----

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| Nevada                                                                        | 87-0393257                                       |
|-------------------------------------------------------------------------------|--------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) | (IRS                Employer Identification No.) |

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|                                                               |                                                                           | Page                                                                                       |
|--------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
| PART                I – FINANCIAL                INFORMATION |
| Item                1.                                             | Financial                Statements                                            |                                                                                       |
|                                                               |                                                                           |                                                                                       |
|                                                               |                                                                           | Consolidated                Balance Sheets (unaudited)                                     | 3 |
|                                                               |                                                                           |                                                                                       |   |
|                                                               |                                                                           | Consolidated                Statements of Operations (unaudited)                           | 4 |
|                                                               |                                                                           |                                                                                       |   |
|                                                               |                                                                           | Consolidated                Statements of Cash Flows (unaudited)                           | 5 |
|                                                               |                                                                           |                                                                                       |   |
|                                                               |                                                                           | Consolidated                Statements of Stockholders’ Equity (Deficit) (unaudited) | 6 |
|                                                               |                                                                           |                                                                                       |   |
|                                                               |                                                                           | Notes                to the Consolidated Financial Statements (unaudited)                  | 7 |
|                                                               |                                                                           |                                                                                       |
| Item                2.                                             | Management’s                Discussion and Analysis or Plan of Operation |  14                                                                                   |
|                                                               |                                                                           |                                                                                       |
| Item                3.                                             | Controls                and Procedures                                         |  18                                                                                   |
|                                                               |                                                                           |                                                                                       |
|                                                               |                                                                           |                                                                                       |
| PART                II – OTHER                INFORMATION    |
| Item                1.                                             | Legal                Proceedings                                               |  19                                                                                   |
|                                                               |                                                                           |                                                                                       |
| Item                2.                                             | Unregistered                Sales of Equity Securities and Use of Proceeds     |  19                                                                                   |
|                                                               |                                                                           |                                                                                       |
| Item                3.                                             | Defaults                Upon Senior Securities                                 |  19                                                                                   |
|                                                               |                                                                           |                                                                                       |
| Item                4.                                             | Submission                of Matters to a Vote of Security Holders             |  19                                                                                   |
|                                                               |                                                                           |                                                                                       |
| Item                5.                                             | Other                Information                                               |  20                                                                                   |
|                                                               |                                                                           |                                                                                       |
| Item                6.                                             | Exhibits                                                                       |  20                                                                                   |
|                                                               |                                                                           |                                                                                       |
|                                                               |                                                                           |                                                                                       |
| SIGNATURES                                                         |                                                                           |  21                                                                                   |

----

| Patch                International                Inc.                                                                              |   |                        |       |   |                   |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|------------------------|--------|
| Consolidated                Balance                Sheets                                                                           |   |                        |       |   |                   |   |
| (Unaudited)                                                                                                                         |   |                        |       |   |                   |   |
|                                                                                                                                |   | November                30, |       |   | May                31, |   |
| (U.S.                Dollars)                                                                                                       |   | 2007                        |       |   | 2007                   |   |
| ASSETS                                                                                                                              |   |                        |       |   |                   |   |
| Current                Assets                                                                                                       |   |                        |       |   |                   |   |
| Cash                and cash                equivalents                                                                             |   | $                           | 2,401,924  |   |                   | $      | 6,590,466 |   |
| Accounts                receivable                                                                                                  |   |                        | 299,992    |   |                   |   | 18,966 |   |
| Due                from related parties (Note                4)                                                                     |   |                        | 1,007,611  |   |                   |   | 1,009,697 |   |
| Prepaid                expenses and                other                                                                            |   |                        | 290,336    |   |                   |   | 71,480 |   |
| Total                Current                Assets                                                                                  |   |                        | 3,999,863  |   |                   |   | 7,690,609 |   |
|                                                                                                                                |   |                        |       |   |                   |   |   |   |
| Marketable                securities (Note                5)                                                                        |   |                        | 225,000    |   |                   |   | 850,000 |   |
| Joint                venture receivable (Note                6)                                                                     |   |                        | 349,681    |   |                   |   | 323,394 |   |
| Property                and                equipment                                                                                |   |                        | 128,355    |   |                   |   | 98,916 |   |
| Oil                and gas interests (successful                efforts method) (Note 7)                                            |   |                        | 41,296,807 |   |                   |   | 37,658,925 |   |
| Total                Assets                                                                                                         |   | $                           | 45,999,706 |   |                   | $      | 46,621,844 |   |
| LIABILITIES                AND STOCKHOLDERS'                EQUITY                                                                  |   |                        |       |   |                   |   |   |   |
| Current                Liabilities                                                                                                  |   |                        |       |   |                   |   |   |   |
| Accounts                payable and accrued                liabilities                                                              |   | $                           | 1,603,060  |   |                   | $      | 2,756,345 |   |
| Income                tax                payable                                                                                    |   |                        | 2,975,265  |   |                   |   | 2,785,763 |   |
| Due                to related parties (Note                4)                                                                       |   |                        | 1,000,000  |   |                   |   | 1,000,000 |   |
| Total                Current                Liabilities                                                                             |   |                        | 5,578,325  |   |                   |   | 6,542,108 |   |
| Exchangeable                shares (Note                8)                                                                          |   |                        | -          |   |                   |   | 20,150,772 |   |
| Special                warrants (Note                9)                                                                             |   |                        | -          |   |                   |   | 26,505,862 |   |
| Asset                retirement obligations (Note                10)                                                                |   |                        | 144,322    |   |                   |   | 129,959 |   |
| Deferred                income                taxes                                                                                 |   |                        | 1,141,370  |   |                   |   | - |   |
| Total                Liabilities                                                                                                    |   |                        | 6,864,017  |   |                   |   | 53,328,701 |   |
| STOCKHOLDERS'                EQUITY                                                                                                 |   |                        |       |   |                   |   |   |   |
| Class                A Preferred Voting                Stock                                                                        |   |                        | -          |   |                   |   | - |   |
| 1                share authorized with par value                of $0.01 per share;                                                 |   |                        |       |   |                   |   |   |   |
| 1                share issued and                outstanding                                                                        |   |                        |       |   |                   |   |   |   |
| Class                B Preferred Voting                Stock                                                                        |   |                        | -          |   |                   |   | - |   |
| 10,000                shares authorized with par                value of $0.01 per share;                                           |   |                        |       |   |                   |   |   |   |
| 1                share issued and                outstanding                                                                        |   |                        |       |   |                   |   |   |   |
| Common                Stock                                                                                                         |   |                        | 34,026     |   |                   |   | 20,240 |   |
| 300,000,000                common shares                authorized with par value of $0.001 per share                               |   |                        |       |   |                   |   |   |   |
| 34,025,724                shares issued and                outstanding (May 31, 2007 - 20,239,774 shares)                           |   |                        |       |   |                   |
| (excludes                2,000 shares held in                treasury)                                                              |   |                        |       |   |                   |   |   |   |
| Exchangeable                shares (Note                8)                                                                          |   |                        | 12,507,376 |   |                   |   | - |   |
| Additional                paid-in                capital                                                                            |   |                        | 26,780,005 |   |                   |   | 10,111,507 |   |
| Stock                subscriptions                receivable                                                                        |   |                        | -          |   |                   |   | (38,500 | ) |
| Accumulated                other comprehensive                income                                                                |   |                        | 940,955    |   |                   |   | 837,870 |   |
| Retained                earnings                (deficit)                                                                           |   |                        | (1,126,673 | )      |                   |   | (17,637,974 | ) |
| Total                Stockholders'                Equity                                                                            |   |                        | 39,135,689 |   |                   |   | (6,706,857 | ) |
| Total                Liabilities and                Shareholders' Equity                                                            |   | $                           | 45,999,706 |   |                   | $      | 46,621,844 |   |
|                                                                                                                                |   |                        |       |   |                   |   |   |   |
| Future                operations (Note                2)                                                                            |   |                        |       |   |                   |   |   |   |
| Commitments                (Note                14)                                                                                 |   |                        |       |   |                   |   |   |   |
|                                                                                                                                |   |                        |       |   |                   |   |   |   |
| The                accompanying notes are an                integral part of these consolidated financial                statements |   |                        |       |   |                   |
|                                                                                                                                |   |                        |       |   |                   |   |   |   |

