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

                                   FORM 10-QSB

           |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 2005

                                       OR

          |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
            For the Transition Period from ___________ to ___________

                        Commission File Number: 000-50229

                            FALCON NATURAL GAS CORP.
             (Exact name of Registrant as specified in its charter)

                 Nevada                                 98-0403897
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
      incorporation or organization)

                   Westchase Center, 2500 City West Boulevard
                                    Suite 300
                              Houston, Texas 77042
          (Address of principal executive offices, including zip code)

                                 (713) 267-2240
              (Registrant's telephone number, including area code)

      Check  whether the  Registrant  (1) has filed all  reports  required to be
filed by Section 13 or 15(d) of the  Securities  Exchange Act of 1934 during the
preceding 12 months,  and (2) has been subject to such filing  requirements  for
the past 90 days. Yes [X] No [ ]

      The number of shares of the Registrant's  common stock  outstanding at May
17, 2005, was 62,262,000.

      Transitional Small Business Disclosure Format:Yes [ ] No [X]

<PAGE>

                            FALCON NATURAL GAS CORP.
                 MARCH 31, 2005 QUARTERLY REPORT ON FORM 10-QSB
                                TABLE OF CONTENTS


                                                                           PAGE
                                                                           ----

         Special Note Regarding Forward Looking Statements ..................3

                                     PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements................................................4
Item 2.  Plan of Operation..................................................18
Item 3.  Controls and Procedures............................................19

                                    PART II - OTHER INFORMATION

Item 1.  Legal Proceedings..................................................20
Item 2.  Unregistered Sales of Equity  Securities and Use of Proceeds.......21
Item 3.  Defaults Upon Senior Securities....................................22
Item 4.  Submission of Matters to a Vote of Security Holders................22
Item 5.  Other Information..................................................22
Item 6.  Exhibits and Reports on Form 8-K...................................22

                                       2
<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

To the extent that the  information  presented in this Quarterly  Report on Form
10-QSB for the quarter ended March 31, 2005,  discusses financial  expectations,
information or expectations about our sales and marketing activities,  financing
and operating  strategies,  or otherwise makes  statements  about future events,
such  statements  are  forward-looking.  We  are  making  these  forward-looking
statements in reliance on the safe harbor  provisions of the Private  Securities
Litigation  Reform  Act of 1995.  Although  we  believe  that  the  expectations
reflected  in  these   forward-looking   statements   are  based  on  reasonable
assumptions,  there are a number of risks and uncertainties that could cause our
actual results to differ materially from such forward-looking statements.  These
risks and  uncertainties  are  described,  among other places in this  Quarterly
Report, in "Plan of Operation".

In  addition,   we  disclaim  any  obligations  to  update  any  forward-looking
statements to reflect events or  circumstances  after the date of this Quarterly
Report.  When considering such  forward-looking  statements,  you should keep in
mind the risks  referenced  above and the other  cautionary  statements  in this
Quarterly Report.

                                       3
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS                                               PAGE
                                                                            ----

         Consolidated Balance Sheets as at March 31, 2005 (unaudited)
         and December 31, 2004                                                5

         Consolidated Statements of Operations for the three
         months ended March 31, 2005 (unaudited) and
         March 31, 2004 (unaudited) and for the period
         from inception (March 1, 2004) to March 31, 2005                     6

         Consolidated Statements of Stockholders'
         Equity (Deficit) (unaudited)                                         7

         Consolidated Statement of Cash Flows for the three
         months ended March 31, 2005 (unaudited) and
         March 31, 2004 (unaudited) and for the period
         from inception (March 1, 2004) to March 31, 2005                     8

         Notes to Consolidated Financial Statements (unaudited)            9-17


                                       4
<PAGE>


FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------

                                                       March 31,
                                                         2005       December 31,
                                                     (Unaudited)       2004
                                                     -----------    -----------
ASSETS

   CURRENT ASSETS
      Cash and cash equivalents                      $   164,352    $   162,227
      Accounts receivable                                  8,537          2,000
                                                     -----------    -----------
        Total Current Assets                             172,889        164,227
                                                     -----------    -----------

   PROPERTY & EQUIPMENT
      Equipment                                            4,088          4,088
      Less accumulated depreciation                         (960)          (618)
      Software                                            15,000             --
      Less accumulated amortization                         (575)            --
                                                     -----------    -----------
        Total Property & Equipment                        17,553          3,470
                                                     -----------    -----------

   OTHER ASSETS
      Oil and gas leases                               1,669,933      1,582,541
      Prepaid expenses                                    44,602         50,000
      Rent deposit                                         1,243          1,243
                                                     -----------    -----------
        Total Other Assets                             1,715,778      1,633,784
                                                     -----------    -----------

   TOTAL ASSETS                                      $ 1,906,220    $ 1,801,481
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

   CURRENT LIABILITIES
      Accounts payable                               $    37,312    $     7,349
      Accrued liabilities                                  6,972          6,959
      Advance from shareholder                               100            100
      Note payable - related party                         3,216          3,216
      Note payable                                       140,000        140,000
      Interest payable                                    19,520          4,854
                                                     -----------    -----------
        Total Current Liabilities                        207,120        162,478
                                                     -----------    -----------

   LONG-TERM LIABILITIES
      Convertible debt                                 1,000,000        500,000
      Discount on convertible debt                      (199,791)      (126,979)
                                                     -----------    -----------
        Total Long-Term Liabilities                      800,209        373,021

   COMMITMENTS AND CONTINGENCIES                              --             --
                                                     -----------    -----------

   STOCKHOLDERS' EQUITY
      Common stock, $0.00001 par value;
       200,000,000 shares authorized,
       62,262,000 and 62,182,000 shares
       issued and outstanding                                622            621
      Additional paid-in capital                       6,923,540      6,776,430
      Deficit accumulated during exploration stage    (6,025,271)    (5,511,069)
                                                     -----------    -----------
        Total Stockholders' Equity                       898,891      1,265,982
                                                     -----------    -----------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $ 1,906,220    $ 1,801,481
                                                     ===========    ===========

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


                                       5
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

                                          Three months ending           From
                                      --------------------------   March 1, 2004
                                        March 31,      March 31,  (Inception) to
                                         2005           2004      March 31, 2005
                                      (Unaudited)    (Unaudited)    (Unaudited)
                                      -----------    -----------    -----------


