**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





R
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT****OF
                1934**





**For
      the fiscal year ended December 31, 2006**





£
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




**Commission
      File Number 0-22723**





**AMERICAN
      PETRO-HUNTER, INC.**


(Name
      of
      small business issuer as specified in its charter)





**Nevada**
            **98-0171619**(State
                or Other Jurisdiction of
            (I.R.S.
                EmployerIncorporation
                or Organization)
            Identification
                Number)**Pacific
                Centre, Suite 3000, P.O. Box 10024, 700 West Georgia
                Street****Vancouver,
                British Columbia, Canada**
            **V7Y
                1A1**(Address
                of Principal Executive Offices)
            (Zip
                Code)





**(604)
      689-8336**


(Issuer’s
      telephone number)





Securities
      registered pursuant to Section 12(b) of the Act:


None.





Securities
      registered pursuant to Section 12(g) of the Act:





COMMON
      STOCK, PAR VALUE $0.001


(Title
      of
      Class)





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





Indicate
      by checkmark if there is no disclosure of delinquent filers in response to
      Item
      405 of Regulation S-B contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. R





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes R No £





Net
      revenues for the most recent fiscal year ending December 31, 2006 were
      $0.





The
      aggregate market value of voting stock held by non-affiliates of the registrant
      was $1,003,437.12 as of March 28, 2007 **** (computed
      by reference to the last sale price of a share of the registrant’s common stock
      on that date as reported by the Over the Counter Bulletin Board). For purposes
      of this computation, it has been assumed that the shares beneficially held
      by
      directors and officers of registrant were “held by affiliates”; this assumption
      is not to be deemed to be an admission by such persons that they are affiliates
      of registrant.





Number
      of
      shares of issuer’s common stock outstanding as of **April 13,
      2007** : **8,265,019**





Transitional
      Small Business Disclosure Format (check one). Yes £ No R















**TABLE
      OF CONTENTS**





**Page****PART
                I**
            3ITEM
                1 — DESCRIPTION OF BUSINESS
            9ITEM
                2 — DESCRIPTION OF PROPERTY
            9ITEM
                3 — LEGAL PROCEEDINGS
            9ITEM
                4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS**PART
                II**ITEM
                5 — MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERMATTERS
            9ITEM
                6 — MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OFOPERATION
            11ITEM
                7 — FINANCIAL STATEMENTS
            13ITEM
                8 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING
                AND FINANCIAL DISCLOSURE
            13ITEM
                8A — CONTROLS AND PROCEDURES
            13ITEM
                8B — OTHER INFORMATION
            13**PART
                III**ITEM
                9 — DIRECTORS AND EXECUTIVE OFFICERS
            14ITEM
                10 — EXECUTIVE COMPENSATION
            15ITEM
                11 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND
                MANAGEMENT AND RELATED STOCKHOLDER MATTERS
            16ITEM
                12 — CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS
            17ITEM
                13 — EXHIBITS
            17ITEM
                14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES
            18SIGNATURES
            19





2


**PART
      I**





**ITEM
      1**  **—
      DESCRIPTION OF BUSINESS**





**Background**





American
      Petro-Hunter Inc. (the
      “Company,” “we,” “us,” “our”) was formed
      on
      January 24, 1996 pursuant to the laws of the State of Nevada under the name
      Wolf
      Exploration, Inc. with a business plan to acquire properties for precious metal
      exploration in the western United States. However, after considering several
      properties, we determined the properties identified were not suitable to fully
      implement an exploration and development project in the United States. In August
      1996, we changed our management team and developed a new business plan to sell
      chemical products to the oil and gas industry.





In
      October 1996, we entered into an agreement to acquire two numbered companies
      that were combined with 714674 Alberta Ltd. continuing in operation.  The
      business operated as Calgary Chemical, selling chemical products to the oil
      and
      gas industry.





In
      March
      1997, we changed our name to Wolf Industries Inc. to reflect these
      developments.





Effective
      June 30, 1998, we sold our subsidiary, 714674 Alberta Ltd. ("Calgary Chemical")
      to Gorda Technology Holdings Limited, a Turks and Caicos Islands corporation
      ("Gorda").  The terms of the sale were as follows:





(a)
      forgiveness of the inter-company debt owed by Calgary Chemical to us in the
      amount of $82,289 (Canadian);





(b)
      payment by Gorda to us of fifteen percent of Calgary Chemical's after-tax profit
      (as determined by generally accepted accounting principles) for the fiscal
      year
      ended December 31, 1998 payable on or before March 31, 1999 and completion
      of an
      audit of the financial statements of Calgary Chemical for such
      period;





(c)
      indemnification by Gorda to hold us harmless from any and all liability arising
      from the debt guarantees of Calgary Chemical;





(d)
      agreement by Gorda to hire Mr. Blair Coady as the President and Chief Executive
      Officer of Calgary Chemical; and





(e)
      receipt from Mr. Coady of his resignation as our President and Chief Executive
      Officer, Secretary, and Director and the surrender of Mr. Coady's options to
      acquire 700,000 shares of our common stock.





The
      sale
      of Calgary Chemical was subject to approval of our shareholders, which was
      received at our annual general meeting of July 24, 1998.





On
      April
      8, 1998, we entered into a license agreement with Andrew Engineering Inc.
      ("Andrew") a British Columbia corporation, Andrew Rawicz Ph.D., and Ivan Melnyk,
      Ph.D., whereby we acquired a world-wide license to manufacture and market a
      patent pending device for the color matching of dentures to a dental patient's
      existing tooth color.  Drs. Rawicz and Melnyk hold the patent pending for
      the color analyzer and Andrew developed and/or acquired the techniques and
      other
      proprietary information related to the device.   The license agreement
      required us and Andrew to develop a business plan for manufacturing and
      marketing the device, including obtaining financing of $1,500,000 US.  The
      license agreement required the issuance of 4,800,000 shares of restricted stock
      to Andrew with registration rights on 600,000 of those shares, and also required
      that Mr. Patrick McGowan to be appointed President and Chief Executive Officer.
       Mr. McGowan signed a management agreement with us, and at a meeting of our
      Board of Directors held on April 16, 1998, Mr. McGowan and Mr. A. Schwabe were
      appointed to our Board of Directors. They were also appointed interim President
      and CEO, and Secretary, Treasurer respectively, pending the approval of the
      shareholders of the Gorda transaction wherein Mr. Coady would resign from all
      positions.  The license agreement also obligated us to pay a royalty to
      Andrew in the amount of ten percent (10%) of gross profit on sales if we
      manufactured the product itself or a royalty of seven percent (7%) of gross
      revenues if manufacturing was done by an independent third party.




3





In
      September 1998, 4,800,000 shares of our common stock were issued to Andrew
      in
      accordance with the terms of the license agreement. As a result of settlement
      of
      the litigation with AEI Trucolor Inc. ("Trucolor"), the license agreement was
      cancelled and the 4,800,000 shares were returned to our treasury in 1999. This
      action was settled by the execution of two agreements, the effect of which
      was
      that we acquired a 40% interest in Trucolor, an arm's length company. As a
      result of the agreement, Trucolor became the owner of the rights to the device.
      During 2006, Trucolor was dissolved.





Pursuant
      to an agreement dated June 14, 2000, we purchased a 100% interest in a private
      company owned by our former director called Travelport Media Inc. ("TPI").
       TPI was a Nevada private internet e-commerce technology and content
      development company specializing in the travel and hospitality industry. The
      agreement required us to issue 3,000,000 share purchase warrants in exchange
      for
      a 100% interest in TPI.  The share purchase warrants allowed the holder to
      purchase 3,000,000 shares of our common stock for $0.27 per share.   Before
      the end of December 31, 2000, our relationship with the consultant and former
      shareholder of TPI became strained, resulting in the consultant resigning as
      our
      director on September 11, 2000.





In
      November, 2000, we received shareholder and regulatory approval to change our
      name to "Travelport Systems Inc." in anticipation of our new strategic
      direction.





Subsequent
      to December 31, 2000, we entered into a settlement agreement whereby we would
      give our interest in the shares of TPI back to the original owner on the
      condition that the original owner and our former director would assume a
      liability of $86,000 which we incurred.  In addition, subsequent to
      December 31, 2000 we cancelled 150,000 share purchase options exercisable at
      $0.15 per share until October 11, 2005, and we cancelled 200,000 share purchase
      options exercisable at $0.25 per share until October 19, 2005 issued to
      employees of TPI. After
      settling that action, in August 2001, we changed our name to “American
      Petro-Hunter Inc.” and our focus to the exploration and eventual exploitation of
      oil and gas.





**Our
      Business**





During
      1998, we sold Calgary Chemical and acquired the worldwide manufacturing and
      marketing rights to a dental color analyzer (the “Product").  This
      technology was developed to assist the dental industry in determining the shades
      and colors of dental materials used in replacement and/or restorative work,
      by
      precisely matching these shades to the original teeth of patients. The dental
      color analyzer discriminates between the minutest differences in tooth shading
      and determines the best shade match for partial or total restorative material.
       It does so by taking into account the differences in color of spectrally
      unmatched materials when illuminated with different light sources such as
      sunlight, incandescent lamps, and fluorescent lamps. Since acquiring the rights
      in April 1998, our efforts have been directed towards research, development
      and
      business plans for manufacturing and marketing the product. This has involved
      manufacturing a small quantity of the product for testing and demonstration
      purposes; engaging technical experts and firms to evaluate the product;
      attendance at dental conventions and shows to demonstrate the product;
      attendance at various dental firms and laboratories to demonstrate and evaluate
      the product; and work on both the product and related software to perfect its
      operation. We have also engaged the assistance of consultants to develop
      marketing plans for the product.  This has resulted in us incurring
      substantial research and development expenditures in 1998.





We
      have
      also held discussions with companies involved in the distribution of dental
      products in Canada, the United States and Europe regarding marketing of the
      product.





We
      developed preliminary business plans to proceed with manufacture and sale of
      the
      units, but were delayed in proceeding pending completion of this research and
      development, and by the action brought against us by AEI Trucolor





As
      a
      result of settlement of the Trucolor action, Trucolor became the owner of the
      dental color analyzer.  The manufacturing/distribution agreement was not
      consummated with a third party, as anticipated by the settlement agreement,
      and
      as a result we own a 40% interest in Trucolor, and GPT owns a 60% interest.
      During 2006, Trucolor was dissolved.




4


**Our
      Strategy**





Our
      focus
      is currently in locating and assessing potential acquisition targets, including
      real property, oil and gas rights and oil and gas companies. We will focus
      primarily on oil and gas properties within the U.S. and Canada including
      exploration, secondary recovery and development projects. Each project will
      be
      evaluated by our management based on sound geology, acceptable risk levels
      and
      total capital requirements to develop. Our officers and directors expect to
      travel to different locations throughout North America to evaluate potential
      acquisitions. Further, our management will participate in a variety of different
      conferences throughout 2007 to increase our exposure to potential opportunities.





Our
      ability to execute our strategy as outlined above is dependent on several
      factors including but not limited to: (i) identifying potential acquisitions
      of
      either assets or operational companies with prices, terms and conditions
      acceptable to us; (ii) additional financing for capital expenditures,
      acquisitions and working capital either in the form of equity or debt with
      terms
      and conditions that would be acceptable to us; (iii) our success in developing
      revenue, profitability and cash flow; (iv) the development of successful
      strategic alliances or partnerships; and (v) the extent and associated efforts
      and costs of federal, state and local regulations in each of the industries
      in
      which we currently or plan to operate in. There are no assurances that we will
      be successful in implementing our strategy as any negative result of one of
      the
      factors alone or in combination could have a material adverse effect on our
      business.





