UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 For the quarterly period ended: FEBRUARY 28, 2007

[  ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
         For the transition period from __________________ to __________________


                         Commission file number: 0-28627


                            PATCH INTERNATIONAL INC.
        (Exact name of small business issuer as specified in its charter)


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


       SUITE 300, 441 - 5TH AVENUE S.W., CALGARY, ALBERTA, CANADA T2P 2V1
                    (Address of principal executive offices)

                                 (403) 441-4390
                           (Issuer's telephone number)

      1220 - 666 BURRARD STREET, VANCOUVER, BRITISH COLUMBIA V6C 2X8 CANADA
            (Former name, former address and former fiscal year, if
                           changed since last report)

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

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 20,241,774 SHARES OF COMMON STOCK,
$.001 PAR VALUE, AS OF APRIL 3, 2007

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


<PAGE>
PATCH INTERNATIONAL INC.
February 28, 2007
(unaudited)
                                                                            Page

Consolidated Balance Sheets                                                 3

Consolidated Statements of Operations                                       4

Consolidated Statements of Cash Flows                                       5

Notes to the Consolidated Financial Statements                              6























                                       2
<PAGE>
PATCH INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)
(unaudited)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                      FEBRUARY 28,                  MAY 31,
                                                                                          2007                       2006
----------------------------------------------------------------------------------------------------------------------------
                                                                                            $                          $
<S>                                                                                  <C>                         <C>
ASSETS
Current Assets
     Cash and cash equivalents                                                       14,369,791                   4,473,444
     Accounts receivable                                                                407,293                      29,260
     Due from related parties (Note 6)                                                1,012,836                           -
     Prepaid expenses and other                                                         107,481                      70,603
----------------------------------------------------------------------------------------------------------------------------

Total Current Assets                                                                 15,897,401                   4,573,307
Available-for-sale securities (Note 3)                                                        -                   7,241,000
Property and equipment                                                                   67,241                       1,452
Oil and gas interests (successful efforts method) (Note 4)                           42,604,389                   2,964,017
----------------------------------------------------------------------------------------------------------------------------
Total Assets                                                                         58,569,031                  14,779,776
============================================================================================================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
     Accounts payable and accrued liabilities                                         2,615,508                     215,694
     Deposit (Note 13)                                                                   84,724                           -
     Income taxes payable (Note 3)                                                    2,671,261                   2,181,000
     Due to related parties (Note 6)                                                  1,000,000                      86,878
----------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                             6,371,493                   2,483,572
Exchangeable shares (Note 5)                                                         13,102,965                           -
Special warrants (Note 10)                                                           18,759,033                           -
Asset retirement obligations (Note 7)                                                   326,614                      34,379
Deferred income taxes                                                                 3,720,926                           -
----------------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                    42,281,031                   2,517,951
----------------------------------------------------------------------------------------------------------------------------
Non-controlling Interest                                                                722,689                     570,862

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:
25,000,000 common shares authorized with par value of $0.001 per
share; 20,239,774 shares issued and outstanding (excludes 2,000
shares held in treasury - Note 9) (May 31, 2006 - 15,163,112 shares)                     20,240                      15,163
Additional paid-in capital                                                            9,462,763                   3,335,380
Stock subscriptions receivable                                                         (117,790)                          -
Accumulated other comprehensive (loss) income                                           (68,175)                  7,352,558
Retained earnings                                                                     6,268,273                     987,862
----------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                           15,565,311                  11,690,963
----------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity                                           58,569,031                  14,779,776
============================================================================================================================

Commitments (Note 12)
Subsequent event (Note 13)
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements

                                       3
<PAGE>
PATCH INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
(unaudited)

<TABLE>
<CAPTION>
                                                                       FOR THE THREE MONTHS             FOR THE NINE MONTHS
                                                                               ENDED                           ENDED
                                                                            FEBRUARY 28                     FEBRUARY 28
                                                                            -----------                     -----------
                                                                     2007             2006             2007             2006
--------------------------------------------------------------------------------------------------------------------------------
                                                                       $              $                $                $
<S>                                                             <C>               <C>              <C>              <C>
Revenue
     Oil and gas                                                    34,710            58,345          100,319          142,427
--------------------------------------------------------------------------------------------------------------------------------
Expenses
     Depletion, depreciation, impairment and accretion               7,584            55,640           48,123           90,265
     Dry hole costs                                              1,291,483                 -        1,291,483                -
     General and administrative                                  2,761,088           655,876        4,387,829        1,440,833
     Oil and gas production, royalties and other                    12,628           118,663           41,461          156,081
--------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses                                         4,072,783           830,179        5,768,896        1,687,179
--------------------------------------------------------------------------------------------------------------------------------
Other Income

     Interest and other                                            (38,075)           63,821          112,671           64,441
     Gain on sale of available-for-sale securities               6,074,719           275,129       13,684,318        6,228,130
     Non-controlling interest in net loss                            3,884                 -           23,649                -
--------------------------------------------------------------------------------------------------------------------------------
Total Other Income                                               6,040,528           338,950       13,820,638        6,292,571
--------------------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Income Taxes                                2,002,455          (432,884)       8,152,061        4,747,819

Provision For Income Taxes
     Current                                                      (392,760)          (10,243)      (2,671,261)      (2,110,243)
     Deferred                                                     (196,766)                -         (196,766)               -
--------------------------------------------------------------------------------------------------------------------------------
                                                                  (589,526)          (10,243)      (2,868,027)      (2,110,243)
--------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss)                                                1,412,929          (443,127)       5,284,034        2,637,576
--------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income (Loss) (Note 11)

     Available-for-sale securities:
         Reclassification to realized gain                      (2,617,231)         (186,000)      (7,240,999)      (1,865,000)
         Holding gain (loss)                                    (2,094,768)          500,000                -        3,587,000
--------------------------------------------------------------------------------------------------------------------------------
     Increase (decrease) in unrealized gain on
     available-for-sale securities                              (4,711,999)          314,000       (7,240,999)       1,722,000
     securities

     Foreign currency translation adjustment                      (119,035)                -         (179,734)               -
--------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income (Loss)                               (4,831,034)          314,000       (7,420,733)       1,722,000
--------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income  (Loss)                                    (3,418,105)         (129,127)      (2,136,699)       4,359,576
================================================================================================================================

Net Income Per Share

     Basic                                                            0.07             (0.03)            0.31             0.20
     Diluted                                                          0.07             (0.03)            0.31             0.19
Weighted Average Number Of Common Stock Outstanding

     Basic                                                      19,173,000        13,775,000       16,820,000       13,457,000
     Diluted                                                    19,209,000        14,383,000       16,856,000       13,729,000
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements

                                       4
<PAGE>
PATCH INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
(unaudited)

<TABLE>
<CAPTION>
                                                                                                    FOR THE
                                                                                                  NINE MONTHS
                                                                                                     ENDED
                                                                                                  FEBRUARY 28
--------------------------------------------------------------------------------------------------------------------------------
                                                                                        2007                      2006
-------------------------------------------------------------------------------------------------------------------------------
                                                                                          $                          $
<S>                                                                                <C>                         <C>
Operating Activities
     Net income                                                                      5,284,034                  2,637,576
     Adjustments for items not involving cash:
        Depletion, depreciation, impairment and accretion                               48,878                     90,265
        Stock-based compensation                                                     2,384,676                    490,079
        Deferred income taxes                                                          196,766                          -
        Gain on sale of available-for-sale securities                              (13,684,318)                (6,228,130)
        Non-controlling interest in net loss                                           (23,649)                         -
        Decrease (increase) in accounts receivable                                    (100,622)                   (23,363)
        (Increase) decrease in prepaid expenses and other                              (39,379)                      (530)
        Increase in due to related parties                                             (98,562)                  (256,157)
        Increase in accounts payable and accrued liabilities                        (6,329,800)                   (88,182)
        Increase in income taxes payable                                               490,261                  1,885,000
-----------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities                                              (11,871,715)                (1,493,442)
-----------------------------------------------------------------------------------------------------------------------------
Investing Activities
     Third party contribution to limited partnership                                   171,223                          -
     Purchase of equipment                                                             (66,660)                         -
     Deposit                                                                            84,724                          -
     Oil and gas interests                                                         (14,167,400)                  (722,826)
     Proceeds on sale of available-for-sale securities                              13,684,319                  6,228,130
-----------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities                                   (293,794)                 5,505,304
-----------------------------------------------------------------------------------------------------------------------------
Financing Activities
     Proceeds from special warrants                                                 18,759,033                          -
     Proceeds from common stock                                                      3,632,680                    499,750
     Acquisition of treasury stock                                                      (6,309)                   (90,559)
-----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                           22,385,404                    409,191
-----------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                                               (323,548)                         -
-----------------------------------------------------------------------------------------------------------------------------
Change in cash and cash equivalents for the period                                   9,896,347                  4,421,053

Cash and cash equivalents, beginning of period                                       4,473,444                    128,872
-----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                            14,369,791                  4,549,925
=============================================================================================================================

CASH AND CASH EQUIVALENTS CONSIST OF:
      Cash in bank                                                                   1,868,072                  1,536,052
      Term deposits                                                                 12,501,719                  3,013,873
-----------------------------------------------------------------------------------------------------------------------------
                                                                                    14,369,791                  4,549,925
=============================================================================================================================