REVENUES                              $        --    $        --    $        --
                                      -----------    -----------    -----------

GENERAL AND ADMINISTRATIVE EXPENSES
     Depreciation and amortization            918             --          7,057
     Investor relations                    56,866             --        172,616
     Advisory services                    115,854             --      3,949,644
     Lease exploration                     18,302        288,000        589,806
     Internet/webhosting                      558             --         20,785
     Officers & directors fees             69,936             --        206,913
     Office and general expenses           36,389             --         52,326
     Professional fees                     46,426            150        181,814
     Travel and entertainment              15,948             --         38,727
     Rent and related expenses              6,083          1,243         29,829
                                      -----------    -----------    -----------
        Total Expenses                    367,280        289,393      5,249,517
                                      -----------    -----------    -----------

LOSS FROM OPERATIONS                     (367,280)      (289,393)    (5,249,517)
                                      -----------    -----------    -----------

OTHER INCOME (EXPENSES)
     Other income                              --             --            500
     Financing fees                       (21,232)            --       (521,232)
     Interest expense                    (125,778)            --       (255,632)
     Interest income                           88             --            608
                                      -----------    -----------    -----------
        Total Other Income (Expenses)    (146,922)            --       (775,756)
                                      -----------    -----------    -----------

LOSS BEFORE INCOME TAXES                 (514,202)      (289,393)    (6,025,273)

PROVISION FOR TAXES                            --             --             --
                                      -----------    -----------    -----------

NET LOSS                              $  (514,202)   $  (289,393)   $(6,025,273)
                                      ===========    ===========    ===========

NET LOSS PER COMMON SHARE,
     BASIC AND DILUTED                $     (0.01)   $     (0.01)
                                      ===========    ===========

WEIGHTED AVERAGE NUMBER
     OF COMMON SHARES OUTSTANDING,
     BASIC AND DILUTED                 60,286,557     20,070,000
                                      ===========    ===========

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



                                       6
<PAGE>


FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                        Deficit
                                                            Common Stock                              Accumulated
                                                     --------------------------    Additional           During          Total
                                                      Number of                     Paid-in           Exploration    Stockholders'
                                                       Shares          Amount       Capital              Stage         Equity
                                                     -----------    -----------    -----------        -----------    -----------
<S>                                                    <C>           <C>            <C>            <C>                <C>
Stock issued for $0.001 per share for services
      on March 1, 2004                                20,000,000    $       200    $    19,800    $            --    $    20,000

Shares issued for acquisition
      of leases at $0.25 per share                       900,000              9        224,991                 --        225,000

Reverse merger acquisition and recapitalization       45,000,000            450         (4,671)                --         (4,221)

Shares issued  for cash at $1.00 per share
      net of expenses of $60                             632,000              6        631,934                 --        631,940

Shares issued for cash at approximately $0.93 per             --
      share net of expenses of $12                     1,500,000             15      1,399,973                 --      1,399,988

Shares issued for services at $1.25 per share             50,000             --         62,500                 --         62,500

Shares issued for services at $1.42 per share          2,500,000             25      3,549,975                 --      3,550,000

Shares issued for services at $1.34 per share            100,000              1        133,999                 --        134,000

Shares issued for services at $1.32 per share            100,000              1        131,999                 --        132,000

Rescission of shares from officer received at merger  (9,000,000)           (90)           934                 --            844

Shares issued for financing costs and charges related
      to services provided                               400,000              4        499,996                 --        500,000

Beneficial conversion feature of convertible debt             --             --        125,000                 --        125,000

Net loss for period ending December 31, 2004                  --             --             --         (5,511,069)    (5,511,069)
                                                     -----------    -----------    -----------        -----------    -----------
BALANCE, December 31, 2004                            62,182,000            621      6,776,430         (5,511,069)     1,265,982

Shares issued for services at $0.45 per share             80,000              1         35,999                 --         36,000

Beneficial conversion feature of convertible debt             --             --        111,111                 --        111,111

Net loss for period ending March 31, 2005                     --             --             --           (514,202)      (514,202)
                                                     -----------    -----------    -----------        -----------    -----------
BALANCE, March 31, 2005 unaudited                     62,262,000    $       622    $ 6,923,540        $(6,025,271)   $   898,891
                                                     ===========    ===========    ===========        ===========    ===========
</TABLE>

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


                                       7
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       Three months ending           From
                                                                    -------------------------    March 1, 2004
                                                                      March 31,     March 31,   (Inception) to
                                                                        2005          2004       March 31, 2005
                                                                    (Unaudited)    (Unaudited)    (Unaudited)
                                                                    -----------    -----------    -----------

<S>                                                                 <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                      $  (514,202)   $  (289,393)   $(6,025,271)

      Adjustments to reconcile net loss to
        net cash (used) by operating activities:
      Depreciation and amortization                                         918             --          7,057
      Common stock issued for services                                   36,000        225,000      3,935,332
      Interest expense for beneficial conversion feature                111,111             --        236,111
      Common stock issued for financing costs and charges                    --             --        500,000

      Changes in assets and liabilities:                                     --
           Decrease (increase) in rent deposit                               --             --         (1,243)
           Decrease (increase) in accounts receivable                    (6,537)            --         (8,537)
           Decrease (increase) in prepaid expenses                        5,398             --        (44,602)
           Increase (decrease) in accounts payable                       29,963             --         33,638
           Increase (decrease) in accrued liabilities                        14             --          6,973
           Increase (decrease) in interest payable                       14,666             --         19,520
           Increase (decrease) in advance from shareholder                   --             --            100
                                                                    -----------    -----------    -----------
                 Net cash used by operating activities                 (322,669)       (64,393)    (1,340,922)
                                                                    -----------    -----------    -----------

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
           Purchase of equipment                                        (15,000)            --        (19,088)
           Oil and gas lease                                            (87,392)        63,000     (1,444,933)
           Cash received through recapitalization and acquisition            --             --          2,681
                                                                    -----------    -----------    -----------
                Net cash used by investing activities                  (102,392)        63,000     (1,461,340)
                                                                    -----------    -----------    -----------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
           Proceeds from notes payable                                       --             --        140,000
           Proceeds from convertible debt                               427,186             --        794,686
           Issuance of common stock for cash                                 --             --      2,031,928
                                                                    -----------    -----------    -----------
              Net cash provided by financing activities                 427,186             --      2,966,614
                                                                    -----------    -----------    -----------

