected to be recovered from completion intervals which are open and
producing at the time of the estimate.

Proved
Developed Non-producing.Reserves sub-categorized as
non-producing include shut-in and behind pipe reserves. Shut-in
reserves are expected to be recovered from (1) completion
intervals which are open at the time of the estimate but which have
not started producing, (2) wells which were shut-in awaiting
pipeline connections or as a result of a market interruption, or
(3) wells not capable of producing for mechanical reasons.

Proved
Reserves.The estimated quantities of oil, gas and condensate
that geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions.

Proved
Undeveloped Reserves.Reserves that are expected to be recovered
from new wells or from existing wells where a relatively major
expenditure is required for recompletion.

Reversionary
Interest.A form of ownership interest in property that reverts
back to the transferor after expiration of an intervening income
interest or the occurrence of another triggering event.

Royalty
Interest.An interest in a gas and oil property entitling the
owner to a share of gas and oil production free of costs of
production.

Undivided
Interest.A form of ownership interest in which more than one
person concurrently owns an interest in the same oil and gas lease or
pipeline.

Working
interest.The operating interest that gives the owner the right
to drill, produce and conduct operating activities on the property
and receive a share of production.



Item 2.
Description of Property

Information
appearing in Item 1 describing our oil and gas properties,
pipelines and other assets under the caption “Description of
Business” is incorporated herein by reference.

Our
executive office is located in Howell, Michigan. We currently have no
operating for this facility.



Item 3.
Legal Proceedings

We are a
party to litigation that is incidental to our business and neither we
nor any of our property is subject to any material pending legal
proceedings.



Item
4. Submission of Matters to a Vote of Securities Holders

None



-12-





PART II



Item 5.
Market for Common Equity and Related Stockholder MattersMarket Price
for Common Stock

Our common
stock is quoted on the OTCBB under the ticker symbol “SOGN”.
As of April 1, 2007, there were an estimated 200 stockholders of
record our common stock. OTCBB quotations reflect inter-dealer
prices, without adjustment for retail mark-ups, markdowns or
commissions and may not represent actual transactions. The following
table sets forth, for the periods indicated, the high and low closing
bid price for our common stock as reported by the OTCBB.



|Quarter Ended      |  | High |      |  | Low |  
|------------------ |  | ---- | ---- |  | --- | -
|December 31, 2007  |  | $    | 0.06 |  |     | $
|September 28, 2007 |  | $    | 0.13 |  |     | $
|June 30, 2007      |  | $    | 0.17 |  |     | $
|March 30, 2007*    |  | $    | 0.20 |  |     | $



Dividend
Policy



We have
not declared or paid any dividends on our common stock since our
incorporation. We currently intend to retain earnings for our capital
needs and expansion of our business and do not anticipate paying cash
dividends on the common stock in the foreseeable future. We expect
that any loan agreements we enter into in the future will likely
contain restrictions on the payment of dividends on our common stock.
Future policy with respect to dividends will be determined by our
Board of Directors based upon our earnings and financial condition,
capital requirements and other considerations.



Recent
Sales of Unregistered Securities



We had no
sales of unregistered securities.

In April,
2006, we completed a registered public placement with certain
accredited investors of 6,130,000 shares of our common stock. The net
proceeds from the offering after the payment of commissions and
expenses were approximately $610,000.



Purchases
of Equity Securities



We made no
purchases of our common stock. During 2006, certain officers and
shareholders did retire 71,400,000 shares of our common stock.



Equity
Compensation Plan Information



We
currently have no Stock Incentive Plan.



Item 6.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations



The
following is a review of certain aspects of our financial condition
and results of operations and should be read in conjunction with the
Notes to Consolidated Financial Statements in Item 7 and
Description of Business in Item 1.

Smarts Oil
and Gas, Inc. was incorporated in the State of Nevada on November 29,
2005. Formerly Value Consulting, Inc., the Company changed its name
to Smart Oil and Gas in August, 2006., and Dynamic Natural Resouces
in September of 2007. Dynamic Natural Resources was created to pursue
an interest in the burgeoning oil and gas market.  Dynamic
Natural Resources has also acquired leases in the Illinois basin and
continues to pursue any opportunity to acquire other attractive oil
and gas areas that can add value to the Company and its shareholders.
The company will focus on properties with proven oil reserves and
high potential for large profit margins.

At the
present time, we do not plan to finance our oil and gas acquisitions
and drilling activities solely through our own resources.
Consequently, we identify prospects or production to acquire and
drill prospects, and seek other industry investors who are willing to
participate in these activities with us. We frequently retain a
promotional interest in these prospects, but generally we finance a
portion (and sometimes a significant portion) of the acquisition and
drilling costs.

-13-





Where we
acquire an interest in acreage on which exploration or development
drilling is planned, we will seldom assume the entire risk of
acquisition or drilling. Rather, we prefer to assess the relative
potential and risks of each prospect and determine the degree to
which we will participate in the exploration or development drilling.
Generally, we have determined that it is more beneficial to invite
industry participants to share the risk and the reward of the
prospect by financing some or all of the costs of drilling
contemplated wells. In such cases, we may retain a carried working
interest, a reversionary interest, or may be required to finance all
or a portion of our proportional interest in the prospect. Although
this approach reduces our potential return should the drilling
operations prove successful, it also reduces our risk and financial
commitment to a particular prospect.



Conversly,
we may from time to time participate in drilling prospects offered by
other persons if we believe that the potential benefit from the
drilling operations outweighs the risk and the cost of the proposed
operations. This approach allows us to diversify into a larger number
of prospects at a lower cost per prospect, but these operations are
generally more expensive than operations where we offer the
participation to others.



Recent
Developments



In October
of  2007  Dynamic announced the signing of a letter of
intent to purchase the assets of a well service company in Illinois.



In
December of 2007 Dynamic retained Wilshire Capital Group, Inc. of
Dallas to help assist the company with its investment banking needs.
Wilshire Capital Group will assist Dynamic in raising funds to build
a dominant Well Services Division & Production Division.  In
December of 2007 the companies lease rights expired on the Oather
Strader lease in Kentucky, this was in keeping with the  strategic
review that was ongoing at the time.



In January
of 2007 Dynamic completed a strategic review that resulted in the
affirmation of our focus in the Illinois basin, Mr. Bruce Scambler
was elected President of the company, and Floyd Keefer was
appointed  VP of Field Operations



Oil and
Gas Exploration and Production Activities:



We began
focusing our efforts on the oil and gas market in 2006. We have
continued to seek oil and gas exploration and production activities,
which include the exploration, acquisition, development, operation
and, when appropriate, disposition of oil and gas properties.