----

| Patch                  International                  Inc.                                                                                |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|------------|--------|----------------------------------------------------|--------|------------|--------|--------|--------|------------|--------|
| Consolidated                  Statements of                  Operations                                                                   |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |
| (Unaudited)                                                                                                                               |   | Three                  Months                  Ended |       |   | Six                  Months                  Ended |   |
|                                                                                                                                      |   | November                  30                         |       |   | November                  30                       |   |
| (U.S.                  Dollars)                                                                                                           |   | 2007                                                 |       |   | 2006                                               |   |       | 2007   |   |   | 2006       |   |
| Revenue                                                                                                                                   |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |
| Oil                  and gas                                                                                                              |   | $                                                    | 3,069      |   |                                               | $      | 2,577      |   |   | $      | 8,132      |   |   | $ | 6,883 |   |
| Expenses                                                                                                                                  |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |   |   |   |   |
| Oil                  and gas production and                  royalties                                                                    |   |                                                 | 23,340     |   |                                               |   | 3,607      |   |   |   | 44,571     |   |   |   | 5,182 |   |
| General                  and                  administrative                                                                              |   |                                                 | 1,046,084  |   |                                               |   | 908,725    |   |   |   | 2,047,012  |   |   |   | 1,626,741 |   |
| Depletion,                  depreciation and                  accretion                                                                   |   |                                                 | 11,193     |   |                                               |   | 13,968     |   |   |   | 20,307     |   |   |   | 28,703 |   |
| Dry                  hole                  costs                                                                                          |   |                                                 | 431,433    |   |                                               |   | -          |   |   |   | 528,482    |   |   |   | - |   |
| Geological                  and geophysical                  costs                                                                        |   |                                                 | 65,286     |   |                                               |   | -          |   |   |   | 101,715    |   |   |   | - |   |
| Total                  operating                  expenses                                                                                |   |                                                 | 1,577,336  |   |                                               |   | 926,300    |   |   |   | 2,742,087  |   |   |   | 1,660,626 |   |
| Other                  income                  (expenses)                                                                                 |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |   |   |   |   |
| Interest                  and                  other                                                                                      |   |                                                 | 41,087     |   |                                               |   | 110,440    |   |   |   | 99,294     |   |   |   | 150,746 |   |
| Financing                  costs (Note                  9)                                                                                |   |                                                 | (320,311   | )      |                                               |   | -          |   |   |   | (640,622   | )      |   |   | - |   |
| Holding                  gain on exchangeable                  shares and special warrants (Notes 8 and 9)                                |   |                                                 | 971,157    |   |                                               |   | -          |   |   |   | 18,178,828 |   |   |   | - |   |
| Holding                  loss on marketable                  securities (Note 5)                                                          |   |                                                 | (209,978   | )      |                                               |   | -          |   |   |   | (672,750   | )      |   |   | - |   |
| Gain                  on foreign                  exchange                                                                                |   |                                                 | 2,187,576  |   |                                               |   | -          |   |   |   | 2,913,315  |   |   |   | - |   |
| Loss                  on foreign exchange relating                  to current income taxes payable                                       |   |                                                 | (228,230   | )      |                                               |   | -          |   |   |   | (189,502   | )      |   |   | - |   |
| Gain                  on sale of marketable                  securities                                                                   |   |                                                 | -          |   |                                               |   | 6,640,000  |   |   |   | -          |   |   |   | 7,609,599 |   |
| Total                  other                  income                                                                                      |   |                                                 | 2,441,301  |   |                                               |   | 6,750,440  |   |   |   | 19,688,563 |   |   |   | 7,760,345 |   |
| Income                  before income taxes and                  discontinued operations                                                  |   |                                                 | 867,034    |   |                                               |   | 5,826,717  |   |   |   | 16,954,608 |   |   |   | 6,106,602 |   |
| Provision                  for income                  taxes                                                                              |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |   |   |   |   |
| Current                                                                                                                                   |   |                                                 | -          |   |                                               |   | 1,987,092  |   |   |   | -          |   |   |   | 2,278,501 |   |
| Deferred                                                                                                                                  |   |                                                 | 443,307    |   |                                               |   | -          |   |   |   | 443,307    |   |   |   | - |   |
|                                                                                                                                      |   |                                                 | 443,307    |   |                                               |   | 1,987,092  |   |   |   | 443,307    |   |   |   | 2,278,501 |   |
| Income                  before discontinued                  operations                                                                   |   |                                                 | 423,727    |   |                                               |   | 3,839,625  |   |   |   | 16,511,301 |   |   |   | 3,828,101 |   |
| Discontinued                  operations (Note                  12)                                                                       |   |                                                 | -          |   |                                               |   | 12,796     |   |   |   | -          |   |   |   | 43,004 |   |
| Net                  income                                                                                                               |   |                                                 | 423,727    |   |                                               |   | 3,852,421  |   |   |   | 16,511,301 |   |   |   | 3,871,105 |   |
| Other                  comprehensive income (loss)                  (Note 13)                                                             |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |   |   |   |   |
| Marketable                  securities:                                                                                                   |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |   |   |   |   |
|   Reclassification                  to                  realized gain                                                           |   |                                                 | -          |   |                                               |   | (3,877,486 | )      |   |   | -          |   |   |   | (4,623,768 | ) |
|   Holding                  gain                                                                                                 |   |                                                 | -          |   |                                               |   | 1,431,486  |   |   |   | -          |   |   |   | 2,094,768 |   |
| Increase                  (decrease) in unrealized                  gain on marketable securities                                         |   |                                                 | -          |   |                                               |   | (2,446,000 | )      |   |   | -          |   |   |   | (2,529,000 | ) |
| Foreign                  currency translation                  adjustment                                                                 |   |                                                 | 163,560    |   |                                               |   | (93,227    | )      |   |   | 103,085    |   |   |   | (60,699 | ) |
| Other                  comprehensive income (loss)                  (Note 13)                                                             |   |                                                 | 163,560    |   |                                               |   | (2,539,227 | )      |   |   | 103,085    |   |   |   | (2,589,699 | ) |
| Comprehensive                  income                                                                                                     |   | $                                                    | 587,287    |   |                                               | $      | 1,313,194  |   |   | $      | 16,614,386 |   |   | $ | 1,281,406 |   |
|                                                                                                                                      |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |   |   |   |   |
| Net                  income per                  share                                                                                    |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |   |   |   |   |
| Basic                                                                                                                                     |   | $                                                    | 0.01       |   |                                               | $      | 0.24       |   |   | $      | 0.54       |   |   | $ | 0.25 |   |
| Diluted                                                                                                                                   |   | $                                                    | 0.01       |   |                                               | $      | 0.24       |   |   | $      | 0.37       |   |   | $ | 0.24 |   |
| Weighted                  average number of common                  shares outstanding                                                    |   |                                                 |       |   |                                               |   |       |   |   |   |       |   |   |   |   |   |
| Basic                                                                                                                                     |   |                                                 | 40,484,439 |   |                                               |   | 15,778,916 |   |   |   | 30,306,793 |   |   |   | 15,665,042 |   |
| Diluted                                                                                                                                   |   |                                                 | 43,952,213 |   |                                               |   | 16,193,512 |   |   |   | 44,317,283 |   |   |   | 16,079,638 |   |
|                                                                                                                                      |   |                                                 |       |   |                                               |   |       |   |   |
| The                  accompanying notes are an                  integral part of these consolidated financial                  statements |   |                                                 |       |   |                                               |   |       |   |   |