**Customers**





As
      of
      December 31, 2006, we had no customers.





**Dividends**





We
      have
      not, and currently do not intend to, pay dividends. Any change in this current
      intention is in the discretion of the Board of Directors.





**Employees**





As
      of
      December 31, 2007, we had no full time employees. We currently utilize temporary
      contract labor throughout the year to address business and administrative needs.





**Factors,
      Risks and Uncertainties That May Affect our Business**





*With
      the exception of historical facts stated herein, the matters*  *discussed
      in this report on Form 10-KSB are “forward looking” statements
      that*  *involve
      risks and uncertainties that could cause actual results to
      differ*  *materially
      from projected results. Such “forward looking” statements
      include,*  *but
      are not necessarily limited to statements regarding anticipated levels
      of*  *future
      revenues and earnings from the operations of American
      Petro-Hunter,*  *Inc.
      and its subsidiaries, (the “Company,” “we,” “us” or “our”), projected costs and
      expenses related to our operations, liquidity,*  *capital
      resources, and availability of future equity capital on
      commercially*  *reasonable
      terms. Factors that could cause actual results to differ
      materially*  *are
      discussed below. We disclaim any intent or obligation to publicly
      update*  *these
      “forward looking” statements, whether as a result of new
      information,*  *future
      events or otherwise.*





**Risks
      Relating to Our Business**





**We
      have a history of losses which may continue, which may negatively impact our
      ability to achieve our business objectives.**





We
      incurred net losses of $3,388,703 for the period from January 24, 1996
      (inception) to December 31, 2006, and $72,398 for the year ended December 31,
      2006. We cannot be assured that we can achieve or sustain profitability on
      a
      quarterly or annual basis in the future. Our operations are subject to the
      risks
      and competition inherent in the establishment of a business enterprise. There
      can be no assurance that future operations will be profitable. We may not
      achieve our business objectives and the failure to achieve such goals would
      have
      an adverse impact on us.





**If
      we are unable to obtain additional funding our business operations will be
      harmed and if we do obtain additional financing our then existing shareholders
      may suffer substantial dilution** ***.***





We
      will
      require additional funds to initiate our oil and gas exploration activities,
      and
      to take advantage of any available business opportunities. Historically, we
      have
      financed our expenditures primarily with proceeds from the sale of debt and
      equity securities, and bridge loans from our officers and stockholders. In
      order
      to meet our obligations or acquire an operating business, we will have to raise
      additional funds. Obtaining additional financing will be subject to market
      conditions, industry trends, investor sentiment and investor acceptance of
      our
      business plan and management. These factors may make the timing, amount, terms
      and conditions of additional financing unattractive or unavailable to us. If
      we
      are not successful in achieving financing in the amount necessary to further
      our
      operations, implementation of our business plan may fail or be
      delayed.




5





**Our
      independent auditors have expressed substantial doubt about our ability to
      continue as a going concern, which may hinder our ability to obtain future
      financing** ***.***





In
      their
      report dated March 21, 2007, our independent auditors stated that our financial
      statements for the fiscal year ended December 31, 2006 were prepared assuming
      that we would continue as a going concern. Our ability to continue as a going
      concern is an issue raised as a result of recurring losses from operations.
      We
      continue to experience net operating losses. Our ability to continue as a going
      concern is subject to our ability to obtain necessary funding from outside
      sources, including obtaining additional funding from the sale of our securities.
      Our continued net operating losses increase the difficulty in meeting such
      goals
      and there can be no assurances that such methods will prove successful.





**We
      have a limited operating history and if we are not successful in growing our
      business, then we may have to scale back or even cease our ongoing business
      operations** ***.***





We
      have
      yet to generate positive earnings from our current business strategy and there
      can be no assurance that we will ever operate profitably. Our company has a
      limited operating history in the business of oil and gas exploration and must
      be
      considered in the development stage. Our success is significantly dependent
      on a
      successful reorganization or acquisition of an existing business. Our operations
      will be subject to all the risks inherent in the establishment of a developing
      enterprise and the uncertainties arising from the absence of a significant
      operating history. We may be unable to locate recoverable reserves or operate
      on
      a profitable basis. We are in the development stage and potential investors
      should be aware of the difficulties normally encountered by enterprises in
      the
      development stage. If our business plan is not successful, and we are not able
      to operate profitably, investors may lose some or all of their investment in
      our
      company.





**Our
      compliance with the Sarbanes-Oxley Act and SEC rules concerning internal
      controls may be time-consuming, difficult and costly for us.**





It
      may be
      time consuming, difficult and costly for us to develop and implement the
      internal controls and reporting procedures required by the Sarbanes-Oxley Act.
      We may need to hire additional financial reporting, internal controls and other
      finance staff in order to develop and implement appropriate internal controls
      and reporting procedures. If we are unable to comply with the internal controls
      requirements of the Sarbanes-Oxley Act, we may not be able to obtain the
      independent accountant certifications that the Sarbanes-Oxley Act requires
      publicly-traded companies to obtain, and this would impact our ability to comply
      with SEC regulations governing public companies.





**Risks
      Related to our Oil and Gas Exploration**





**If
      we are unable to successfully recruit qualified managerial and field personnel
      having experience in oil and gas exploration, we may not be able to execute
      on
      our business plan.**





In
      order
      to successfully implement and manage our business plan, we will be dependent
      upon, among other things, successfully recruiting qualified managerial and
      field
      personnel having experience in the oil and gas exploration business. Competition
      for qualified individuals is intense. There can be no assurance that we will
      be
      able to find, attract and retain existing employees or that we will be able
      to
      find, attract and retain qualified personnel on acceptable terms.





**We
      may not be insured against all of the operating risks to which our business
      is
      exposed.**





Our
      business is subject to all of the operating risks normally associated with
      the
      exploration for and production of oil and gas, any of which could result in
      damage to, or destruction of, property and injury to persons. As protection
      against financial loss resulting from these types of operating hazards, we
      maintain insurance coverage. However, because we are in the exploratory stage
      and have not identified for reorganization, an operating business, we are not
      fully insured against all these risks. The occurrence of a significant event
      against which we are not fully insured could have a material adverse effect
      on
      our financial position.




6





**Even
      if we are able to, the potential profitability of oil and gas ventures depends
      upon factors beyond the control of our company.**





The
      potential profitability of oil and gas properties is dependent upon many factors
      beyond our control. For instance, world prices and markets for oil and gas
      are
      unpredictable, highly volatile, potentially subject to governmental fixing,
      pegging, controls or any combination of these and other factors, and respond
      to
      changes in domestic, international, political, social and economic environments.
      Additionally, due to worldwide economic uncertainty, the availability and cost
      of funds for production and other expenses have become increasingly difficult,
      if not impossible, to project. These changes and events may materially affect
      our future financial performance. These factors cannot be accurately predicted
      and the combination of these factors may result in our company not receiving
      an
      adequate return on invested capital.





**Competition
      in the oil and gas industry is highly competitive and there is no assurance
      that
      we will be successful in acquiring the leases.**





The
      oil
      and gas industry is intensely competitive. We compete with numerous individuals
      and companies, including many major oil and gas companies which have
      substantially greater technical, financial and operational resources and staffs.
      Accordingly, there is a high degree of competition for desirable oil and gas
      leases, suitable properties for drilling operations and necessary drilling
      equipment, as well as for access to funds. We cannot predict if the necessary
      funds can be raised or that any projected work will be completed.





**The
      marketability of natural resources will be affected by numerous factors beyond
      our control which may result in us not receiving an adequate return on invested
      capital to be profitable or viable** ***.***





The
      marketability of natural resources which may be acquired or discovered by us
      will be affected by numerous factors beyond our control. These factors include
      market fluctuations in oil and gas pricing and demand, the proximity and
      capacity of natural resource markets and processing equipment, governmental
      regulations, land tenure, land use, regulation concerning the importing and
      exporting of oil and gas and environmental protection regulations. The exact
      effect of these factors cannot be accurately predicted, but the combination
      of
      these factors may result in us not receiving an adequate return on invested
      capital to be profitable or viable.





**Oil
      and gas operations are subject to comprehensive regulation which may cause
      substantial delays or require capital outlays in excess of those anticipated
      causing an adverse effect on our company** ***.***





Oil
      and
      gas operations are subject to country-specific federal, state, and local laws
      relating to the protection of the environment, including laws regulating removal
      of natural resources from the ground and the discharge of materials into the
      environment. Oil and gas operations are also subject to country-specific
      federal, state, and local laws and regulations which seek to maintain health
      and
      safety standards by regulating the design and use of drilling methods and
      equipment. Various permits from government bodies are required for drilling
      operations to be conducted; no assurance can be given that such permits will
      be
      received. Environmental standards imposed by federal, state, provincial, or
      local authorities may be changed and any such changes may have material adverse
      effects on our activities. Moreover, compliance with such laws may cause
      substantial delays or require capital outlays in excess of those anticipated,
      thus causing an adverse effect on us. Additionally, we may be subject to
      liability for pollution or other environmental damages. To date, we have not
      been required to spend any material amount on compliance with environmental
      regulations. However, we may be required to do so in the future and this may
      affect our ability to expand or maintain our operations.





**Exploration
      and production activities are subject to certain environmental regulations
      which
      may prevent or delay the commencement or continuation of our operations.**





In
      general, our exploration and production activities are subject to certain
      country-specific federal, state and local laws and regulations relating to
      environmental quality and pollution control. Such laws and regulations increase
      the costs of these activities and may prevent or delay the commencement or
      continuation of a given operation. Compliance with these laws and regulations
      has not had a material effect on our operations or financial condition to date.
      Specifically, we are subject to legislation regarding emissions into the
      environment, water discharges and storage and disposition of hazardous wastes.
      In addition, legislation has been enacted which requires well and facility
      sites
      to be abandoned and reclaimed to the satisfaction of U.S. state authorities.
      However, such laws and regulations are frequently changed and we are unable
      to
      predict the ultimate cost of compliance. Generally, environmental requirements
      do not appear to affect us any differently or to any greater or lesser extent
      than other companies in the industry. We believe that our operations comply,
      in
      all material respects, with all applicable environmental regulations. Our
      operating partners maintain insurance coverage customary to the industry;
      however, we are not fully insured against all possible environmental risks.




7





**Exploratory
      drilling involves many risks and we may become liable for pollution or other
      liabilities which may have an adverse effect on our financial
      position** ***.***





Drilling
      operations generally involve a high degree of risk. Hazards such as unusual
      or
      unexpected geological formations, power outages, labor disruptions, blow-outs,
      sour gas leakage, fire, inability to obtain suitable or adequate machinery,
      equipment or labor, and other risks are involved. We may become subject to
      liability for pollution or hazards against which it cannot adequately insure
      or
      which it may elect not to insure. Incurring any such liability may have a
      material adverse effect on our financial position and operations.





**Risk
      Related to Seeking Other Business Opportunities**





**Exploring
      and entering into business opportunities could be very time consuming and costly
      and could adversely affect our financial condition.**





We
      have
      not identified and have no commitments to enter into or acquire a specific
      business opportunity such as a merger, joint venture or acquisition of a private
      or public entity. There can be no assurance we will be successful in identifying
      and evaluating suitable business opportunities or in concluding a business
      combination. However, if we entered into a potential business opportunity our
      participation in a business opportunity may be highly illiquid and could result
      in a total loss to us and our stockholders if the business or opportunity proved
      to be unsuccessful. Due to the special risks inherent in the investigation,
      acquisition,





**Even
      if we were to enter into a business opportunity there is no assurance of success
      or profitability.**





There
      is
      no assurance that we will acquire a favorable business opportunity. Moreover,
      even if we become involved in a business opportunity because of the unforeseen
      costs, expenses, and difficulties involved with a new business opportunity,
      there is no assurance that it will generate revenues or profits, or that the
      market price of our common stock will increase.