The
leasehold interests we hold in properties are subject to royalty,
overriding royalty and interests of others. In the future, our
properties may become subject to burdens and encumbrances typical to
oil and gas operators, such as liens incident to operating agreements
and current taxes, development obligations under oil and gas leases
and other encumbrances.

-14-





Liquidity
and Capital Resources



We ended
2007 with working capital of approximately $8,998. At the end of
2006, our working capital was approximately $63,680. The decrease in
working capital from year-end 2006 was primarily the result of our
use of capital for targeting and acquiring acquisitions.



Results
of Operations 2007 to 2006



For the
year ended December 31, 2007, we reported net loss of $554,527,
compared to net loss of $36,724 for the year ended December 31,
2006. We were incorporated in December 2005 and have yet to generate
significant revenue.

Our
operating expenses increased from $38,503 in 2006 to $96,030 in 2007.
This increase is attributable to our marketing efforts and pursuit of
oil and gas properties. We were incorporated in December 2005 and
2007 was our second full year of operation.

Income
decreased from $1,779 in 2006 to $1,092 in 2007.



Critical
Accounting Policies



The
selection and application of accounting policies is an important
process that has developed as our business activities have evolved
and as the accounting rules have developed. Accounting rules
generally do not involve a selection among alternatives, but involve
an implementation and interpretation of existing rules, and the use
of judgment, to the specific set of circumstances existing in our
business. We make every effort to properly comply with all applicable
rules at or before their adoption, and believe the proper
implementation and consistent application of the accounting rules is
critical. However, not all situations are specifically addressed in
the accounting literature. In these cases, we must use our best
judgment to adopt a policy for accounting for these situations. We
accomplish this by comparatively analyzing similar situations and
reviewing the accounting guidance governing them, and may consult
with our independent accountants about the appropriate interpretation
and application of these policies.

-15-



Recently
Issued Accounting Pronouncements and Accounting Developments



In
February 2007, FASB issued FASB Statement No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities –
Including an Amendment of FASB Statement No. 115(“SFAS
159”). This standard permits an entity to choose to measure
many financial instruments and certain other items at fair value.
This option is available to all entities, including not-for-profit
organizations. Most of the provisions in SFAS 159 are elective;
however, the amendment to FASB Statement No. 115, Accounting
for Certain Investments in Debt and Equity Securities, applies to
all entities with available-for-sale and trading securities. Some
requirements apply differently to entities that do not report net
income. The FASB’s stated objective in issuing this standard is
as follows: “to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities
differently without having to apply complex hedge accounting
provisions.”

The fair
value option established by SFAS 159 permits all entities to choose
to measure eligible items at fair value at specified election dates.
A business entity will report unrealized gains and losses on items
for which the fair value option has been elected in earnings (or
another performance indicator if the business entity does not report
earnings) at each subsequent reporting date. A not-for-profit
organization will report unrealized gains and losses in its statement
of activities or similar statement. The fair value option: (i) may
be applied instrument by instrument, with a few exceptions, such as
investments otherwise accounted  for by the equity method;
(ii) is irrevocable (unless a new election date occurs); and
(iii) is applied only to instruments and not to portions of
instruments.

SFAS 159
is effective as of the beginning of an entity’s first fiscal
year that begins after November 15, 2007. Early adoption is
permitted as of the beginning of the previous fiscal year provided
that the entity makes that choice in the first 120 days of that
fiscal year and also elects to apply the provisions of FASB Statement
No. 157, Fair Value Measurements(“SFAS 157”).
We are currently assessing the impact of SFAS 159 on our consolidated
financial statements.

In
September 2006, SFAS 157 was issued by the FASB. This new
standard provides guidance for using fair value to measure assets and
liabilities. The FASB believes the standard also responds to
investors’ requests for expanded information about the extent
to which companies measure assets and liabilities at fair value, the
information used to measure fair value and the effect of fair value
measurements on earnings. SFAS 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair
value but does not expand the use of fair value in any new
circumstances.

Currently,
over 40 accounting standards within GAAP require (or permit) entities
to measure assets and liabilities at fair value. Prior to SFAS 157,
the methods for measuring fair value were diverse and inconsistent,
especially for items that are not actively traded. The standard
clarifies that for items that are not actively traded, such as
certain kinds of derivatives, fair value should reflect the price in
a transaction with a market participant, including an adjustment for
risk, not just the company’s mark-to-model value. SFAS 157 also
requires expanded disclosure of the effect on earnings for items
measured using unobservable data.

Under SFAS
157, fair value refers to the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants in the market in which the reporting
entity transacts. In this standard, FASB clarifies the principle that
fair value should be based on the assumptions market participants
would use when pricing the asset or liability. In support of this
principle, SFAS 157 establishes a fair value hierarchy that
prioritizes the information used to develop those assumptions. The
fair value hierarchy gives the highest priority to quoted prices in
active markets and the lowest priority to unobservable data, for
example, the reporting entity’s own data. Under the standard,
fair value measurements would be separately disclosed by level within
the fair value hierarchy.

The
provisions of SFAS 157 are effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. Earlier application is encouraged,
provided that the reporting entity has not yet issued financial
statements for that fiscal year, including any financial statements
for an interim period within that fiscal year. We are currently
assessing the impact of SFAS 157 on our financial statements.

In
July 2006, FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes-An Interpretation of FASB Statement
No. 109(“FIN 48”), was issued. FIN 48 clarifies
the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes. FIN 48
also prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. The new FASB standard
also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition.

The
evaluation of a tax position in accordance with FIN 48 is a two-step
process. The first step is a recognition process whereby the
enterprise determines whether it is more likely than not that a tax
position will be sustained upon examination, including resolution of
any related appeals or litigation processes, based on the technical
merits of the position. In evaluating whether a tax position has met
the more-likely-than-not recognition threshold, the enterprise should
presume that the position will be examined by the appropriate taxing
authority that has full knowledge of all relevant information. The
second step is a measurement process whereby a tax position that
meets the more-likely-than-not recognition threshold is  calculated
to determine the amount of benefit to recognize in the financial
statements. The tax position is measured at the largest amount of
benefit that is greater than 50% likely of being realized upon
ultimate settlement.