----

| Patch                  International                  Inc.                                                                                |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|------------|--------|----------------------------------------------------|--------|------------|--------|--------|--------|-------------|--------|
| Consolidated                  Statements of Cash                  Flows                                                                   |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |
| (Unaudited)                                                                                                                               |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |
|                                                                                                                                      |   | Three                  Months                  Ended |       |   | Six                  Months                  Ended |   |
| (U.S.                  Dollars)                                                                                                           |   | November                  30                         |       |   | November                  30                       |   |
|                                                                                                                                      |   | 2007                                                 |       |   | 2006                                               |   |       | 2007   |   |   | 2006        |   |
| Operating                  Activities                                                                                                     |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |
| Net                  income                                                                                                               |   | $                                                    | 423,727    |   |                                               | $      | 3,852,421  |   |   | $      | 16,511,301  |   |   | $ | 3,871,105 |   |
| Adjustment                  of items not involving                  cash                                                                  |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |   |   |   |   |
| Depletion,                  depreciation and                  accretion                                                                   |   |                                                 | 11,193     |   |                                               |   | 13,968     |   |   |   | 20,307      |   |   |   | 28,703 |   |
| General                  and                  administrative                                                                              |   |                                                 | -          |   |                                               |   | 146,171    |   |   |   | -           |   |   |   | 211,095 |   |
| Stock-based                  compensation                                                                                                 |   |                                                 | 376,349    |   |                                               |   | 341,182    |   |   |   | 771,136     |   |   |   | 554,643 |   |
| Financing                  costs                                                                                                          |   |                                                 | 320,311    |   |                                               |   | -          |   |   |   | 640,622     |   |   |   | - |   |
| Holding                  gain on exchangeable                  shares and special warrants                                                |   |                                                 | (971,157   | )      |                                               |   | -          |   |   |   | (18,178,828 | )      |   |   | - |   |
| Gain                  on sale of marketable                  securities                                                                   |   |                                                 | -          |   |                                               |   | (6,640,000 | )      |   |   | -           |   |   |   | (7,609,599 | ) |
| Holding                  loss on marketable                  securities                                                                   |   |                                                 | 209,978    |   |                                               |   | -          |   |   |   | 672,750     |   |   |   | - |   |
| Gain                  on foreign                  exchange                                                                                |   |                                                 | (2,187,576 | )      |                                               |   | -          |   |   |   | (2,913,315  | )      |   |   | - |   |
| Non-controlling                  interest in net                  loss                                                                    |   |                                                 | -          |   |                                               |   | (12,005    | )      |   |   | -           |   |   |   | (19,765 | ) |
| Deferred                  income                  taxes                                                                                   |   |                                                 | 443,307    |   |                                               |   | -          |   |   |   | 443,307     |   |   |   | - |   |
| (Increase)                  decrease in accounts                  receivable                                                              |   |                                                 | 17,772     |   |                                               |   | 5,039      |   |   |   | (307,313    | )      |   |   | 19,621 |   |
| Increase                  in prepaid expenses and                  other                                                                  |   |                                                 | (217,728   | )      |                                               |   | (20,816    | )      |   |   | (218,856    | )      |   |   | (30,946 | ) |
| Decrease                  in due from related                  parties                                                                    |   |                                                 | 3,234      |   |                                               |   | -          |   |   |   | 2,086       |   |   |   | - |   |
| Increase                  (decrease) in accounts                  payable and accrued liabilities                                         |   |                                                 | 268,212    |   |                                               |   | 21,750     |   |   |   | (1,153,285  | )      |   |   | 69,980 |   |
| Increase                  in income taxes                  payable                                                                        |   |                                                 | 228,230    |   |                                               |   | 2,007,508  |   |   |   | 189,502     |   |   |   | 2,298,917 |   |
| Net                  cash used in continuing                  operations                                                                  |   |                                                 | (1,074,148 | )      |                                               |   | (284,782   | )      |   |   | (3,520,586  | )      |   |   | (606,246 | ) |
| Discontinued                  operations                                                                                                  |   |                                                 | -          |   |                                               |   | 24,497     |   |   |   | -           |   |   |   | 11,836 |   |
| Net                  cash used in operating                  activities                                                                   |   |                                                 | (1,074,148 | )      |                                               |   | (260,285   | )      |   |   | (3,520,586  | )      |   |   | (594,410 | ) |
| Investing                  Activities                                                                                                     |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |   |   |   |   |
| Purchase                  of                  equipment                                                                                   |   |                                                 | (28,226    | )      |                                               |   | -          |   |   |   | (38,132     | )      |   |   | - |   |
| Oil                  and gas                  interests                                                                                   |   |                                                 | (742,985   | )      |                                               |   | (1,301,064 | )      |   |   | (931,056    | )      |   |   | (2,660,480 | ) |
| Proceeds                  on sale of marketable                  securities                                                               |   |                                                 | -          |   |                                               |   | 6,640,001  |   |   |   | -           |   |   |   | 7,609,600 |   |
| Net                  cash provided by (used in)                  investing activities                                                     |   |                                                 | (771,211   | )      |                                               |   | 5,338,937  |   |   |   | (969,188    | )      |   |   | 4,949,120 |   |
| Financing                  Activities                                                                                                     |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |   |   |   |   |
| Repayments                  to related                  parties                                                                           |   |                                                 | -          |   |                                               |   | (37,268    | )      |   |   | -           |   |   |   | (37,268 | ) |
| Proceeds                  from common                  stock                                                                              |   |                                                 | -          |   |                                               |   | -          |   |   |   | -           |   |   |   | 203,000 |   |
| Acquisition                  of treasury                  stock                                                                           |   |                                                 | -          |   |                                               |   | (1,554     | )      |   |   | -           |   |   |   | (6,309 | ) |
| Net                  cash provided by (used in)                  financing activities                                                     |   |                                                 | -          |   |                                               |   | (38,822    | )      |   |   | -           |   |   |   | 159,423 |   |
| Effect                  of exchange rate changes on                  cash                                                                 |   |                                                 | 203,875    |   |                                               |   | (19,646    | )      |   |   | 301,232     |   |   |   | (22,069 | ) |
| Change                  in cash and cash                  equivalents for the period                                                      |   |                                                 | (1,641,484 | )      |                                               |   | 5,020,184  |   |   |   | (4,188,542  | )      |   |   | 4,492,064 |   |
| Cash                  and cash equivalents,                  beginning of period                                                          |   |                                                 | 4,043,408  |   |                                               |   | 3,945,324  |   |   |   | 6,590,466   |   |   |   | 4,473,444 |   |
| Cash                  and cash equivalents, end of                  period                                                                |   | $                                                    | 2,401,924  |   |                                               | $      | 8,965,508  |   |   | $      | 2,401,924   |   |   | $ | 8,965,508 |   |
| CASH                  AND CASH EQUIVALENTS CONSISTS                  OF:                                                                  |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |   |   |   |   |
| Cash                  in                  bank                                                                                            |   |                                                 | 3,844      |   |                                               |   | 2,183,610  |   |   |   | 3,844       |   |   |   | 2,183,610 |   |
| Term                  deposits                                                                                                            |   |                                                 | 2,398,080  |   |                                               |   | 6,781,898  |   |   |   | 2,398,080   |   |   |   | 6,781,898 |   |
|                                                                                                                                      |   | $                                                    | 2,401,924  |   |                                               | $      | 8,965,508  |   |   | $      | 2,401,924   |   |   | $ | 8,965,508 |   |
| SUPPLEMENTAL                  CASH FLOW                  INFORMATION                                                                      |   |                                                 |       |   |                                               |   |       |   |   |   |        |   |   |   |   |   |
| Taxes                  paid                                                                                                               |   | $                                                    | -          |   |                                               | $      | -          |   |   | $      | -           |   |   | $ | - |   |
| Interest                  paid                                                                                                            |   | $                                                    | -          |   |                                               | $      | (12,631    | )      |   | $      | -           |   |   | $ | - |   |
|                                                                                                                                      |   |                                                 |       |   |                                               |   |       |   |   |
| The                  accompanying notes are an                  integral part of these consolidated financial                  statements |   |                                                 |       |   |                                               |   |       |   |   |