**SEC
      reporting requirements may be too costly for us to take advantage of any
      potential business opportunities.**





The
      Securities Exchange Act of 1934 (the "Exchange Act"), require companies to
      provide certain information about significant acquisitions, including certified
      financial statements for the company acquired, covering one, two or three years,
      depending on the relative size of the acquisition. The time and additional
      costs
      that may be incurred by some prospective entities to prepare such statements
      may
      preclude consummation of an otherwise desirable acquisition by us. Acquisition
      prospects that do not have or are unable to obtain the required audited
      financial statements may not be appropriate for acquisition.





**Risk
      Relating To Our Common Stock**





**A
      limited public trading market exists for our common stock, which makes it more
      difficult for our stockholders to sell their common stock in the
      public.**





Although
      our common stock is quoted on the OTBB under the symbol “AAPH,” there is a
      limited public market for our common stock. No assurance can be given that
      an
      active market will develop or that a stockholder will ever be able to liquidate
      its shares of common stock without considerable delay, if at all. Many brokerage
      firms may not be willing to effect transactions in the securities. Even if
      a
      purchaser finds a broker willing to effect a transaction in these securities,
      the combination of brokerage commissions, state transfer taxes, if any, and
      any
      other selling costs may exceed the selling price




8





**Our
      common stock may be subject to the penny stock rules which may make it more
      difficult to sell our common stock** *.*





The
      Securities and Exchange Commission has adopted regulations which generally
      define a “penny stock” to be any equity security that has a market price, as
      defined, less than $5.00 per share or an exercise price of less than $5.00
      per
      share, subject to certain exceptions. Our securities may be covered by the
      penny
      stock rules, which impose additional sales practice requirements on
      broker-dealers who sell to persons other than established customers and
      accredited investors such as, institutions with assets in excess of $5,000,000
      or an individual with net worth in excess of $1,000,000 or annual income
      exceeding $200,000 or $300,000 jointly with his or her spouse. For transactions
      covered by this rule, the broker-dealers must make a special suitability
      determination for the purchase and receive the purchaser’s written agreement of
      the transaction prior to the sale. Consequently, the rule may affect the ability
      of broker-dealers to sell our securities and also affect the ability of our
      stockholders to sell their shares in the secondary market.





**Our
      management and stockholders may lose control of the Company as a result of
      a
      merger or acquisition.**





We
      may
      consider an acquisition in which we would issue as consideration for the
      business opportunity to be acquired an amount of our authorized but unissued
      common stock that would, upon issuance, represent the great majority of the
      voting power and equity of the Company. As a result, the acquiring company's
      stockholders and management would control the Company, and our current
      management may be replaced by persons unknown at this time. Such a merger would
      result in a greatly reduced percentage of ownership of the Company by its
      current stockholders.





**We
      have historically not paid dividends and do not intend to pay
      dividends.**





We
      have
      historically not paid dividends to our stockholders and management does not
      anticipate paying any cash dividends on our common stock to our stockholders
      for
      the foreseeable future. We intend to retain future earnings, if any, for use
      in
      the operation and expansion of our business





**ITEM
      2**  **—
      DESCRIPTION OF PROPERTY**





Effective
      May 2006 we moved our offices to Suite 3000 - 700 West Georgia Vancouver, B.C.
      under a verbal agreement with one of our directors. We do not pay rent for
      the
      use of its office but are responsible for monthly telephone charges and
      miscellaneous office expenses. We share this office space with other companies,
      and occupy approximately 1,500 square feet.





**ITEM
      3**  **—
      LEGAL PROCEEDINGS**





During
      2002, we received a formal demand for payment from Canadian Western Bank ("CWB")
      whereby CWB, pursuant to a full liability guarantee we provided in favor of
      714674 Alberta Ltd. (operating as Calgary Chemical) demanded payment of
      Cdn$102,000 (approx. US$88,530). We divested ourselves of Calgary Chemical
      in
      1998 under an agreement with our former president.  The agreements covering
      the transaction included an indemnity guarantee from the purchaser whereby
      the
      purchaser would indemnify and save us harmless from any and all liability,
      loss,
      damage or expenses. We intend to defend ourselves against the claim from CWB,
      believing that it has a valid indemnification from the purchaser of Calgary
      Chemical. We have accrued for the amount of the guarantee in our financial
      statements.





**ITEM
      4**  **—
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**PART
      II**





**ITEM
      5**  **—
      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





**Market
      Information**





Our
      common stock is traded on the Over the Counter Bulletin Board under the symbol
      AAPH.




9





The
      following is the range of high and low bid prices for our common stock for
      the
      periods indicated. The quotations reflect inter-dealer prices, without retail
      mark-up, mark-down or commissions and may not represent actual
      transactions.





**Fiscal
                2006**
            
            **High**
            
            **Low**First
                Quarter (March 31, 2006)
            
            $
            .15
            
            $
            .12Second
                Quarter (June 30, 2006)
            
            $
            .20
            
            $
            .12Third
                Quarter (September 30, 2006)
            
            $
            .29
            
            $
            .13Fourth
                Quarter (December 31, 2006)
            
            $
            .24
            
            $
            .13




**Fiscal
                2005**
            
            **High**
            
            **Low**First
                Quarter (March 31, 2005)
            
            $
            .24
            
            $
            .13Second
                Quarter (June 30, 2005)
            
            $
            .24
            
            $
            .08Third
                Quarter (September 30, 2005)
            
            $
            .15
            
            $
            .13Fourth
                Quarter (December 31, 2005)
            
            $
            .15
            
            $
            .13





The
      closing price for our common stock on December 31, 2006 was $0.20.





**Stockholders**





As
      of
      December 31, 2006, there were 8,265,019 shares of common stock issued and
      outstanding held by 65 stockholders of record (not including street name
      holders).





**Dividends**





We
      have
      not paid dividends to date and do not anticipate paying any dividends in the
      foreseeable future. Our Board of Directors intends to follow a policy of
      retaining earnings, if any, to finance our growth. The declaration and payment
      of dividends in the future will be determined by our Board of Directors in
      light
      of conditions then existing, including our earnings, financial condition,
      capital requirements and other factors.





**Equity
      Compensation Plan Information**





In
      November 1996, by resolution of our board of directors, we adopted the Wolf
      Exploration Inc. 1996 Directors and Officers Stock Option Plan ("the Plan"),
      for
      our officers and directors, whereby 1,000,000 shares of our common stock was
      reserved for issuance. The
      plan
      permitted us to grant nonqualified stock options within five years of the date
      of establishing the Plan.  By
      resolution of our directors dated May 28, 1998, we reserved an additional one
      million shares of common stock for the Plan bringing the total shares reserved
      to 2,000,000 and renamed the Plan "The Wolf Industries Inc. 1998 Directors
      and
      Officers Stock Option Plan” (the “Revised Plan”) with all other terms and
      conditions of the Plan remaining in full force and effect.





In
      September 1998, by resolution of our board of directors, we established the
      "1998 Key Personnel Compensation Plan"  ("Key Plan"), for our key
      personnel, whereby 1,000,000 shares of our common stock was reserved for
      issuance. The
      Key
      Plan permitted us to grant nonqualified stock options within five years of
      the
      date of establishing the Plan. By
      resolution of our directors dated November, 1998, a further 1,000,000 shares
      of
      common stock was authorized to be reserved for issuance, bringing the total
      issuable under the Key Plan to 2,000,000 shares of common stock.





In
      October, 2000, by resolution of our board of directors, we established the
      2000
      Stock Option Plan ("2000 Plan"), for our officers, directors, employees,
      consultants and advisors, whereby 5,000,000 of our common stock was reserved
      for
      issuance. The
      2000
      Plan permitted us to grant nonqualified stock options within five years of
      the
      date of establishing the Plan.




In
      September, 2001, by resolution of our board of directors, we established the
      2001 Stock Option Plan ("2001 Plan"), for our officers, directors, employees,
      consultants and advisors, whereby 1,500,000 of our common stock was reserved
      for
      issuance. The
      2001
      Plan permitted us to grant incentive and nonqualified stock options, restricted
      stock, stock bonuses, stock appreciation rights, reload options. Options
      under the 2001 Plan are exercisable subject to continued employment and other
      conditions.




10





There
      are
      no options currently outstanding under any of the aforementioned plans.





**ITEM
      6**  **—
      MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





The
      following discussion should be read in conjunction with our consolidated
      financial statements and notes thereto included elsewhere in this Report.
      Forward looking statements are statements not based on historical information
      and which relate to future operations, strategies, financial results or other
      developments. Forward-looking statements are based upon estimates, forecasts,
      and assumptions that are inherently subject to significant business, economic
      and competitive uncertainties and contingencies, many of which are beyond our
      control and many of which, with respect to future business decisions, are
      subject to change. These uncertainties and contingencies can affect actual
      results and could cause actual results to differ materially from those expressed
      in any forward-looking statements made by us, or on our behalf. We disclaim
      any
      obligation to update forward-looking statements.





The
      discussion and financial statements contained herein are for our fiscal year
      ended December 31, 2006 and December 31, 2005. The following discussion
      regarding our financial statements should be read in conjunction with our
      financial statements included herewith. Revenue and expense transactions in
      Canadian dollars are converted to U.S. dollars at the average rates in effect
      when the transactions occurred. Asset and liability accounts are converted
      at
      year-end closing rates, which were US$0.8619 for one Canadian dollar at December
      31, 2006 and US$0.8598 at December 31, 2005.





**Financial
      Condition as of December 31, 2006.**





We
      reported total current assets of $22,688 at December 31, 2006 consisting of
      cash
      of $20,783, and taxes recoverable totaling $1,905. Total current liabilities
      reported of $407,227 consisted of accounts payables of $218,931, amounts payable
      to related parties of $74,166, note payable of $25,600, and a loan guarantee
      of
      $88,530. The Company had a working capital deficit of $384,539 at December
      31,
      2006.





Stockholders'
      Deficiency increased from $305,761 at December 31, 2005 to $384,539 at December
      31, 2006. This increase is due to net losses of approximately $72,398 and other
      comprehensive losses of approximately $6,380.





We
      are
      currently a development stage company focused on the oil and gas industry,
      and
      evaluating opportunities for expansion within that industry through acquisition
      or other strategic relationships.





**Plan
      of Operation**





**Background**





We
      were
      formed on January 24, 1996 pursuant to the laws of the State of Nevada under
      the
      name Wolf Exploration, Inc. with a business plan to acquire properties for
      precious metal exploration in the western United States. However, after
      considering several properties, we determined the properties identified were
      not
      suitable to fully implement an exploration and development project in the United
      States. In August 1996, we changed our management team and developed a new
      business plan to sell chemical products to the oil and gas industry. In 1998,
      we
      sold that business and developed a new business plan for the manufacturing
      and
      marketing of a dental color analyzer. Our plans to manufacture and sell the
      analyzer were delayed pending completion of research and development and by
      an
      action brought against us by AEI Trucolor. After settling that action, in August
      2001, we changed our name to “American Petro-Hunter Inc.” and our focus to the
      exploration and eventual exploitation of oil and gas.