      Net increase (decrease) in cash and cash equivalents                2,125         (1,393)       164,352

Cash and cash equivalents beginning of period                           162,227          1,393             --
                                                                    -----------    -----------    -----------

Cash and cash equivalents end of period                             $   164,352    $        --    $   164,352
                                                                    ===========    ===========    ===========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
      Income taxes paid                                             $        --    $        --    $        --
                                                                    ===========    ===========    ===========
      Interest paid                                                 $        --    $        --    $        --
                                                                    ===========    ===========    ===========

NON-CASH INVESTING AND FINANCING TRANSACTIONS:
      Common stock issued for services                              $    36,000    $   225,000    $ 3,935,332
      Interest expense for beneficial conversion feature            $   111,111    $        --    $   236,111
      Common stock issued for financing costs and charges           $        --    $        --    $   500,000
</TABLE>

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

                                       8
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Falcon Natural Gas Corporation  was  incorporated on March 1, 2004. On April 16,
2004,  Countryside  Review,  Inc.  entered  into a  reverse  merger  transaction
agreement with Falcon Natural Gas Corporation,  which  transaction was completed
on May 6, 2004. In  contemplation  of this  transaction and a change in business
focus,  Countryside  Review,  Inc.  changed its name to Falcon Natural Gas Corp.
("the  Company")  effective  April 12,  2004.  As a result of this  transaction,
Falcon Natural Gas Corporation became a wholly-owned  subsidiary.  The Company's
operations are conducted  through this  wholly-owned  subsidiary.  The Company's
year-end is December 31.

The Company is in the  exploration  stage as a natural gas  exploration  company
and, as such,  has not realized any revenues  from its planned  operations.  The
Company's principal office is located in Houston, Texas.

Basis of Presentation
The  foregoing  unaudited  interim  financial  statements  have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information  and with the  instructions  to Form  10-QSB and  Regulation  S-B as
promulgated  by the  Securities and Exchange  Commission  ("SEC").  Accordingly,
these  financial  statements do not include all of the  disclosures  required by
generally  accepted  accounting  principles  in the United States of America for
complete  financial  statements.  These unaudited interim  financial  statements
should be read in conjunction with the Company's  audited  financial  statements
for the year  ended  December  31,  2004.  In the  opinion  of  management,  the
unaudited interim financial statements furnished herein include all adjustments,
all of which are of a normal recurring nature, necessary for a fair statement of
the results for the interim period  presented.  Operating results for the period
ended March 31, 2005 are not  necessarily  indicative of the results that may be
expected for the year ending December 31, 2005.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in
understanding the financial statements. The financial statements and notes are
representations of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the U.S. and have been consistently applied in
the preparation of the financial statements.

Recent Accounting Pronouncements
In December 2004, the Financial  Accounting  Standards Board issued Statement of
Financial Accounting Standards No. 153. This statement addresses the measurement
of  exchanges  of  nonmonetary  assets.  The  guidance  in APB  Opinion  No. 29,
"Accounting  for  Nonmonetary  Transactions,"  is  based on the  principle  that
exchanges of  nonmonetary  assets should be measured  based on the fair value of
the assets exchanged.  The guidance in that opinion,  however,  included certain


                                       9
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

exceptions to that principle.  This statement amends Opinion 29 to eliminate the
exception for nonmonetary exchanges of similar productive assets and replaces it
with a general  exception for exchanges of  nonmonetary  assets that do not have
commercial  substance.  A nonmonetary  exchange has commercial  substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. This statement is effective for financial statements for fiscal
years  beginning  after June 15, 2005.  Earlier  application  is  permitted  for
nonmonetary  asset  exchanges  incurred  during fiscal years beginning after the
date of this  statement  is issued.  Management  believes  the  adoption of this
statement will have no impact on the financial statements of the Company.


In December 2004, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No. 152,  which amends FASB  statement No. 66,
"Accounting for Sales of Real Estate," to reference the financial accounting and
reporting guidance for real estate time-sharing transactions that is provided in
AICPA Statement of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing
Transactions." This statement also amends FASB Statement No. 67, "Accounting for
Costs and Initial Rental  Operations of Real Estate Projects," to state that the
guidance  for (a)  incidental  operations  and (b) costs  incurred  to sell real
estate  projects does not apply to real estate  time-sharing  transactions.  The
accounting  for those  operations  and costs is subject to the  guidance  in SOP
04-2.  This  statement is effective  for financial  statements  for fiscal years
beginning  after  June  15,  2005.  Management  believes  the  adoption  of this
statement will have no impact on the financial statements of the Company.

In December 2004, the Financial  Accounting Standards Board issued a revision to
Statement of Financial  Accounting  Standards  No. 123R,  "Accounting  for Stock
Based  Compensation." This statement  supersedes APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and its related  implementation  guidance.  This
statement  establishes standards for the accounting for transactions in which an
entity exchanges its equity instruments for goods or services. It also addresses
transactions  in which an entity  incurs  liabilities  in exchange  for goods or
services that are based on the fair value of the entity's equity  instruments or
that may be settled by the issuance of those equity instruments.  This statement
focuses  primarily on accounting  for  transactions  in which an entity  obtains
employee services in share-based payment  transactions.  This statement does not
change the accounting guidance for share based payment transactions with parties
other than employees provided in Statement of Financial Accounting Standards No.
123. This statement does not address the accounting for employee share ownership
plans,  which are  subject to AICPA  Statement  of  Position  93-6,  "Employers'
Accounting  for  Employee  Stock  Ownership  Plans."  The  Company  has  not yet
determined  the impact to its  financial  statements  from the  adoption of this
statement.

In November  2004,  the  Financial  Accounting  Standards  Board  (FASB)  issued
statement of  financial  accounting  standards  No. 151,  "Inventory  Costs-- an
amendment of ARB No. 43, Chapter 4." This  statement  amends the guidance in ARB
No. 43, Chapter 4,  "Inventory  Pricing," to clarify the accounting for abnormal
amounts of idle facility expense,  freight,  handling costs, and wasted material


                                       10
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

(spoilage).  Paragraph  5 of ARB 43,  Chapter 4,  previously  stated that ". . .
under  some  circumstances,  items  such as  idle  facility  expense,  excessive
spoilage,  double freight, and rehandling costs may be so abnormal as to require
treatment as current period charges.  . . ." This statement  requires that those
items be recognized as  current-period  charges  regardless of whether they meet
the  criterion of "so  abnormal."  In addition,  this  statement  requires  that
allocation of fixed production  overheads to the costs of conversion be based on
the normal  capacity of the production  facilities.  This statement is effective
for inventory  costs incurred during fiscal years beginning after June 15, 2005.
As of March 31,  2005,  the Company  does not have  inventory  and  believes the
adoption of this  statement will not have any immediate  material  impact on the
Company.