-16-





The
provisions of FIN 48 are effective for fiscal years beginning after
December 15, 2006. Earlier application is permitted as long as
the enterprise has not yet issued financial statements, including
interim financial statements, in the period of adoption. The
provisions of FIN 48 are to be applied to all tax positions upon
initial adoption of this standard. Only tax positions that meet the
more-likely-than-not recognition threshold at the effective date may
be recognized or continue to be recognized upon adoption of FIN 48.
The cumulative effect of applying the provisions of FIN 48 should be
reported as an adjustment to the opening balance of retained earnings
(or other appropriate components of equity or net assets in the
statement of financial position) for that fiscal year. We are
currently assessing the impact on our consolidated financial
statements of FIN 48.

On
September 13, 2006, the SEC staff issued Staff Accounting
Bulletin No. 108, which adds Section N to Topic 1,
Financial Statements– Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements(“SAB 108”). The SEC staff
provides guidance on how prior year misstatements should be taken
into consideration when quantifying misstatements in current year
financial statements for the purposes of determining whether the
current year’s financial statements are materially misstated.
In providing this guidance, the SEC staff references both the “iron
curtain” and “rollover” approaches to quantifying a
current year misstatement for purposes of determining its
materiality. The iron curtain approach focuses on how the current
year’s balance sheet would be affected in correcting a
misstatement without considering the year(s) in which the
misstatement originated. The rollover approach focuses on the amount
of the misstatement that originated in the current year’s
income statement. The SEC staff indicates in SAB 108 that
“registrants must quantify the impact of correcting all
misstatements, including both the carryover and reversing effects of
prior year misstatements, on the current year financial statements.”
In other words, both the iron curtain approach and rollover approach
should be used in assessing the materiality of a current year
misstatement. SAB 108 provides that once a current year misstatement
has been quantified, the guidance in Staff Accounting Bulletin
No. 99, Section M, Topic 1, Financial Statements–
Materiality(“SAB 99”), should be applied to
determine whether the misstatement is material and should result in
an adjustment to the financial statements.

If
correcting a misstatement in the current year would materially
misstate the current year’s income statement, the SEC staff
indicates that the prior year financial statements should be
adjusted. In addition, adjusting for one misstatement in the current
year may alter the amount of the misstatement attributable to prior
years that exists in the current year’s financial statements.
If adjusting for the resultant misstatement is material to the
current year’s financial statements, the SEC staff again
indicates that the prior year financial statements should be
adjusted. These adjustments to prior year financial statements are
necessary even though such adjustments were appropriately viewed as
immaterial in the prior year. In making these adjustments, previously
filed reports do not need to be amended.

Instead,
the adjustments should be reflected the next time the registrant
would otherwise be filing those prior year financial statements. It
should be noted that if, in the current year, a registrant identifies
a misstatement in the prior year financial statements and determines
that the misstatement is material to those prior year financial
statements, the registrant would be required to restate for the
material misstatement in accordance with FASB Statement No. 154,
Accounting Changes and Error Corrections(“SFAS 154”).

If a
registrant has historically been using either the iron curtain
approach or the rollover approach and, upon application of the
guidance of SAB 108, determines that there is a material misstatement
in its financial statements, the SEC staff will not require the
registrant to restate its prior year financial statements provided
that: (a) management properly applied the approach it previously
used as its accounting policy and (b) management considered all
relevant qualitative factors in its materiality assessment. If the
registrant does not elect to restate its financial statements for the
material misstatements that arise in connection with application of
the guidance in SAB 108, then for fiscal years ending after
November 15, 2006, it must recognize the cumulative effect of
applying SAB 108 in the current year beginning balances of the
affected assets and liabilities with a corresponding adjustment to
the current year opening balance in retained earnings. Certain
disclosures are required in this situation. SAB 108 provides
additional transition guidance if it is adopted early in an interim
period. The adoption of SAB 108 did not have a material effect on our
consolidated financial statements.



Item 7.
Financial Statements



|                                                                               | Page
|------------------------------------------------------------------------------ | ----
|Report
			of Independent Registered Public Accounting Firm                     | F-1 
|Balance
			Sheet at December 31, 2007 and 2006                                 | F-2 
|Statement
			of Income Years Ended December 31, 2007 and 2006                  | F-3 
|Statement
			of Stockholders’ Equity Years Ended December 31, 2007 and
			2006 | F-4 
|Statement
			of Cash Flows Years Ended December 31, 2007 and 2006              | F-5 
|Notes
			to financial Statements                                               | F-6 

-17-





Report of Independent Registered Public Accounting
Firm



The Board
of Directors of

Dynamic
Natural Resources, Inc.

Howell,
Michigan



We have
audited the accompanying balance sheet of Dynamic Natural Resources,
Inc. (the “Company”) as of December 31, 2007 and
2006, and the related statements of income, stockholders’
equity and cash flows for the years ended December 31, 2007 and
2006. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on these consolidated 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 audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our 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 Dynamic Natural
Resources, Inc. as of December 31, 2007 and 2006, and the
results of their operations and their cash flows for the years ended
December 31, 2007 and 2006 in conformity with accounting
principles generally accepted in the United States of America.

The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern, as discussed in Note A
to the financial statements, the company has not generated revenues
since inception, has incurred losses in developing its business, and
further losses are anticipated. The Company requires additional funds
to meet it obligations and the cost of its operations. These factors
raise substantial doubt about the Company’s ability to continue
as a going concern. Management’s plans in this regard are
described in Note 1. The financial statements do not include any
adjustments that might result from the out come of this uncertainty.



Robert L.
White & Associates, Inc.



/s/
Robert L White & Associates, Inc.

Robert L.
White & Associates, Inc.