We
      have
      had no revenues since 2004. The accompanying financial statements have been
      prepared assuming that we will continue as a going concern. Having no sources
      of
      income, substantial doubt is raised about our ability to continue as a going
      concern.





Our
      plan
      of operations for the next fiscal year is to seek out a privately held business
      with whom we can reorganize so as to take advantage of our status as a publicly
      held corporation.  As of the date of this report, our management has
      evaluated several potential reorganizations but deemed them unsuitable.
 However as of the date of this report, there has been no decision to
      proceed on any reorganization nor has any agreement been reached on even
      principal terms of such reorganization. We also intend to investigate the
      acquisition and development of natural resource projects without necessarily
      reorganizing with another party.




11




**Cash
      and Cash Equivalents**





As
      of
      December 31, 2006, we had cash of $20,783 and did not have any cash equivalents.
      We anticipate that a substantial portion shall be used as working capital and
      to
      execute our reorganization strategy and business plan. As such, we further
      anticipate that we will have to raise additional capital through debt or equity
      financings to fund our operations during the next 6 to 12 months.




**Results
      of Operations**





**For
      the Fiscal Year Ended December 31, 2006**





For
      the
      fiscal year ended December 31, 2006, the Company incurred a net loss of
      $72,398.





Administration
      expenses for the fiscal year end amounted to $61,523 compared to $42,329 in
      2005. Executive compensation for the fiscal year end is $10,000 compared to
      $26,268 in 2005.





**For
      the Fiscal Year Ended December 31, 2005**





For
      the
      fiscal year ended December 31, 2005, the Company incurred a net loss of
      $72,398.





Administration
      expenses for the fiscal year ended December 31, 2005 amounted to $42,329
      compared to $33,155 in 2004. Executive compensation for the fiscal year end
      was
      $26,268 compared to $23,889 in 2004.





**Period
      from inception, January 24, 1996 to December 31, 2006**





We
      have
      incurred losses in each period since inception and have an accumulated deficit
      of $3,428,932 at December 31, 2006. We expect to continue to incur losses as
      a
      result of expenditures for general and administrative activities while we remain
      in the development stage.





**Liquidity
      and Capital Resources**





The
      Company is experiencing illiquidity and has been dependent upon shareholders
      and
      directors to provide funds to maintain its activities. At fiscal year ended
      December 31, 2006, the balance of amounts owing to related parties amounted
      to
      $74,166. There are no specific terms of repayment for amounts owing to related
      parties.





The
      Company had a working capital deficiency of $384,539 at December 31, 2006.





As
      a
      development stage company, we currently have limited operations, principally
      directed at oil and gas exploration.





Our
      management believes that we will be able to generate sufficient revenue or
      raise
      sufficient amounts of working capital through debt or equity offerings, as
      may
      be required to meet our short-term and long-term obligations. In order to
      execute on our business strategy, we will require additional working capital,
      commensurate with the operational needs of the target companies we may pursue.
      Such working capital will most likely be obtained through equity financings
      until such time as acquired operations are integrated and producing revenue
      in
      excess of operating expenses. There are no assurances that we will be able
      to
      raise the required working capital on terms favorable, or that such working
      capital will be available on any terms when needed.





**Off-Balance
      Sheet Transactions**





There
      are
      no off balance sheet items.





**Capital
      Expenditures**





We
      did
      not make any capital expenditures in the fiscal year ending December 31, 2006.




12





The
      following table outlines payments due under our significant contractual
      obligations over the periods shown, exclusive of interest:





**Payments
                Due by Period****Contract
                Obligations**
              **At
                December 31, 2006**
            
            **Total**
            
            **Less
                than**
              **1
                Year**
            
            **1-3
                years**
            
            **3-5
                years**
            
            **More
                than**
              **5
                years**Total
                Long Term Debt
            
            $
            25,000
            
            $
            25,000
            
            
            
            
            $$
            
            
            $
            —




The
      above
      table outlines our obligations as of December 31, 2006 and does not reflect
      any
      changes in our obligations that have occurred after that date.





**ITEM
      7**  **—
      FINANCIAL STATEMENTS**





The
      Financial Statements that constitute Item 7 are included at the end of this
      report beginning on Page F-1.





**ITEM
      8**  **—
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND**  **FINANCIAL
      DISCLOSURE**





Previously
      reported pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934.





**ITEM
      8A**  **—
      CONTROLS AND PROCEDURES**





We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our reports filed or submitted under
      the
      Exchange Act is recorded, processed, summarized and reported within the time
      periods specified in the Securities and Exchange Commission’s rules and forms
      and that such information is accumulated and communicated to our management,
      including our Principal Executive Officer and Principal Financial Officer,
      as
      appropriate, to allow timely decisions regarding required
      disclosure.





We
      conducted an evaluation of the effectiveness of the design and operation of
      our
      disclosure controls and procedures as defined by Section 240.13a -15e of the
      Exchange Act that were in place for the fiscal year covered by this report.
      This
      evaluation was carried out under the supervision and with the participation
      of
      our management, including our Principal Executive Officer and Principal
      Financial Officer. Based upon their evaluation, our Principal Executive Officer
      and Principal Financial Officer concluded that, as of the end of such fiscal
      year, our disclosure controls and procedures are effective and sufficient to
      ensure that we record, process, summarize, and report information required
      to be
      disclosed in the reports we filed under the Exchange Act within the time periods
      specified in the Securities and Exchange Commission's rules and regulations.





We
      have
      had very limited operations and there were no changes in our internal controls
      over financial reporting that occurred during the three months ended December
      31, 2006 that have materially affected, or are reasonably likely to materially
      affect, our internal controls over financial reporting. We believe that a
      control system, no matter how well designed and operated, cannot provide
      absolute assurance that the objectives of the control system are met, and no
      evaluation of controls can provide absolute assurance that all control issues
      and instances of fraud, if any, within any company have been
      detected.





**ITEM
      8B**  **—
      OTHER INFORMATION**





On
      October 18, 2006 we entered into a loan agreement with VCF Capital Corp., a
      company organized under the laws of British Columbia, Canada to borrow $25,000
      at an annual percentage rate of 12% for working capital needs. The loan was
      originally due 60 days from October 18 th ,
      2006
      but was extended to May 15 th ,
      2007.





Subsequent
      to year end, we completed an equity financing for 800,000 units at $0.05 per
      unit for total proceeds of $40,000 to foreign accredited investors. Each unit
      is
      comprised of one share of our common stock and a warrant to purchase one share
      of our common stock at a price per share of $0.15 for a period of 3 years from
      the date of issuance.




13





**PART
      III**





**ITEM
      9**  **—
      DIRECTORS AND EXECUTIVE OFFICERS**





**Directors
      and Executive Officers**





The
      following table sets forth the names and ages of our current directors and
      executive officers, the principal offices and positions held by each person:





******Person**
            
            **Age**
            
            **Position**Patrick
                A. McGowan
            
            66
            
            Chairman
                of the Board; President, Chief Executive Officer, Chief Financial
                Officer
                and SecretaryBarry
                L. Whelan
            
            65
            
            DirectorMike
                Veldhius
            
            27
            
            Director





Patrick
      A. McGowan




President
      of the Company since April 16, 1998. November, 2001 to date, Executive
      Vice-President of MIV Therapeutics Inc., Vancouver, B.C., a company whose
      business is medical devices, that trades on the NASD OTC BB. September 1996
      to
      April, 1999, President of Consolidated Ewing Industries Inc. (now Lyra Resources
      Ltd.), Vancouver, B.C., a company formerly engaged in oil and gas exploration,
      which is publicly traded on the TSX-V, November 1997 to the present, President
      of American Hunter Exploration, Vancouver, B.C., a privately held Nevada
      corporation engaged in oil and gas exploration.  February 1998 to the
      present, President and Director of U.S Diamond Corp., Vancouver, B.C., the
      parent company of American Hunter Exploration, a public company involved in
      natural resources, which formerly traded on the TSX-V.  August 1997 to
      December 1997, President and Director of Globenet Resources Inc., Vancouver,
      B.C., a public traded company traded on the TSX-V, engaged in natural resource
      exploration and
      development. October 1992 - September 1996, President and Director of The
      Indisposibles, Burnaby, B.C., a manufacturer and distributor of infant wear,
      incontinent and feminine hygiene products throughout North America and Europe.
      January 1988 to September 1992, Executive Vice-President of Pacific Paper
      Products, Burnaby, B.C., a manufacturer and distributor of paperboard products
      in British Columbia and Alberta. Graduated from University of Western Ontario
      with Masters of Business Administration in 1965, graduated University of Oregon
      with Bachelor of Science, Finance and Economics in 1963.





Barry
      L.
      Whelan




Director
      since September 11, 2001. From 1981 to present, consulting geologist. Past
      Director of the following companies: Adamus Resources Ltd., Northern Star Mining
      Corp., Flying A Petroleum Corp., Little Mountain Resources Ltd., Hard Creek
      Nickel Corporation. All of the above companies trade on the TSX-V. Graduated
      from the University of Western Ontario in 1961 with a Bachelor of Arts in
      Geology, Graduated from McMaster University in 1965 with a Bachelor of Science
      in Geology.





Mike
      Veldhius




Director
      since May 2006. Mr.
      Veldhuis currently serves on the Board of Directors for Upton Capital
      Corporation which is a private corporation specializing in providing mortgages
      to individuals. Mr.
      Veldhuis worked as an Account Manager for GE Capital Solutions from 2004 until
      2006 structuring financing proposals, analyzing companies and industries and
      maintaining client relationships. Prior to that, Mr. Veldhuis worked as a
      Teaching Assistant at both McGill University and Simon Fraser University in
      economics. Mr. Veldhuis received a Masters of Arts in Economics from McGill
      University, a Bachelor of Arts in Economics from Simon Fraser University and
      majored in Business Administration and Economics at Kwantlen University College.
      He is a level I candidate for Chartered Financial Analyst.





**Audit
      Committee Financial Expert**





Our
      Board
      of Directors has not established a separate audit committee within the meaning
      of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the
      "Exchange Act"). Instead, the entire Board of Directors acts as the audit
      committee within the meaning of Section 3(a)(58)(B) of the Exchange Act. In
      addition, each of our directors currently meets the definition of an "audit
      committee financial expert" within the meaning of Item 401(e) of Regulation
      SB,
      however, Barry Whelan and Mike Veldhius are the independent directors. We are
      seeking candidates for outside directors and for a financial expert to serve
      on
      a separate audit committee when we establish one. Due to our small size and
      limited operations and resources, it has been difficult to recruit outside
      directors and financial experts.




14





**Compliance
      with Section 16(a) of the Securities Exchange Act of 1934**





Based
      solely upon a review of Forms 3, 4 and 5 delivered to us as filed with the
      Securities Exchange Commission, our executive officers and directors, and
      persons who own more than 10% of our Common Stock timely filed all required
      reports pursuant to Section 16(a) of the Securities Exchange Act.





**Code
      of Ethics**





Given
      our
      limited operations and resources and because we are in the exploratory stage,
      we
      have not yet adopted a code of ethics. Upon commencement of significant
      operations and hiring other executive officers, we intend to adopt a code of
      ethics that will apply to all our employees.





**ITEM
      10**  **—
      EXECUTIVE COMPENSATION**





**Summary
      Compensation**





The
      summary compensation table below shows certain compensation information for
      services rendered in all capacities to us by our principal executive officer
      and
      by each other executive officer whose total annual salary and bonus exceeded
      $100,000 during the fiscal periods ended December 31, 2006 and December 31,
      2005. Other than as set forth below, no executive officer’s total annual
      compensation exceeded $100,000 during our last fiscal period.