SUPPLEMENTAL CASH FLOW INFORMATION
     Taxes paid                                                                      2,256,649                    225,243
     Interest paid                                                                      49,494                     36,451
=============================================================================================================================
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements

                                       5
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)

1.   BASIS OF PRESENTATION

The unaudited  consolidated  financial information furnished herein reflects all
adjustments,  which in the opinion of management,  are necessary to fairly state
the  Company's   consolidated   financial   position  and  the  results  of  its
consolidated  operations for the periods  presented.  This report on Form 10-QSB
should  be  read  in  conjunction  with  the  Company's  consolidated  financial
statements  and notes  thereto  included  in the  Company's  Form 10-KSB for the
fiscal  year  ended May 31,  2006.  The  Company  assumes  that the users of the
interim  financial  information  herein  have read or have access to the audited
financial  statements  for the  preceding  fiscal year and that the  adequacy of
additional  disclosure  needed for a fair presentation may be determined in that
context.  Accordingly,  footnote disclosure, which would substantially duplicate
the disclosure  contained in the Company's Form 10-KSB for the fiscal year ended
May 31, 2006,  has been  omitted.  The results of  operations  for the three and
nine-month  periods ended  February 28, 2007 are not  necessarily  indicative of
results  that may be expected  for the fiscal year  ending May 31,  2007.  These
unaudited interim financial statements reflect all adjustments which are, in the
opinion of  management,  necessary  for a fair  statement of the results for the
interim periods presented and follow similar significant  accounting policies to
the  Company's  Form  10-KSB  for  fiscal  year  ended May 31,  2006  except for
Flow-Through Shares. A portion of the Company's exploration activities have been
financed through the issue of flow-through common shares. Under the terms of the
share issue,  the related resource  expenditure  deductions are renounced to the
shareholder  in  accordance  with  income  tax  legislation.  Upon  issue of the
flow-through  shares,  the proceeds are allocated between the offering of shares
and the sale of tax benefits to investors.  The  allocation is made based on the
difference  between  the  quoted  price of the  Company's  shares and the amount
received for the flow-through  shares, with a liability being recognized for the
difference.  The  liability is reversed  when tax benefits are  renounced  and a
deferred  tax  liability  is  recognized  at that time.  Income  tax  expense is
recognized for the  difference  between the amount of the deferred tax liability
recognized on issuance.

2.   RECENT PRONOUNCEMENTS

In February 2007, the Financial  Accounting Standards Board ("FASB") issued SFAS
No.  159,   "THE  FAIR  VALUE  OPTION  FOR   FINANCIAL   ASSETS  AND   FINANCIAL
LIABILITIES--INCLUDING   AN   AMENDMENT  OF  FASB   STATEMENT   NO.  115."  This
pronouncement  permits  entities to use the fair value method to measure certain
financial  assets and  liabilities by electing an irrevocable  option to use the
fair value method at specified  election  dates.  After  election of the option,
subsequent  changes in fair value would result in the  recognition of unrealized
gains or losses as period costs during the period the change occurred.  SFAS No.
159 becomes  effective as of the  beginning of the first fiscal year that begins
after November 15, 2007, with early adoption  permitted.  However,  entities may
not retroactively apply the provisions of SFAS No. 159 to fiscal years preceding
the date of adoption.  The Company is currently  evaluating the impact that SFAS
No. 159 may have on the financial position, results of operations and cash flows
of the Company.

In September  2006,  the FASB issued SFAS No. 158,  "EMPLOYERS'  ACCOUNTING  FOR
DEFINED  BENEFIT PENSION AND OTHER  POSTRETIREMENT  PLANS - AN AMENDMENT OF FASB
STATEMENTS NO. 87, 88, 106, AND 132(R)".  This statement  requires  employers to
recognize  the   overfunded  or   underfunded   status  of  a  defined   benefit
postretirement  plan (other than a multiemployer  plan) as an asset or liability
in its statement of financial  position and to recognize  changes in that funded
status in the year in which the changes occur through  comprehensive income of a
business  entity or  changes  in  unrestricted  net  assets of a  not-for-profit
organization.  This  statement  also  requires an employer to measure the funded
status of a plan as of the date of its year-end statement of financial position,
with  limited  exceptions.  The  provisions  of SFAS No. 158 are  effective  for
employers  with publicly  traded  equity  securities as of the end of the fiscal
year ending  after  December 15,  2006.  The  adoption of this  statement is not
expected to have a material effect on the Company's  future  reported  financial
position or results of operations.



                                       6
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


2.   RECENT PRONOUNCEMENTS (CONTINUED)

In September 2006, the FASB issued SFAS No. 157, "FAIR VALUE MEASUREMENTS".  The
objective of SFAS 157 is to increase consistency and comparability in fair value
measurements and to expand disclosures about fair value  measurements.  SFAS 157
defines  fair  value,  establishes  a  framework  for  measuring  fair  value in
generally accepted  accounting  principles,  and expands  disclosures about fair
value measurements.  SFAS 157 applies under other accounting pronouncements that
require or permit  fair value  measurements  and does not  require  any new fair
value measurements.  The provisions of SFAS No. 157 are effective for fair value
measurements  made in fiscal  years  beginning  after  November  15,  2007.  The
adoption of this  statement  is not  expected  to have a material  effect on the
Company's future reported financial position or results of operations.

In June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued FASB
Interpretation   No.  48,  "ACCOUNTING  FOR  UNCERTAINTY  IN  INCOME  TAXES,  AN
INTERPRETATION  OF FASB STATEMENTS NO. 109". FIN 48 clarifies the accounting for
uncertainty in income taxes by prescribing a two-step method of first evaluating
whether a tax position has met a more likely than not recognition  threshold and
second,  measuring  that tax position to  determine  the amount of benefit to be
recognized  in  the  financial  statements.  FIN  48  provides  guidance  on the
presentation  of such  positions  within a  classified  statement  of  financial
position as well as on  derecognition,  interest and  penalties,  accounting  in
interim  periods,  disclosure,  and  transition.  FIN 48 is effective for fiscal
years  beginning  after December 15, 2006. The adoption of this statement is not
expected to have a material effect on the Company's  future  reported  financial
position or results of operations.

In March  2006,  the FASB  issued SFAS No. 156,  "ACCOUNTING  FOR  SERVICING  OF
FINANCIAL  ASSETS,  AN  AMENDMENT  OF FASB  STATEMENT  NO. 140,  ACCOUNTING  FOR
TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES".
This statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent  measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization  and impairment  requirements of
Statement No. 140. The subsequent measurement of separately recognized servicing
assets and  servicing  liabilities  at fair value  eliminates  the necessity for
entities  that  manage the risks  inherent  in  servicing  assets and  servicing
liabilities  with  derivatives  to qualify for hedge  accounting  treatment  and
eliminates  the  characterization  of declines in fair value as  impairments  or
direct write-downs.  SFAS No. 156 is effective for an entity's first fiscal year
beginning  after  September  15,  2006.  The  adoption of this  statement is not
expected to have a material effect on the Company's  future  reported  financial
position or results of operations.

In February 2006, the FASB issued SFAS No. 155,  "ACCOUNTING  FOR CERTAIN HYBRID
FINANCIAL  INSTRUMENTS-AN  AMENDMENT  OF FASB  STATEMENTS  NO. 133 AND 140",  to
simplify  and  make  more  consistent  the  accounting  for  certain   financial
instruments.  SFAS No. 155  amends  SFAS No.  133,  "ACCOUNTING  FOR  DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES", to permit fair value re-measurement for any
hybrid  financial  instrument  with an embedded  derivative that otherwise would
require  bifurcation,  provided that the whole  instrument is accounted for on a
fair  value  basis.  SFAS No.  155  amends  SFAS No.  140,  "ACCOUNTING  FOR THE
IMPAIRMENT   OR  DISPOSAL  OF   LONG-LIVED   ASSETS",   to  allow  a  qualifying
special-purpose  entity to hold a derivative  financial instrument that pertains
to a beneficial  interest other than another  derivative  financial  instrument.
SFAS No. 155 applies to all financial  instruments  acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006,
with earlier application allowed. The adoption of this statement is not expected
to have a material effect on the Company's future reported financial position or
results of operations.






                                       7
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


3.   AVAILABLE-FOR-SALE SECURITIES

At  February  28,  2007,  the Company  owns no  ordinary  shares (May 31, 2006 -
6,791,937) of Pharmaxis Ltd. ("Pharmaxis"),  an Australian company listed on the
Australian Stock Exchange. The Company recorded the ordinary shares of Pharmaxis
at market value, net of tax.

During the nine-month period ended February 28, 2007, the Company sold 6,791,937
Pharmaxis  shares for gross  proceeds  of  $13,684,319,  and  realized a gain of
$13,684,318, before applicable taxes.

                                            Market Value
                                            February 28,
                                               2007
                                          -----------------
     No ordinary shares                   $              -
                                          =================


                                           Market Value
                                           May 31, 2006
                                          -----------------
     6,791,937 ordinary shares            $      7,241,000
                                          =================


The Company paid  Australian  taxes of  $2,256,649  (AUS$2,861,657)  on sales of
Pharmaxis'  shares up to May 31,  2006,  on  December  1, 2006.  The Company has
accrued an estimate of Australian taxes of $2,671,261  (AUS$3,367,702)  on sales
of Pharmaxis' shares during the nine-month period ended February 28, 2007.

