===============================================================================

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

                                  FORM 10-QSB/A

      |X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
            EXCHANGE ACT OF 1934

                 For the quarterly period ended September 30, 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
November 17, 2005, was 63,262,000.

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

================================================================================

<PAGE>

                              FALCON NATURAL GAS CORP.
                 September 30, 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................................................19
Item 3.     Controls and Procedures..........................................21

                          PART II - OTHER INFORMATION

Item 1.     Legal Proceedings................................................21
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds......22
Item 3.     Defaults Upon Senior Securities..................................23
Item 4.     Submission of Matters to a Vote of Security Holders..............23
Item 5.     Other Information................................................24
Item 6.     Exhibits.........................................................25


                                       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   September  30,  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

<TABLE>
<CAPTION>
                                                                                   PAGE
ITEM 1.     FINANCIAL STATEMENTS                                                   ----
<S>         <C>                                                                    <C>


            Consolidated Balance Sheets as at September 30, 2005 (unaudited) and    5
            December 31, 2004

            Consolidated Statements of Operations for the three and nine months     6
            ended September 30, 2005 (unaudited) and September 30, 2004
            (unaudited) and for the period from inception (March 1, 2004) to
            September 30, 2005(unaudited)

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

            Consolidated Statement of Cash Flows for the nine months ended
            September 30, 2005 (unaudited) and September 30, 2004 (unaudited)
            and for the period from inception (March 1, 2004) to September 30,      8
            2005(unaudited)

            Notes to Consolidated Financial Statements (unaudited)                  9
</TABLE>


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                        September 30
                                                                            2005        December 31,
                                                                         (Unaudited)       2004
                                                                         -----------    -----------
<S>                                                                      <C>            <C>
ASSETS

   CURRENT ASSETS
      Cash and cash equivalents                                          $ 5,262,254    $   162,227
      Accounts receivable                                                      2,000          2,000
                                                                         -----------    -----------
        Total Current Assets                                               5,264,254        164,227
                                                                         -----------    -----------

   PROPERTY & EQUIPMENT
      Equipment                                                                4,505          4,088
      Less accumulated depreciation                                           (1,656)          (618)
      Software                                                                15,000             --
      Less accumulated amortization                                           (3,584)            --
                                                                         -----------    -----------
        Total Property & Equipment                                            14,265          3,470
                                                                         -----------    -----------

   OTHER ASSETS
      Proved properties oil & gas properties                               1,237,159             --
      Unproved oil & gas properties                                          649,773      1,582,541
      Prepaid expenses                                                        48,183         50,000
      Rent deposit                                                             1,243          1,243
                                                                         -----------    -----------
        Total Other Assets                                                 1,936,358      1,633,784
                                                                         -----------    -----------

   TOTAL ASSETS                                                          $ 7,214,877    $ 1,801,481
                                                                         ===========    ===========


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

   CURRENT LIABILITIES
      Accounts payable                                                   $    65,288    $     7,349
      Accrued liabilities                                                         --          6,959
      Advance from shareholder                                                    --            100
      Note payable - related party                                                --          3,216
      Note payable                                                         6,340,000        140,000
      Interest payable                                                       210,298          4,854
                                                                         -----------    -----------
        Total Current Liabilities                                          6,615,586        162,478
                                                                         -----------    -----------

   LONG-TERM LIABILITIES
      Convertible debt                                                     1,000,000        500,000
      Discount on convertible debt                                          (220,634)      (126,979)
                                                                         -----------    -----------
        Total Long-Term Liabilities                                          779,366        373,021
                                                                         -----------    -----------

   COMMITMENTS AND CONTINGENCIES                                                  --             --

   STOCKHOLDERS' EQUITY (DEFICIT)
      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
      Stock warrants                                                          98,960             --
      Deficit accumulated during exploration stage                        (7,203,197)    (5,511,069)
                                                                         -----------    -----------
        Total Stockholders' Equity (Deficit)                                (180,075)     1,265,982
                                                                         -----------    -----------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                  $ 7,214,877    $ 1,801,481
                                                                         ===========    ===========
</TABLE>


                                       5
<PAGE>

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


<TABLE>
<CAPTION>
                                            Three Months Ending             Nine Months Endging           From
                                       ----------------------------    ----------------------------    March 1, 2004
                                       September 30    September 30,   September 30,   September 30,  (Inception) to
                                           2005            2004            2005            2004      September 30, 2005
                                        (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
                                       ------------    ------------    ------------    ------------    ------------
<S>                                    <C>             <C>             <C>             <C>             <C>
REVENUES                               $         --    $         --    $         --    $         --    $         --
                                       ------------    ------------    ------------    ------------    ------------


GENERAL AND ADMINISTRATIVE EXPENSES
    Depreciation and amortization             1,862             207           4,622             207          10,761
    Investor relations                       36,451          22,914         140,560          91,045         256,310
    Advisory services                        17,779              --         139,533              --       3,973,323
    Lease exploration                            --         225,395          13,636         299,195         585,140
    Internet/webhosting                         108              36             773          20,120          21,000
    Officers & directors fees                55,500          67,500         180,936          82,500         317,913
    Office and general expenses               6,674           6,508          57,034           7,761          72,971
    Professional fees                        62,962          20,209         210,391          75,225         345,777
    Travel and entertainment                 11,411          16,083          35,675          16,083          58,454
    Rent and related expenses                 7,919           7,438          24,612          16,924          48,358
                                       ------------    ------------    ------------    ------------    ------------
       Total Expenses                       200,666         366,290         807,772         609,060       5,690,007
                                       ------------    ------------    ------------    ------------    ------------