----

|                                                                                                                                      |   |                             |   |   |                          |   |   |         |   |   |       |   |   |          |   |   |          |   |       |       |   |   | Accumulated                    |   |   |      |    |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|-------------------------------|--------|--------|--------------|--------|--------|------------|--------|--------|---------------|--------|--------|---------------|--------|------------|------------|--------|--------|--------------------------------|--------|--------|-----------|---------|--------|--------|--------|
|                                                                                                                                      |   |                             |   |   |                          |   |   |         |   |   |       |   |   |          |   |   | Additional    |   |       | Stock      |   |   | Other                          |   |   | Retained  |    |   | Total  |   |
|                                                                                                                                      |   | Preferred                  Stock |   |   | Common                  Stock |   |   | Exchangeable |   |   | Paid-in    |   |   | Subscriptions |   |   | Comprehensive |   |       | Earnings   |   |   | Stockholders'                  |   |
|                                                                                                                                      |   | Shares                           |   |   | Amount                        |   |   | Shares       |   |   | Amount     |   |   | Shares        |   |   | Capital       |   |       | Receivable |   |   | Income                  (Loss) |   |   | (Deficit) |    |   | Equity |   |
| Balance,                  May 31,                  2006                                                                                   |   |                             | -      |   |                          | $      | -      |         |   |   | 15,163,112 |   |   | $             | 15,163 |   |          | $      | -          |       |   | $      | 3,335,380                      |   |   | $         | -       |   |   | $      | 7,352,558 |   |   | $ | 987,862 |   |   | $ | 11,690,963 |   |
| Stock                  options exercised for                  cash                                                                        |   |                             | -      |   |                          | $      | -      |         |   |   | 1,590,000  |   |   | $             | 1,590  |   |          | $      | -          |       |   | $      | 1,144,410                      |   |   | $         | (38,500 | )      |   | $      | - |   |   | $ | - |   |   | $ | 1,107,500 |   |
| Common                  stock issued by private                  placement                                                                |   |                             | -      |   |                          | $      | -      |         |   |   | 3,240,000  |   |   | $             | 3,240  |   |          | $      | -          |       |   | $      | 2,601,229                      |   |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | 2,604,469 |   |
| Acquisition                  of common stock,                  subsequently cancelled                                                     |   |                             | -      |   |                          | $      | -      |         |   |   | (3,588     | )      |   | $             | (3     | )      |          | $      | -          |       |   | $      | (1,127                         | )      |   | $         | -       |   |   | $      | - |   |   | $ | (3,624 | ) |   | $ | (4,754 | ) |
| Acquisition                  of common                  stock                                                                             |   |                             | -      |   |                          | $      | -      |         |   |   | (2,000     | )      |   | $             | (2     | )      |          | $      | -          |       |   | $      | (1,553                         | )      |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | (1,555 | ) |
| Share                  issuance                  costs                                                                                    |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | -          |       |   | $      | (102,922                       | )      |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | (102,922 | ) |
| Stock-based                  compensation                                                                                                 |   |                             | -      |   |                          | $      | -      |         |   |   | 252,250    |   |   | $             | 252    |   |          | $      | -          |       |   | $      | 3,136,090                      |   |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | 3,136,342 |   |
| Accumulated                  other comprehensive                  income                                                                  |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | -          |       |   | $      | -                              |   |   | $         | -       |   |   | $      | (6,514,688 | ) |   | $ | - |   |   | $ | (6,514,688 | ) |
| Net                  loss for the                  year                                                                                   |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | -          |       |   | $      | -                              |   |   | $         | -       |   |   | $      | - |   |   | $ | (18,622,212 | ) |   | $ | (18,622,212 | ) |
| Balance,                  May 31,                  2007                                                                                   |   |                             | -      |   |                          | $      | -      |         |   |   | 20,239,774 |   |   | $             | 20,240 |   |          | $      | -          |       |   | $      | 10,111,507                     |   |   | $         | (38,500 | )      |   | $      | 837,870 |   |   | $ | (17,637,974 | ) |   | $ | (6,706,857 | ) |
| Conversion                  of special warrants -                  Sept.14, 2007 (note 9)                                                 |   |                             | -      |   |                          | $      | -      |         |   |   | 13,121,790 |   |   | $             | 13,122 |   |          | $      | -          |       |   | $      | 15,629,382                     |   |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | 15,642,504 |   |
| Conversion                  of bonus warrants -                  Sept.25, 2007 (note 9)                                                   |   |                             | -      |   |                          | $      | -      |         |   |   | 664,160    |   |   | $             | 664    |   |          | $      | -          |       |   | $      | -                              |   |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | 664 |   |
| Reclassify                  exchangeable shares to                  equity (note 8)                                                       |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | 12,507,376 |       |   | $      | -                              |   |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | 12,507,376 |   |
| Recovery                  of stock subscriptons                  receivable                                                               |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | -          |       |   | $      | -                              |   |   | $         | 38,500  |   |   | $      | - |   |   | $ | - |   |   | $ | 38,500 |   |
| Share                  issuance                  costs                                                                                    |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | -          |       |   | $      | (1,841                         | )      |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | (1,841 | ) |
| Stock-based                  compensation                                                                                                 |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | -          |       |   | $      | 1,040,957                      |   |   | $         | -       |   |   | $      | - |   |   | $ | - |   |   | $ | 1,040,957 |   |
| Accumulated                  other comprehensive                  income                                                                  |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | -          |       |   | $      | -                              |   |   | $         | -       |   |   | $      | 103,085 |   |   | $ | - |   |   | $ | 103,085 |   |
| Net                  income for the                  period                                                                               |   |                             | -      |   |                          | $      | -      |         |   |   | -          |   |   | $             | -      |   |          | $      | -          |       |   | $      | -                              |   |   | $         | -       |   |   | $      | - |   |   | $ | 16,511,301 |   |   | $ | 16,511,301 |   |
| Balance,                  November 30,                  2007                                                                              |   |                             | -      |   |                          | $      | -      |         |   |   | 34,025,724 |   |   | $             | 34,026 |   |          | $      | 12,507,376 |       |   | $      | 26,780,005                     |   |   | $         | -       |   |   | $      | 940,955 |   |   | $ | (1,126,673 | ) |   | $ | 39,135,689 |   |
|                                                                                                                                      |   |                             |   |   |                          |   |   |         |   |   |       |   |   |          |   |   |          |   |       |       |   |   |                           |   |   |      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an                  integral part of these consolidated financial                  statements |