4.   OIL AND GAS INTERESTS

<TABLE>
<CAPTION>
                                                                         February 28,                  May 31,
                                                                             2007                       2006
                                                                   ------------------------   ------------------------
<S>                                                                <C>                        <C>
OIL AND GAS INTERESTS - SUCCESSFUL EFFORTS METHOD

Balance beginning of the period                                    $           2,964,017      $             198,284
Expenditures                                                                  39,681,046                  3,029,321
Depletion and depreciation                                                      (40,674)                  (193,888)
Dry well and abandoned interests                                                       -                   (69,700)
                                                                   ------------------------   ------------------------
Balance end of the period                                          $          42,604,389      $           2,964,017
                                                                   ========================   ========================

Represented by:

British Columbia, Canada
Non-producing interests                                            $             428,977      $                   -
                                                                   ------------------------   ------------------------
                                                                                 428,977                          -
Alberta, Canada
Non-producing interests                                                       42,076,374                  2,846,147
Producing interests subject to depletion and amortization                        151,974                    150,739
Accumulated depletion and depreciation                                         (142,462)                  (121,060)
                                                                   ------------------------   ------------------------
                                                                              42,085,886                  2,875,826
Saskatchewan, Canada
Producing interests subject to depletion and amortization                        293,285                    243,004
Accumulated depletion and depreciation                                         (203,759)                  (154,813)
                                                                   ------------------------   ------------------------
                                                                                  89,526                     88,191
                                                                   ------------------------   ------------------------
                                                                   $          42,604,389      $           2,964,017
                                                                   ========================   ========================
</TABLE>

                                       8
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


5.   ACQUISITIONS

  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.  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") (a wholly-owned subsidiary of the
     Company)  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 (the "Preferred  Voting Share") 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 Preferred Voting Share entitles the holder to attend and vote at
     all  meetings  of holders  of shares of common  stock of the  Company.  The
     maximum number of votes  attached to the Preferred  Voting Share equals the
     number of  shares of common  stock of the  Company  into  which the  Energy
     Exchangeable  Shares issued in conjunction  with the Preferred Voting share
     are at that time outstanding are then exchangeable. The Exchangeable Shares
     will be exchanged  when the Company has  increased  its  authorized  common
     stock.  The shares were valued at $1.32,  based upon the  weighted  average
     market  price of the  Company's  common  shares at the closing  date of the
     transaction.  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. A director of Energy received $244,840 (CAD$283,019) in connection
     with the acquisition.

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


<TABLE>
<CAPTION>
<S>                                                                                 <C>
       Accounts receivable                                                          $          279,368
       Oil and gas properties                                                               23,475,628
       Accounts payable and accrued liabilities                                             (7,597,054)
       Other current liabilities                                                              (427,871)
       Asset retirement obligation                                                             (73,534)
       Future 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
                                                                                    ===================
</TABLE>

     PRO FORMA RESULTS (UNAUDITED):

     The pro forma  data of the  Company  set forth  below  gives  effect to the
     purchase  transactions  completed in fiscal 2007 as if they had occurred at
     the  beginning  of fiscal 2007 and at the  beginning  of fiscal  2006.  The
     unaudited pro forma  financial  information is not intended to represent or
     be indicative of the consolidated results of operations of the Company that
     would have been reported had the acquisition been completed as of the dates
     presented,  and  should  not be  taken  as  representative  of  the  future
     consolidated results of operations of the Company.

<TABLE>
<CAPTION>
                                                                            June 1, 2006 to        June 1, 2005 to
                                                                              February 28,           February 28,
                                                                                 2007                   2006
                                                                                   $                      $
     ==============================================================================================================
<S>                                                                            <C>                     <C>
     Pro Forma Revenue                                                           100,319                 142,427
     --------------------------------------------------------------------------------------------------------------
     Pro Forma Net Income                                                      4,538,394               2,639,665
     ==============================================================================================================
     Pro Forma Net Income Per Share - Basic and Diluted                             0.27                    0.20
     ==============================================================================================================
</TABLE>


                                       9
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


5.   ACQUISITIONS (CONTINUED)

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.  Under the terms of the Share Exchange Agreement,  because
     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  (the  "Preferred  Voting
     Share")  and  500,000  shares of Series A  Preferred  Stock of Energy  (the
     "Exchangeable  Shares")  that are  exchangeable  for 500,000  shares of the
     Company's  common stock.  The Preferred Voting Share entitles the holder to
     attend and vote at all meetings of holders of shares of common stock of the
     Company. The maximum number of votes attached to the Preferred Voting Share
     equals the number of shares of common  stock of the Company  into which the
     Energy  Exchangeable Shares issued in conjunction with the Preferred Voting
     share are at that time outstanding are then exchangeable.  The Exchangeable
     Shares will be  exchanged  when the Company has  increased  its  authorized
     common  stock.  The shares  were valued at $1.32,  based upon the  weighted
     average market price of the Company's  common shares at the closing date of
     the transaction.  A private Alberta company controlled by an officer of the
     Company was repaid  $1,000,000 for a promissory note in connection with the
     acquisition.

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

        Accounts receivable                                 $                1
        Oil and gas properties                                       1,994,644
        Other current liabilities                                      (24,057)
        Promissory note payable                                     (1,000,000)
        Future income taxes                                           (310,588)
                                                            -------------------

        Paid by issuance of 500,000 shares of Series A
        preferred stock of Patch Energy Inc., and 1
        share of Class B preferred voting stock of Patch
        International Inc.                                  $          660,000
                                                            ===================


6.   DUE TO/FROM RELATED PARTIES

  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 or repayment. At February 28,
     2007,  $1,012,836 (May 31, 2006 - $86,878 owing to related parties) was due
     from related parties.

  b) At  the  time  of  acquisition  of  Damascus  Energy  Inc. the president of
     Damascus  was also a  director  of  Energy.  In  conjunction  with this (as
     disclosed  in Note  5(a))  a  director  of the  Company  received  $244,840
     (CAD$283,019).

  c) In  conjunction  with the acquisition of 1289307 Alberta Ltd. (as disclosed
     in Note 5(b)) the Company  assumed a liability  to an officer in the amount
     of $1,000,000.

  d) During  the  nine-month  period  ended  February 28, 2007, the Company paid
     $525,298  (2006 -  $144,906)  in  management  fees to  current  and  former
     directors  and  officers  of the  Company,  of which  $415,000  related  to
     severance pay to former directors and officers.

  e) A  finders'  fee  of  $114,428  (CAD$132,300) was paid to an officer of the
     Company in connection with the flow-through  private placement as described
     in Note 9.


                                       10
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


7.   ASSET RETIREMENT OBLIGATIONS

The total future asset  retirement  obligation was estimated by management based
on the  Company's  net  ownership in wells and  facilities,  estimated  costs to
reclaim and abandon wells and facilities  and the estimated  timing of the costs
to be incurred in future  periods.  At February 28, 2007 the total  undiscounted
value of the total asset  retirement  obligation  is  estimated  to be $344,290.
These  payments  are  expected to be made over the next 3 years.  The  Company's
credit adjusted risk free rate of eight percent and an inflation rate of 1.5 per
cent  were  used  to  calculate  the  present  value  of  the  asset  retirement
obligation.

The following table reconciles the Company's asset retirement obligations:


                                             For the Nine       For the Year
                                             Months Ended          Ended May
                                             February 28,             31,
                                                 2007                2006
                                          ----------------     -----------------
Beginning asset retirement obligations    $        34,379      $              -
Liabilities acquired                               73,534                     -
Liabilities incurred                              217,513                32,834
Accretion                                           1,188                 1,545
                                          ----------------     -----------------
Total asset retirement obligations        $       326,614      $         34,379
                                          ================     =================


8.   PREFERRED STOCK

The  Company  authorized  two  classes  of  preferred  voting  stock  during the
nine-month  period  ended  February  28, 2007 as  follows:  one share of Class A
Preferred Voting Stock, par value of $0.01 per share, and 10,000 shares of Class
B Preferred Voting Stock, par value of $0.01 per share.  Refer to Notes 5(a) and
(b).







                                       11

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


9.   COMMON STOCK

During the  nine-month  period  ended  February  28,  2007,  the Company  issued
1,590,000  shares of common stock and received  $1,111,000 in cash proceeds from
the exercise of stock  options.  The Company has  recorded a stock  subscription
receivable of $117,790 related to these stock option exercises.

On June 23, 2006, the Company  purchased  3,588 of its shares on the open market
at an average price of $1.32 per share.

On July 26, 2006,  the Company  issued 222,250 shares of common stock at a price
of $1.25 per share for investor relation services.

On September  15, 2006,  the Company  purchased  2,000 of its shares on the open
market at a price of $0.78 per share.  These  2,000  shares are held in treasury
for  cancellation.  The 2,000 treasury  shares are not included in the Company's
issued and outstanding shares for financial reporting purposes.

On October 24, 2006,  the Company  issued 30,000  shares for investor  relations
services valued at $23,100.