LOSS FROM OPERATIONS                       (200,666)       (366,290)       (807,772)       (609,060)     (5,690,007)
                                       ------------    ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSES)
    Other income                                 --             248              --             500             500
    Financing fees                         (529,783)             --        (595,182)             --      (1,095,182)
    Interest expense                       (170,836)             --        (316,556)             --        (446,410)
    Interest income                          23,790              --          24,066             520          24,586
    Forgiveness of debt                          --              --           3,316              --           3,316
                                       ------------    ------------    ------------    ------------    ------------
       Total Other Income (Expenses)       (676,829)            248        (884,356)          1,020      (1,513,190)
                                       ------------    ------------    ------------    ------------    ------------

LOSS BEFORE INCOME TAXES                   (877,495)       (366,042)     (1,692,128)       (608,040)     (7,203,197)

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

NET LOSS                               $   (877,495)   $   (366,042)   $ (1,692,128)       (608,040)     (7,203,197)
                                       ============    ============    ============    ============    ============

NET LOSS PER COMMON SHARE,
    BASIC AND DILUTED                  $      (0.01)   $      (0.01)   $      (0.03)          (0.01)
                                       ============    ============    ============    ============

WEIGHTED AVERAGE NUMBER
    OF COMMON SHARES OUTSTANDING,
    BASIC AND DILUTED                    62,262,000      66,832,000      62,244,222      56,338,028
                                       ============    ============    ============    ============
</TABLE>


                                       6
<PAGE>

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

<TABLE>
<CAPTION>

                                                                     Common Stock
                                                             --------------------------    Additional
                                                               Number of                     Paid-in        Stock
                                                                Shares        Amount         Capital       Warrants
                                                             -----------    -----------    -----------    -----------
<S>                                                          <C>            <C>            <C>            <C>
Stock issued for $0.001 per share for services
     on March 1, 2004                                         20,000,000    $       200    $    19,800    $        --

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

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

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

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

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

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

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

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

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

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

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

Net loss for period ending December 31, 2004                          --             --             --             --

                                                             -----------    -----------    -----------    -----------
BALANCE, December 31, 2004                                    62,182,000            621      6,776,430             --

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

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

Warrants issued for fees                                              --             --             --         98,960

Net loss for period ending Sept 30, 2005                              --             --             --             --

                                                             -----------    -----------    -----------    -----------
BALANCE, September 30, 2005 (unaudited)                       62,262,000    $       622    $ 6,923,540    $    98,960
                                                             ===========    ===========    ===========    ===========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                               Deficit
                                                              Accumulated
                                                                 During         Total
                                                               Exploration   Stockholders'
                                                                 Stage         Equity
                                                              -----------    -----------
<S>                                                           <C>            <C>
Stock issued for $0.001 per share for services
     on March 1, 2004                                         $        --    $    20,000

Shares issued for acquisition of leases at $0.25 per share             --        225,000

Reverse merger acquisition and recapitalization                        --         (4,221)

Shares issued  for cash at $1.00 per share
     net of expenses of $60                                            --        631,940
                                                                             -----------
Shares issued for cash at approximately $0.93 per
     share net of expenses of $12                                      --      1,399,988
                                                                             -----------
Shares issued for services at $1.25 per share                          --         62,500

Shares issued for services at $1.42 per share                          --      3,550,000

Shares issued for services at $1.34 per share                          --        134,000

Shares issued for services at $1.32 per share                          --        132,000

Rescission of shares from officer received at merger                   --            844

Shares issued for financing costs and charges related
     to services provided                                              --        500,000

Beneficial conversion feature of convertible debt                      --        125,000

Net loss for period ending December 31, 2004                   (5,511,069)    (5,511,069)

                                                              -----------    -----------
BALANCE, December 31, 2004                                     (5,511,069)     1,265,982

Shares issued for services at $0.45 per share                          --         36,000

Beneficial conversion feature of convertible debt                      --        111,111

Warrants issued for fees                                               --         98,960

Net loss for period ending Sept 30, 2005                       (1,692,128)    (1,692,128)

                                                              -----------    -----------
BALANCE, September 30, 2005 (unaudited)                        (7,203,197)   $  (180,075)
                                                              ===========    ===========
</TABLE>


                                       7
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                 Nine Months Ending             From
                                                                            ----------------------------   March 1, 2004
                                                                            September 30    September 30   (Inception) to
                                                                                2005            2004     September 30, 2005
                                                                            (Unaudited)     (Unaudited)     (Unaudited)
                                                                            ------------    ------------    ------------
<S>                                                                         <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
        Net loss                                                            $ (1,692,128)   $   (608,040)   $ (7,203,197)