----

----

|   | a) | Related                  parties include former and current directors and officers and companies                  with common management and directorships. Related party accounts                  are                  unsecured with no fixed terms of interest. At November 30, 2007,                  $1,007,611 (May 31, 2007 - $1,009,697) was due from a current director                  of                  the Company. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | An                  officer and the then sole director of the Company earned a fee                  of                  $1,000,000 for the facilitation of the acquisition of the Firebag                  Oil                  Sands Project owned by in 1289307 Alberta Ltd. (as disclosed in                  Note 8(b))                  by the Company. These properties were previously owned by a company                  controlled by this officer who was at the time the sole director                  of the                  Company. The timing of this payment is subject to certain conditions                  as                  set out in an agreement between the parties. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                             |   | Market                    Value                         |    |
|--------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|
|                                                                                             |   | November                    30,                    2007 |    |
| 50,000,000                    ordinary shares --                    Great Northern Oilsands Inc. |   | $                                                       | 225,000 |   |
|                                                                                             |   |                                                    |    |   |

|                                                                                                 |   | November                    30, |       |   | May                    31, |   |
|------------------------------------------------------------------------------------------------------|--------|---------------------------------|------------|--------|----------------------------|--------|
| OIL                    AND GAS INTERESTS --                    SUCCESSFUL EFFORTS METHOD             |   | 2007                            |       |   | 2007                       |   |
| Balance                    beginning of the                    period                                |   | $                               | 37,658,925 |   |                       | $      | 2,964,017 |   |
| Expenditures                    and                    acquisitions                                  |   |                            | 1,561,253  |   |                       |   | 48,457,902 |   |
| Foreign                    currency translation                    adjustment                        |   |                            | 2,706,826  |   |                       |   | 2,108,970 |   |
| Dispositions                                                                                         |   |                            | -          |   |                       |   | (2,651,277 | ) |
| Depletion,                    depreciation and                    impairment of oil and gas property |   |                            | -          |   |                       |   | (5,087,858 | ) |
| Dry                    well and abandoned                    interests                               |   |                            | (528,482   | )      |                       |   | (5,664,773 | ) |
| Geological                    and geophysical                    costs                               |   |                            | (101,715   | )      |                       |   | (2,468,056 | ) |
| Balance                    end of the                    period                                      |   | $                               | 41,296,807 |   |                       | $      | 37,658,925 |   |
|                                                                                                 |   |                            |       |   |                       |   |   |   |

----

| a) | The                  Company entered into a Share Exchange Agreement dated December                  1, 2006,                  with Damascus Energy Inc. (“Damascus”), whereby the Company would acquire                  100% of the issued and outstanding share capital of                  Damascus.  The transaction closed on December 15, 2006, and is                  accounted for using the purchase method.  By acquiring Damascus,                  the Company received the right to earn up to an 80% working interest                  in                  the Dover Oil Sands Project.  Under the terms of the Share                  Exchange Agreement, because the Company did not have enough authorized                  shares to effect the transaction, Patch Energy Inc. (“Energy”) acquired                  all of the issued and outstanding common shares of Damascus (18,852,978                  common shares) in consideration for one share of Class A Preferred                  Voting                  Stock of the Company and 9,426,489 shares of Series A Preferred                  Stock of                  Energy (the “Exchangeable Shares”) that are exchangeable for 9,426,489                  shares of the Company’s common stock.  The Exchangeable Shares                  may be exchanged when the Company has increased its authorized                  common                  stock, however, no recourse exists should approval not be received                  by the                  Company allowing for the conversion of the Exchangeable Shares                  into the                  Company’s common stock.  The shares were valued at $1.32 per                  share based upon the market price of the Company’s common shares at the                  closing date of the transaction.  During the current fiscal                  year, adjustments may be made to finalize the purchase price                  equation.  The president of Damascus, who was also a director of                  Energy prior to the acquisition, was appointed to serve as a director                  of                  the Company.  During the year ended May 31, 2007, a director of                  Energy received $244,840 (CAD$283,019) in connection with the acquisition. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                            |   |   |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|
| Accounts                    receivable                                                                                                                                                                                                                          |   | $      | 279,368    |   |
| Oil                    and gas                    interests                                                                                                                                                                                                     |   |   | 23,475,628 |   |
| Accounts                    payable and accrued                    liabilities                                                                                                                                                                                  |   |   | (7,597,054 | ) |
| Other                    current                    liabilities                                                                                                                                                                                                 |   |   | (427,871   | ) |
| Asset                    retirement                    obligations                                                                                                                                                                                              |   |   | (73,534    | ) |
| Deferred                    income                    taxes                                                                                                                                                                                                     |   |   | (3,213,572 | ) |
|                                                                                                                                                                                                                                                            |   |   |       |   |
| Paid                    by issuance of 9,426,489                    shares of Series A preferred stock of Patch                    Energy Inc., and 1 share of                    Class A preferred voting stock of Patch International                    Inc. |   | $      | 12,442,965 |   |