On November 3, 2006,  the Company  filed a form S-8  Registration  Statement  in
connection with a 2006 Stock Option Plan allowing for the granting of options to
acquire up to a total of 1,500,000 shares.

During the nine-month  period ended  February 28, 2007, the Company  completed a
private  placement  and  issued  an  aggregate  3,240,000  shares  at a price of
CAD$1.00  per  share  on  a  flow-through   basis  for  proceeds  of  $2,798,400
(CAD$3,240,000).  In connection with the private  placement,  the Company paid a
finder's fee of 7% ($193,932 (CAD$224,350)), of which $114,428 (CAD$132,300) was
paid to an officer of the Company. The shares were issued pursuant to Regulation
S under  the  Securities  Act of  1933,  as the  sales  were  made in  "offshore
transactions".

The Company had  previously  proposed the  distribution  of a cash dividend on a
pro-rata  basis  of 50% of the net  proceeds  of the sale of its  investment  in
Pharmaxis  Ltd.  (the  "Pharmaxis  Shares").  Net  proceeds  include  the  costs
associated  with  the  sale of the  Pharmaxis  shares  and  related  taxes.  The
directors of the Company had fixed July 30, 2004 as the record date. The Company
did not  receive  approval  from the NASD and the SEC,  therefore,  the board of
directors was unable to declare a dividend for shareholders of record as of July
30, 2004 and did not proceed with the dividend payment.


A summary of the Company's stock option activity is as follows:

                                  -----------------------------------------
                                                                   Weighted
                                                 Number             Average
                                                     Of            Exercise
                                                Options               Price
                                  -----------------------------------------

Outstanding June 1, 2006                      2,272,500               $0.75
Granted                                       3,090,000                1.18
Expired                                       (300,000)                0.39
Forfeited                                     (622,500)                0.55
Exercised                                   (1,590,000)                0.72
                                  -----------------------------------------
Outstanding February 28, 2007                 2,850,000               $1.20
                                  =========================================

Exercisable February 28, 2007                         -                   -
                                  =========================================

As at February 28, 2007, the weighted average remaining  contractual life of the
outstanding  options  is 4.8 years,  and the  aggregate  intrinsic  value of the
options is $3,534,000.



                                       12
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


9.   COMMON STOCK (CONTINUED)

A summary of the status of the  Company's  nonvested  shares as of February  28,
2007,  and changes  during the  nine-month  period ended  February 28, 2007,  is
presented below:


                                                                Weighted-Average
                                                                      Grant-Date
    Nonvested shares                      Number of Shares            Fair Value

    Nonvested at June 1, 2006                      485,000                 $0.61
    Granted                                      3,090,000                  1.24
    Vested                                       (725,000)                  0.65
--------------------------------------------------------------------------------

    Nonvested at February 28, 2007               2,850,000                 $1.29
================================================================================

Prior to June 1, 2006, the Company  accounted for  stock-based  awards under the
recognition and measurement  provisions of Accounting  Principles  Board Opinion
("APB") No. 25,  "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES"  using the intrinsic
value method of accounting. Effective June 1, 2006, the Company adopted the fair
value recognition provisions of SFAS No. 123R "SHARE BASED PAYMENTS",  using the
modified   prospective   transition   method.   Under  that  transition  method,
compensation  cost is recognized for all stock-based  payments granted prior to,
but not yet  vested  as of June 1,  2006,  based on the grant  date  fair  value
estimated  in  accordance  with the  original  provisions  of SFAS No. 123,  and
compensation  cost for all stock-based  payments  granted  subsequent to June 1,
2006,  based on the grant  date fair  value  estimated  in  accordance  with the
provisions of SFAS 123R. Results for prior periods have not been restated.

As a result of adopting SFAS 123R on June 1, 2006,  the Company's net income for
the nine-month period ended February 28, 2007 is $1,406,838 lower than if we had
continued to account for  share-based  compensation  under APB No. 25. Basic and
diluted net income per share for the  nine-month  period ended February 28, 2007
would have been $0.08 per share lower than as reported.

During the nine-month period ended February 28, 2007,  stock-based  compensation
amounting  to  $2,083,764  was  recorded.  During the  nine-month  period  ended
February 28, 2007,  stock options for  stock-based  compensation  were issued as
follows:  50,000 stock options priced at $0.90 per share,  190,000 stock options
priced at $0.90 per share and 2,850,000 stock options priced at $1.20 per share.
Stock-based  compensation  also  includes  amounts  relating to the repricing of
485,000 stock options on August 30, 2006,  from $1.54 to $0.90 per share,  which
were previously granted on May 15, 2006.

For the nine-month  period ended February 28, 2006, had  compensation  cost been
recognized  on the basis of fair value,  pursuant to SFAS No. 123,  net loss and
loss per share would have been as follows:

<TABLE>
<CAPTION>
                                                             Three Months Ended       Nine Months Ended
                                                                February 28,             February 28,
                                                                   2006                     2006
                                                          ---------------------------------------------
<S>                                                            <C>                    <C>
Net income (loss) - as reported                                  $ (443,127)          $  2,637,576
  Add: Stock-based compensation expense included in
  net loss - as reported                                            248,950                490,079
  Deduct: Stock-based compensation expense
  determined under fair value method                               (292,832)              (755,711)
                                                          ---------------------------------------------
Net income (loss) - Pro-Forma                                    $ (487,009)          $  2,371,944
                                                          =============================================

Basic net income (loss) per share - as reported                $ (0.03)                  $ 0.20
Diluted net income (loss) per share - as reported              $ (0.03)                  $ 0.19

Basic net income (loss) per share - Pro-Forma                  $ (0.04)                  $ 0.17
Diluted net income (loss) per share - Pro-Forma                $ (0.03)                  $ 0.17
</TABLE>


                                       13
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


9.   COMMON STOCK (CONTINUED)

For the nine-month period ended February 28, 2006,  stock-based  compensation of
$490,079 was  recorded.  The fair value of each option  granted  during the nine
months  February 28, 2006 was estimated using the  Black-Scholes  option pricing
model assuming a dividend yield of 0.0%,  expected volatility of 156%, risk free
interest rate of 3.93%, and weighted average expected option terms of 1.6 years.

The weighted  average fair value of the options  granted  during the  nine-month
period  ended  February  28,  2007  was  $1.24  and  was  estimated   using  the
Black-Scholes   option  pricing  model  using  the  following   weighted-average
assumptions:  a dividend yield of 0.0%;  expected  volatility of 164%; risk free
interest rate of 4.62%; and expected life of 4.75 years.


10.  SPECIAL WARRANTS AND FLOW-THROUGH SPECIAL WARRANTS

On February 27,  2007,  the Company  completed a private  placement of 8,302,000
Special  Warrants  at $1.50 per  Special  Warrant,  and  4,653,750  Flow-through
Special  Warrants  at $1.65 per  Flow-through  Special  Warrant  for total gross
proceeds of  $20,131,687.  Net  proceeds of  $18,759,033  were  received,  after
commissions and professional  fees paid. Of the Flow-through  Special  Warrants,
4,408,750  were  issued  on a  brokered  basis,  and  245,000  were  issued on a
non-brokered basis.

The  Company  has  accounted  for  the  net  proceeds  received  as a  long-term
liability, as the Company must settle in cash to the warrant holders, if certain
conditions are not met.

Each  Special  Warrant  entitles  the  holder  to  acquire,  for  no  additional
consideration,  one share of the Company's  increasing its authorized  number of
shares of common stock.  Each Unit consists of one share of the Company's common
stock and one common share Bonus Warrant. Each Bonus Warrant entitles the holder
to receive, without additional consideration, up to 0.10 shares of the Company's
common stock, subject to the Company not completing certain filings on or before
April 28, 2007 and not,  (i)  becoming a  "reporting  issuer" in any province or
territory of Canada; (ii) having a registration  statement declared effective in
the United  States;  and (iii) having its common stock listed on the TSX Venture
Exchange or Toronto Stock Exchange on or before September 25, 2007.

Each  Flow-through  Special  Warrant  entitles  the  holder to  acquire,  for no
additional  consideration,  on shares of the  Company's  common  stock  upon the
Company increasing its authorized number of share of the Company's common stock.

The  Company  paid  $1,183,646  in cash  commissions  to the  agents  and issued
non-transferable  agents'  warrants  to  purchase  up to  762,645  shares of the
Company's  common stock at an exercise price of $1.50 per share on the later of:
(i) February 27, 2008; and (ii) six months from the date the  securities  issued
under the private  placement  are free from trading  restrictions  in the United
States and Canada,  but no later than  February 27, 2009.  The fair value of the
Agents'  warrants of $1,281,244  was estimated  using the  Black-Scholes  option
pricing model using the following weighted-average assumptions: a dividend yield
of 0.0%;  expected  volatility of 138%;  risk free  interest rate of 4.54%;  and
expected life of 2 years.  For the  nine-month  period ended  February 28, 2007,
$14,080 has been determined to be the fair value representing the vested portion
of the Agents' warrants.