        Adjustments to reconcile net loss to net cash (used) by operating
           activities:
        Depreciation and amortization                                              4,622             207          10,761
        Common stock issued for services                                          36,000          82,500       3,935,332
        Interest expense attibutable to beneficial conversion feature            111,111              --         236,111
        Issuance of warrants for fees                                             98,960              --          98,960
        Common stock issued for financing costs and charges                           --              --         500,000
        Net effect of recapitalization                                                --          (4,221)             --

        Changes in assets and liabilities:
               Decrease (increase) in rent deposit                                    --          (1,243)         (1,243)
               Decrease (increase) in accounts receivable                             --              --          (2,000)
               Decrease (increase) in prepaid expenses                             1,818              --         (48,182)
               Increase (decrease) in accounts payable                            57,938         450,425          61,613
               Increase (decrease) in accrued liabilities                         (6,959)             --              --
               Increase (decrease) in interest payable                           205,444              --         210,298
               Increase (decrease) in advance from shareholder                      (100)            100              --
                                                                            ------------    ------------    ------------
                     Net cash used by operating activities                    (1,183,294)        (80,272)     (2,201,547)
                                                                            ------------    ------------    ------------

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
               Purchase of equipment                                             (15,417)         (4,088)        (19,505)
               Oil and gas lease                                                (304,391)     (1,070,514)     (1,661,932)
               Cash received through recapitalization and acquisition                 --              --           2,681
                                                                            ------------    ------------    ------------
                    Net cash used by investing activities                       (319,808)     (1,074,602)     (1,678,756)
                                                                            ------------    ------------    ------------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
               Proceeds from notes payable                                     6,200,000           3,217       6,340,000
               Proceeds from convertible debt                                    406,345              --         773,845
               Issuance of common stock for cash                                      --       1,631,941       2,031,928
               Forgiveness of debt                                                (3,216)             --          (3,216)
                                                                            ------------    ------------    ------------
                  Net cash provided by financing activities                    6,603,129       1,635,158       9,142,557
                                                                            ------------    ------------    ------------

        Net increase (decrease) in cash and cash equivalents                   5,100,027         480,284       5,262,254

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

Cash and cash equivalents end of period                                     $  5,262,254    $    480,284    $  5,262,254
                                                                            ============    ============    ============
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 attibutable to beneficial conversion feature       $    111,111    $         --    $    236,111
        Common stock issued for financing costs and charges                 $         --    $         --    $    500,000
        Issuance of warrants for fees                                       $     98,960    $         --    $     98,960
</TABLE>


                                       8
<PAGE>

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 September 30, 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
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.


                                       9
<PAGE>

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
(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
September  30,  2005,  the Company  does not have  inventory  and  believes  the
adoption of this  statement will not have any immediate  material  impact on the
Company.


                                       10
<PAGE>

Concentration of Credit Risk

The Company  maintains its cash in two commercial  accounts at a major financial
institution.

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
September  30,  2005,  the  exploration  costs  expensed  during  the  Company's
exploration stage have been approximately $585,140.

Going Concern

As shown in the accompanying financial statements,  the Company has generated no
revenues  since  inception.  From  inception to September 30, 2005,  the Company
recorded losses of  approximately  $7,200,000 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.)

Use of Estimates

The process of preparing  financial  statements  in conformity  with  accounting
principles  generally  accepted in the United States of America requires the use
of estimates and  assumptions  regarding  certain types of assets,  liabilities,
revenues,   and  expenses.   Such  estimates   primarily   relate  to  unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.

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.


                                       11
<PAGE>

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
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.


                                       12
<PAGE>

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 is  scheduled  to
automatically  convert  into  common  stock on the  second  anniversary  date of
issuance.  The  terms  of the  debt do 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
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.

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 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
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.


                                       13
<PAGE>

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  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. They have been recorded on the balance sheet at $98,960.

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.  The
repayment  of this loan has been  extended  to May 24th 2006 with an  additional
facility fee of $5,000.

The Company  borrowed  $200,000 from Blue Mint  Exploration on May 13, 2005. The
loan is unsecured, matures on May 11, 2006 on which date the entire loan becomes
payable with interest. The loan bears interest at 12% per annum.

On July 15, 2005, The Company  entered into a Promissory  Note  $6,000,000  from
Cornell  Capital  Partners,  LP and Highgate  House  Funds,  Ltd. The loan bears
interest at 12% per annum. The face value of the note plus 12% interest shall be
payable to the Holders in twenty four (24) weekly  installments  of an aggregate
of two hundred fifty thousand  dollars  ($250,000).  The first of which shall be
due the first  Friday  after such as the  Company's  Registration  Statement  is
declared  effective,  and shall be payable in full on the earlier of one hundred
eighty  (180) days from the date of the  Promissory  Note or within one  hundred
seventy five days (175) from the Effective  Date of the  Company's  Registration
Statement.  The  repayment  of  this  Note  is in no  manner  contingent  on the
Registration  Statement being declared effective.  In the event the Registration
Statement is declared  effective,  the Company  shall use the net proceeds to be
received by the Company under that certain standby equity distribution agreement
dated April 19, 2005  towards the  repayment of the  obligations  due under this
note.  The Company has  escrowed  twenty three  requests for advances  under the
standby  equity  distribution  agreement  in an amount not less that two hundred
fifty  thousand  dollars  and one request for advance in an amount not less than
two hundred  fifty  thousand  dollars plus accrued  interest on the  outstanding
principal  balance  of this  note with a law firm,  and on the  effective  date,
twenty four million  (24,000,000)  shares of the  Company's  common  stock.  The
advanced  notices  shall be  released  to Cornell  by the law firm  every  seven
calendar days  commencing on the first Monday after the effective  date. If this
note is not paid in full when due,  the  outstanding  principal  owed  hereunder
shall be due and payable in full together  with interest  thereon at the rate of
twenty-four  percent (24%) per annum or the highest permitted by applicable law,
if lower.