Cincinnati,
OH



March 21,
2008

F-1





|Dynamic
			Natural Resources, Inc.                                                                                                                                   | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Balance Sheet                                                                                                                                                        | 
|Years Ended
			December 31, 2007 and 2006                                                                                                                            | 
|                                                                                                                                                                     | 
|                                                                                                                                                                     | 
|ASSETS                                                                                                                                                               | 
|Current Assets:                                                                                                                                                      | 
|Cash                                                                                                                                                                 | 
|Accounts receivable                                                                                                                                                  | 
|Note Receivable - Related Party                                                                                                                                      | 
|Other Current Assets                                                                                                                                                 | 
|Total Current Assets                                                                                                                                                 | 
|                                                                                                                                                                     | 
|Property and Equipment, net                                                                                                                                          | 
|                                                                                                                                                                     | 
|                                                                                                                                                                     | 
|Other Assets:                                                                                                                                                        | 
|Oil and gas Properties                                                                                                                                               | 
|Total other assets                                                                                                                                                   | 
|                                                                                                                                                                     | 
|Total Assets                                                                                                                                                         | 
|                                                                                                                                                                     | 
|                                                                                                                                                                     | 
|LIABILITIES AND STOCKHOLDERS'
			EQUITY (DEFICIT)                                                                                                                    | 
|Current Liabilities:                                                                                                                                                 | 
|Accounts payable                                                                                                                                                     | 
|Accrued liabilities                                                                                                                                                  | 
|Total Current Liabilities                                                                                                                                            | 
|                                                                                                                                                                     | 
|Long term Liabilities                                                                                                                                                | 
|                                                                                                                                                                     | 
|Total Liabilities:                                                                                                                                                   | 
|                                                                                                                                                                     | 
|Stockholders' Equity (Deficit):                                                                                                                                      | 
|Common stock at $0.0001 par value;
			100,000,000 shares authorized; issued and outstanding: December
			31, 2007 26,97,000 -; December 31, 2006 24,910,000 - shares | 
|Additional paid-in capital                                                                                                                                           | 
|Accumulated deficit                                                                                                                                                  | 
|Stockholders’ Equity                                                                                                                                                 | 
|                                                                                                                                                                     | 
|Total Liabilities and
			Stockholders' Equity (Deficit)                                                                                                              | 
|                                                                                                                                                                     | 
|See accompanying
			notes                                                                                                                                            | 

F-2





|Dynamic
			Natural Resources, Inc.                        | 
|--------------------------------------------------------- | 
|Statement of
			Operation                                 | 
|For the Years
			Ended December 31, 2007 and 2006         | 
|                                                          | 
|                                                          | 
|                                                          | 
|Revenue                                                   | 
|Cost of Revenue                                           | 
|Gross Profit                                              | 
|                                                          | 
|Operating Expenses:                                       | 
|General and Administrative                                | 
|Professional Fees                                         | 
|Miscellaneous Expense                                     | 
|Total Operating Expenses                                  | 
|                                                          | 
|Other (Expense), write off of
			expired oil & gas leases | 
|Interest Income                                           | 
|Total Other (Expense)                                     | 
|                                                          | 
|                                                          | 
|                                                          | 
|Net (Loss)                                                | 
|                                                          | 
|Basic and diluted loss per share                          | 
|                                                          | 
|Weighted average number of common
			shares outstanding   | 
|                                                          | 
|See accompanying
			notes                                 | 

F-3





|Dynamic
			Natural Resources, Inc.                | 
|------------------------------------------------- | 
|Statement of
			Changes in Stockholders' Equity   | 
|For the Years
			Ended December 31, 2007 and 2006 | 
|                                                  | 
|                                                  | 
|                                                  | 
|Balance, December 6, 2006                         | 
|Sale of Common Stock                              | 
|Retirement of Common Stock                        | 
|Net loss, year end December 31,
			2006           | 
|Balance, December 31, 2006                        | 
|Sale of common stock                              | 
|Net Loss, year ended December
			31,2007          | 
|Balance, December 31, 2007                        | 
|                                                  | 
|See accompanying
			notes                         | 

F-4





|Dynamic
			Natural Resources, Inc.                                                | 
|--------------------------------------------------------------------------------- | 
|Statement of Cash
			Flows                                                        | 
|Years ended
			December 31, 2007 and 2005                                         | 
|                                                                                  | 
|                                                                                  | 
|Cash Flows From Operating
			Activities                                           | 
|Net loss                                                                          | 
|Adjustments to reconcile net loss
			to net cash flows from operating activities: | 
|Depreciation                                                                      | 
|Write off of expired Oil and Gas
			leases                                        | 
|Changes in operating assets and
			liabilities:                                   | 
|Prepaid and other assets                                                          | 
|Accounts Payable                                                                  | 
|Note receivable - related party                                                   | 
|Total adjustments                                                                 | 
|                                                                                  | 
|Net cash flows from operating
			activities                                       | 
|                                                                                  | 
|Cash Flows From Investing
			Activities                                           | 
|Purchases of property and
			equipment                                            | 
|Acquisition of Oil and Gas
			Properties                                          | 
|Net cash flows from investing
			activities                                       | 
|                                                                                  | 
|Cash Flows From Financing
			Activities                                           | 
|Proceed from notes payable                                                        | 
|Proceeds from sale of common stock                                                | 
|                                                                                  | 
|Net cash provided by financing
			activities                                      | 
|                                                                                  | 
|Net Change in Cash                                                                | 
|                                                                                  | 
|Cash, Beginning of the Period                                                     | 
|                                                                                  | 
|Cash, End of the Period                                                           | 
|                                                                                  | 
|See accompanying
			notes                                                         | 

F-5





Dynamic Natural Resources, Inc.

Notes
to Financial Statements





Note A.
Nature and Continuance of Operations



Nature
of Operations



Dynamic
Natural Resources, Inc. was incorporated in the State of Nevada on
November 29, 2005. Formerly Value Consulting, Inc., the Company
changed its name to Smart Oil and Gas in August, 2006. Smarts Oil &
Gas was created to pursue an interest in the burgeoning oil and gas
market. Dynamic Natural Resources initial entry into the market was
the acquisition of several leases located in northern Louisiana.
Smarts Oil and Gas will continuously pursue any opportunity to
acquire other attractive oil and gas areas that can add value to the
Company and its shareholders. The company will focus on leases and
properties with proven oil reserves and high potential for large
profit margins.



The
financial statements are presented in US dollars and have been
prepared by management in accordance with generally accepted
accounting principles in the United States (“US GAAP”) on
a going concern basis, which contemplates the realization of assets
and the discharge of liabilities in the normal course of business for
the foreseeable future.



During the
year ended December 31, 2007, the Company incurred a loss of $554,527
and at December 31, 2007 had an accumulated deficit of $608,751 and a
working capital deficit of $7,353. The ability of the Company to
continue as a going concern is uncertain and dependant upon achieving
a profitable level of operations and on the ability of the Company to
obtain necessary capital and financing to fund ongoing operations.
The outcome of these matters cannot be predicted at this time.



These
financial statements do not give effect to any adjustments which
would be necessary should the Company be unable to continue as a
going concern and therefore be required to realize its assets and
discharge its liabilities in other than the normal course of business
and the amounts different from those reflected in the accompanying
financial statements.