                                       14
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


11.      TAX EFFECTS OF OTHER COMPREHENSIVE (LOSS)/INCOME

Components of other comprehensive income (loss) are as follows:

<TABLE>
<CAPTION>
                                                                                 For the Nine Months Ended
                                                                                     February 28, 2007
                                                                   -------------------------------------------------------
                                                                     Before-Tax          Tax (Expense)        Net-of-Tax
                                                                        Amount            Or Benefit            Amount
                                                                   -------------------------------------------------------
<S>                                                                 <C>                  <C>                 <C>
Available-for-sale securities:
    Decrease in unrealized gain on available for sale
    securities                                                      $ (10,344,284)       $  3,103,285        $ (7,240,999)
    Holding gain                                                                -                   -                   -
                                                                   -------------------------------------------------------
(Decrease) in unrealized gain on available-for-sale
    securities                                                        (10,344,284)          3,103,285          (7,240,999)
Foreign currency translation adjustment                                  (179,734)                  -            (179,734)
                                                                   -------------------------------------------------------
Other comprehensive (loss)                                          $ (10,524,018)       $  3,103,285        $ (7,420,733)
                                                                   =======================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                    For the Nine
                                                                    Months Ended
                                                                    February 28,
                                                                        2006
                                                                   -------------------------------------------------------
                                                                     Before-Tax           Tax (Expense)       Net-of-Tax
                                                                        Amount             Or Benefit           Amount
                                                                      ----------------------------------------------------
<S>                                                                 <C>                  <C>                 <C>
Available-for-sale securities:
    Decrease in unrealized gain on available for sale
    securities                                                      $ (2,664,286)        $    799,286        $ (1,865,000)
    Holding gain                                                       5,124,286           (1,537,286)          3,587,000
                                                                   -------------------------------------------------------
Other comprehensive income                                          $   2,460,000        $   (738,000)       $  1,722,000
                                                                   =======================================================
</TABLE>

12.  COMMITMENTS

  a) The Company entered into a "Farm-in" agreement  on the Dover  property (the
     "Dover agreement") on November 30, 2006 with Bounty  Developments.  Through
     the terms of the Dover  agreement  the  Company  has  earned a 50%  working
     interest  in  the  Dover  property,  as of  the  date  of  these  financial
     statements.

     In  addition  the  Company  can earn an  additional  30%  working  interest
     (aggregate  80% undivided  working  interest) by drilling and  evaluating a
     minimum of 16 evaluation  wells through the McMurray  formation at mutually
     agreed  locations on the Dover leases;  and completing a 2D seismic program
     on or before March 31, 2007 at a minimum cost of $1,500,000. As of the date
     of these  financial  statements,  the  Company  expects  to have met  these
     commitments to earn the additional 30% working interest.



                                       15
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(Stated in U.S. Dollars)
(unaudited)


12.  COMMITMENTS (CONTINUED)

  b) On  December 21, 2006 the Company's wholly-owned subsidiary was conveyed an
     interest  with Bounty  Developments  to  "Farm-in" on the Firebag Oil Sands
     property. The Company has earned a 25% working interest in the lands.

     The Company shall earn an additional  25%  undivided  working  interest (an
     aggregate 50% working interest) in the Firebag Oil Sands Project subject to
     spudding  8  evaluation  wells  at  mutually  agreeable  locations  on  the
     properties and the completion of a 2D seismic  program on the properties at
     a minimum cost of $1,033,680  (CAD$1,200,000)  but not to exceed $1,292,100
     (CAD$1,500,000) on or before March 31, 2007.

     Upon the Company earning its initial 50% undivided  working interest in the
     Firebag  Oil Sands  Project,  the  Company  shall  earn an  additional  25%
     individual  working  interest (an  aggregate  75% working  interest) in the
     Firebag Oil Sands Project, subject to the following:

     i)   a payment to Bounty in the amount of $2,153,500 (CAD$2,500,000)  on or
          before April 1, 2007 (paid); and

     ii)  on  or  before  April 1, 2008, spudding 4 evaluation wells at mutually
          agreeable  locations  on  the  properties  and  the completion of a 2D
          seismic  program  on  the  properties  at  a  minimum cost of $473,770
          (CAD$550,000)  but  not  to exceed $559,910 (CAD$650,000) on or before
          March 31, 2008.


13.  SUBSEQUENT EVENT

On March 8, 2007,  the  Company  completed  a  transaction  with Great  Northern
Oilsands Inc. ("Great  Northern"),  whereby Great Northern  acquired various oil
sands assets and  conventional  oil and gas  properties in Western  Canada.  The
conventional  oil and gas  assets  included  all  the  conventional  oil and gas
interests held by Damascus. The Company received cash and share consideration of
approximately $2,595,300 (CAD$3,000,000) in total, of which management estimates
CAD$800,000 was attributed to the sale of the Company's conventional oil and gas
assets. As at February 28, 2007, the Company had received $84,724  (CAD$100,000)
from Great Northern.  The share  consideration  is 1,000,000 Rule 144 restricted
shares.








                                       16
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion of the financial condition and results of operations
for Patch International Inc. ("we," "us," or "our") should be read in
conjunction with the accompanying financial statements and related footnotes.

GENERAL

We were incorporated as Praxis Pharmaceuticals, Inc. on June 20, 1997 under the
laws of the State of Nevada ("Praxis-Nevada"). Our business was the development
and commercialization of non-prescription therapeutics and nutraceuticals
designed to prevent inflammation and their sequelae, and the development of
cosmetics for skin conditions. In June 1998, Praxis-Nevada engaged in a reverse
acquisition transaction with Micronetics, Inc., a company incorporated in Utah
on December 31, 1981, where the stockholders of Praxis-Nevada gained control
over Micronetics. Micronetics then changed its name to Praxis Pharmaceuticals
Inc. ("Pharmaceuticals"). Immediately after the reverse acquisition transaction,
the stockholders of Praxis-Nevada held approximately 98% of the outstanding
shares of Pharmaceuticals. Praxis-Nevada was merged into Pharmaceuticals
effective June 30, 2002, thereby eliminating Praxis-Nevada as a subsidiary of
Pharmaceuticals.

PHARMAXIS LTD. A wholly owned Australian subsidiary, Praxis Pharmaceuticals
Australia Pty. Ltd. (ACN 082 811 630) was formed in May 1998 as a private
company. In October 1999, an equity investment was made in this subsidiary by
Rothschild Bioscience Managers Limited (now known as GBS Venture Partners Ltd),
which reduced Pharmaceuticals' equity ownership to 35%. The funds raised were
used for the development of autoimmune disease research licensed from Anutech
Pty Ltd, the development arm of the Australian National University.
Praxis-Australia changed its name to "Pharmaxis Ltd" in June 2002. An additional
equity investment was made in Pharmaxis in August 2002, which reduced
Pharmaceuticals' equity ownership to 19.6%. Pharmaceuticals' equity ownership
was further reduced to 10.4% upon completion of an initial public offering by
Pharmaxis in November 2003. Pharmaxis is listed on the Australian Stock Exchange
under the symbol "PXS". Pharmaxis is a specialist pharmaceutical company
committed to the research, development and commercialization of human
therapeutic products for chronic respiratory and autoimmune diseases and the
development of an improved lung function test. We have sold all of our shares in
Pharmaxis to fund our business and the purchase of oil sands properties in
Alberta, Canada, described below.

PATCH ENERGY INC. We did not generate any revenues from product sales, royalties
or license fees in our pharmaceutical business. Due to our inability of to
obtain funding and/or partners to pursue our pharmaceutical projects, we decided
to seek other business opportunities. On October 20, 2003, we entered into an
Arrangement Agreement to acquire Patch Energy Inc., which at the time was a
privately-held company existing under the CANADA BUSINESS CORPORATIONS ACT
("Energy"). Energy's principal business was the exploration, development and
production of oil and natural gas reserves through participation in farmout
arrangements. Energy's main focus had been on its assets located in the
Kerrobert area in the Province of Saskatchewan, Canada.

As of March 15, 2004, we consummated the Arrangement Agreement with Energy under
which we acquired Energy in a stock-for-stock transaction. As a result of the
acquisition, Energy became our wholly owned subsidiary. On June 15, 2004, we
changed our domicile to Nevada and changed our name to Patch International Inc.
The acquisition has been treated for accounting purposes as an acquisition by
Energy of our net assets and liabilities. Because Energy has been deemed to be
the purchaser for accounting purposes, the consolidated financial statements are
presented as a continuation of Energy and include the results of operations of
Energy since incorporation on February 11, 2002, and the results of operations
of International since the date of acquisition on March 15, 2004.


                                       17
<PAGE>


PATCH OILSANDS LTD. On February 3, 2006, Energy formed a wholly-owned
subsidiary, Patch Oilsands Ltd. ("Oilsands") in the Province of British
Columbia. On February 27, 2006, Oilsands formed a Canadian limited partnership,
Patch Oilsands Limited Partnership (the "Partnership"), of which Energy owned a
75% interest and Oilsands was the general partner. The minority limited partners
of the Partnership were Habanero Resources Inc. ("Habanero"), owning 20.833%,
and Micron Enviro Systems ("Micron"), owning a 4.1667% interest. The purpose of
the Partnership was to pursue the acquisition, exploration and development of
land or other property interests primarily in the Alberta Oil Sands area of
Canada.