                                       14
<PAGE>

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, 2005:


                Computer Equipment              $    4,505
                Software                            15,000
                Less: Accumulated Depreciation      (5,240)
                                                ----------
                Total Property & Equipment      $   14,265
                                                ==========

Depreciation expense for the period ending September 30, 2005 was $4,622.

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.

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
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,  these  payments have been
made.


                                       15
<PAGE>

NOTE 8 - PROVEN RESERVES

The  Securities and Exchange  Commission  defines proved oil and gas reserves as
those  estimated  quantities of crude oil,  natural gas, and natural gas liquids
which geological and engineering  data demonstrate with reasonable  certainty to
be recovered in future years from known reservoirs  under existing  economic and
operating  conditions.  Proved  developed oil and gas reserves are reserves that
can be expected to be recovered  through existing wells with existing  equipment
and operating methods.

In 2005, the Company reclassified  $1,071,410 of unproved oil and gas properties
in St. Mary Parish,  Louisiana  to proved  properties,  based on an  independent
engineering  report dated June 10, 2005.  Proved reserves do not include amounts
that may result from extensions of currently proved areas or from application of
enhanced  recovery  processes  not yet  determined  to be commercial in specific
reservoirs.


NOTE 9 - 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.

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 September 30, 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 an unsecured loan agreement with
Blue Mint  Exploration in the amount of $140,000 for a term of six months and an
interest rate of 12% per annum to be paid at the maturity of the loan agreement.

On May 13, 2005, the Company  entered into an unsecured loan agreement with Blue
Mint  Exploration  in the amount of $200,000 for a one year term and an interest
rate of 12% per annum to be paid at the maturity of the loan agreement.

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)


                                       16
<PAGE>

NOTE 10 - 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.  This
advance was forgiven at June 30, 2005.

NOTE 11 - COMMON STOCK

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

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.

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.


                                       17
<PAGE>

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.)

Warrants

On April 19, 2004, the Company issued 1,000,000  warrants with an exercise price
of $0.60 cents.  These  warrants  are recorded on the balance  sheet at $98,960.
This amount was  estimated  using Black  Scholes  calculation  and the following
assumptions  were made to value the warrant for the period ending  September 30,
2005:  estimated risk free interest rate of 4%; estimated volatility of 48%; and
a term of two years.

NOTE 12 - SUBSEQUENT EVENTS

On October 05,  2005,  the Company  entered into a loan  agreement  with Cornell
Capital  Partners,  LP and Highgate House Funds, LLP ("the  Investors") in which
the Company received a $7,000,000 loan less related expenses of $625,486,  which
will be  allocated  as  discount on debt and will be  amortized  over a one year
period.  The loan is due on  October  05,  2006.  Interest  shall  accrue on the
outstanding  principal balance at a rate of 12%. Monthly scheduled  payments are
required  consisting  of principal  and accrued  interest.  The first  scheduled
payment is due ninety days from the date of the loan, each subsequent payment is
due on the same day of each  subsequent  calendar month until the maturity date.
The convertible  securities are secured by the security agreement dated November
16, 2004. The debenture shall be convertible  into shares of common stock at the
option  of the  holder,  in whole or in part at any time and from  time to time,
after  the  original  issue  date at a price of $0.60.  The  number of shares of
common stock issuable upon a conversion  hereunder equals the quotient  obtained
by dividing  the  outstanding  amount of this  debenture  to be converted by the
conversion  price.  This loan agreement  replaces the promissory note dated July
15, 2005. (See Note 5.)

The Company  entered signed  nonbinding  letters of intent (LOI) with Blue Ridge
Group, Inc (BRG) and Bayou City Exploration  (BCE) to purchase working interests
in one of BRG's and five of BCE's oil and gas  prospects.  According  to the LOI
with BRG,  Falcon will  purchase  12.5% of the working  interest of Prospect 107
located  in  Beauregard  Parish  Louisiana  and pay  16.67% of all well costs to
casing point on the initial well drilled on the prospect.  Additionally,  Falcon
will pay 16.67% of all G&G costs,  third party  prospect  fees,  land  brokerage
costs,  lease bonus,  and all other similar costs  associated with the prospect.
Under the terms of the LOI with BCE,  Falcon will purchase  12.5% of the working
interest for the Live Oak County Prospects,  which include  Jaboncillo  Windmill
Prospect,  Leopard  Branch  Prospect,  and Frost  National  Bank Deep  Prospect.
Additionally,  Falcon  agrees to pay 16.67% of all well costs to casing point on
the initial  well drilled on each  prospect  and 16.67% of all G&G costs,  third
party prospect fees,  land  brokerage  costs,  lease bonus and all similar costs
associated  with the project.  Under the trade terms for BCE's Jeff Davis Parish
Prospects,  including  Gemini Prospect and Zodiac II Prospect,  Falcon agrees to
purchase 25% of the working  interest from BCE. Also,  Falcon will pay 33.33% of
all well costs to casing point on the initial well drilled on each  prospect and
its  proportionate  share of all G&G costs,  third  party  prospect  fees,  land
brokerage  costs,  lease bonus,  and all other similar costs associated with the
prospect.