**Summary
      Compensation Table**


**Non-Equity**
              
              **Non-qualified****Incentive**
              
              **Deferred****Stock**
              
              **Option**
              
              **Plan**
              
              **Compensation**
              
              **All
                  Other****Salary**
              
              **Bonus**
              
              **Awards**
              
              **Awards**
              
              **Compensation**
              
              **Earnings**
              
              **Compensation**
              
              **Total****Name
                  and**
              
              **Year**
              
              **($)**
              
              **($)**
              
              **($)**
              
              **($)**
              
              **($)**
              
              **($)**
              
              **($)**
              
              **($)****Principal
                  Position (a)**
              
              **(b)**
              
              **(c)**
              
              **(d)**
              
              **(e)(2)**
              
              **(f)**
              
              **(g)**
              
              **(h)**
              
              **(i)**
              
              **(j)**Patrick
                  McGowan,
              
              
              2006
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              
              -0-
              
              
              -0-
              
              $
              10,000
              
              $
              10,000Chairman
                  of the Board, President,
              
              
              2005
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              
              -0-
              
              
              -0-
              
              $
              26,268
              
              $
              26,268Peter
                  Rook-Green
              
              
              2006
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              
              -0-
              
              
              -0-
              
              $
              14,682
              
              $
              14,682Former
                  Chief Financial Officer and Director(1)
              
              
              2005
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              
              -0-
              
              
              -0-
              
              $
              18,318
              
              $
              18,318Mike
                  Veldhuis, Director
              
              
              2006
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              
              -0-
              
              
              -0-
              
              $
              7,500
              
              $
              7,500Barry
                  Whelan, Director
              
              
              2006
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              $
              -0-
              
              
              -0-
              
              
              -0-
              
              $
              579
              
              $
              579.00




(1)
            Mr.
                Rook-Green resigned all his positions with us on May 25, 2006.





Mr.
      McGowan billed a total of $10,000 and $26,268 in management fess for the fiscal
      years ended December 31, 2006 and 2005 respectively in accordance with a
      management agreement approved by the board of directors on April 1, 1998 at
      a
      rate of Cnd $7,000 per month, which was subsequently reduced to Cnd $5,000
      per
      month effective August 1999, and in 2002, to Cnd $2,500 retroactive to October
      1, 2001. The management agreement was further reduced to $833.33 per month
      effective January 1, 2006.




15





A
      private
      company owned by Mr. Rook-Green billed a total of $14,682 of compensation for
      the fiscal year ended December 31, 2006 for the provision of office space,
      office services, accounting and administrative services. Such private company
      received $18,318 for such services for the fiscal year ended December 31, 2005.





Two
      private companies owned by Mr. Veldhuis was paid a total of $7,500 of consulting
      fees for the fiscal year ended December 31, 2006. Neither private company
      received payment nor billed for such services for the fiscal year ended December
      31, 2005.





Mr.
      Whelan was paid a total of $579 of consulting fees for the fiscal year ended
      December 31, 2006. Mr. Whelan did not receive payment or bill for such services
      for the fiscal year ended December 31, 2005.





**Director
      Compensation**





Our
      board
      of directors are reimbursed for actual expenses incurred in attending Board
      meetings. There are no other compensation arrangement with directors, and the
      directors did not receive any compensation in the fiscal years ending December
      31, 2006 and 2005.





**ITEM
      11**  **—
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**  **AND
      RELATED STOCKHOLDER MATTERS**





The
      following table sets forth, as of March 28, 2007, the number and percentage
      of
      outstanding shares of our common stock owned by (i) each person known to us
      to
      beneficially own more than 5% of our outstanding common stock, (ii) each
      director, (iii) each named executive officer, and (iv) all executive officers
      and directors as a group. Share ownership is deemed to include all shares that
      may be acquired through the exercise or conversion of any other security
      immediately or within the next sixty days. Such shares that may be so acquired
      are also deemed outstanding for purposes of calculating the percentage of
      ownership for that individual or any group of which that individual is a member.
      Unless otherwise indicated, the stockholders listed possess sole voting and
      investment power with respect to the shares shown.





**Name
                and Address**
              **of
                Beneficial Owner**
            
            **Title
                of Class**
            
            **Amount
                and Nature**
              **of
                Beneficial**
              **Ownership
                of**
              **Common
                Stock(1)**
            
            **Percentage
                of**
              **Common
                Stock**
              **Outstanding(1)**Patrick
                A. McGowan
              211-1148
                Westwood Street
              Coquitlam,
                B.C., Canada
              V3B
                4S4
            
            
            Common
            
            
            225,438
            
            
            2.73
            %Peter
                G. Rook-Green
              #12-16325
                82ndAvenue
              Surrey,
                B.C., Canada
              V3S
                8K3
            
            
            Common
            
            
            72,173
            
            
            0.87
            %Mike
                Veldhuis
              Suite
                2 - 2072 West 3rdAve
              Vancouver,
                B.C., Canada
              V6J
                1L5
            
            
            Common
            
            
            -
            
            
            -Barry
                L. Whelan
              1250
                - 800 West Pender Street
              Vancouver,
                B.C., Canada
              V6C
                2V6
            
            
            Common
            
            
            -
            
            
            -All
                Executive Officers and Directors as a Group (3 persons)
            
            
            Common
            
            
            297,611
            
            
            3.60
            %







(1)  Based
      upon information furnished to us by the directors and executive officers or
      obtained from our stock transfer books showing 8,265,019 shares of common stock
      outstanding as of March 28, 2007. We are informed that these persons hold the
      sole voting and dispositive power with respect to the common stock except as
      noted herein. For purposes of computing “beneficial ownership” and the
      percentage of outstanding common stock held by each person or group of persons
      named above as of March 28, 2007, any security which such person or group of
      persons has the right to acquire within 60 days after such date is deemed to
      be
      outstanding for the purpose of computing beneficial ownership and the percentage
      ownership of such person or persons, but is not deemed to be outstanding for
      the
      purpose of computing the percentage ownership of any other person.




16





**ITEM
      12**  **—
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**





Mr.
      McGowan billed us a total of $10,000 during 2006 and $26,268 during 2005 for
      services rendered.





Mr.
      Rook-Green, our former Chief Financial Officer is an owner of R-G Management,
      which during 2006 billed us $14,682 and during 2005 billed us $18,318 for
      accounting, administration, rent and office services.





Mr.
      Veldhuis, one of our directors, is an owner of Endurven Management Inc. and
      0758445 BCLTD which were paid a total of $7,500 of consulting fees for the
      fiscal year ended December 31, 2006.





Mr.
      Whelan, one of our directors, was paid a total of $579 of consulting fees for
      the fiscal year ended December 31, 2006.





**ITEM
      13**  **—
      EXHIBITS**





**Exhibit
                Number**
            
            **Name**3.1(1)
            
            Amended
                and Restated Articles of Incorporation4.1(2)
            
            1998
                Directors and Officers Option Plan4.2(3)
            
            Amended
                1998 Key Personnel Compensation Plan4.3(4)
            
            2000
                Stock Option Plan4.4(5)
            
            2001
                Stock Option Plan10.1(6)
            
            Sale
                Agreement between Wolf Industries Inc. and Gorda Technology Holdings
                Limited10.2(6)
            
            License
                Agreement between Wolf Industries Inc. and Andrew Engineering Inc.,
                et
                al10.3(7)
            
            Asset
                Purchase Agreement between Wolf Industries Inc. and Andrew Engineering
                Inc.10.4(7)
            
            Agreement
                between Wolf Industries Inc., Andrew Engineering Inc., Andrew Rawicz
                and
                GPT Management10.5(8)
            
            Letter
                of Intent with Galloway Financial Services10.6(8)
            
            Letter
                Agreement with Dancing Star Resources10.7(8)
            
            Assignment
                of Lease with Exor Oil Company, LLC10.8
            
            Loan
                Agreement with VCF Capital Corp.10.9
            
            Form
                of Securities Purchase Agreement31.1
            
            Rule
                13(a) — 14(a)/15(d) — 14(a) Certification (Principal Executive
                Officer)31.2
            
            Rule
                13(a) — 14(a)/15(d) — 14(a) Certification (Principal Financial
                Officer)32
            
            Section
                1350 Certifications





17


**Footnotes
      to Exhibits Index**





(1)
            Incorporated
                by reference to Form 10-SB12G dated June 19, 1997.(2)
            Incorporated
                by reference to Form S-8 dated September 10, 1998.(3)
            Incorporated
                by reference to Form S-8 dated December 9, 1998.(4)
            Incorporated
                by reference to Form S-8 dated October 20, 2000.(5)
            Incorporated
                by reference to Form S-8 dated October 2, 2001.(6)
            Incorporated
                by reference to Form 10-QSB for the period ending March 31,
                1998.(7)
            Incorporated
                by reference to Form 10-QSB for the period ending June 30,
                1999.(8)
            Incorporated
                by reference to Form 10-QSB for the period ending September 30,
                2001.





**ITEM
      14**  **—
      PRINCIPAL ACCOUNTANT FEES AND SERVICES.**





The
      following table shows the fees paid or accrued by us for the audit and other
      services provided Morgan and Company for the fiscal periods shown.





**December
                31, 2006**
            
            **December
                31, 2005**Audit
                Fees
            
            $
            34,840
            
            $
            22,544Audit
                — Related Fees
            
            
            —
            
            
            —Tax
                Fees
            
            
            —
            
            
            —All
                Other Fees
            
            
            —
            
            
            —Total
            
            $
            34,840
            
            $
            22,544





Audit
      fees consist of fees billed for professional services rendered for the audit
      of
      our financial statements and review of the interim financial statements included
      in quarterly reports and services that are normally provided by the above
      auditors in connection with statutory and regulatory fillings or
      engagements





In
      the
      absence of a formal audit committee, the full Board of Directors pre-approves
      all audit and non-audit services to be performed by the independent registered
      public accounting firm in accordance with the rules and regulations promulgated
      under the Securities Exchange Act of 1934, as amended. The Board of Directors
      pre-approved 100% of the audit, audit-related and tax services performed by
      the
      independent registered public accounting firm in fiscal 2006. The percentage
      of
      hours expended on the principal accountant's engagement to audit the Company's
      financial statements for the most recent fiscal year that were attributed to
      work performed by persons other than the principal accountant's full-time,
      permanent employees was 0%.




18




**SIGNATURES**





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


**AMERICAN
                PETRO-HUNTER, INC.**Dated:
              April 16, 2007
            
            /s/
              Patrick
              McGowanBy:
                Patrick McGowan
              Its:
                President, Chief Executive Officer, Interim Chief
              Financial
                Officer and Chairman of the Board (Principal
              Executive
                Officer)


Dated:
              April 16, 2007
            
            /s/
              Patrick
              McGowanBy:
                  Patrick McGowan
                Its
                  President, Chief Executive Officer, Interim
                Chief
                  Financial Officer and Chairman of the Board
                (Principal
                  Financial Officer and Principal Accounting
                  Officer)





Pursuant
      to requirements of the Securities Exchange Act of 1934, this report has been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated:





**Signature**
            
            **Capacity**
            
            **Date**/s/
                Patrick
                McGowan
            
            Director
            
            April
                16, 2007Patrick
                McGowan/s/
                Mike
                Veldhius
            
            Director
            
            April
                16, 2007Mike
                Veldhius/s/
                Barry
                L. Whelan
            
            Director
            
            April
                16, 2007Barry
                L. Whelan





19


**American
      Petro-Hunter, Inc.**


**Index
      to Financial Statements**


**December
      31, 2006**





**INDEX**





**Page**Independent
                Registered Public Accounting Firms’ Reports
            
            F-2Financial
                StatementsConsolidated
                Balance Sheets
            
            F-3Consolidated
                Statements of Operations
            
            F-4Consolidated
                Statements of Cash Flows
            
            F-5Consolidated
                Statements of Stockholder’s Deficiency
            
            F-6
                to F-8Notes
                to Consolidated Financial Statements
            
            F-9Index
                to Exhibits
            
            F-19










**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**FINANCIAL
      STATEMENTS**





**DECEMBER
      31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**




F-1







**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Stockholders and Directors of


American
      Petro-Hunter Inc.