| b)                             | The                  Company entered into a Share Exchange Agreement dated December                  21, 2006                  with 1289307 Alberta Ltd. (“1289307”), whereby the Company would acquire                  100% of the issued and outstanding share capital of                  1289307.  The transaction closed on January 16, 2007 and is                  accounted for using the purchase method.  By acquiring 1289307                  the Company received the right to earn up to a 75% working interest                  in the                  Firebag Oil Sands Project.  Under the terms of the Share                  Exchange Agreement, since the Company did not have enough authorized                  shares to effect the transaction, Energy acquired all of the issued                  and                  outstanding common shares of 1289307 (500,000 common shares) in                  consideration for one share of Class B Preferred Voting Stock of                  the                  Company and 500,000 shares of Energy that are exchangeable for                  500,000                  shares of the Company’s common stock.  The Exchangeable Shares                  will be exchanged when the Company has increased its authorized                  common                  stock, however no recourse exists should approval not be received                  by the                  Company allowing for the conversion of the Exchangeable Shares                  into the                  Company’s common stock.  The shares were valued at $1.32 per                  share, based upon the market price of the Company’s common shares at the                  closing date of the transaction. |
|----------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 8. |   | ACQUISITIONS                  (Continued) |
|----|--------|-------------------------------------------|

|   | The                  purchase price was allocated to the following assets and liabilities: |
|--------|--------------------------------------------------------------------------------------------|

|                                                                       |   |   |       |
|----------------------------------------------------------------------------|--------|--------|------------|
| Accounts                    receivable                                     |   | $      | 1          |   |
| Oil                    and gas                    interests                |   |   | 5,417,197  |   |
| Other                    current                    liabilities            |   |   | (4,417,197 | ) |
| Promissory                    note payable -- Note                    4(b) |   |   | (1,000,000 | ) |
|                                                                       |   |   |       |   |
| Purchase                    price                                          |   | $      | 1          |   |

|                                                                                                    |   | Issued |      |   | Issue                    Price |   |   | $      |
|---------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------------------------------|--------|--------|--------|
|                                                                                                    |   |   |      |   |                           |   |   |   |   |   |
| Exchangeable                    shares:                                                                 |   |   |      |   |                           |   |   |   |   |   |
| Issued                    on acquisition of Damascus                    (Note 8(a))                     |   |   | 9,426,489 |   |                           | $      | 1.32   |   |   |   | 12,442,965 |   |
| Issued                    in conjunction with the                    acquisition of 1289307 (Note 8(b)) |   |   | 500,000   |   |                           | $      | 1.32   |   |   |   | 660,000 |   |
|                                                                                                    |   |   | 9,926,489 |   |                           |   |   |   |   |   | 13,102,965 |   |
| Fair                    value                    adjustment                                             |   |   | -         |   |                           |   |   |   |   |   | 7,047,807 |   |
| Balance,                    May 31,                    2007                                             |   |   | 9,926,489 |   |                           |   |   |   |   |   | 20,150,772 |   |
| Fair                    value adjustment (to                    September 14, 2007)                     |   |   | -         |   |                           |   |   |   |   |   | (7,643,396 | ) |
| Balance                    - reclassified to                    stockholder's equity                    |   |   | 9,926,489 |   |                           |   |   |   |   |   | 12,507,376 |   |
|                                                                                                    |   |   |      |   |                           |   |   |   |   |   |   |   |

----

|                                                                                     |   | Issued |       |   | Issue                    Price |   |   | $      |
|------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------------------------------|--------|--------|--------|
|                                                                                     |   |   |       |   |                           |   |   |   |   |   |
| Special                    Warrants                                                      |   |   | 8,302,000  |   |                           | $      | 1.50   |   |   |   | 12,453,000 |   |
| Flow-through                    Special                    Warrants                      |   |   | 4,653,750  |   |                           | $      | 1.65   |   |   |   | 7,678,687 |   |
|                                                                                     |   |   |       |   |                           |   |   |   |   |   | 20,131,687 |   |
| Less:  Commissions                    and                    professional fees |   |   | -          |   |                           |   |   |   |   |   | (1,372,654 | ) |
| Net                    proceeds                                                          |   |   |       |   |                           |   |   |   |   |   | 18,759,033 |   |
| Agent's                    Warrants                                                      |   |   | 762,645    |   |                           |   |   |   |   |   | 334,391 |   |
| Bonus                    warrants                                                        |   |   | 166,040    |   |                           |   |   |   |   |   | 298,872 |   |
|                                                                                     |   |   | 13,884,435 |   |                           |   |   |   |   |   | 19,392,296 |   |
| Fair                    value                    adjustments:                            |   |   |       |   |                           |   |   |   |   |   |   |   |
| Special                    Warrants and Flow-through                    Special Warrants |   |   | -          |   |                           |   |   |   |   |   | 7,113,196 |   |
| Agent's                    Warrants                                                      |   |   | -          |   |                           |   |   |   |   |   | (37,819 | ) |
| Bonus                    Warrants                                                        |   |   | -          |   |                           |   |   |   |   |   | 38,189 |   |
| Balance,                    May 31,                    2007                              |   |   | 13,884,435 |   |                           |   |   |   |   |   | 26,505,862 |   |
|                                                                                     |   |   |       |   |                           |   |   |   |   |   |   |   |
| Agent's                    warrants                                                      |   |   | -          |   |                           |   |   |   |   |   | 370,137 |   |
| Fair                    value                    adjustments:                            |   |   |       |   |                           |   |   |   |   |   |   |   |
| Special                    Warrants and Flow-through                    Special Warrants |   |   | -          |   |                           |   |   |   |   |   | (10,920,639 | ) |
| Agent's                    Warrants                                                      |   |   | -          |   |                           |   |   |   |   |   | (127,850 | ) |
| Bonus                    Warrants                                                        |   |   | -          |   |                           |   |   |   |   |   | (185,006 | ) |
| Balance,                    September 14,                    2007                        |   |   | 13,884,435 |   |                           |   |   |   |   |   | 15,642,504 |   |
|                                                                                     |   |   |       |   |                           |   |   |   |   |   |   |   |