                                       18
<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;  Starr County,
Texas; Beauregard Parish,  Louisiana; Jeff Davis Parish, Louisiana; and Live Oak
County, Texas.

During  2004  and the  first  nine  months  of  2005,  we  raised  approximately
$9,000,000 from a combination of equity and debt financing.  We estimate that we
can satisfy  our cash  requirements  for the next 12 months  which does not take
into account our present debt services  requirements  which are presently  being
restructured,  the costs for drilling wells or further  exploration  work on our
leased properties.  We currently use approximately $60,000 of cash per month for
general  and  administrative  expenses  such  as  investor  relations,  advisory
services,  Internet/web-hosting,  officer's salaries and director's 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 approximately $1,900,000 on lease exploration during 2004 and the
first nine months of 2005. In October 2005 we received an additional  $1,000,000
of debt financing  part of which is being used to make interest  payments due on
prior debt.

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  on our  Wyandotte  Property  is  intended  to be a  replacement  of the
Inglewood 2 well,  previously  drilled in 1980. We originally  anticipated being
able to commence drilling  operations on the Wyandotte Property in July 2005 but
due to limited  rig  availability,  we  subsequently  expected  to being able to
commence  drilling  operations no sooner than October 2005. Now due to Hurricane
Katrina,  we do not have any  authorized  commencement  date  although  we still
intend  to  proceed  with  drilling  on  the  Wyandotte  Property  as  and  when
circumstances  permit.  The  Wyandotte  Property  was not  damanged by Hurricane
Katrina but the State of Louisiana is more than three months behind  schedule in
issuing  drilling  permits.  At this  time,  Louisiana  is  giving  priority  to
reconstruction  efforts  involving public and private  infrastructure.  For this
reason, on October 1, 2005 we executed oil and gas well participation agreements
with each of Bayou City Exploration, Inc. and Blue Ridge Group, Inc. under which
an aggregate of six wells are  scheduled to be drilled in the next three months.
As the result of our July 15, 2005 loan from Cornell  Capital  Partners,  LP and
Highgate  House Funds,  Ltd. in which we received net proceeds of  $5,490,000 we
now have the necessary funds to cover our costs for drilling these new wells and
for drilling part of the Wyandotte Property well.

In connection with the Wyandotte  Property,  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 to develop the Discorbis Bol
Sands.


                                       19
<PAGE>

Tt 0 0 he estimated cost for drilling and completion of the replacement  well is
$6,000,000.  Drilling and  completion  of this or any other well is no guarantee
that we will be able to  produce  commercial  quantities  of  natural  gas.  The
discovery of natural gas and the ability to produce it in commercial  quantities
is very speculative.  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.  Estimates of reserves  are made under  conditions  of  uncertainty.
Notwithstanding  the  foregoing,  in September  2005 we requested and received a
reserves report from an independent  petroleum  engineering firm with respect to
the  Wyandotte  Property.  The report  indicated  estimated  proved  undeveloped
reserves  of  approximately  26  billion  cubic  feet  of gas in the  reservoirs
comprising  the Discorbis  Bol Sands.  Proved  reserves are those  quantities of
petroleum and gas which, by analysis of geological and engineering  data, can be
estimated with reasonable certainty to be commercially recoverable, from a given
date  forward,  from known  reservoirs  and under current  economic  conditions,
operating methods, and government  regulations.  Proved reserves are categorized
as developed or undeveloped.

In general,  reserves are considered  proved if the commercial  producibility of
the  reservoir is supported by actual  production  or formation  tests.  In this
context,  the term proved refers to the actual quantities of petroleum  reserves
and not just the productivity of the well or reservoir. In certain cases, proved
reserves  may be  assigned  on the  basis  of well  logs or core  analysis  that
indicate  the subject  reservoir  is  hydrocarbon  bearing and is  analogous  to
reservoirs in the same area that are producing or have  demonstrated the ability
to produce on formation tests.

The area of the reservoir  considered as proved includes (i) the area delineated
by  drilling  and  defined by fluid  contacts,  if any,  and (ii) the  undrilled
portions  of the  reservoir  that  can  reasonably  be  judged  as  commercially
productive on the basis of available  geological  and  engineering  data. In the
absence of data on fluid contacts,  the lowest known  occurrence of hydrocarbons
controls the proved limit unless otherwise  indicated by definitive  geological,
engineering or performance data.