DAMASCUS ENERGY INC. On December 15, 2006, we entered into a Share Exchange
Agreement with Damascus Energy Inc., a private Alberta corporation and related
party ("Damascus"), the stockholders of Damascus, and Energy, providing for the
acquisition of Damascus. Damascus was a related party because Michael S.
Vandale, our current President, Chief Executive Officer and Director, was the
president of Damascus and was a director of Energy. Energy acquired all of the
issued and outstanding common shares of Damascus in consideration for one share
of our Class A Preferred Voting Stock and 9,426,489 shares of Series A Preferred
Stock of Energy (the "Exchangeable Shares"). The share of Class A Preferred
Voting Stock entitles its holder to 9,426,489 votes on any matter to be voted
upon by the holders of our common stock. The Exchangeable Shares are
exchangeable without further consideration for 9,426,489 shares of our common
stock. As a result of the share exchange, Energy acquired Damascus as a
wholly-owned subsidiary.

By acquiring Damascus, we received the right to earn up to an 80% working
interest in the Dover Oil Sands Project, located in the Fort McMurray area of
central Alberta, Canada under a farmout agreement between Damascus and Bounty
Developments Ltd. ("Bounty"). The Dover Oil Sands Project consists of 32
contiguous square miles of land approximately 40 miles northwest of Fort
McMurray, representing 20,840 acres. We earned an initial 30% undivided working
interest in the Dover Oil Sands Project in exchange for payment of CAD$7,581,500
to Bounty, reimbursement to Bounty for all expenditures made to date on the
project, and issuance of 4,341,489 shares of our common stock to Bounty. Under
the agreement, to earn an additional 50% in the project, we were required to
spud 16 evaluation wells and complete of a 2D seismic program on or before March
31, 2007. As of April 17, 2007, we satisfied all the conditions required under
the farmout agreement, earning an 80% working interest in the Dover Oil Sands
Project.

1289307 ALBERTA LTD. On January 16, 2007, we entered into a Share Exchange
Agreement with 1289307 Alberta Ltd. ("Holdco"), a private corporation
incorporated under the laws of Alberta, the stockholders of Holdco, and Energy,
providing for the acquisition of Holdco. Energy acquired all of the issued and
outstanding common shares of Holdco in consideration for one share of our Class
B Preferred Voting Stock and 500,000 Exchangeable Shares. The share of Class B
Preferred Voting Stock entitles its holder to 500,000 votes on any matter to be
voted upon by the holders of our common stock. The Exchangeable Shares are
exchangeable without further consideration for 500,000 shares of our common
stock. As a result of the share exchange, Energy acquired Holdco as a
wholly-owned subsidiary.

By acquiring Holdco, we received the right to earn up to a 75% working interest
in 18 square miles of land located in Townships 91-92, Range 2 W4M (the "Firebag
Oil Sands Project"), in the Fort McMurray area of central Alberta, Canada,
pursuant to a farmout agreement with Bounty. We earned an initial 25% working
interest in the Firebag Oil Sands Project by making payments to Bounty in the
amount $4,393,140 (CAD$5,100,000). Under the agreement we had the right to earn
an additional 50% working interest by (i) spudding 8 evaluation wells and
completing a 2D seismic program on the property on or before March 31, 2007,
(ii) paying Bounty $2,153,500 (CAD$2,500,000) on or before April 1, 2007, (ii)
spudding 4 additional evaluation wells on or before April 1, 2008, and (iv) and
completing another 2D seismic program on the property on or before March 31,
2008. As of the filing of this report, we were able to spud 3 evaluation wells
before March 31, 2007 and we paid bounty the $2,153,500 (CAD$2,500,000). We
negotiated a compromise with Bounty and the remaining requirements to earn the
additional 50% working interest have been waived. In exchange for a waiver of
the remaining requirements under the farmout agreement, we agreed that Bounty's
25% working interest in the Firebag Oil Sands Project will be a carried interest
until we have spent an additional $1,500,000 on exploration (drilling and
seismic evaluation) expenses. As of April 16, 2007, we have earned the full 75%
working interest in the Firebag Oil Sands Project.

                                       18
<PAGE>


In addition to assets acquired, we assumed Holdco's $1,000,000 Promissory Note
payable to 1286664 Alberta Ltd., a related party. As of the date of this report,
we have paid off the Promissory Note in full.

SALE OF PROPERTIES TO GREAT NORTHERN. On March 8, 2007, we, through Energy,
executed an Asset Purchase Agreement (the "Agreement") with Great Northern
Oilsands Inc. ("Great Northern"), whereby Energy sold its entire inventory of
conventional oil and gas assets together with all its interest in Oilsands and
the Partnership (together, the "Assets"). A description of the material terms of
the agreement is included in Item 2.01 below. The Agreement excluded certain
assets owned by Energy and assets held by Energy's other subsidiaries.

On March 8, 2007, prior to the execution of the Agreement, Oilsands, as general
partner for the Partnership, executed an Assignment of Lease (the "Assignment")
in favor of Energy. Under the Assignment, the Partnership distributed three
Crown oil sands leases in the Muskwa area of Alberta, comprising four sections
(1,024 hectares) under a 15-year lease with annual rental payable to the Alberta
Crown of CAD$3.50 per hectare and Crown royalties on production, to the
Partnership's members in proportion to their partnership interests. As a result
of the pro-rata distribution, Energy received a 75% interest in the Muskwa
property.

In connection with the Assignment, Energy entered into two Declarations of Trust
with Habanero and Micron under which Energy holds the 20.833% and 4.167%
interests in the Muskwa property held by Habanero and Micron, respectively, in
trust for them. Energy will continue to develop the Muskwa properties according
to the plans for development that existed when the properties were held by the
Partnership.

Great Northern paid CAD$100,000 as a non-refundable deposit, 1,000,000
restricted shares of Great Northern common stock, and CAD$800,000 on the closing
date. The sales price will be adjusted by June 30, 2007 for the following: (i)
all revenues and expenses accrued prior to March 8, 2007 will inure to and be
borne by Energy; (ii) all revenues and expenses accrued after March 8, 2007 will
inure to and be borne by Great Northern; and (iii) all mineral taxes, surface
and mineral lease rental payments, or similar payments made by Energy will be
apportioned, according to their respective holding periods, between Energy and
Great Northern as of March 8, 2007.

The Agreement provides for the sale of all of Energy's interest in Oilsands and
the Partnership, as well as the petroleum and natural gas rights owned by
Energy, the interests of Energy directly related to such petroleum and natural
gas rights in all other tangible property and assets used in connection with the
petroleum and natural gas rights, and other miscellaneous interests associated
with the petroleum and natural gas rights.

         The properties sold consisted of all of Energy's holdings in the
following areas:

   o     Kerrobert Area, Saskatchewan, Canada;
   o     Browning, Saskatchewan, Canada;
   o     Bear Canyon Project, Alberta, Canada;
   o     McLeod Project, Alberta, Canada;
   o     Lloydminster, Alberta, Canada;
   o     Elnora, Alberta, Canada;
   o     Atlee-Buffalo, Alberta, Canada;
   o     Halkirk, Alberta, Canada;
   o     Peace River Area, Alberta, Canada;
   o     Athabasca Oilsands, Alberta, Canada;
   o     Red Deer, Alberta, Canada;
   o     Rich / Rumsey, Alberta, Canada; and
   o     Manahuilla Creek Project, Goliad County, Texas.


                                       19
<PAGE>


Energy retained the following: (i) all petroleum substances produced by the
Assets prior to the sale; (ii) all accounts receivables accruing or attributable
to the activity of the Assets prior the sale; (iii) all assets held by Energy's
wholly owned subsidiaries, including the Dover Oil Sands Project and the Firebag
Oil Sands Project; and (iv) the Muskwa property distributed to Energy, Habanero,
and Micron prior to the closing of the Agreement.

ACCOUNTING POLICIES

We follow the successful efforts method of accounting for our oil and gas
producing activities. Under this method, all costs associated with productive
exploratory wells and productive or non-productive development wells are
capitalized while the costs of non-productive exploratory wells are expensed. If
an exploratory well finds oil and gas reserves, but a determination that such
reserves can be classified as proved is not made after one year following
completion of drilling, the costs of drilling are charged to operations.
Indirect exploratory expenditures, including geophysical costs and annual lease
rentals, are expensed as incurred. Unproved oil and gas properties that are
individually significant are periodically assessed for impairment of value, and
a loss is recognized at the time of impairment by providing an impairment
allowance. Capitalized costs of producing oil and gas properties and related
support equipment, after considering estimated dismantlement and abandonment
costs and estimated salvage values, are depreciated and depleted by the
unit-of-production method.

Prior to June 1, 2006, we account for stock-based awards under the recognition
and measurement provisions of Accounting Principles Board Opinion ("APB") No.
25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES," using the intrinsic value method
of accounting. Effective June 1, 2006, we adopted the fair value recognition
provisions of SFAS No. 123R "SHARE BASED PAYMENTS," using the modified
prospective transition method. Under that transition method, compensation cost
is recognized for all share-based payments granted prior to, but not yet vested
as of June 1, 2006, based on the grant date fair value estimated in accordance
with the original provisions of SFAS No. 123, and compensation cost for all
share-based payments granted subsequent to June 1, 2006, based on the grant date
fair value estimated in accordance with the provisions of SFAS 123R. Results for
prior periods have not been restated.