----

|                                                                         |   | For                    the six                          |    |   | For                    the                    year |   |
|------------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|--------|----------------------------------------------------|--------|
|                                                                         |   | months                    ended                         |    |   | ended                                              |   |
|                                                                         |   | November                    30,                    2007 |    |   | May                    31,                    2007 |   |
| Beginning                    Asset Retirement                    Obligations |   | $                                                       | 129,959 |   |                                               | $      | 34,379 |   |
|     Liabilities                    acquired              |   |                                                    | -       |   |                                               |   | 73,534 |   |
|     Revisions                                            |   |                                                    | 9,483   |   |                                               |   | 20,858 |   |
|     Accretion                                            |   |                                                    | 4,880   |   |                                               |   | 1,188 |   |
| Total                    Asset Retirement                    Obligations     |   | $                                                       | 144,322 |   |                                               | $      | 129,959 |   |
|                                                                         |   |                                                    |    |   |                                               |   |   |   |

|                                                               |   | For                    the six months                    ended |      |   | For                    the year                    ended |   |
|--------------------------------------------------------------------|--------|----------------------------------------------------------------|-----------|--------|----------------------------------------------------------|--------|
|                                                               |   | November                    30,                    2007        |      |   | May                    31,                    2007       |   |
|                                                               |   |                                                           |      |   | Weighted                                                 |   |   |   |   |   | Weighted |   |
| Stock                    Options                                   |   | Number                    of                                   |      |   | Average                                                  |   |   | Number                    of |   |   | Average |   |
|                                                               |   | Options                                                        |      |   | Exercise                    Price                        |   |   | Options |   |   | Exercise                    Price |   |
| Balance,                    beginning of                    period |   |                                                           | 3,225,000 |   |                                                     | $      | 1.40 |   |   |   | 2,272,500 |   |   | $ | 0.75 |   |
|     Granted                                    |   |                                                           | 40,000    |   |                                                     |   | 2.32 |   |   |   | 4,265,000 |   |   |   | 1.33 |   |
|     Expired                                    |   |                                                           | -         |   |                                                     |   | - |   |   |   | (300,000 | ) |   |   | 0.39 |   |
|     Forfeited                                  |   |                                                           | (75,000   | )      |                                                     |   | 1.75 |   |   |   | (672,500 | ) |   |   | 0.60 |   |
|     Cancelled                                  |   |                                                           | -         |   |                                                     |   | - |   |   |   | (750,000 | ) |   |   | 1.20 |   |
|     Exercised                                  |   |                                                           | -         |   |                                                     |   | - |   |   |   | (1,590,000 | ) |   |   | 0.72 |   |
| Balance,                    end of                    period       |   |                                                           | 3,190,000 |   |                                                     | $      | 1.40 |   |   |   | 3,225,000 |   |   | $ | 1.40 |   |

----

|                                                                                    |   | Six                    Months                    Ended |   |
|-----------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                                    |   | November                    30,                        |   |
|                                                                                    |   | 2007                                                   |   |   | 2006 |   |
|                                                                                    |   | $                                                      |   |   |   | $ |   |   |
| Revenue:                                                                                |   |                                                   |   |   |   |   |   |   |
| Oil                    and Gas                                                          |   |                                                   | -      |   |   |   | 58,726 |   |
| Expenses                                                                                |   |                                                   | -      |   |   |   | 15,722 |   |
| Net                    operating income from                    discontinued operations |   |                                                   | -      |   |   |   | 43,004 |   |
|                                                                                    |   |                                                   |   |   |   |   |   |   |

|                                                                                         |   | For                    the six months                    ended |       |
|----------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|------------|
|                                                                                         |   | November                    30,                    2007        |       |
|                                                                                         |   | Before                    Tax                    Amount        |       |   | Tax                    (Expense) or                    Benefit |   |   | Net-of-Tax                    Amount |   |
| Foreign                    currency translation                    adjustment                |   | $                                                              | 103,085    |   |   | $ | - |   |   | $ | 103,085 |   |
| Other                    comprehensive                    income                             |   | $                                                              | 103,085    |   |   | $ | - |   |   | $ | 103,085 |   |
|                                                                                         |   |                                                           |       |   |   |   |   |   |   |   |   |   |
|                                                                                         |   | For                    the six months                    ended |       |
|                                                                                         |   | November                    30,                    2006        |       |
|                                                                                         |   | Before                    Tax                    Amount        |       |   | Tax                    (Expense) or                    Benefit |   |   | Net-of-Tax                    Amount |   |
| Marketable                    securities:                                                    |   |                                                           |       |   |   |   |   |   |   |   |   |   |
| Decrease                    in unrealized gain on                    marketable securities   |   | $                                                              | (6,605,383 | ) |   | $ | 1,981,615 |   |   | $ | (4,623,768 | ) |
| Holding                    gain                                                              |   |                                                           | 2,992,526  |   |   |   | (897,758 | ) |   |   | 2,094,768 |   |
| (Decrease)                    in unrealized gain on                    marketable securities |   |                                                           | (3,612,857 | ) |   |   | 1,083,857 |   |   |   | (2,529,000 | ) |
| comprehensive                    income                                                      |   |                                                           |       |   |   |   |   |   |   |   |   |   |
| Foreign                    currency translation                    adjustment                |   |                                                           | (60,699    | ) |   |   | - |   |   |   | (60,699 | ) |
| Other                    comprehensive income                    (loss)                      |   | $                                                              | (3,673,556 | ) |   | $ | 1,083,857 |   |   | $ | (2,589,699 | ) |

| For                    the year ended May                    31, |    |
|------------------------------------------------------------------|---------|
| 2008                                                             |    |   | 2009 |   |   | 2010 |   |
| $                                                                | 123,697 |   |   | $ | 247,002 |   |   | $ | 20,584 |   |

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|                                                           | For        | Against   | Abstain   | Broker                Non-Votes |
|----------------------------------------------------------------|------------|-----------|-----------|---------------------------------|
| Increase                authorized common stock to 300,000,000 | 15,303,338 | 885,225   | 9,159     | -                               |
| Change                quorum requirement to one-third          | 15,123,075 | 1,049,305 | 25,342    | -                               |
| Approve                the 2007 Stock Option Plan              | 10,936,021 | 902,646   | 4,359,055 | -                               |