Reserves may be  classified  as proved if  facilities  to process and  transport
those reserves to market are operational at the time of the estimate or there is
a reasonable  expectation  that such facilities  will be installed.  Reserves in
undeveloped  locations may be classified as proved undeveloped  provided (i) the
locations are direct offsets to wells that have indicated commercial  production
in the objective  formation,  (ii) it is reasonably  certain such  locations are
within the known proved productive limits of the objective formation,  (iii) the
locations conform to existing well spacing  regulations  where  applicable,  and
(iv) it is  reasonably  certain the locations  will be developed.  Reserves from
other locations are categorized as proved undeveloped only where interpretations
of geological and engineering data from wells indicate with reasonable certainty
that the objective formation is laterally  continuous and contains  commercially
recoverable petroleum at locations beyond direct offsets.

We plan to drill the replacement well a few yards away from an existing well. 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  $4,340,000  and a completed
cost of $5,500,000.

If we can produce  commercial  quantities  of natural  gas that we can sell,  we
intend to use the  proceeds to fund a second well on the  Wyandotte  property 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 any  proceeds  from  production  to fund
additional  exploration and drilling on our leased properties.  We estimate that
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.


                                       20
<PAGE>

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

      (a)  Evaluation  of  Disclosure   Controls  and   Procedures.   Under  the
supervision and with the participation of our senior  management,  including our
chief executive officer and chief financial officer,  we conducted an evaluation
of the effectiveness of the design and operation of our disclosure  controls and
procedures,  as defined in Rules  13a-15(e) and 15d-15(e)  under the  Securities
Exchange Act of 1934,  as amended,  as of the end of the period  covered by this
report (the "Evaluation  Date").  Based on this evaluation,  our chief executive
officer and chief financial officer concluded as of the Evaluation Date that our
disclosure  controls and procedures  were  effective  such that the  information
relating to us, including our consolidated subsidiary,  required to be disclosed
in our  Securities  and  Exchange  Commission  ("SEC")  reports (i) is recorded,
processed,  summarized  and reported  within the time  periods  specified in SEC
rules and forms,  and (ii) is accumulated  and  communicated  to our management,
including  our  chief  executive  officer  and  chief  financial   officer,   as
appropriate to allow timely decisions regarding required disclosure.

      (b) Changes in Internal  Control over Financial  Reporting.  There were no
changes in our internal  control over financial  reporting that occurred  during
the  period  covered  by  this  report  that  have  materially  affected  or are
reasonably  likely to  materially  affect our internal  control  over  financial
reporting.

                           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 was
titled  Landmark  Graphics  Corporation,  Halliburton  Company,  and Halliburton
Energy  Services,   Inc.  v.  Falcon  Natural  Gas  Corporation,   Case  Number,
2004-56842.  We  issued a press  release  and  posted  on our  website  a report
prepared by Landmark (the "Report"),  which Landmark claimed was in violation of
an agreement  between  Landmark and us. We issued a corrective press release and
removed the Report  from our  website.  Landmark  claimed  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 quoted from and paraphrased portions of
the Report and repeatedly  referred to the Report as a report of  "Halliburton,"
"Halliburton Company," and "a Halliburton Company." Landmark was claiming breach
of contract  and injury to its  business  reputation  and trade names and marks.
Landmark was seeking  unspecified  damages,  reasonable  attorneys'  fees, court
costs,  and injunctive  relief.  We generally denied the allegations of Landmark
and made a motion for summary  judgment.  In November 2005, prior to the hearing
on our  summary  judgment  motion,  Landmark  voluntarily  withdrew  the lawsuit
without prejudice.


                                       21
<PAGE>

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.

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

On July 15, 2005 we issued a $6,000,000  promissory note (the "Note") to Cornell
Capital Partners, LP ("Cornell") and Highgate House Funds, Ltd ("Highgate") with
respect to an  aggregate  of  $6,000,000  loaned to us by Cornell  and  Highgate
consisting of $4,000,000  from Cornell and $2,000,000  from  Highgate.  The Note
bore  interest at the rate of 12% per annum.  Principal  and interest due on the
note  was  payable  in 23  equal  weekly  installments,  each in the  amount  of
$250,000,  and 1  installment  of  $502,452.05.  The first  payment  was due the
earlier of  September  2, 2005 or the first  Friday  after the date on which our
registration  statement  (the  "Registration  Statement") on Form SB-2 (File No.
333-124397)  was declared  effective by the Securities  and Exchange  Commission
and, in all events, was payable in full no later than 24 weeks from September 2,
2005,  which is February 10, 2006.  The repayment of the Note was not contingent
on the Registration Statement being declared effective. If the Note was not paid
in full when due, the outstanding  principal  balance together with all interest
due thereon was to be thereafter  due and payable with  interest  thereon at the
rate of 24% per annum or the highest rate permitted by applicable law, if lower,
until  paid.  At our  option,  the Note  could be  prepaid  in whole or in part.
Cornell and Highgate  (collectively the "Lenders")  received a cash fee of 8% or
$480,000 and a structuring fee of $10,000 in connection with the loan.  Further,
Lender's  counsel was paid $20,000 in connection with the loan  transaction.  We
received  aggregate  loan proceeds of $5,490,000.  Upon an Event of Default,  as
described  in the Note,  the  entire  principal  balance  and  accrued  interest
outstanding under the Note, was to become immediately due and payable.