(A
      Development Stage Company)





We
      have
      audited the accompanying balance sheets of American Petro-Hunter Inc. (a
      development stage company) as of December 31, 2006 and 2005, and the related
      statements of operations, cash flows, and stockholders’ deficiency for each of
      the two years in the period ended December 31, 2006 and for the period from
      inception, January 24, 1996 to December 31, 2006. These financial statements
      are
      the responsibility of the Company's management. Our responsibility is to express
      an opinion on these financial statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of the Company as of December 31,
      2006
      and 2005, and the results of its operations and its cash flows for the years
      ended December 31, 2006 and 2005, and the period from inception, January 24,
      1996 to December 31, 2006, in conformity with accounting principles generally
      accepted in the United States of America.





The
      Company is not required to have, nor were we engaged to perform, an audit of
      its
      internal control over financial reporting. Our audits included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company’s internal control
      over financial reporting. Accordingly, we express no such opinion.




The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. As discussed in Note 1 to the financial statements,
      the Company has suffered recurring losses from operations, has negative cash
      flows, has a stockholders’ deficiency and is dependent upon obtaining adequate
      financing to fulfill its exploration activities. These factors raise substantial
      doubt about its ability to continue as a going concern. Management’s plans in
      regard to these matters are also described in Note 1. The financial statements
      do not include any adjustments that might result from the outcome of this
      uncertainty.




Vancouver, Canada
            “Morgan
&
Company”March 21, 2007
            Chartered
                Accountantsjhi





F-2





**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**BALANCE
      SHEETS**


**(Stated
      in U.S. Dollars)**





DECEMBER
                31**2006**
            
            2005**ASSETS****Current**Cash
            
            **$**
            **20,783**
            
            $
            49,551Taxes
                recoverable
            
            
            **1,905**
            
            
            374**22,688**
            
            
            49,925**Investment
                In AEI Trucolor Inc.**(Note 4)
            
            
            **-**
            
            
            1**$**
            **22,688**
            
            $
            49,926**LIABILITIES****Current**Accounts
                payable and accrued liabilities
            
            **$**
            **218,931**
            
            $
            214,938Accounts
                payable to related parties (Note 5)
            
            
            **74,166**
            
            
            55,891Note
                payable (Note 6)
            
            
            **25,600**
            
            
            -Loan
                guarantee (Note 7)
            
            
            **88,530**
            
            
            84,858**407,227**
            
            
            355,687**STOCKHOLDERS’
                DEFICIENCY****Common
                Stock**Authorized:200,000,000
                voting common shares, par value of $0.001 eachIssued
                and outstanding:8,265,019
                common shares at December 31, 2006 and 2005
            
            
            **8,265**
            
            
            8,265**Additional
                Paid-In Capital**
            
            
            **3,036,128**
            
            
            3,036,128**Accumulated
                Other Comprehensive Loss**
            
            
            **(40,229**
            **)**
            
            (33,849
            )**Accumulated
                Deficit**
            
            
            **(3,388,703**
            **)**
            
            (3,316,305
            )**(384,539**
            **)**
            
            (305,761
            )**$**
            **22,688**
            
            $
            49,926




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





F-3





**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**STATEMENTS
      OF OPERATIONS**


**(Stated
      in U.S. Dollars)**


**YEARS
                  ENDED DECEMBER 31**
              
              *PERIOD
                  FROM*
                **INCEPTION**
                **JANUARY
                  24**
                **1996
                  TO**
                **DECEMBER
                  31****2006**
              
              2005
              
              2006**Revenue**
              
              **$**
              **-**
              
              $
              -
              
              $
              -**Expenses**Administration
              
              
              **61,523**
              
              
              42,329
              
              
              1,542,314Executive
                  compensation
              
              
              **10,000**
              
              
              26,268
              
              
              384,488Finders’
                  fees
              
              
              **-**
              
              
              -
              
              
              48,000Rent
              
              
              **874**
              
              
              2,114
              
              
              61,698Research
                  and development
              
              
              **-**
              
              
              -
              
              
              566,875**72,397**
              
              
              70,711
              
              
              2,603,375**Loss
                  For The Period Before Under-Noted Items**
              
              
              (72,397
              )
              
              (70,711
              )
              
              (2,603,375
              )**Write
                  Off Loans And Advances**
              
              
              **-**
              
              
              -
              
              
              (327,451
              )**Write
                  Down Of Investments**
              
              
              
              (1)
              
              -
              
              
              (7,500
              )**Loss
                  From Discontinued Operations**
              
              
              **-**
              
              
              -
              
              
              (365,519
              )**Loss
                  From Loan Guarantee**(Note 7)
              
              
              **-**
              
              
              -
              
              
              (84,858
              )**Net
                  Loss For The Period**
              
              
              (72,398
              )
              
              (70,711
              )
              
              (3,388,703
              )**Other
                  Comprehensive Loss**,
                  net of taxForeign
                  currency translation adjustment
              
              
              (6,380
              )
              
              (6,156
              )
              
              (40,229
              )**Comprehensive
                  Loss For The Period**
              
              **$**
              (78,778
              )
              $
              (76,867
              )
              $
              (3,428,932
              )**Basic
                  And Diluted Loss Per Share**
              
              **$**
              (0.01
              )
              $
              (0.01
              )**Basic
                  And Diluted Weighted Average Number Of Common Shares
                  Outstanding**
              
              
              **8,265,019**
              
              
              6,582,649




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





F-4


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**STATEMENTS
      OF CASH FLOWS**


**(Stated
      in U.S. Dollars)**


**YEARS
                  ENDED DECEMBER 31**
              
              *PERIOD
                  FROM*
                **INCEPTION**
                **JANUARY
                  24**
                **1996
                  TO**
                **DECEMBER
                  31****2006**
              
              **2005**
              
              **2006****Cash
                  Flows From (Used In) Operating Activities**Net
                  loss for the period before discontinued operations
              
              **$**
              (72,398
              )
              $
              (70,711
              )
              $
              (3,023,184
              )Items
                  not involving cash:Shares
                  issued for services rendered
              
              
              **-**
              
              
              3,226
              
              
              992,558Loss
                  from loan guarantee
              
              
              **3,672**
              
              
              -
              
              
              88,530Write
                  down of investment in AEI Trucolor
              
              
              **1**
              
              
              -
              
              
              7,500Compensation
                  stock purchase warrants issued
              
              
              **-**
              
              
              -
              
              
              80,000Stock
                  purchase warrants issued for finders’ fees
              
              
              **-**
              
              
              -
              
              
              48,000Changes
                  in non-cash working capital items:Taxes
                  recoverable
              
              
              (1,531
              )
              
              128
              
              
              (1,905
              )Accounts
                  payable and accrued liabilities
              
              
              **22,268**
              
              
              61,253
              
              
              1,802,764(47,988
              )
              
              (6,104
              )
              
              (5,737
              )**Cash
                  Flows From (Used In) Financing Activities**Issuance
                  of common shares
              
              
              **-**
              
              
              75,000
              
              
              502,400Share
                  issue costs
              
              
              **-**
              
              
              -
              
              
              (95,732
              )Loans
                  from related parties
              
              
              **-**
              
              
              (13,684
              )
              
              -Proceeds
                  from note payable
              
              
              **25,600**
              
              
              -
              
              
              25,600**25,600**
              
              
              61,316
              
              
              432,268**Cash
                  Flows From Discontinued Operations**
              
              
              **-**
              
              
              -
              
              
              (365,519
              )**Effect
                  Of Exchange Rate Changes On Cash**
              
              
              (6,380
              )
              
              (6,156
              )
              
              (40,229
              )**Increase
                  (Decrease) In Cash**
              
              
              (28,768
              )
              
              49,056
              
              
              20,783**Cash,
                  Beginning Of Period**
              
              
              **49,551**
              
              
              495
              
              
              -**Cash,
                  End Of Period**
              
              **$**
              **20,783**
              
              $
              49,551
              
              $
              20,783**Supplemental
                  Disclosure Of Non-Cash Activities**Shares
                  issued in settlement of debt
              
              $
              -
              
              $
              11,969
              
              $
              1,509,667Shares
                  issued for services rendered
              
              $
              -
              
              $
              -
              
              $
              992,558Shares
                  issued for investment
              
              $
              -
              
              $
              -
              
              $
              7,500





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




F-5


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**


**STATEMENTS
      OF STOCKHOLDERS’ DEFICIENCY**





**PERIOD
      FROM INCEPTION, JANUARY 24, 1996 TO DECEMBER 31, 2006**


**(Stated
      in U.S. Dollars)**


**NUMBER**
                **OF**
                **SHARES**
              
              ****
                **PAR**
                **VALUE**
              
              ****
                **ADDITIONAL**
                **PAID-IN**
                **CAPITAL**
              
              ****
                **DEFERRED**
                **COMPENSATION**
              
              ****
                **ACCUMULATED**
                **DEFICIT**
              
              **ACCUMULATED**
                **OTHER**
                **COMPREHENSIVE**
                **LOSS**
              
              ****
                **TOTAL**
                **STOCKHOLDERS’**
                **DEFICIENCY**Shares
                  issued for cash, net of issue costs
              
              
              10,497,300
              
              $
              10,497
              
              $
              296,833
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              307,330Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              4,856
              
              
              -
              
              
              4,856Balance,
                  December 31, 1996
              
              
              10,497,300
              
              
              10,497
              
              
              296,833
              
              
              -
              
              
              4,856
              
              
              -
              
              
              312,186Shares
                  issued for cash, net of issue costs
              
              
              187,416
              
              
              187
              
              
              46,850
              
              
              -
              
              
              -
              
              
              -
              
              
              47,037Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (96,386
              )
              
              -
              
              
              (96,386
              )Unrealized
                  foreign exchange gain
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              8,258
              
              
              8,258Balance,
                  December 31, 1997
              
              
              10,684,716
              
              
              10,684
              
              
              343,683
              
              
              -
              
              
              (91,530
              )
              
              8,258
              
              
              271,095Stock
                  reverse split 3:1
              
              
              (7,123,094
              )
              
              (7,123
              )
              
              7,123
              
              
              -
              
              
              -
              
              
              -
              
              
              -Shares
                  issued
              
              
              7,773,026
              
              
              7,773
              
              
              1,980,833
              
              
              -
              
              
              -
              
              
              -
              
              
              1,988,606Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,798,830
              )
              
              -
              
              
              (1,798,830
              )Unrealized
                  foreign exchange gain
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              )
                (8,258
              
              
              )
                (8,258Balance,
                  December 31, 1998
              
              
              11,334,648
              
              
              11,334
              
              
              2,331,639
              
              
              -
              
              
              (1,890,360
              )
              
              -
              
              
              452,6131998
                  issuance cancelled
              
              
              (4,800,000
              )
              
              (4,800
              )
              