Concentration of Credit Risk
The Company  maintains its cash in one commercial  account at a major  financial
institution.  Although the financial institution is considered creditworthy,  at
March 31, 2005 the Company's cash balance  exceeded  Federal  Deposit  Insurance
Corporation (FDIC) limits by $64,352.

Exploration Costs
In accordance with accounting principles generally accepted in the United States
of America,  the Company  expenses lease  exploration  costs as incurred.  As of
March 31, 2005, the exploration costs expensed during the Company's  exploration
stage have been approximately $584,276.

Going Concern
As shown in the accompanying financial statements,  the Company has generated no
revenues since inception. from inception to March 31, 2005, the Company recorded
losses of approximately  $6,062,000 and had no revenues.  The Company,  being an
exploration stage enterprise,  is currently implementing a revised business plan
that will, if successful,  mitigate these factors that raise  substantial  doubt
about the  Company's  ability to  continue  as a going  concern.  The  financial
statements  do not include any  adjustments  relating to the  recoverability  of
recorded assets, or the amounts and  classification of liabilities that might be
necessary in the event the Company cannot continue in existence.

Property and Equipment
Property  and  equipment  are  stated  at cost.  Depreciation  of  property  and
equipment is calculated using the straight-line method over the estimated useful
lives of the assets, which is three years.

Stock Split
In April,  2004,  the Company  entered into a 5 for 1 forward  stock split.  The
number  of  shares  of the  registrant  company  outstanding  at the time of the
adoption of the 5 for 1 forward  stock  split was  9,000,000  shares  which were
restated to 45,000,000  shares.  All  references in the  accompanying  financial
statements have been restated to reflect this stock split. (See Note 3.)


                                       11
<PAGE>


FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

NOTE 3 - SHARE EXCHANGE

On May 6, 2004, the Company,  Falcon Natural Gas Corporation (the "Corporation")
and  shareholders  of the  Corporation  completed a share  exchange  whereby the
Corporation became a wholly owned subsidiary of Falcon Natural Gas Corp when the
Company  issued  20,000,000  shares  of its  common  stock to the  Corporation's
shareholders in exchange for services received.  The Company computed the number
of shares issued in this transaction based on the par value of the Corporation's
common  stock on the date of issuance and  recognized  an expense of $20,000 for
services.  In  addition,  900,000  shares of common stock were issued in partial
payment of an oil and gas lease valued at $0.25 per share, or $225,000. Pursuant
to the share exchange,  the Company issued 20,900,000 shares of its common stock
in exchange for 20,900,000 shares of common stock, which represented 100% of the
Corporation's   issued  and  outstanding  common  stock.  This  acquisition  was
accounted  for as a reverse  merger and  recapitalization  whereby the operating
company,  Falcon  Natural  Gas  Corporation,  is the  continuing  entity for all
accounting purposes.

The recapitalization of the Company required the following accounting adjustment
in  order  to  properly  reflect  the  accumulated   deficit  in  the  financial
statements:
<TABLE>
<CAPTION>

                                                                     Additional
                                           Number of                  Paid-in      Deficit      Shareholders'
                                             Shares      Amount       Capital    Accumulated      Equity
                                          ----------   ----------   ----------    ----------    ----------
<S>                                       <C>          <C>          <C>           <C>           <C>
Prior to recapitalization                 45,000,000   $      450   $   99,550    $ (104,221)   $   (4,221)

Recapitalization adjustment
           to close deficit accumulated           --           --     (104,221)      104,221            --
                                          ----------   ----------   ----------    ----------    ----------

Total                                     45,000,000   $      450   $   (4,671)   $       --    $   (4,221)
                                          ==========   ==========   ==========    ==========    ==========
</TABLE>

The net liabilities assumed consisted of the following items:

                Cash and cash equivalents                       $     2,681
                Less:        Accounts payable                        (3,686)
                             Accounts payable shareholders           (3,216)
                                                                -----------

                Net liabilities assumed                         $    (4,221)
                                                                ===========

The  following  transactions  involved the majority  shareholder  of the Company
prior to the share exchange with Falcon Natural Gas Corporation:

On March 22, 2004,  an investor  acquired an aggregate of  20,000,000  shares of
common stock of Countryside  Review,  Inc. in exchange for $500,000  pursuant to
three stock purchase agreements with three shareholders.  On March 23, 2004, the
investor returned 5,000,000 shares of common stock to Countryside Review,  Inc.,
which shares were subsequently cancelled, returned to treasury, and then retired


                                       12
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

and  restored to the status of  authorized  and  unissued.  As a result of these
transactions,  control of Countryside  Review,  Inc. shifted to the investor who
owned 15,000,000 shares of the common stock of Countryside Review, Inc. prior to
the share exchange agreement with Falcon Natural Gas Corporation.

Effective April 12, 2004,  Countryside  Review,  Inc. changed its name to Falcon
Natural Gas Corp.  and  authorized a 5 to1 forward stock split of the originally
issued and outstanding  Countryside  Review Inc.  shares.  All references in the
accompanying  financial  statements and notes to the common shares and per share
amounts have been restated to reflect the forward stock split.  The Company also
reauthorized two hundred million (200,000,000) shares of common stock with a par
value of $0.00001 per share.

NOTE 4 - CONVERTIBLE DEBT

In  November,  2004,  the Company  entered  into a loan  agreement  with Cornell
Capital Partners, LP ("the Investor") in which the Company received a $1,000,000
loan less related expenses of $230,000,  which has been allocated as discount on
debt and will be amortized over a two year period.  The  convertible  securities
are guaranteed by the assets of the Company.  The  convertible  debt  instrument
underlying this loan agreement will  automatically  convert into common stock at
either 120% of the closing bid price by the second  anniversary date of issuance
or 80% of the average of the three lowest daily volume weighted average price of
the common stock for the 30 trading days  immediately  preceding the  conversion
date.  Under the  agreement,  the Company is required to keep  available  common
stock duly  authorized  for issuance in  satisfaction  of the  convertible.  The
conversion  amount will be the face amount of the  convertible  plus interest at
the  rate  of 5% per  annum  from  the  closing  date of  November,  2004 to the
conversion  date,  which is the date on which the  Company  receives a notice of
conversion  from the investor  exercising  the right to convert the  convertible
into common  shares of the  Company.  The  convertible  debt will  automatically
convert into common stock on the second anniversary date of issuance.  The terms
of the debt does not require  regular monthly  payments.  Interest is accrued at
5%.