Note B
– Significant Accounting Policies



Use of
Estimates



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

F-6



Accounts
Receivable



Dynamic
trade accounts receivable result from the sale of its services, and
consist of private and public companies. Smarts uses the allowance
method to account for uncollectible accounts. Bad debt expense for
the years ended December 31, 2007 and 2006 was $0.



Concentration
of Credit Risk



Dynamic
Natural Resources trade accounts receivable result from the sale of
oil and gas to customers. In order to minimize the risk of loss from
these companies, credit limits, ongoing credit evaluation of its
customers, and account monitoring procedures are utilized. Collateral
is not generally required. Management analyzes historical bad debt,
customer concentrations, customer credit-worthiness, current economic
trends, and changes in customer payment tendencies, when evaluating
the allowance for doubtful accounts. As of December 31, 2007 and
2006, Dynamic had no customers who accounted for 10% or more of gross
accounts receivable or 10% or more of the net sales.



The
Company is obligated to pay the salaries, wages, related benefit
costs, and expenses of its employees and consultants. Accordingly,
the Company's ability to collect amounts due from customers could be
affected by economic fluctuations in its markets or these industries.



Financial
Instruments



Dynamic
Natural Resources estimates that the fair value of all financial
instruments at December 31, 2007 do not differ materially from the
aggregate carrying value of its financial instruments recorded in the
accompanying balance sheets.



Property
and Equipment



Property
and equipment are recorded at historical cost and include
expenditures, which substantially increase the useful lives of
existing property and equipment. Maintenance and repairs are charged
to operations when incurred.



Depreciation
of property and equipment is computed primarily using the
straight-line method based on estimated useful lives (furniture and
fixtures, 6 to 7 years, office equipment 5 to 7 years, and computers
and software, 3 to 5 years). Depreciation for income tax purposes is
computed principally using the straight line method and estimated
useful lives.



Oil and
gas properties



The
Company follows the full cost method of accounting for its oil and
gas operations. Under this method, costs incurred in the acquisition,
exploration and development of oil and gas properties are capitalized
in one cost center, including certain internal costs directly
associated with such activities. Proceeds from the sale of oil and
gas properties are credited to the cost center with no gain or loss
recognized unless such sale would significantly alter the
relationship between capitalized costs and proved oil and gas
reserves.

F-7



Note A.
Nature and Continuance of Operations (Continued)



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



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



As of
December 31, 2007 and 2006 the Company proven reserves were valued at
$337,707 and $547,596 respectively.



Advertising
Cost



Advertising
costs, except for costs associated with direct-response advertising,
are charged to operations when incurred. The costs of direct-response
advertising are capitalized and amortized over the period during
which future benefits are expected to be received. Smarts did not
have direct-response advertising costs during the years ended
December 31, 2007 and 2006.



Accounting
for Stock-based Compensation



The
Company’s accounts for and reports its stock-based employee
compensation arrangements in accordance with the provisions of
Financial Accounting Standards N0, 123 (revised 2004) Share-Based
Payment ("SFAS No. 123R") which requires the
compensation cost related to share-based payments, such as stock
options and employee stock purchase plans, be recognized in the
financial statements based on the grant-date fair value of the award.
During 2007 or 2006, the Company did not grant any stock options
which would require a calculation as prescribed by SFAS No. 123R.



Income
Taxes



Smarts
records its federal and state income tax liability in accordance with
Statement of Financial Accounting Standards Statement No. 109
"Accounting for Income Taxes". Deferred taxes are provided
for differences between the basis of assets and liabilities for
financial statements and income tax purposes, using current tax
rates. Deferred tax assets represent the expected benefits from net
operating losses carried forward and general business credits that
are available to offset future income taxes.



Loss
Per Share



The
Company computes loss per chare in accordance with SFAS NO. 128
“Earnings per Share” which requires presentation of
bother basic and diluted earnings per share on the face of the
statement of operations. Basic loss per share is computed by dividing
net loss available to common shareholders by the weighted average
number of outstanding common shares during the period. Diluted loss
per share gives effect to all potentially dilutive common shares
outstanding during the period including, stock options and warrants,
using the treasury method, and preferred stock, using the
if-converted method. Dilutive loss per share excludes all potential
common shares if their effect is anti dilutive. As the Company has no
potential dilutive securities, basic loss per share is equal to
diluted loss per share.

F-8



Note A.
Nature of Operations and Basis of Presentation (Continued)



Recent
Accounting Pronouncements



In
February 2006, the FASB issued SFAS No. 155, Accounting for Certain
Hybrid Financial Instruments-an amendment of FASB Statements No. 133
and 140. This statement resolves issues addressed in FAS No. 133
Implementation Issue No. D1, Application of Statement 133 to
Beneficial Interest in Securitized Financial Assets. SFAS No. 155:
(a) permits fair value remeasurement for any hybrid financial
instrument that contains an embedded derivative that otherwise would
require bifurcation; (b) clarifies which interest-only strips and
principal-only strips are not subject to the requirements of SFAS No.
133; (c) establishes a requirement to evaluate beneficial interests
in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments
that contain an embedded derivative requiring bifurcation; (d)
clarifies that concentrations of credit risk in the form of
subordination are not embedded derivatives; and, (e) eliminates
restrictions on a qualifying special-purpose entity's ability to hold
passive derivative financial instruments that pertain to beneficial
interests that are or contain a derivative financial instrument. SFAS
No. 155 also requires presentation within the financial statements
that identifies those hybrid financial instruments for which the fair
value election has been applied and information on the income
statement impact of the changes in fair value of those instruments.
The Company is required to apply SFAS No. 155 to all financial
instruments acquired, issued or subject to a remeasurement event
beginning January 1, 2007. The Company does not expect the adoption
of SFAS No. 155 to have a material impact on the Company's financial
statements.



Furthermore,
public entities are required to measure liabilities incurred to
employees in share-based payment transactions at fair value as well
as estimate the number of instruments for which the requisite service
is expected to be rendered. Any incremental compensation cost for a
modification of the terms or conditions of an award is measured by
comparing the fair values before and after the modification. The
Company has yet to determine the effect SFAS No. 123R may have on its
financial statements, if any.



Note B
- Income Taxes



For income
tax purposes Dynamic Natural Resources had $608,751 of net operating
losses as of December 31, 2007, which can be used to offset future
federal and state taxable income. No income tax benefit has been
recorded in the accompanying financial statements since the
recoverability of such assets is not reasonably assured through known
future revenue sources.



Note C-
Related Party Transactions



On
December 15, 2006, Dynamic Natural Resources, Inc. entered
into a short-term, month to month, loan with Dan Seifer, our Chairman
for $20,000. AS of December 31, 2007 the balance of the loan was
$3,880.