              (1,339,200
              )
              
              -
              
              
              -
              
              
              -
              
              
              (1,344,000
              )Share
                  issue costs
              
              
              500,000
              
              
              500
              
              
              85,000
              
              
              -
              
              
              -
              
              
              -
              
              
              85,500Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (307,331
              )
              
              -
              
              
              (307,331
              )Balance,
                  December 31, 1999
              
              
              7,034,648
              
              $
              7,034
              
              $
              1,077,439
              
              $
              -
              
              $
              (2,197,691
              )
              
              
              
              $
              (1,113,218
              )





F-6


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**STATEMENTS
      OF STOCKHOLDERS’ DEFICIENCY (Continued)**





**PERIOD
      FROM INCEPTION, JANUARY 24, 1996 TO DECEMBER 31, 2006**


**(Stated
      in U.S. Dollars)**




**NUMBER**
                **OF**
                **SHARES**
              
              ****
                **PAR**
                **VALUE**
              
              **ADDITIONAL**
                **PAID-IN**
                **CAPITAL**
              
              ****
                **DEFERRED**
                **COMPENSATION**
              
              ****
                **ACCUMULATED**
                **DEFICIT**
              
              **ACCUMULATED**
                **OTHER**
                **COMPREHENSIVE**
                **LOSS**
              
              ****
                **TOTAL**
                **STOCKHOLDERS’**
                **DEFICIENCY**Balance,
                  December 31, 1999
              
              
              7,034,648
              
              $
              7,034
              
              $
              1,077,439
              
              $
              -
              
              $
              (2,197,691
              )
              $
              -
              
              $
              (1,113,218
              )Shares
                  issued
              
              
              4,435,570
              
              
              -
              
              
              1,083,791
              
              
              -
              
              
              -
              
              
              -
              
              
              1,083,791Finders’
                  fees
              
              
              -
              
              
              -
              
              
              48,000
              
              
              -
              
              
              -
              
              
              -
              
              
              48,000Share
                  purchase warrants
              
              
              -
              
              
              -
              
              
              80,000
              
              
              -
              
              
              -
              
              
              -
              
              
              80,000Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (547,097
              )
              
              -
              
              
              (547,097
              )Balance,
                  December 31, 2000
              
              
              11,470,218
              
              
              7,034
              
              
              2,289,230
              
              
              -
              
              
              (2,744,788
              )
              
              -
              
              
              (448,524
              )Stock
                  reverse split 10:1
              
              
              (10,323,196
              )
              
              (5,887
              )
              
              5,887
              
              
              -
              
              
              -
              
              
              -
              
              
              -Shares
                  issued
              
              
              4,253,617
              
              
              4,254
              
              
              552,106
              
              
              -
              
              
              -
              
              
              -
              
              
              556,360Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (297,352
              )
              
              -
              
              
              (297,352
              )Balance,
                  December 31, 2001
              
              
              5,400,639
              
              
              5,401
              
              
              2,847,223
              
              
              -
              
              
              (3,042,140
              )
              
              -
              
              
              (189,516
              )Shares
                  issued
              
              
              220,000
              
              
              220
              
              
              21,780
              
              
              -
              
              
              -
              
              
              -
              
              
              22,000Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (29,664
              )
              
              -
              
              
              (29,664
              )Balance,
                  December 31, 2002
              
              
              5,620,639
              
              
              5,621
              
              
              2,869,003
              
              
              -
              
              
              (3,071,804
              )
              
              -
              
              
              (197,180
              )Shares
                  issued
              
              
              430,000
              
              
              430
              
              
              25,370
              
              
              -
              
              
              -
              
              
              -
              
              
              25,800Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (57,652
              )
              
              -
              
              
              (57,652
              )Balance,
                  December 31, 2003
              
              
              6,050,639
              
              $
              6,051
              
              $
              2,894,373
              
              $
              -
              
              $
              (3,129,456
              )
              $
              -
              
              $
              (229,032
              )





F-7


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**STATEMENTS
      OF STOCKHOLDERS’ DEFICIENCY (Continued)**





**PERIOD
      FROM INCEPTION, JANUARY 24, 1996 TO DECEMBER 31, 2006**


**(Stated
      in U.S. Dollars)**


**NUMBER**
                **OF**
                **SHARES**
              
              ****
                **PAR**
                **VALUE**
              
              ****
                **ADDITIONAL**
                **PAID-IN**
                **CAPITAL**
              
              ****
                **DEFERRED**
                **COMPENSATION**
              
              ****
                **ACCUMULATED**
                **DEFICIT**
              
              **ACCUMULATED**
                **OTHER**
                **COMPREHENSIVE**
                **LOSS**
              
              ****
                **TOTAL**
                **STOCKHOLDERS’**
                **DEFICIENCY**Balance,
                  December 31, 2003
              
              
              6,050,639
              
              $
              6,051
              
              $
              2,894,373
              
              $
              -
              
              $
              (3,111,536
              )
              $
              (17,920
              )
              $
              (229,032
              )Shares
                  issued for services rendered
              
              
              475,000
              
              
              475
              
              
              56,525
              
              
              (3,226
              )
              
              -
              
              
              -
              
              
              53,774Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (134,058
              )
              
              -
              
              
              (134,058
              )Other
                  comprehensive loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (9,773
              )
              
              (9,773
              )Balance,
                  December 31, 2004
              
              
              6,525,639
              
              
              6,526
              
              
              2,950,898
              
              
              (3,226
              )
              
              (3,245,594
              )
              
              (27,693
              )
              
              (319,089
              )Shares
                  issued for services rendered
              
              
              -
              
              
              -
              
              
              -
              
              
              3,226
              
              
              -
              
              
              -
              
              
              3,226Shares
                  issued for cash
              
              
              1,739,380
              
              
              1,739
              
              
              85,230
              
              
              -
              
              
              -
              
              
              -
              
              
              86,969Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (70,711
              )
              
              -
              
              
              (70,711
              )Other
                  comprehensive loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (6,156
              )
              
              (6,156
              )Balance,
                  December 31, 2005
              
              
              8,265,019
              
              
              8,265
              
              
              3,036,128
              
              
              -
              
              
              (3,316,305
              )
              
              (33,849
              )
              
              (305,761
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (72,398
              )
              
              -
              
              
              (72,398
              )Other
                  comprehensive loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (6,380
              )
              
              (6,380
              )Balance,
                  December 31, 2006
              
              
              8,265,019
              
              $
              8,265
              
              $
              3,036,128
              
              $
              -
              
              $
              (3,388,703
              )
              $
              (40,229
              )
              $
              (384,539
              )




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





F-8


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**1.**
            **NATURE
                OF OPERATIONS AND CONTINUANCE OF
                OPERATIONS**





American
      Petro-Hunter Inc. was incorporated in the State of Nevada on January 24, 1996
      as
      Wolf Exploration Inc. Active operations commenced on July 10, 1996. On March
      17,
      1997, Wolf Exploration Inc. changed its name to Wolf Industries Inc.; on
      November 21, 2000, changed its name to Travelport Systems Inc., and on August
      17, 2001, changed its name to American Petro-Hunter Inc. The Corporation’s
      business offices are located in Surrey, British Columbia, Canada.





These
      financial statements have been prepared in accordance with the United States
      generally accepted accounting principles applicable to a going concern, which
      contemplates the realization of assets and the satisfaction of liabilities
      and
      commitments in the normal course of business. The Company has accumulated losses
      of $3,388,703 and requires additional funds to maintain its operations.
      Management’s plan in this regard is to raise equity financing as required. The
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded assets, or the amounts of and
      classification of liabilities that might be necessary in the event the Company
      cannot continue in existence.





The
      Company is investigating the acquisition of natural resource projects with
      the
      intent of developing such projects. During the 2006 fiscal year, the Company
      investigated a number of potential acquisitions but did not proceed with an
      acquisition as all were deemed unsuitable for acquisition of the
      Company.





**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**





The
      following is a summary of significant accounting policies used in the
      preparation of these financial statements.





a)
            Principles
                in Accounting





These
      financial statements are stated in U.S. Dollars and have been prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America.




F-9





**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**(Continued)





b)
            Foreign
                Currency Translation





The
      Company’s functional currency is the Canadian dollar and its reporting currency
      is the United States dollar. Assets and liabilities denominated in foreign
      currencies are translated to United States dollars in accordance with Statement
      of Financial Accounting Standards (“SFAS”) No. 52 *“Foreign
      Currency Translation”* using
      the exchange rate in effect at the balance sheet date. Revenues and expenses
      are
      translated at rates approximating exchange rates in effect at the time of the
      transactions. Certain translation adjustments are reported as a separate
      component of stockholders’ equity, whereas gains or losses resulting from
      foreign currency transactions are included in the results of
      operations.





c)
            Income
                Taxes





The
      Company adopted the SFAS No. 109, *“Accounting
      for Income Taxes”* .
      Pursuant to SFAS No. 109, deferred income tax assets and liabilities are
      computed for differences between the financial statement carrying amounts and
      the respective tax bases. Deferred tax assets and liabilities are measured
      using
      enacted or substantially enacted tax rates expected to apply to the taxable
      income in the periods in which those differences are expected to affect taxable
      income. Valuation allowances are established when necessary to reduce deferred
      income tax assets to the amount expected to be realized.





Potential
      benefits of net operating losses have not been recognized in the financial
      statements because the Company cannot be assured it is more likely than not
      it
      will utilize the net operating losses carried forward in future years.





d)
            Use
                of Estimates





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




F-10


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**(Continued)





e)
            Stock-Based
                Compensation





The
      Company accounts for employee stock-based compensation using the intrinsic
      value
      method prescribed in Accounting Principles Board Opinion No. 25, *“Accounting
      for Stock Issued to Employees.”* Compensation cost for stock options, if any, is measured as the excess of the
      quoted market price of the Company’s stock at the date of grant over the amount
      an employee must pay to acquire the stock. SFAS No. 123, “Accounting for
      Stock-Based Compensation,” established accounting and disclosure requirements
      using a fair-value-based method of accounting for stock-based employee
      compensation plans. The Company has elected to remain on its current method
      of
      accounting as described above, and has adopted the disclosure requirements
      of
      SFAS No. 123.





The
      Company did not grant any stock options during the fiscal years 2006 and
      2005.





f)
            Impairment
                and Disposal of Long-Lived Assets





The
      carrying value of intangible assets and other long-lived assets are reviewed
      on
      a regular basis for the existence of facts or circumstances that might suggest
      impairment, in accordance with SFAS No. 144, *“Accounting
      for the Impairment or Disposal of Long-Lived Assets”* .
      For
      assets that are to be held and used, an impairment loss is recognized when
      the
      estimated undiscounted future cash flows associated with the asset or group
      of
      assets is less than their carrying value. If impairment exists, an adjustment
      is
      made to write the asset down to its fair value, and a loss is recorded as the
      difference between the carrying value and fair value.





g)
            Comprehensive
                Income (Loss)





The
      Company has adopted SFAS No. 130, *“Reporting
      Comprehensive Income”* ,
      which
      established standards for the reporting and display of comprehensive income,
      its
      components and accumulated balances in financial statements.





F-11





**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**(Continued)





h)
            Accounting
                for Derivative Instruments and Hedging
                Activities





The
      Company has adopted SFAS No. 133, *“Accounting
      for Derivative Instruments and Hedging Activities”* ,
      which
      requires companies to recognize all derivatives contracts as either assets
      or
      liabilities in the balance sheet and to measure them at fair value. If certain
      conditions are met, a derivative may be specifically designated as a hedge,
      the
      objective of which is to match the timing of gain or loss recognition on the
      hedging derivative with the recognition of (i) the changes in the fair value
      of
      the hedged asset or liability that are attributable to the hedged risk or (ii)
      the earnings effect of the hedged forecasted transaction. For a derivative
      not
      designated as a hedging instrument, the gain or loss is recognized in income
      in
      the period of change.