The convertible debentures contained a beneficial conversion feature computed at
its intrinsic value,  which was the difference  between the conversion price and
the fair value on the debenture issuance date of the common stock into which the
debt was convertible, multiplied by the number of shares into which the debt was
convertible at the commitment date. Since the beneficial  conversion feature was
to be  settled by  issuing  equity,  the  amount  attributed  to the  beneficial
conversion  feature,  or $111,111  was  recorded  as an  interest  expense and a
component of equity on the issuance date.

Standby Equity Distribution Agreement
In  November,  2004,  the Company  entered  into a standby  equity  distribution
agreement  with  Cornell  Capital  Partners,  LP  ("Cornell").  Pursuant to this
agreement, Cornell will purchase up to $10,000,000 of the Company's common stock
through  a  placement   agent  over  a  two-year   period  after  the  effective


                                       13
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

registration  of the shares.  In addition,  the Company issued 400,000 shares of
its common stock to Cornell and the  placement  agent upon the  inception of the
standby equity  distribution  agreement.  The $500,000 value of these shares was
based on the fair  market  value of the  shares on the date of the  contract  is
recognized as a period expense due to the fact that the 400,000 shares have been
deemed to be fully earned as of the date of the agreement.

NOTE 5 - LOAN AGREEMENT

The Company  borrowed  $140,000 from Blue Mint Exploration on November 24, 2004.
The loan is  unsecured,  matures on May 25,  2005 on which date the entire  loan
becomes payable with interest. The loan bears interest at 12% per annum.

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost.  Depreciation  is calculated  using
the  straight-line  method  over five  years.  The  following  is a  summary  of
property, equipment and accumulated depreciation at September 30, 2004:

                       Computer Equipment                             $   4,088
                       Software                                          15,000
                       Less: Accumulated Depreciation                     1,536
                                                                      ---------
                       Total Property & Equipment                     $  17,552
                                                                      =========

Depreciation expense for the period ending March 31, 2005 was $918

NOTE 7 - OIL AND GAS LEASES

On March  25,  2004,  the  Company  paid cash and  issued  stock for oil and gas
leases.  The leases,  assigned from Argyle Energy Corp  (hereinafter  "Argyle"),
entitle the Company to a 100% working interest and 70% net revenue interest in 5
tracts of land in Starr County, Texas.

NOTE 8 -  COMMITMENTS AND CONTINGENCIES

On June 14, 2004, the Company entered into a contract for one year from the date
of the  contract  for  investor  relations  services.  The terms of the contract
include a  retainer  of $5,000 per month plus any  out-of-pocket  expenses,  and
50,000 restricted shares in the Company's common stock. (See Note 10.)

On August 2, 2004, the Company  contracted with Argyle Energy,  Inc.  ("Argyle")
for various oil, gas and mineral leases  located in St. Mary Parish,  Louisiana.
The contract  provides that the Company will receive a 100% working  interest in


                                       14
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

these  leases in  exchange  for two cash  payments  to Argyle  of  $404,235  and
$454,235 by September 30, 2004. As of March 31, 2005, a cash payment was made in
the amount of $858,470.

On August 2, 2004, the Company entered into a business consultant agreement. The
consultant  will be paid  $15,000  for work  performed  in  accordance  with the
agreement.  In addition,  the Company agrees to pay the consultant  7.5% in cash
and 10% in warrants for any financing  monies  raised.  As of March 31, 2005, no
financing  monies had been  raised by the  consultant  and  $15,000 was paid for
services performed.

On August 9, 2004, the Company entered into an agreement for financial  advisory
services.  The terms of the  agreement  include  compensation  of 2% cash and 2%
warrants on all monies raised by the financial advisory company and payment of a
retainer in the amount of $5,000.  The agreement  states a  termination  date of
January 1, 2005.  As of March 31,  2005,  the  financial  advisory  company  was
instrumental in the raising of funds related to Cornell Capital  Partners LP and
new terms related to the agreement dated August 9, 2004 were renegotiated. Under
the new terms of the  agreement,  the  Company  paid a retainer in the amount of
$5,000 in addition to a fixed one time payment of $35,000.

On November 24, 2004,  the Company  entered into a loan agreement with Blue Mint
Exploration in the amount of $140,000 for a term of six months  terminating  May
25, 2005 and an interest rate of 12% per annum to be paid at the maturity of the
loan agreement. (See Note 5.)

Standby Equity Distribution Agreement
In  November,  2004,  the Company  entered  into a standby  equity  distribution
agreement  with  Cornell  Capital  Partners  LP  ("Cornell").  Pursuant  to this
agreement, Cornell will purchase up to $10,000,000 of the Company's common stock
through  a  placement   agent  over  a  two  year  period  after  the  effective
registration of the shares. (See Note 4.)

NOTE 9 - RELATED PARTY TRANSACTIONS

A shareholder  advanced the Company $100 to open the Company's bank account. The
funds advanced are unsecured, non-interest bearing, and due on demand.

NOTE 10 - COMMON STOCK

During the period ended December 31, 2004, the Company issued  20,000,000 shares
valued at $0.001  per share for  services  received.

During the period ended  December 31, 2004, the Company issued 900,000 shares of
common stock in partial payment of an oil and gas lease.  The shares were valued
at $0.25 per share, or $225,000.


                                       15
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

During the period ended  December 31, 2004,  the Company issued for cash 632,000
shares of common  stock at $1.00 per share,  less  expenses of $60, for a net of
$631,940.

In April,  2004,  the Company  entered into a 5 for 1 forward  stock split.  The
number  of  shares  of the  registrant  company  outstanding  at the time of the
adoption of the 5 for 1 forward  stock  split was  9,000,000  shares  which were
restated to 45,000,000 shares. (See Note 3.)