The Note was  secured by the  Pledged  Shares,  as such term was  defined in the
related Pledge and Escrow Agreement  between us, Cornell and Highgate dated July
15, 2005, as well as the Security  Agreement  entered into by and between us and
Cornell on April 19,  2005.  The Pledged  Shares  consisted  of an  aggregate of
24,000,000  shares of our common  stock  issued in the name of the Lenders  (the
"Escrow  Agent")  delivered to Kirkpatrick & Lockhart  Nicholson  Graham LLP, as
escrow agent (the "Escrow  Agent") on or about July 20, 2005. The Pledged Shares
were  to be  held by the  Escrow  Agent  until  payment  in full on the  Note or
termination  or  expiration  of  the  Pledge  and  Escrow  Agreement.  Upon  the
occurrence  of an Event of Default,  as defined in the Pledge and Escrow  Agent,
the  Lenders  were to become  entitled to vote the  Pledged  Shares,  to receive
dividends  and other  distributions  thereon,  and to enjoy all other rights and
privileges  incident to the ownership of the Pledged Shares. Upon payment of all
amounts  due to the  Lenders  under  the Note,  the  Pledged  Shares  were to be
returned  to us by the  Escrow  Agent  for  cancellation  and all  rights of the
Lenders in the Pledged  Shares shall was to be  terminated.  The Lenders were to
have no  ownership  rights in the  Pledged  Shares  absent an Event of  Default.
Accordingly,  the Pledged  Shares were not deemed to be  outstanding  unless and
until an Event of Default have occurred.


                                       22
<PAGE>

We were unable to make any of the  installment  payments due under the Note, the
first of which was to have been made on September 2, 2005. At such time, Cornell
and Highgate declined to exercise their right to declare the nonpayment an Event
of Default and agreed to restructure our existing  obligations to them under the
Note and to provide us with additional financing.  In connection  therewith,  on
October  17, 2005 we  received  gross  proceeds  of  $1,000,000  from  Highgate,
cancelled  the Note and  replaced  it with  $7,000,000  of  Secured  Convertible
Debentures dated October 17, 2005 which represented the original $4,000,000 lent
to us by  Cornell,  the  original  $2,000,000  lent  to us by  Highgate  and  an
additional  $1,000,000 lent to us by Highgate on October 17, 2005.  Accordingly,
the  $7,000,000  of  Debentures  consisted of a $4,000,000  Debenture  issued to
Cornell and a $3,000,000  Debenture  issued to Highgate.  In connection with the
additional  financing,  we paid  Highgate  a 10%  cash fee of  $100,000,  paid a
$10,000  structuring  fee, paid  $5,485.73 in legal fees,  and paid Highgate and
Cornell an aggregate $185,424.66  representing all interest due on the Note from
its July 15, 2005 date of issuance to the October 17, 2005 date of cancellation.
After making these payments,  we retained the net proceeds of  $699,089.61.  The
Secured  Convertible  Debentures mature on October 17, 2006 and bear interest at
the rate of 12% per  annum.  Payments  of  principal  and  interest  are due and
payable monthly on the Secured  Convertible  Debentures  commencing  January 15,
2006.  The  Debentures  are  convertible  into shares of our common stock at the
option of the holders  thereof,  in whole or in part, at any time, at a price of
$.60 per share,  which may be adjusted  pursuant to the terms of the  Debentures
(the "Conversion Price"). In the event the closing price for our common stock is
less than the Conversion  Price, we can, at our option,  redeem all or a portion
of the principal  and interest then due on the  Debentures at a 20% premium over
the amount of principal and interest being redeemed.

t 0 0 In October 2005 we issued 1,000,000  shares of restricted  common stock to
Fred Zaziski,  our president and chief executive officer pursuant to our October
27, 2004 employment agreement with Mr. Zaziski.

All of the foregoing  securities  were issued in reliance on Section 4(2) of the
Securities Act of 1933, as amended.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

As discussed in greater  detail in Item 2 above,  we defaulted on the payment of
interest  and  principal  that was due on our July 15, 2005 Note  commencing  on
September  2, 2005.  The  holders of the Note did not  exercise  their  right to
declare  the  nonpayment  an Event of  Default  and  restructured  our  existing
obligations to them under the Note.

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

Not applicable.


                                       23
<PAGE>

ITEM 5. OTHER INFORMATION.

In connection  with a $6,000,000  12% July 15, 2005 Note issued by us to Cornell
Capital  Partners,  LLP and Highgate House Funds,  Ltd. and a related Pledge and
Escrow Agreement of the same date, as more fully described in Item 2 hereof,  we
received net loan proceeds of  $5,490,000  and issued  24,000,000  shares of our
common stock in escrow as security for repayment of the Note.

Effective  October  17,  2005 we  received  $1,000,000  in gross  proceeds  from
Highgate, cancelled the $6,000,000 July 15, Note and rolled our obligation under
the Note  together  with our  obligation  under the October 2005  funding,  into
$7,000,000 of Secured Convertible Debentures, for a more detailed description of
the terms of the October 17, 2005 Debentures. See Item 2 hereof.