RESULTS OF OPERATIONS

THREE MONTHS ENDED FEBRUARY 28, 2007. We generated $34,710 in oil and gas
revenues for the three months ended February 28, 2007 ("2007"), a decrease of
$23,635 or 41% from the comparable three months ended February 28, 2006
("2006"). Oil and gas production, royalties and other expenses decreased
$106,035 or 89% to $12,628 in 2007 from $118,663 in 2006. The decrease in
revenue and expenses was due to a decrease in production offset in part by an
increase in price. As a result, net oil and gas operations produced a small
profit of $22,082 in 2007 versus a loss of $60,318 in 2006, an increase of
$82,400.

Expenses, other than oil and gas production expenses, were $4,060,155 for 2007,
as compared to $711,516 for 2006, an increase of $3,348,639 or 471%. General and
administrative expense increased $2,105,212 or 321% to $2,761,088 in 2007 as
compared to $655,876 in 2006 primarily due to incurring $1,803,033 of
stock-based compensation and other fees associated with the acquisitions of the
Dover Oil Sands Project and Firebag Oil Sands Project. Dry hole costs were
$1,291,483 in 2007 and $nil in 2006. These costs relate to geological and
geophysical costs associated with our exploration of the Dover Oil Sands
Project. The increase in expenses overall reflect the increased level of
acquisition activity as well as operations relating to the disposition of our
share position in Pharmaxis Ltd.

As a result of the increase in expenses in 2007 versus 2006, we incurred an
operating loss of $4,038,073 as compared to $771,834 in 2006, an increase in
operating loss of $3,266,239 or 423%.

We realized a gain before applicable taxes of $6,074,719 from the sale of our
available for sale Pharmaxis shares in 2007 as compared to $275,129 in 2006. We
paid interest and other expenses of $38,075 in 2007 as compared to earning
interest and other income of $63,821 in 2006. We recorded $3,884 of
non-controlling interest in net gain in 2007 compared to $nil in 2006. As a
result, we had income before taxes

                                       20
<PAGE>

of $2,002,455 in 2007 as compared to a loss of $432,884 in 2006, an increase in
income before taxes of $2,435,339.

Provision for income taxes was $589,526 for 2007 as compared to $10,243 in 2006.

Net income for 2007 is $1,412,929 as compared to net loss of $443,127 in 2006,
an increase in net income of $1,856,056.

Other comprehensive loss comprised a decrease in unrealized gain on available
for sale Pharmaxis securities of $4,711,999 in 2007, as compared to a $314,000
increase in 2006, and a foreign currency translation adjustment loss of $119,035
in 2007, as compared to $nil in 2006. The decrease in unrealized gain on
available for sale Pharmaxis securities in 2007 is due to the reclassification
of available for sale Pharmaxis securities holding gain of $2,617,231 to
realized gain in 2007, as compared to $186,000 in 2006, and the holding loss on
available for sale Pharmaxis securities of $2,094,768 in 2007 as compared to a
holding gain of $500,000 in 2006.

Comprehensive loss is $3,418,105 in 2007 as compared to a comprehensive loss of
$129,127 in 2006, an increase in comprehensive loss of $3,288,789.

NINE MONTHS ENDED FEBRUARY 28, 2007. We generated $100,319 in oil and gas
revenues for the nine months ended February 28, 2007 ("2007"), a decrease of
$42,108 or 30% from the comparable nine months ended February 28, 2006 ("2006").
Oil and gas production, royalties and other expenses decreased $114,620 or 73%
to $41,461 in 2007 from $156,081 in 2006. The decrease in revenues and expenses
was due to a decrease in production offset in part by an increase in price. As a
result, net oil and gas operations produced a profit of $58,858 in 2007 versus a
loss of $13,654 in 2006, an increase of $72,512.

Expenses, other than oil and gas production expenses, were $5,727,435 for 2007,
as compared to $1,531,098 for 2006, an increase of $4,196,337 or 274%. General
and administrative expense increased $2,946,996 or 205% to $4,387,829 in 2007 as
compared to $1,440,833 in 2006 primarily due to incurring $2,384,676 of
stock-based compensation and other fees associated with the acquisitions of the
Dover Oil Sands Project and Firebag Oil Sands Project. Dry hole costs were
$1,291,483 in 2007 and $nil in 2006. These costs relate to geological and
geophysical costs associated with our exploration of the Dover Oil Sands
Project. The increase in expenses overall reflect the increased level of
acquisition activity as well as operations relating to the disposition of our
share position in Pharmaxis Ltd.

As a result of the increase in expenses in 2007 versus 2006, we incurred an
operating loss of $5,668,577 as compared to $1,544,752 in 2006, an increase in
operating loss of $4,123,825 or 267%.

We realized a gain before applicable taxes of $13,684,318 from the sale of our
available for sale Pharmaxis shares in 2007 as compared to $6,228,130 in 2006.
We earned interest income of $112,671 in 2007 as compared to $64,441 in 2006. We
recorded $23,649 of non-controlling interest in net gain in 2007 compared to
$nil in 2006. As a result, we had income before taxes of $8,152,061 in 2007 as
compared to income of $4,474,819 in 2006, an increase in income before taxes of
$3,404,242.

Provision for income taxes is $2,868,027 for 2007 as compared to $2,110,243 in
2006.

Net income for 2007 is $5,284,034 as compared to net income of $2,637,576 in
2006, an increase in net income of $2,646,458.

Other comprehensive loss comprised a decrease in unrealized gain on available
for sale Pharmaxis securities of $7,240,999 in 2007, as compared to an increase
in unrealized gain of $1,722,000 in 2006, and a foreign currency translation
adjustment loss of $179,734 in 2007, as compared to $nil in 2006. The decrease
in unrealized gain on available for sale Pharmaxis securities in 2007 is due to
the reclassification of available for sale Pharmaxis securities holding gain of
$7,240,999 to realized gain in 2007, as

                                       21
<PAGE>


compared to $1,865,000 in 2006, and the holding gain on available for sale
Pharmaxis securities of $nil in 2007 as compared to $3,587,000 in 2006.

Comprehensive loss was $2,136,699 in 2007 as compared to comprehensive income of
$4,359,576 in 2006, a decrease of $6,496,275.

LIQUIDITY AND CAPITAL RESOURCES

For the nine months ended February 28, 2007 ("2007"), we used cash of
$11,871,715 for our operating activities as compared to $1,493,442 used during
the comparable nine months ended February 28, 2006 ("2006"). Investing
activities used cash of $293,794 in 2007 as compared to $5,505,304 provided by
investing activities in 2006. We expended $14,167,400 on our oil and gas
interests in 2007 as compared to $722,826 in 2006. We realized gross proceeds on
the sale of available-for-sale Pharmaxis securities of $13,684,319 in 2007 as
compared to $6,228,130 in 2006.

Financing activities provided $22,391,713 from the sale of special warrants and
common stock, net of expenses, in 2007 as compared to $499,750 in 2006. We used
$6,309 to acquire shares of our common stock under our stock repurchase plan in
2007 compared to $90,559 in 2006.

At February 28, 2007, we had working capital of $9,525,908 as compared to
$2,089,735 as at May 31, 2006. We no longer own any available-for-sale
securities, having sold the remainder of our Pharmaxis shares.

We believe we will have sufficient working capital to fund our 2007 planned
program of capital expenditures and operations, and to pay our corporate
obligations as they arise over the next 12 months.

PLAN OF OPERATION

In December 2006, we completed the acquisition of Damascus, a related party,
whose main asset is a farmout agreement with Bounty pertaining to the Dover Oil
Sands Project in the Fort McMurray area of central Alberta, Canada. Under the
terms of the farmout agreement, Damascus has the right to earn an 80% working
interest in the Dover Oil Sands Project, which consists of 32 square miles of
100% owned lands, representing 20,480 acres. As of the date of this report,
Damascus has earned an 80% working interest in the Dover Oil Sands Project in
exchange for payment of $13,057,250 (CAD$15,193,000) to Bounty, the issuance to
Bounty of 4,341,489 of Energy's Exchangeable Shares that will be exchanged for
an equivalent number of our common stock without further consideration, and by
spudding mutually agreeable evaluation wells and completing a 2D seismic
program.

On January 16, 2007, we completed the acquisition of Holdco and the assumption
of a $1,000,000 promissory note payable to 1286664 Alberta Ltd., an Alberta
company wholly owned by Michael Vandale. Pursuant to the acquisition, we
acquired a farmout agreement with Bounty pertaining to the Firebag Oil Sands
Project in the Fort McMurray area of central Alberta, Canada. As of the filing
of this report, we have earned a 75% working interest in the Firebag Oil Sands
Project by making payments to Bounty in the amount of $6,546,640
(CAD$7,600,000), spudding 3 evaluation wells, and agreeing to carry Bounty's 25%
working interest in the Firebag Oil Sands Project until we have spent an
additional $1,500,000 on exploration (drilling and seismic evaluation) expenses.

We intend to develop our Dover and Firebag Oil Sands Projects by drilling well
pairs and extracting bitumen from the oil sands using the Steam Assisted Gravity
Drainage ("SAGD") technique. This technique consists of injecting steam into the
upper well to melt the bitumen. The bitumen then flows to the lower well with
the help of gravity where it is pumped to the surface. We also intend to
participate in future oil sands land sales and/or acquire oil sands
leases/participation from third parties.