F-9





Note D
- Cash Flow Supplemental Information



Cash paid
for interest during the years ended December 31, 2007 and 2006
amounted to $0.



During the
year ended December 31, 2005, Smarts issued 90,000,000 shares of
restricted common stock, valued at $32,500, to various investors,
including both of the Company’s officers and directors.



On May 15,
2006, Smarts issued 6,310,000 shares of common stock, value at
$631,000. The shares were issued pursuant to an SB-2 registration
statement declared effective by the SEC on April 14, 2006.



On various
dates in 2006, certain individuals and officers of the Company
retired 71,400,000 shares of common stock. No consideration was given
to the shareholders.



Note E
- Other Assets



Other
Assets consists of oil and gas properties purchased for an aggregate
total of $545,596. At December 31, 2007 the proven reserves were
valued at $337,707.



Note F
- Stockholders’ Equity



Issuance
of Common Stock



On
December 6, 2005, the Board of Directors approved the issuance of
90,000,0000 restricted shares of the Company’s $.0001 par value
common stock for a total investment of $32,500.



On January
20, 2006, Smarts Oil and Gas filed an SB-2 registration statement
with the SEC. The Company registered an additional 10 million
(10,000,000) shares to be sold for an aggregate of $1 million
($1,000,000). On April 14, 2006 the SEC declared the registration
statement effective. On May 15, 2006, Smarts Oil and Gas issued
6,310,000 shares of common stock for an aggregate of $631,000. On
June 9, 2006 Smarts removed the remaining 3,690,000 shares and closed
the registration.



On August
7, 2006, Brian Ramsey, President and CEO, retired 55,000,000 shares
of his common stock, bringing the total common shares outstanding to
41,310,000.



On
September 30, 2006, Dan Seifer, President and CEO, along with various
other shareholders, retired 16,400,000 shares of common stock,
bringing the total common shares outstanding to 24,910,000.

F-10





Note F
– Stockholders Equity (Continued)



Common
Stock Warrants



As of
December 31, 2007and 2006 there were no stock warrants issued or
outstanding.



Note G
- Commitments and Contingencies



Operating
Leases



Dynamic
Natural Resources currently has no lease obligations.



Litigation



As of
December 31, 2007, Dynamic Natural Resources did not have any
outstanding legal issues outside of the ordinary course of business.



Note H
- Subsequent Events

F-11





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



None.



Item 8A.
Controls and Procedures



Evaluation
of Disclosure Controls and Procedures



Dynamic
Natural Resources Inc. maintains disclosure controls and procedures
that are designed to ensure that information required to be disclosed
in the Company’s Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated
to the company’s management, including its Chief Executive
Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding required disclosure based closely on the
definition of  “disclosure controls and procedures” in
Rule 13a-14( c).  In designing and evaluating the disclosure controls
and procedures, management recognized that any controls procedures,
no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.  Also,
the company has investments in certain unconsolidated entities.  As
the company does not control or manage these entities, its disclosure
controls and procedures with respect to such entities are necessarily
substantially more limited than those it maintains with respect to
its own operations.



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, 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
on the foregoing, the Company’s Chief Executive Officer and
Chief Financial Officer concluded that the Company’s disclosure
controls and procedures were effective.



Management’s
Report on Internal Control over Financial Reporting



Dynamic
Natural Resources, Inc.’s management is responsible for
establishing and maintaining internal control over financial
reporting for the Company.   Dynamic Natural Resources, Inc.’s
internal control system was designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with
generally accepted accounting principles.  Internal control over
financial reporting of the Company includes those policies and
procedures that:



(1)
pertain to the maintenance of records that in reasonable detail
accurately and fairy reflect the transactions of the company.



(2)
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorization of management and directors of the Company; and



(3)
provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the Company’s
financial statements.



All
internal control systems, no matter how well designed, have inherent
limitations, including the possibility of human error or
circumvention through collusion of improper overriding of controls.
Therefore, even those internal control systems determined to be
effective can provide only reasonable assurance with respect to
financial statement preparation.  Further, because of changes in
conditions, the effectiveness of internal control may vary over time.



The
management of Dynamic Natural Resources Inc. assessed the
effectiveness of the Company’s internal control over financial
reporting as of December 21, 2007.  In making its assessment of
internal control over financial reporting, management used the
criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSD) in Internal- Control-Integrated
Frameworkand implemented a process to monitor and assess both
the design and operating effectiveness of the Company’s
internal controls.  Based on this assessment, management believe that
as of December 21, 2007, the Company’s internal control over
financial reporting was effective.



Changes
in Internal Control over Financial Reporting



Management
of the company has evaluated, with the participation of the Company’s
Chief Executive Officer and Chief Financial Officer, changes in the
Company’s internal controls over financial reporting (as
defined in Rule 13a-15(f) of the Exchange Act) during the fourth
quarter of 2007.  In connection with such evaluation, there have been
no changes to the Company’s internal control over financial
reporting that occurred since the beginning of the Company’s
fourth quarter of 2007 that have materially affected, or are
reasonably likely to materially affect the Company’s internal
control over financial reporting.

-29-





PART III



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



Additional
information required by this Item 9 concerning directors and
executive officers of the Company appears under the heading
“Executive Officers of the Registrant” in this report.



Presently,
Smarts has a total of 6 officers and directors. The following table
identifies, as of  February 23,2008, each executive officer
and director of the Company.





|Name             | Age | Position                         
|---------------- | --- | ---------------------------------
|Daniel Seifer    | 31  | Chairman, Director               
|Scott R. Masse   | 34  | Chief Executive Officer, Director
|Eddie McGarraugh | 61  | Director                         
|Gerald Schiano   | 48  | Chief Financial Officer, Director
|Bruce Scambler   | 49  | President                        
|Floyd Keefer     | 57  | VP of Field Operations:          



Directors
serve until the next annual meeting and until their successors are
elected and qualified. Officers are appointed to serve for one year
until the meeting of the Board of Directors following the annual
meeting of stockholders and until their successors have been elected
and qualified.



Daniel
Seifer: Mr. Seifer joined Smarts as an officer onAugust 14,
2006. Mr. Seifer has spent the last 12 years working in the public
markets. His experience includes investor relations, consulting,
raising capital, mergers and acquisitions, and public relations. Mr.
Seifer is currently active in the oil and gas industry, personally
owning ten oil wells in Northern Louisiana. Mr. Seifer graduated from
MichiganState with a degree in Engineering and a Business Minor.