Effective October 27, 2005 we renewed our October 27, 2004 Employment  Agreement
with Fred Zaziski,  our President and Chief Executive  Officer for an additional
one year period.  The October 27, 2004  Employment  Agreement  provides that for
each completed year of the Employment Agreement,  as renewed, up to a maximum of
five years,  we are  required to issue to Mr.  Zaziski  1,000,000  shares of our
restricted  common  stock.  We are also  required to issue  shares of our common
stock to Mr. Zaziski,  on a pro rata basis, for partially  completed years under
the Employment Agreement.  In connection with the renewal, we also increased Mr.
Zaziski's  annual  salary  under  the  employment  agreement  from  $132,000  to
$144,000.  In  consideration  of the employment  year ended October 26, 2005, in
October 2005 we issued 1,000,000 shares of our common stock to Mr. Zaziski.

Effective  November 11, 2005 we entered into a  renewable,  one year  Employment
Agreement with Massimiliano  Pozzoni pursuant to which Mr. Pozzoni serves as our
Vice President of Business Development,  Secretary and Treasurer.  Thereunder we
are paying Mr. Pozzoni an annual salary of $102,000.  Further, we have agreed to
issue  1,000,000  shares of our restricted  common stock to Mr. Pozzoni for each
completed year of the Employment Agreement,  as renewed, up to a maximum of five
years.  In the event Mr.  Pozzoni's  Employment  Agreement is  terminated  by us
without  cause  or by Mr.  Pozzoni  for  good  reason  we are  required  to make
severance payments to Mr. Pozzoni equal to three months of additional salary.

On  October 1, 2005 we entered  into oil and gas well  participation  agreements
with each of Blue Ridge Group,  Inc. ("Blue Ridge") and Bayou City  Exploration,
Inc. ("Bayou City").  Under the agreement with Blue Ridge, we agreed to purchase
a 12.5% working interest from Blue Ridge in the initial well drilled on Prospect
107 located in Beauregard  Parish,  Louisiana  (the "Blue Ridge  Prospect").  We
further  agreed  to pay  16.67%  of all well  costs to the  casing  point on the
initial well  drilled on the Blue Ridge  Prospect and to pay 16.67% of all other
drilling costs,  third party prospect fees, land brokerage costs,  lease bonuses
and all other similar costs associated with the Blue Ridge Prospect. To date, we
have  paid  Blue  Ridge  a  total  of  $121,200  consisting  of  geological  and
geophysical  costs.  The total cost for  drilling  the initial  well on the Blue
Ridge Prospect is presently estimated to be $2,100,000. Under the Agreement with
Bayou City we agreed to purchase working  interests from Bayou City in 5 oil and
gas  prospects  including  the  Jaboncillo  Windfall  Prospect,  Leopard  Branch
Prospect and Frost National Bank Deep Prospect,  each located in Live Oak County
Texas and the Gemini Prospect and Zodiac II Prospect, each located in Jeff Davis
Parish,  Louisiana.  The  agreement  terms with respect to the 3 Live Oak County
Prospects (the "Live Oak  Prospects")  are that we will purchase a 12.5% working
interest in the initial well drilled on each Live Oak Prospect  subject to prior
recovery of well costs by all well participants. We further agreed to pay 16.67%
of all well costs to the initial  casing  point on the initial  well  drilled on
each Live Oak  Prospect  and to pay  16.67% of all  geological  and  geophysical
costs,  third party prospect fees,  land  brokerage  costs,  lease bonus and all
other  costs  associated  with the  respective  Live Oak  Prospects.  The  total
aggregate cost for drilling the initial wells on the 3 Live Oak County Prospects
is presently estimated to be $4,200,000. The agreement terms with respect to the
2 Jeff Davis Parish,  Louisiana  Prospects (the "Jeff Davis Prospects") are that
we will purchase a 25% working interest in the initial well drilled on each Jeff
Davis Prospect. We have further agreed to pay 33.33% of well costs to the casing
point on the initial well drilled on each Jeff Davis  Prospect and to pay 33.33%
of all  geological  and  geophysical  costs , third party  prospect  fees,  land
brokerage  costs,  lease bonus and all other similar costs  associated with each
Jeff Davis  Prospect.  To date we have paid Bayou City an  aggregate of $256,200
including  $53,851 for the Frost  National Bank Deep  Prospect,  $16,137 for the
Leopard Branch Prospect,  $16,212 for the Jaboncillo Windmill Prospect,  $62,667
for the Gemini Prospect and $107,333 for the Zodiac II Prospect.  Subject to rig
availability,  drilling is scheduled to commence on the Blue Ridge  Prospect,  3
Live Oak County  Prospects and 2 Jeff Davis Prospects  anytime from mid December
2005  through  mid  February  2006.  Drilling a well on the  Wyandotte  Property
remains a  priority  for us. We are  seeking  further  financing  and a drilling
partner with respect to the Wyandotte Property.


                                       24
<PAGE>

ITEM 6.     EXHIBITS

Exhibits

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

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

10.1*       $4,000,000 Secured Debenture dated October 17, 2006

10.2*       $3,000,000 Secured Debenture dated October 17, 2006

10.3*       Executive Employment Agreement with Max Pozzoni effective as of
            November 11, 2005

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

*Previously filed


                                       25
<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/A to be
signed on its behalf by the undersigned, thereunto duly authorized.

     Dated: January 23, 2006               Falcon Natural Gas Corp.

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


                                       26