On June 14, 2004,  the Company issued 50,000  restricted  shares valued at $1.25
per share as part of an investor relations contract. See Note 8.

On August 2, 2004, the Company issued 2,500,000 shares valued at $1.42 per share
for services as part of the Argyle Energy, Inc. lease contract.

On August 27, 2004,  the Company issued 100,000 shares valued at $1.32 per share
to an independent consultant for advisory services.

On September 7, 2004,  the Company  issued  100,000  shares  valued at $1.34 per
share to an independent consultant for advisory services.

On October 8, 2004, the Company  entered into a subscription  agreement to issue
1,500,000  shares at the purchase price of  approximately  $0.93 per share.  The
Company received $1,400,000 less expenses of $12, for a net of $1,399,988.

In October,  2004,  an officer of the Company  resigned from his position as CEO
and rescinded 9,000,000 shares that he currently held. The rescinded shares were
valued at par because they were part of the  recapitalization  of the  Company's
shares.

In October, 2004, the Company issued 392,000 shares to Cornell Capital and 8,000
to the placement  agent  related to the standby  equity  distribution  agreement
valued at fair market value of $1.25 per share. (See Note 4.)

On March 2, 2005,  the Company issued 80,000 shares valued at $0.45 per share to
two consultants for geological services.

NOTE 11 - SUBSEQUENT EVENTS

On April 19, 2005, Falcon Natural Gas Corporation (the "Company") entered into a
Termination Agreement with Cornell Capital Partners, LP ("Cornell"), whereby the
Standby Equity Distribution Agreement,  dated November 19, 2004, and the related
Registration  Rights  Agreement,  Placement Agent Agreement and Escrow Agreement
were  terminated.  Upon  execution  of the  Termination  Agreement,  the Company
entered into a new Standby Equity  Distribution  Agreement with Cornell on April
19, 2005. Pursuant to the new standby Equity Distribution Agreement, the Company
may, at its discretion,  periodically sell to Cornell shares of common stock for
a total purchase  price of up to $20.0  million.  For each share of common stock
purchased under the Standby Equity Distribution Agreement,  Cornell will pay the


                                       16
<PAGE>

FALCON NATURAL GAS CORP.
(Formerly Countryside Review Inc.)
(An Exploration Stage Company)
Condensed Notes to Consolidated Financial Statements
March 31, 2005
--------------------------------------------------------------------------------

Company 100% of the lowest volume weighted average price of the Company's common
stock as quoted by Bloomberg, LP on the Over-the-Counter Bulletin Board or other
principal  market on which the  Company's  common stock is traded for the 5 days
immediately  following  the notice  date.  Cornell  will also  retain 5% of each
advance under the Standby Equity Distribution Agreement. Cornell's obligation to
purchase  shares  of  the  Company's  common  stock  under  the  Standby  Equity
Distribution  Agreement is subject to certain conditions,  including the Company
obtaining an effective  registration  statement  for shares of common stock sold
under the Standby Equity  Distribution  Agreement and is limited to $750,000 per
weekly advance.

On April 19, 2005, the Company and Cornell  terminated  the Securities  Purchase
Agreement  entered  into on  November  19,  2004,  and the  related  Convertible
Debentures,  Security Agreement, Escrow Agreement,  Investor Registration Rights
Agreement and  Irrevocable  Transfer Agent  Instructions.  Upon execution of the
Termination  Agreement,  the  Company  entered  into a new  Securities  Purchase
Agreement  with  Cornell  on April  19,  2005.  Pursuant  to the new  Securities
Purchase Agreement,  Cornell issued convertible debentures to the Company in the
original  principal  amount of $1,000,000.  The  debentures  are  convertible at
Cornell's  option any time up to maturity at a fixed  conversion  price equal to
$0.60 (the  "Fixed  Price").  The  debentures  are  secured by the assets of the
Company. The debentures have a two-year term and accrue interest at 5% per year.
After the earlier to occur of a) the date a  registration  statement  related to
the shares issuable upon  conversion of the debentures is declared  effective by
the United States  Securities  and Exchange  Commission or b) August 1, 2005, if
the closing bid price of the Company's Common Stock, as quoted by Bloomberg, LP,
is less than $0.60,  Cornell at its sole option can elect cash  repayment of the
debentures  by  requiring  the  Company to make 5  payments  of  $200,000,  plus
outstanding and accrued interest. At maturity, the debentures will automatically
convert  into shares of common  stock at a  conversion  price equal to the Fixed
Price.

On April  19,  2005,  in  connection  with  the  Termination  Agreement  and the
execution of the new Securities Purchase Agreement, the Company issued a warrant
to Cornell to purchase  1,000,000  shares of the  Company's  common  stock.  The
warrants have an exercise price equal to $0.60 per share. The warrants expire on
April 19, 2007.


                                       17
<PAGE>

ITEM 2.  PLAN OF OPERATION

The following Plan of Operation of ours should be read in  conjunction  with our
consolidated financial statements and notes thereto included herein.

We are in the exploration stage as a natural gas exploration  company.  As such,
we have not realized any revenues from our planned operations. We are engaged in
natural gas  exploration  activities  in St. Mary  Parish,  Louisiana  and Starr
County, Texas.

During  2004,  we  raised  $2,539,428  from a  combination  of  equity  and debt
financing.  We estimate that we can satisfy our cash  requirements  for the next
six months  which does not take into  account  the costs for  drilling  wells or
further  exploration work on our leased properties.  We further estimate that we
need to  raise  at least  $240,000  to  satisfy  our  cash  requirements  for an
additional six months, excluding the costs of drilling and lease exploration. We
currently  use  approximately   $40,000  of  cash  per  month  for  general  and
administrative   expenses  such  as  investor   relations,   advisory  services,
Internet/web-hosting,  officers  salaries and directors fees, office and general
expenses,  professional  fees,  travel and  entertainment  and rent and  related
expenses.  We estimate that such uses of cash will continue  throughout 2005. We
spent $571,504 on lease  exploration  during 2004 and the first quarter of 2005.
As discussed  below, we need more than $5.2 million for drilling a proposed well
on our Wyandotte  property located in St. Mary Parish,  Louisiana.  If we do not
receive any additional  financing during the next six months we will not be able
to continue as a going concern,  our business operations will fail and investors
will  lose  their  entire  investment.  We  have  not  yet  executed  assignment
agreements  with Argyle Energy,  Inc. to transfer the interests in the Wyandotte
property or  approximately  3,600  additional  acres comprising the Starr County
Property.  We hope to execute such assignment  agreements in the near future, of
which there can be no assurance.