----

| RegulationS-B                  Number | Exhibit                                                                                                                                                                                                                                                                    |
|---------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1                                   | Arrangement                  Agreement made among Praxis Pharmaceuticals Inc. and Patch Energy                  Inc.                  dated as of October 20, 2003 (1)                                                                                                     |
| 2.2                                   | Articles                  of Merger Merging Praxis Pharmaceuticals Inc., a Utah Corporation,                  into                  Patch International Inc., a Nevada Corporation (2)                                                                                     |
| 2.3                                   | Share                  Exchange Agreement among the shareholders of Damascus Energy Inc.,                  Patch                  Energy Inc., Patch International Inc., and Damascus Energy Inc.                  dated                  December 15, 2006 (3)       |
| 2.4                                   | Share                  Exchange Agreement among the shareholders of 1289307 Alberta Ltd.,                  Patch                  Energy Inc., Patch International Inc., and 1289307 Alberta Ltd.                  dated                  January 16, 2007 (4)             |
| 3.1                                   | Articles                  of Incorporation, as amended (5)                                                                                                                                                                                                                 |
| 3.2                                   | Bylaws                  (5)                                                                                                                                                                                                                                                |
| 3.3                                   | Certificate                  of Change Pursuant to NRS 78.209 (6)                                                                                                                                                                                                          |
| 3.4                                   | Certificate                  of Change Pursuant to NRS 78.209 (7)                                                                                                                                                                                                          |
| 3.5                                   | Certificate                  of Amendment to Articles of Incorporation (8)                                                                                                                                                                                                 |
| 4.1                                   | Certificate                  of Designation of Class A Preferred Voting Stock (3)                                                                                                                                                                                          |
| 4.2                                   | Certificate                  of Designation of Class B Preferred Voting Stock (4)                                                                                                                                                                                          |
| 4.3                                   | Form                  of Non-Flow-Through Special Warrant Certificate (9)                                                                                                                                                                                                  |
| 4.4                                   | Form                  of Flow-Through Special Warrant Certificate (9)                                                                                                                                                                                                      |
| 4.5                                   | Form                  of Bonus Warrant Certificate (9)                                                                                                                                                                                                                     |
| 4.6                                   | Form                  of Agent Warrant Certificate (9)                                                                                                                                                                                                                     |
| 10.1                                  | Management                  services agreement with David Stadnyk dated May 1, 2005                  (5)                                                                                                                                                                   |
| 10.2                                  | Change                  of Control Agreement with David Stadnyk dated May 1,                  2005 (5)                                                                                                                                                                |
| 10.3                                  | 2006                  Stock Option Plan (10)                                                                                                                                                                                                                               |
| 10.4                                  | Exchange                  and Voting Trust Agreement among Patch International Inc., Patch                  Energy                  Inc., 1286664 Alberta Ltd., and the shareholders of Damascus Energy                  Inc.                  dated December 15, 2006 (3) |
| 10.5                                  | Support                  Agreement among Patch International Inc., Patch Energy Inc., and                  1286664                  Alberta Ltd. dated December 15, 2006 (3)                                                                                               |
| 10.6                                  | Farmout                  Agreement Between Damascus Energy Inc. and Bounty Developments                  Ltd. dated                  November 30, 2006 (11)                                                                                                                |
| 10.7                                  | Exchange                  and Voting Trust Agreement among Patch International Inc., Patch                  Energy                  Inc., 1286664 Alberta Ltd., and the shareholders of 1289307 Alberta                  Ltd.                  dated January 16, 2007 (4)  |
| 10.8                                  | Support                  Agreement among Patch International Inc., Patch Energy Inc., and                  1286664                  Alberta Ltd. dated January 16, 2007 (4)                                                                                                |
| 10.9                                  | Farmout                  Agreement dated December                  12, 2006 (4)                                                                                                                                                                                            |
| 10.10                                 | Conveyance                  Agreement among 1289307 Alberta Ltd and 1286664 Alberta Ltd. dated December                  21, 2006                  (4)                                                                                                                     |
| 10.11                                 | Demand                  Promissory Note issued by 1289307 Alberta Ltd to 1286664 Alberta                  Ltd. dated December                  21, 2006                  (4)                                                                                               |
| 10.12                                 | Amending                  Agreement between Bounty                  Developments Ltd., 1286664 Alberta Ltd., and Damascus Energy Inc.                  dated                  January 22, 2007 (4)                                                                         |
| 10.13                                 | Agency                  Agreement among Patch International Inc., Canaccord Capital Corporation                  and Wellington West Capital Markets Inc. dated February 27, 2007                  (9)                                                                     |
| 10.14                                 | Amending                  Agreement between Bounty                  Developments Ltd., 1286664 Alberta Ltd., and Damascus Energy Inc.                  dated February 20, 2007 (11)                                                                                        |
| 10.15                                 | Amending                  Agreement between Bounty                  Developments Ltd. and 1286664 Alberta Ltd., dated April 16, 2007                  (11)                                                                                                                 |

----

| RegulationS-B                  Number | Exhibit |
|---------------------------------------|---------|

| 10.16 | Confirmation                  of Earning between Damascus Energy Inc. and Bounty Developments                  Ltd. dated                  April 16, 2007 (11)                            |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.17 | 2007                  Stock Option Plan                  (12)                                                                                                                             |
| 16    | Letter                  from Morgan & Company                  dated March 8, 2007 (13)                                                                                               |
| 31.1  | Rule                  13a-14(a) Certification of Principal Executive Officer and Principal                  Financial Officer                                                             |
| 32.1  | Certification                  Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section                  906 of                  the Sarbanes-Oxley Act of                  2002 |

| (1)   | Incorporated                by reference to the exhibits filed with the registrant’s current report on                Form 8-K dated March 15, 2004, filed March 19,                2004. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Incorporated                by reference to the exhibit filed with the registrant’s current report on                Form 8-K dated June 15, 2004, filed June 15,                2004. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Incorporated                by reference to the exhibits filed with the registrant’s current report on                Form 8-K dated December 15, 2006, filed December 26,                2006. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | Incorporated                by reference to the exhibits filed with the registrant’s current report on                Form 8-K dated January 16, 2007, filed February 6,                2007. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | Incorporated                by reference to the exhibits filed with the registrant’s annual report on                Form 10-KSB for the fiscal year ended May 31, 2005, filed September                14,                2005. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)   | Incorporated                by reference to the exhibits filed with the registrant’s current report on                Form 8-K dated July 8, 2005, filed July 19,                2005. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7)   | Incorporated                by reference to the exhibits filed with the registrant’s current report on                Form 8-K dated March 14, 2006, filed March 14,                2006. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8)   | Incorporated                by reference to the exhibit filed with the registrant’s current report on                Form 8-K dated September 14, 2007, filed September 17,                2007. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9)   | Incorporated                by reference to the exhibits filed with the registrant’s current report on                Form 8-K dated February 27, 2007, filed March 1,                2007. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10)   | Incorporated                by reference to the exhibits filed with the registrant’s annual report on                Form 10-KSB for the fiscal year ended May 31, 2006, filed August                24,                2006. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11)   | Incorporated                by reference to the exhibits filed with the registrant’s quarterly report                on Form 10-QSB for the quarter ended February 28, 2007, filed April                30,                2007. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (12)   | Incorporated                by reference to the exhibits filed with the registrant’s current report on                Form 8-K/A dated September 14, 2007, filed November 15,                2007. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (13)   | Incorporated                by reference to the exhibits filed with the registrant’s current report on                Form 8-K dated March 3, 2007, filed March 9,                2007. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (14)   | Incorporated                by reference to the exhibits filed with the registrant’s registration                statement on Form SB-2 filed May 9,                2007. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             | PATCH                INTERNATIONAL INC.                                                                                              |
|--------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                             |                                                                                                                                 |
| Date:  January                14, 2008 | By:                           /s/ Jason G.                Dagenais___________ |
|                                             | Jason                G. Dagenais, Chief                Operating Officer                                                             |
|                                             | and                Interim Chief Financial                Officer                                                                    |

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