Scott
R. Masse: Mr. Masse Joined as CEO and President in August of
2007.

An
accomplished entrepreneur and financial advisor with many years
experience in the oil industry. Scott began his career at Smith
Barney in Boston after graduating Boston College with a double
concentration in finance and accounting. He has also worked for Legg
Mason, First Union, and Wachovia Securities Financial Network leading
to the establishment of Masse Wealth Management. Scott has extensive
experience in working with small capitalization securities.  In
the oil field, Scott has focused his efforts on building alliances
with key enhanced oil recovery companies and well stimulation
companies.

-30-







Eddie
McGarraugh – Mr. McGarraugh joined the board of directors
in August, 2006. Mr. McGarraugh has been an entrepreneur for over 40
years.  Mr. McGarraugh is a seasoned oil and gas operator with
knowledge of all phases of drilling and completing wells. He
worked in the oil and gas industry for 30 years, leasing, drilling
and completing wells in Texas, Oklahoma, and Colorado.



Gerald
Schiano: Mr. Schiano Joined as CFO in August of 2007.

After
graduating from Rhode Island College Gerald began his career as an
accountant for Gilbane Building Company.  The rigors of
construction accounting trained Gerald well for his next positions as
cost accountant and then controller in the high technology industry.
Gerald later was hired as Chief Financial Officer of a construction
company involved in large public work projects.  Gerald later
ran his own construction company servicing large public work
projects.  Of late Gerald has been using his entrepreneurial
talent to develop interests in oil fields in the mid west.



Bruce
Scambler: Mr. Scambler Joined as President in January of 2008.

Mr
Scambler started with KPMG in 1980 and is a CPA, with over 30 years
of business experience, of which over ten years has been working in
the Mid Continent oil and gas industry. Mr Scambler has been an
officer and director of public companies in the United States and the
United Kingdom including Chief Financial Officer of Cotton Valley
Resources and Aspen Energy. Mr Scambler has a proven track record of
successful financing, restructuring, and value added growth in
companies he has managed. His management has included prospect and
company acquisitions, mergers and realizations. The added experience
of hands on field operations, drilling, well work-overs, and
production enhancement has proven multiples of success. Bruce
received a degree in law from Bristol University, Bristol, England,
and a MBA from Strathclyde Graduate Business School in Glasgow,
Scotland. Bruce served as a pilot officer in the Royal Air Force.
Bruce is a recognized speaker on COPAS/taxation and other oil and gas
taxation matters. His community involvement includes working as a
Court Appointed Special Advocate (CASA), Board Member Court Appointed
Special Advocates, and is a Lay Reader with All Souls Episcopal
Church.



Floyd
Keefer: Mr. Keefer Joined as Vice President  in January
of 2008.

Mr. Keefer
is a 3rd generation oilman from the state of Oklahoma. He has over 35
years of experience in the oil industry working in service, drilling
and completing of wells. Mr. Keefer has worked with many major oil
companies throughout his years including, Chevron, Exxon Mobil,
Texaco, and Standard Oil. Mr. Keefer brings Dynamic valuable
experience that will benefit the company in reaching aggressive goals
for near term expansion. He works through an industry network which
brings integrated expertise including geology, geophysics, petroleum
engineering and all aspects of well drilling operations. Mr. Keefer
has conservatively overseen more than 500 domestic and foreign
drilling projects.

-31-





Item 10.
Executive Compensation



Executive
Compensation



The
following Summary Compensation Table sets forth certain information
regarding the compensation of our officers as of December 31, 2007



Summary
Compensation Table



|                                          |              | Annual
			Compensation | Long Term
			Compensation Awards |                                  |                          
|----------------------------------------- | ------------ | ---------------------- | -------------------------------- | -------------------------------- | -------------------------
|                                          | Year         | Salary                 | Bonus                            | Securities
			Underlying Options | All Other
			Compensation
|                                          |              |                        |                                  |                                  |                          
|Daniel Seifer, COB                        | 2006
			2007 | -                      | -                                | -                                | -                        
|Scott R. Masse CEO                        | 2006
			2007 | -
			23,697            | -                                | -                                | -                        
|Eddie McGarraug, Director                 |              |                        |                                  |                                  |                          
|Gerald Schiano CFO                        | 2006
			2007 | 11,950                 | -                                | -                                | -                        
|Bruce
			Scambler
			President            | 2006
			2007 |                        | -                                | -                                | -                        
|Floyd
			Keefer
			VP of Field Operations | 2006
			2007 |                        |                                  |                                  |                          



Option
Grants During Last Fiscal Year



No
options, warrants or similar rights to purchase our Common Stock have
been granted to any officers or directors.



Employment
Agreements



There are
no employment agreements to date.



Compensation
of Directors



Our
directors receive no compensation as members of our board. Our
directors are reimbursed for travel and out-of-pocket expenses in
connection with attendance at board meetings. The following table
summarizes compensation that our directors earned during 2006 for
services as members of our Board of Directors.





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|                    | Year |  | Fees Earned or
			Paid in Cash |   |  | Options Awarded |   |   | All Other
			Compensation |  |   | Total | 
|------------------- | ---- |  | ------------------------------ | - |  | --------------- | - | - | ------------------------- |  | - | ----- | 
|Daniel
			Seifer    | 2006 |  | $                              | - |  |                 | $ | - |                           |  | $ | -     | 
|                    | 2007 |  |                                | - |  |                 |   | - |                           |  |   | -     | 
|                    |      |  |                                |   |  |                 |   |   |                           |  |   |       | 
|Scott
			R. Masse   | 2006 |  |                                | - |  |                 |   | - |                           |  |   | -     | 
|                    | 2007 |  |                                | - |  |                 |   | - |                           |  |   | -     | 
|                    |      |  |                                |   |  |                 |   |   |                           |  |   |       | 
|Eddie
			McGarraugh | 2006 |  |                                | - |  |                 |   | - |                           |  |   | -     | 
|                    | 2007 |  |                                | - |  |                 |   | - |                           |  |   | -     | 
|                    |      |  |                                |   |  |                 |   |   |                           |  |   |       | 
|Gerald
			Schiano   | 2006 |  |                                | - |  |                 |   | - |                           |  |   | -     | 
|                    | 2007 |  |                                | - |  |                 |   | - |                           |  |   | -     | 