We obtained the services of independent contractors to complete  two-dimensional
geophysical   studies  of  our  Starr  County  property  and   three-dimensional
geophysical seismic studies on our Wyandotte property.  The well scheduled to be
drilled  in July  2005 is going to be a  replacement  of the  Inglewood  2 well,
previously  drilled in 1980. An engineering study has concluded that the reentry
of the old well would be too risky.  A new well will  therefore  be drilled.  We
plan to drill the  replacement  well on the DB3  Prospect.  The DB3  Prospect is
located on the  Wyandotte  Property.  We need to raise more than $5.2 million to
pay for drilling and completion of the  replacement  well. We plan to obtain the
money for drilling from our financial arrangement with Cornell Capital Partners,
LP which is subject to certain terms and conditions including the SEC's granting
of effectiveness to our pending registration  statement. We have also contracted
with a financial advisory company to help us raise additional financing.  Except
for the financial  arrangement with Cornell Capital Partners,  LP we do not have
any commitments or identified  sources of additional  capital from third parties
or from our officers,  directors or majority shareholders.  Additional financing
may not be available to us on favorable  terms,  if at all. In the event that we
cannot obtain enough money to drill the replacement well on the DB3 Prospect, we
intend to seek a drilling  partner  that could raise the money in  exchange  for
part of our  mineral  interest.  We may not  raise  additional  capital  or,  if
necessary,  find a suitable  drilling  partner.  Further,  we may not be able to
produce commercial  quantities of natural gas from a replacement well on the DB3
Prospect.  If we cannot raise the money or find a suitable drilling partner,  we


                                       18
<PAGE>

will not be able to drill and our business will fail. Furthermore, the discovery
of natural gas and the ability to produce it in  commercial  quantities  is very
speculative.  Even assuming that we obtain the necessary financing for drilling,
if we do not discover and produce commercial  quantities of natural gas, we will
not have any products or services to offer and our business could fail.

We plan to drill the replacement  well a few yards away from an existing well on
the DB3 Prospect.  We believe that we will have to drill the replacement well to
a depth of at least  17,000  feet.  We have  estimated  a dry hole cost of $4.34
million and a completed cost of $5.27 million.

If we discover and can produce commercial  quantities of natural gas that we can
sell, we intend to use the proceeds to fund a second well on the DB3 Prospect to
accelerate  the recovery time of the natural gas  reserves.  Based on our letter
agreement with Argyle Energy Inc. for  transferring  all of our purchased leases
into our name and the  leases,  we are  entitled  to  receive a 70% net  revenue
interest.  In addition,  we plan to use the  proceeds  from  production  to fund
additional  exploration  and  drilling  on our leased  properties.  We will need
between $2 million and $7 million of additional  financing  for each  additional
well  that we  desire to drill.  We have not  examined  the title to our  leased
properties.

We do not expect to purchase or sell any plant or significant  equipment  during
the next twelve months.

We have two full-time employees consisting of Fred B. Zaziski, our President and
Chief  Executive  Officer,  and  Massimiliano  Pozzoni,  our Vice  President  of
Business Development,  Secretary and Treasurer (Principal Financial Officer). We
do not expect  significant  changes in the number of  employees  during the next
twelve months.  We intend to use several  contractors  on an as-needed  basis to
conduct our operating  activities.  Messrs.  Zaziski and Pozzoni will select and
hire  these   contractors  and  manage  and  evaluate  their  work  performance.
Additionally,  we have formed an advisory board with three experienced  members,
Alan  Aitchison,  our former Chief  Executive  Officer,  Paul C.  Kirkitelos and
Daniel H.  Tesfamicael.  We established  the advisory board in an effort to save
cost by  relying  on the  members  rather  than  consultants  in such  areas  as
drilling, petroleum engineering, and capital raising efforts.

ITEM 3.  CONTROLS AND PROCEDURES

Our principal  executive  officer and principal  financial officer evaluated the
effectiveness  of our  disclosure  controls and  procedures  (as defined in Rule
13a-14(c)  under  the  Securities  Exchange  Act of  1934)  as of the end of the
quarter ended March 31, 2005. Based on this evaluation,  our principal executive
officer and principal  financial  officer have  concluded  that our controls and
procedures are effective in providing  reasonable assurance that the information
required to be  disclosed  in this Report is accurate  and complete and has been
recorded, processed, summarized and reported within the time period required for
the filing of this Report. Subsequent to the date of this evaluation, there have
not been any significant  changes in our internal controls or, to our knowledge,
in other factors that could significantly affect our internal controls.


                                       19
<PAGE>

                           PART II--OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On October 8, 2004,  Landmark Graphics  Corporation,  Halliburton  Company,  and
Halliburton  Energy Services,  Inc.  (collectively  "Landmark")  filed a lawsuit
against us in the 125th  District  Court of Harris  County,  Texas.  The case is
styled  Landmark  Graphics  Corporation,  Halliburton  Company,  and Halliburton
Energy  Services,  Inc.  v.  Falcon  Natural  Gas  Corporation,   Cause  Number,
2004-56842.  We  issued a press  release  and  posted  on our  website  a report
prepared by Landmark (the  "Report"),  which Landmark claims was in violation of
an agreement  between  Landmark and us. We issued a corrective press release and
removed  the Report from our  website.  Landmark  claims  that we  breached  our
agreement  with Landmark by engaging MS Corporate  Communications  d/b/a Michael
Williams   Market  Movers   ("Market   Movers")  to  create  and  distribute  an
advertisement (the "Advertisement") that quotes from and paraphrases portions of
the Report  and  repeatedly  refers to the Report as a report of  "Halliburton,"
"Halliburton  Company," and "a Halliburton Company." Landmark is claiming breach
of contract  and injury to its  business  reputation  and trade names and marks.
Landmark is seeking  unspecified  damages,  reasonable  attorneys'  fees,  court
costs,  and  injunctive  relief.  We have  generally  denied the  allegations of
Landmark.  Landmark has agreed that if, after discovery,  it finds that there is
no basis for a claim  that we had  knowledge  of,  or were  involved  with,  the
commissioning or financing of the  Advertisement,  Landmark will dismiss us from
the  lawsuit.  Landmark  has  scheduled  a hearing in May 2005,  in New York for
purposes of obtaining discovery from Market Movers.