On March 8, 2007, we sold our entire inventory of conventional oil and gas
assets together with all our interest in Oilsands and the Partnership to Great
Northern. We retained a 75% interest in the three

                                       22
<PAGE>
Muskwa Leases. We will establish a future work program for the Muskwa Leases
based on the engineering report we will obtain.

In light of the aggressive operations program for 2007, we have raised money
through the sale of securities to successfully complete all planned operations.
In December 2006, we completed a private placement of 3,240,000 common shares,
issued on a flow-through basis at a subscription price of CAD$1.00 per share for
gross proceeds of $2,798,400. The proceeds were used to fund development of the
Dover Oil Sands Project and Firebag Oil Sands Project.

In February 2007, we completed a private placement of Special Warrants at $1.50
per Special Warrant and Flow-Through Special Warrants at $1.65 per Flow-Through
Special Warrant. We issued 8,302,000 Special Warrants and 4,408,750 Flow-Through
Special Warrants on a brokered basis, and 245,000 Flow-Through Special Warrants
on a non-brokered basis for gross proceeds of $20,131,687. We have used the
proceeds to fund development of the Dover Oil Sands Project, Firebag Oil Sands
Project, and the Muskwa Leases and intend to continue to develop those
properties with the remaining funds.

In light of our successful financing efforts, management believes we have
sufficient capital to fund our plan of operations for the 2007 fiscal year.
However, there can be no assurance that the current capitalization will be
sufficient to successfully complete all planned operations. Management has not
yet formulated its plans to deal with a potential shortfall in our current
capital.

FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-QSB and our Annual Report
on Form 10-KSB for our fiscal year ended May 31, 2006, as well as statements
made by us in periodic press releases and oral statements made by our officials
to analysts and shareholders in the course of presentations about our company,
constitute "forward-looking statements." Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors that may cause the
actual results, our performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by the
forward looking statements. Such factors include, among other things, (1)
general economic and business conditions; (2) interest rate changes; (3) the
relative stability of the debt and equity markets; (4) required accounting
changes; and (5) other factors over which we have little or no control.

ITEM 3.  CONTROLS AND PROCEDURES

Our principal executive officer and principal financial officer evaluated our
disclosure controls and procedures as of the end of the period covered by this
report. In their opinions, our disclosure controls and procedures contain
weaknesses. Since our last quarterly report, we have changed the location of our
central offices, hired all new accounting personnel, and fundamentally changed
our operations to the exploration and extraction of oil from oil sands. These
changes that occurred during our last fiscal quarter materially affected our
ability to timely file this quarterly report. However, management has evaluated
the disclosure in this report and has determined that our disclosure controls
and procedures were effective with respect to the qualitative and quantitative
information presented herein. Furthermore, in the opinions of the principal
executive officer and principal financial officer, the identified weakness in
the timeliness of financial reporting will be remedied before the end of the
current fiscal year due to the recent hire of a full time accounting staff.





                                       23
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Not Applicable.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In December 2006, we completed a private placement of 3,240,000 common shares,
issued on a flow-through basis at a subscription price of CAD$1.00 per share for
gross proceeds of $2,798,400. We paid a finder's fee of 7% or $193,932
(CAD$224,350), of which $114,428 (CAD132,300) was paid to Michael Vandale, our
President and CEO. The shares were issued pursuant to Regulation S under the
Securities Act of 1933.

In December 2006, we issued 1,210,000 shares of common stock pursuant to the
exercise of stock options for gross proceeds of $908,000. Furthermore, we issued
2,850,000 options to purchase common stock at $1.20 per share to certain of our
officers and directors with a grant date fair value of $3,676,500. The shares
and options were issued pursuant to Section 4(2) of the Securities Act of 1933
and/or Rule 506 promulgated thereunder.

In February 2007, we completed a private placement of Special Warrants at $1.50
per Special Warrant and Flow-Through Special Warrants at $1.65 per Flow-Through
Special Warrant. We issued 8,302,000 Special Warrants and 4,408,750 Flow-Through
Special Warrants on a brokered basis, and 245,000 Flow-Through Special Warrants
on a non-brokered basis for gross proceeds of $20,131,687. We paid $1,183,646 in
cash commissions and issued 762,645 warrants to purchase common stock at $1.50
per share to the agents that facilitated the offering. The Special Warrants,
Flow-Through Special Warrants and Agent's Warrants were issued pursuant to
Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder
or Regulation S, as certain sales were made in "offshore transactions."

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

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

Not Applicable.

ITEM 5.  OTHER INFORMATION

Not Applicable.

ITEM 6.  EXHIBITS

--------------------------------------------------------------------------------
REGULATION
S-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)
--------------------------------------------------------------------------------


                                       24
<PAGE>
--------------------------------------------------------------------------------
REGULATION
S-B NUMBER                        EXHIBIT
--------------------------------------------------------------------------------
    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)
--------------------------------------------------------------------------------
    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 (8)
--------------------------------------------------------------------------------
    4.4       Form of Flow-Through Special Warrant Certificate (8)
--------------------------------------------------------------------------------
    4.5       Form of Bonus Warrant Certificate (8)
--------------------------------------------------------------------------------
    4.6       Form of Agent Warrant Certificate (8)
--------------------------------------------------------------------------------
   10.1       Letter agreement dated February 18, 2004 regarding Termination
              Agreement with Fairchild International Corporation (9)
--------------------------------------------------------------------------------
   10.2       2005 Stock Option Plan (10)
--------------------------------------------------------------------------------
   10.3       Assumption and Cancellation of Debt agreements with Fairchild
              International Corporation dated April 15, 2005 (5)
--------------------------------------------------------------------------------
   10.4       Management services agreement with David Stadnyk dated May 1, 2005
              (5)
--------------------------------------------------------------------------------
   10.5       Change of Control Agreement with David Stadnyk dated May 1, 2005
              (5)
--------------------------------------------------------------------------------
   10.6       2006 Stock Option Plan (11)
--------------------------------------------------------------------------------
   10.7       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)
--------------------------------------------------------------------------------
   10.8       Support Agreement among Patch International Inc., Patch Energy
              Inc., and 1286664 Alberta Ltd. dated December 15, 2006 (3)
--------------------------------------------------------------------------------
   10.9       Farmout Agreement Between Damascus Energy Inc. and Bounty
              Developments Ltd. dated November 30, 2006
--------------------------------------------------------------------------------
   10.10      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)
--------------------------------------------------------------------------------
   10.11      Support Agreement among Patch International Inc., Patch Energy
              Inc., and 1286664 Alberta Ltd. dated January 16, 2007 (4)
--------------------------------------------------------------------------------

                                       25
<PAGE>
--------------------------------------------------------------------------------
REGULATION
S-B NUMBER                        EXHIBIT
--------------------------------------------------------------------------------
   10.12      Farmout Agreement dated December 12, 2006 (4)
--------------------------------------------------------------------------------
   10.13      Conveyance Agreement among 1289307 Alberta Ltd and 1286664 Alberta
              Ltd. dated December 21, 2006 (4)
--------------------------------------------------------------------------------
   10.14      Demand Promissory Note issued by 1289307 Alberta Ltd to 1286664
              Alberta Ltd. dated December 21, 2006 (4)
--------------------------------------------------------------------------------
   10.15      Amending Agreement between Bounty Developments Ltd., 1286664
              Alberta Ltd., and Damascus Energy Inc. dated January 22, 2007 (4)
--------------------------------------------------------------------------------
   10.16      Agency Agreement among Patch International Inc., Canaccord Capital
              Corporation and Wellington West Capital Markets Inc. dated
              February 27, 2007 (8)
--------------------------------------------------------------------------------
   10.17      Amending Agreement between Bounty Developments Ltd., 1286664
              Alberta Ltd., and Damascus Energy Inc. dated February 20, 2007
--------------------------------------------------------------------------------
   10.18      Amending Agreement between Bounty Developments Ltd. and 1286664
              Alberta Ltd., dated April 16, 2007
--------------------------------------------------------------------------------
   10.19      Confirmation of Earning between Damascus Energy Inc. and Bounty
              Developments Ltd. dated April 16, 2007
--------------------------------------------------------------------------------
   31.1       Rule 13a-14(a) Certification of Principal Executive Officer
--------------------------------------------------------------------------------
   31.2       Rule 13a-14(a) Certification of 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
--------------------------------------------------------------------------------
   32.2       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 exhibits filed with the  registrant's
         current  report on Form 8-K dated  February  27,  2007,  filed March 1,
         2007.
(9)      Incorporated  by reference to the exhibits filed with the  registrant's
         annual  report on Form 10-KSB for the fiscal  year ended May 31,  2004,
         filed October 18, 2004.
(10)     Incorporated  by reference to the exhibits filed with the  registrant's
         registration  statement  on Form S-8,  file  number  333-128627,  filed
         September 27, 2005.
(11)     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.


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<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                     PATCH INTERNATIONAL INC.
                                     (REGISTRANT)

Date:  April 27, 2007                By:  /s/ MICHAEL S. VANDALE
                                        ----------------------------------------
                                        Michael S. Vandale, President and Chief
                                        Executive Officer

Date:  April 27, 2007                By:  /s/ THOMAS K. ROUSE
                                        ----------------------------------------
                                        Thomas K. Rouse, Chief Financial Officer
























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