Item 11.
Security Ownership of Certain Beneficial Owners and Management



As of
February 25, 2008, there were 26,889,857 shares of common stock, par
value $.0001 outstanding. The following table sets forth certain
information regarding the beneficial ownership of our common stock as
of February 25, 2008:



| | • |  | all directors                                                                                                                 
| | - |  | ------------------------------------------------------------------------------------------------------------------------------
| | • |  | each person who is known by us to
			be the beneficial owner of more than five percent (5%) of the
			outstanding common stock
| | • |  | each executive officer named in
			the Summary Compensation Table                                                             
| | • |  | all directors and executive
			officers as a group                                                                            



The number
of shares beneficially owned by each director or executive officer is
determined under rules of the SEC, and the information is not
necessarily indicative of beneficial ownership for any other purpose.
Under the SEC rules, beneficial ownership includes any shares as to
which the individual has the sole or shared voting power or
investment power. In addition, beneficial ownership includes any
shares that the individual has the right to acquire within 60 days.
Unless otherwise indicated, each person listed below has sole
investment and voting power (or shares such powers with his or her
spouse). In certain instances, the number of shares listed includes
(in addition to shares owned directly), shares held by the spouse or
children of the person, or by a trust or estate of which the person
is a trustee or an executor or in which the person may have a
beneficial interest.





-33-





|Title of Class | Name and Address of Beneficial
			Owner                                                                         | Amount of
			Beneficial Ownership | Percent of
			Class
|-------------- | --------------------------------------------------------------------------------------------------------------- | --------------------------------- | -------------------
|Common Stock   | Daniel
			Seifer(1)
			Dynamic
			Natural Resources Inc.
			78
			South Street  Suite 202
			Wrentham, MA 02093 | 10,402,700                        | 49.79%             
|Common Stock   | Scott
			R. Masse
			Dynamic
			Natural Resources Inc.
			78
			South Street Suite 202
			Wrentham, MA 02093    | 1,710,000                         | 1.60%              
|Common Stock   | Eddie
			McGarraugh
			Dynamic
			Natural Resources Inc.
			78
			South Street Suite 202
			Wrentham, MA 02093  | -                                 | -%                 
|Common Stock   | Gerald
			Schiano
			Dynamic
			Natural Resources Inc.
			78
			South Street Suite 202
			Wrentham, MA 02093    | -                                 | -%                 
|Total as group |                                                                                                                 | 12,112,700                        | 45%                



Stock
Option and Incentive Plans



There are
no stock option or incentive plans.





-34-







Item 13. Exhibits



|No.  | Description                                                            
|---- | -----------------------------------------------------------------------
|3.1  | Articles of Incorporation (1)                                          
|3.2  | Bylaws of the Company (2)                                              
|4.1  | Specimen Stock Certificate (3)                                         
|31.1 | Certification
			of Chief Executive Officer pursuant to Rule 13a-14(a).
|31.2 | Certification
			of Chief Financial Officer pursuant to Rule 13a-14(a).
|32.1 | Certification
			pursuant to 18 U.S.C. Section 1350.                   
|32.2 | Certification
			pursuant to 18 U.S.C. Section 1350.                   



(1)
incorporated by reference to Exhibit 3.1 of the Current report on
Form SB-2/A, as filed with the SEC on March 2, 2006

(2)
incorporated by reference to Exhibit 3.2 of the Current report on
Form SB-2/A, as filed with the SEC on March 2, 2006

(3)
incorporated by reference to Exhibit 4.1 of the Current report on
Form SB-2/A, as filed with the SEC on March 2, 2006



Item 14.
Principal Accountant Fees and Services



The
following are the fees billed us by our auditors, Robert L. White and
Associates, Inc., for services rendered thereby during 2007 and 2006:



|                     |  | 2007 |       |  | 2006 |  
|-------------------- |  | ---- | ----- |  | ---- | -
|Audit Fees           |  | $    | 4,000 |  |      | $
|Audited Related Fees |  |      | -     |  |      |  
|Tax Fees             |  |      | -     |  |      |  
|Total Fees           |  | $    | 4,000 |  |      | $



Audit
Fees consist of the aggregate fees billed for professional
services rendered for the audit of our annual financial statements
and the reviews of the financial statements included in our Forms
10-QSB and for any other services that were normally provided in
connection with our statutory and regulatory filings or engagements.



Audit
Related Fees consist of the aggregate fees billed for
professional services rendered for assurance and related services
that were reasonably related to the performance of the audit or
review of our financial statements and were not otherwise included in
Audit Fees.



Tax
Fees consist of the aggregate fees billed for professional
services rendered for tax compliance, tax advice and tax planning. 
Included in such Tax Fees were fees for preparation of our tax
returns and consultancy and advice on other tax planning matters.

-35-







SIGNATURES



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



|                     | Dynamic Natural Resources, Inc.,
				a Nevada Corporation |                        
|-------------------- | --------------------------------------------------------- | -----------------------
|                     |                                                           |                        
|Date: March 24, 2008 | By:                                                       | /s/ Scott Masse        
|                     |                                                           | Scott Masse            
|                     |                                                           | Chief Executive Officer
|                     |                                                           |                        





In
accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



|Signature          | Title                                   | Date           
|------------------ | --------------------------------------- | ---------------
|/s/ Scott Masse    |                                         | August 18, 2008
|Scott Masse        | Chief Executive Officer and
			Director |                
|                   |                                         |                
|/s/ Gerald Schiano |                                         | August 18, 2008
|Gerald Schiano     | Chief Financial Officer and
			Director |                
|                   |                                         |                
|                   |                                         |                
|                   |                                         |                





-36-







Exhibit Index



|No.  | Description                                                            
|---- | -----------------------------------------------------------------------
|3.1  | Articles of Incorporation (1)                                          
|3.2  | Bylaws of the Company (2)                                              
|4.1  | Specimen Stock Certificate (3)                                         
|31.1 | Certification
			of Chief Executive Officer pursuant to Rule 13a-14(a).
|31.2 | Certification
			of Chief Financial Officer pursuant to Rule 13a-14(a).
|32.1 | Certification
			pursuant to 18 U.S.C. Section 1350.                   
|32.2 | Certification
			pursuant to 18 U.S.C. Section 1350.                   



(1)
incorporated by reference to Exhibit 3.1 of the Current report on
Form SB-2/A, as filed with the SEC on March 2, 2006

(2)
incorporated by reference to Exhibit 3.2 of the Current report on
Form SB-2/A, as filed with the SEC on March 2, 2006

(3)
incorporated by reference to Exhibit 4.1 of the Current report on
Form SB-2/A, as filed with the SEC on March 2, 2006





-37-