On November  3, 2004,  Falcon Gas  Storage  Company,  Inc.  ("Falcon  Gas"),  an
unaffiliated  company with its  principal  place of business in Houston,  Texas,
filed a  lawsuit  against  us in the  United  States  District  Court,  Southern
District  of Texas,  Houston  Division.  The case is styled  Falcon Gas  Storage
Company, Inc. v. Falcon Natural Gas Corp., Case Number H-04-4231.  Falcon Gas is
alleging trademark  infringement and unfair competition  arising from our use of
the term "Falcon Natural Gas" as a corporate name and service mark in connection
with the promotion,  advertising,  offer,  and sale of services which Falcon Gas
claims are  substantially  similar to the services offered by Falcon Gas. Falcon
Gas alleges that it is a leading  developer of market-area  high-deliverability,
multi-cycle  natural gas storage  facilities.  Falcon Gas is seeking  injunctive
relief as well as  unspecified  damages and payments from us of profits,  gains,
and advantages  resulting  from the alleged  activities,  reasonable  attorneys'
fees,  and court  costs.  We are  currently  seeking to enter into a  settlement
agreement with Falcon Gas which would result in neither  company paying monetary
damages.

In the ordinary course of our business,  we may from time to time become subject
to routine litigation or administrative  proceedings which are incidental to our
business.

We are not aware of any  proceedings  to which any of our  directors,  officers,
affiliates  or  security  holders  are a party  adverse  to us or has a material
interest adverse to us.


                                       20
<PAGE>

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

On March  2,  2005 we  issued  80,000  shares  valued  at $.45 per  share to two
consultants for geological services.

On April 19, 2005, we and Cornell Capital  Partners,  LP ("Cornell")  terminated
the  Securities  Purchase  Agreement  entered into on November 19, 2004, and the
related Convertible Debentures,  Security Agreement, Escrow Agreement,  Investor
Registration  Rights  Agreement and Irrevocable  Transfer Agent  Instructions of
even date therewith were also terminated.  On April 19, 2005, in connection with
the  Termination  Agreement  and  the  execution  of a new  Securities  Purchase
Agreement,  we issued a warrant to Cornell to purchase  1,000,000  shares of our
common stock.  The warrants have an exercise price equal to $0.60 per share. The
warrants expire on April 19, 2007.

On April 19, 2005, we entered into a Securities  Purchase Agreement with Cornell
Capital Partners,  LP. Pursuant to the Securities  Purchase  Agreement,  Cornell
Capital  Partners,  LP  issued  convertible  debentures  to us in  the  original
principal amount of $1,000,000.  The debentures are convertible,  into shares of
our common stock at the holder's option, at any time up to maturity,  at a fixed
conversion  price equal to $0.60 per share (the "Fixed  Price").  The debentures
are  secured by our  assets.  The  debentures  have a  two-year  term and accrue
interest  at 5%  per  year.  After  the  earlier  to  occur  of a)  the  date  a
registration  statement  related to the shares  issuable upon  conversion of the
debentures is declared  effective by the United States  Securities  and Exchange
Commission  or b) August 1, 2005,  if the closing bid price of our common stock,
as quoted by  Bloomberg,  LP, is less  than the  Fixed  Price,  Cornell  Capital
Partners,  LP at its sole option can elect cash  repayment of the  debentures by
requiring  us to make 5 payments  of  $200,000,  plus  outstanding  and  accrued
interest. At maturity,  the debentures will automatically convert into shares of
common stock at a conversion price equal to the Fixed Price.

On April 19, 2005, we entered into a Standby Equity Distribution  Agreement with
Cornell  Capital  Partners,  LP.  Pursuant  to the Standby  Equity  Distribution
Agreement,  we may,  at our  discretion,  periodically  sell to Cornell  Capital
Partners,  LP shares of our  common  stock for a total  purchase  price of up to
$20,000,000  (exclusive  of Cornell  Capital  Partners LP's 5% retainage and the
392,000 shares received by Cornell Capital Partners, LP as a one-time commitment
fee).  For each  share of  common  stock  purchased  under  the  Standby  Equity
Distribution  Agreement,  Cornell Capital  Partners,  LP will pay us 100% of the
lowest  volume  weighted  average  price (VWAP) of our common stock as quoted by
Bloomberg,  LP on the Over-the-Counter  Bulletin Board or other principal market
on which our common  stock is traded for the 5 days  immediately  following  the
notice date.  The daily VWAP is  calculated by totaling the dollar amount traded
for every  transaction  (selling price multiplied by the shares traded) and then
dividing  by the total  shares  traded  for the day.  Further,  Cornell  Capital
Partners  will retain 5% of each advance under the Standby  Equity  Distribution
Agreement.

Each  of  the  above  transactions  were  exempt  from  registration  under  the
Securities Act by reason of Section 4(2) of the Securities  Act, or Regulation D
promulgated  thereunder,  as  transactions  by an issuer not  involving a public
offering.


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<PAGE>

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.

On May 12, 2005 we entered  into a Loan  Agreement  with an  unaffiliated  third
party  pursuant  to which we received a $200,000  loan.  The loan is due May 11,
2006 and bears interest at the rate of 12% per annum.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits

The following exhibits are filed as a part of this report on Form 10-QSB:

Exhibit No.    Description
-----------    -----------

31.1           Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal
               Executive Officer

31.2           Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal
               Financial Officer

32.1           Rule 1350 Certification of Principal Executive Officer

32.2           Rule 1350 Certification of Principal Financial Officer

(b) Reports on Form 8-K

On February  15,  2005,  we filed a Form 8-K dated  January 24, 2005  containing
disclosure under Item 8.

On March 25, 2005 we filed a Form 8-K dated March 24, 2005 containing disclosure
under Items 7.01 "Regulation FD Disclosure" and under Item 9.01(c) "Exhibits".

No other reports on Form 8-K were filed by us during the quarter ended March 31,
2005.


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<PAGE>

                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-QSB to be
signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 19, 2005                             Falcon Natural Gas Corp.

                                                By:    /s/ Massimiliano Pozzoni
                                                       -------------------------
                                                Name:  Massimiliano Pozzoni
                                                Title: Secretary, Treasurer and
                                                       Chief Financial Officer


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