The
      Company has not entered into derivative contracts either to hedge existing
      risks
      or for speculative purposes. The adoption of this pronouncement does not have
      an
      impact on the Company’s financial statements.





i)
            Loss
                Per Share





The
      Company computes net income (loss) per share in accordance with SFAS No. 128, *“Earnings
      per share”* which
      requires presentation of both basic and diluted earnings per share (“EPS”) on
      the ace of the income statement. Basic EPS is computed by dividing net income
      (loss) available to common shareholders by the weighted average number of common
      shares outstanding during the year. Diluted EPS gives effect to all dilutive
      potential common shares outstanding during the period using the treasury stock
      method. In computing diluted EPS, the average stock price for the period is
      used
      in determining the number of shares assumed to be purchased from the exercise
      of
      stock options or warrants. Diluted ESP excludes all dilutive potential shares
      if
      their effect is anti-dilutive. Because the Company does not have any potentially
      dilutive securities only basic loss per share is presented in the accompanying
      financial statements.





j)
            Financial
                Instruments





The
      Company’s financial instruments consist of cash, taxes recoverable, accounts
      payable and accrued liabilities, accounts payable to related parties, note
      payable, and loan guarantee. Unless otherwise noted, it is management’s opinion
      that the Company is not exposed to significant interest, or credit risks arising
      form these financial instruments. The fair values of these financial instruments
      approximate their carrying values.




F-12


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**(Continued)





j)
            Financial
                Instruments (Continued)





The
      Company operates outside of the United States of America and is exposed to
      foreign currency risk due to the fluctuation between the currency in which
      the
      Company operates in and the United States Dollars.





k)
            Asset
                Retirement Obligations





The
      Company has adopted SFAS No. 143, “Accounting for Asset Retirement Obligations”,
      which addresses financial accounting and reporting for obligations associated
      with the retirement of tangible long-lived assets and the associated retirement
      costs. The standard applies to legal obligations associated with the retirement
      of long-lived assets that result from the acquisition, construction, development
      and normal use of the asset.





SFAS
      No.
      143 requires that the fair value of a liability for an asset retirement
      obligation be recognized in the period in which it is incurred if a reasonable
      estimate of fair value can be made. The fair value of the liability is added
      to
      the carrying amount of the associated asset and this additional carrying amount
      is depreciated over the life of the asset. The liability is accreted at the
      end
      of each period through charges to operating expense. If the obligation is
      settled for other than the carrying amount of the liability, the Company will
      recognize a gain or loss on settlement.





**3.**
            **RECENT
                ACCOUNTING PRONOUNCEMENTS**





The
      following Recent Accounting Pronouncements are disclosed as they may be
      applicable to the Company’s operations and have an impact on the Company’s
      financial statements:





In
      September 2006, FASB issued SFAS No. 157, “Fair Value Measures”. This Statement
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), expands disclosures about
      fair
      value measurements, and applies under other accounting pronouncements that
      require or permit fair value measurements. SFAS No. 157 does not require any
      new
      fair value measurements. However, the FASB anticipates that for some entities,
      the application of SFAS No. 157 will change current practice. SFAS No. 157
      is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, which for the Company would be the fiscal year beginning
      January 1, 2008. The Company is currently evaluating the impact of adopting
      SFAS
      No. 157 but does not expect that it will have a significant effect on its
      financial position or results of operations.




F-13


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**3.**
            **RECENT
                ACCOUNTING PRONOUNCEMENTS**(Continued)





In
      September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
      Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year
      Misstatements when Quantifying Misstatements in Current Year Financial
      Statements.” SAB No. 108 addresses how the effects of prior year
      uncorrected misstatements should be considered when quantifying misstatements
      in
      current year financial statements. SAB No. 108 requires companies to quantify
      misstatements using a balance sheet and income statement approach and to
      evaluate whether either approach results in quantifying an error that is
      material in light of relevant quantitative and qualitative factors. SAB
      No.
      108 is effective for interim periods ending after November 15, 2006. The
      Company is currently evaluating the impact of adopting SAB No. 108 but does
      not
      expect that it will have a significant effect on its financial position or
      results of operations.





In
      June
      2006, FASB issued Interpretation No. 48, “ *Accounting
      for Uncertainty in Income Taxes-an Interpretation of FASB Statement No.
      109* .”
This
      Interpretation clarifies the accounting for uncertainty in income taxes
      recognized in an enterprise’s financial statements in accordance with FASB No.
      109, “ *Accounting
      for Income Taxes.* ”
This
      Interpretation prescribes a recognition threshold and measurement attribute
      for
      the financial statement recognition and measurement of a tax position taken
      or
      expected to be taken in a tax return. This Interpretation also provides guidance
      on derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure and transition. This Interpretation is effective for fiscal
      years beginning after December 15, 2006. The Company has determined that the
      adoption of Statement No. 158 does not have any material impact on the Company’s
      results of operations or financial position.





In
      February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments-an amendment of FASB Statements No. 133 and 140”, to
      simplify and make more consistent the accounting for certain financial
      instruments. SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative
      Instruments and Hedging Activities”, to permit fair value remeasurement for any
      hybrid financial instrument with an embedded derivative that otherwise would
      require bifurcation, provided that the whole instrument is accounted for on
      a
      fair value basis. SFAS No. 155 amends SFAS No. 140, “Accounting for the
      Impairment or Disposal of Long-Lived Assets”, to allow a qualifying
      special-purpose entity to hold a derivative financial instrument that pertains
      to a beneficial interest other than another derivative financial instrument.
      SFAS No. 155 applies to all financial instruments acquired or issued after
      the
      beginning of an entity's first fiscal year that begins after September 15,
      2006,
      with earlier application allowed. The adoption of this statement is not expected
      to have a significant effect on the Company’s future reported financial position
      or results of operations.





F-14


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**3.**
            **RECENT
                ACCOUNTING PRONOUNCEMENTS**(Continued)





In
      November 2005, FASB issued Staff Position No. FSP (FASB Staff Position) FAS
      (Financial Accounting Standard) 115-1, “ *The
      Meeting of Other-Than-Temporary Impairment and Its Application to Certain
      Investments* ”.
      FAS
      FSP 115-1 provides accounting guidance for identifying and recognizing
      other-than-temporary impairments of debt and equity securities, as well as
      cost
      method investments in addition to disclosure requirements. FAS FSP 115-1 is
      effective for reporting periods beginning after December 15, 2005, and earlier
      application is permitted. The Company has determined that the adoption of FAS
      FSP 115-1 does not have any material impact on the Company’s results of
      operations or financial position.





In
      July
      2005, FASB issued SFAS No. 154, “Accounting Changes and Error Corrections - A
      Replacement of APB Opinion No. 20 and SFAS No. 3”. SFAS No. 154 changes the
      requirements for the accounting for and reporting of a change in accounting
      principle and applies to all voluntary changes in accounting principle. It
      also
      applies to changes required by an accounting pronouncement in the unusual
      instance that the pronouncement does not include specific transition provisions.
      SFAS No. 154 requires retrospective application to prior periods’ financial
      statements of changes in accounting principle, unless it is impracticable to
      determine either the period-specific effects or the cumulative effect of the
      change. The provisions of SFAS No. 154 are effective for accounting changes
      and
      correction of errors made in fiscal years beginning after December 15, 2005.
      The
      adoption of this statement did not have a significant effect on the Company’s
      reported financial position or results of operations.





In
      March
      2005, FASB issued Interpretation No. (“FIN”) 47, “ *Accounting
      for Conditional Asset Retirement Obligations”* .
      FIN 47
      clarifies that an entity must record a liability for a conditional asset
      retirement obligation if the fair value of the obligation can be reasonably
      estimated. This interpretation also clarifies the circumstances under which
      an
      entity would have sufficient information to reasonably estimate the fair value
      of an asset retirement obligation. This Interpretation is effective no later
      than the end of fiscal years ending after December 15, 2005. The Company has
      determined that this guidance does not have any material impact on the Company’s
      results of operations or financial position.





**4.**
            **INVESTMENT
                IN AEI TRUCOLOR INC.**





The
      Company held a 40% interest in AEI Trucolor Inc., a private British Columbia
      Corporation. During the year ended December 31, 2006, AEI Trucolor Inc. was
      dissolved by the British Columbia Registrar of Companies and as a result the
      Company wrote off the carrying value. As at December 31, 2005, the Company
      had
      recorded their interest at a carrying value of $1 to reflect significant
      impairment in its value.




F-15


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**5.**
            **DUE
                TO RELATED PARTIES**





a)
            During
                the year ended December 31, 2006, the Company accrued management
                fees of
                $10,000 (2005 - $26,268) to a
                director.





b)
            During
                the year ended December 31, 2006, the Company paid accounting fees,
                rental, and office expenses totalling $14,682 (2005 - $18,318) to
                a
                company owned by a former director and
                officer.





c)
            During
                the year ended December 31, 2006, the Company paid a total of $8,079
                (2005
                - $Nil) in consulting fees to two companies controlled by a director
                and
                to a director.





d)
            Accounts
                payable to related parties are payable to a director, a company owned
                by a
                director, and a company owned by a former director and
                officer.





All
      amounts owing to related parties are interest-free, unsecured and repayable
      on
      demand.


e)
              During the year ended December 31, 2006, the Company
                carried out a number of transactions with related parties in the
                normal
                course of business. These transactions were recorded at their exchange
                amount, which is the amount of consideration established and agreed
                to by
                the related parties.





**6.**
            **NOTE
                PAYABLE**





On
      October 18, 2006, the Company entered into a promissory note agreement with
      VCF
      Capital Corp. (“VCF”). Under the terms of the agreement, VCF loaned the Company
      $25,000, which was repayable on December 18, 2006 and which accrued interest
      at
      12% per annum, calculated monthly.





As
      at
      December 31, 2006, the note remained unpaid and accrued interest totaled $600.
      Subsequent to the Company’s year end, an amending agreement was entered into
      which revised the repayment term of the note to May 18, 2007. All other terms
      in
      the agreement remained unchanged.





F-16


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**7.**
            **LOAN
                GUARANTEE**





In
      the
      year ended December 31, 2004, the Company received a demand for payment from
      Canadian Western Bank (“CWB”) pursuant to a guarantee provided by the Company in
      favour of 714674 Alberta Ltd. (operating as Calgary Chemical) of CDN$102,000
      (US$88,530).





The
      Company divested itself of Calgary Chemical in 1998 under an agreement with
      the
      former president of the Company. The agreements covering the transaction
      included an indemnity guarantee from the purchaser of Calgary Chemical, whereby
      the purchaser would indemnify and save harmless the Company from any and all
      liability, loss, damage or expenses.





The
      Company intends to defend itself against the claim from CWB.





**8.**
            **STOCK
                OPTIONS**





The
      Company did not grant any stock options in fiscal years 2006 and
      2005.





Summary
      of stock option information for the years ended December 31, 2005 and 2006
      is as
      follows:





**SHARES**
            
            **WEIGHTED**
              **AVERAGE**
              **EXERCISE**
              **PRICE**Options
                outstanding and exercisable at December 31, 2004 and 2005
            
            
            803,000
            
            $
            0.16Expired
                during 2006
            
            
            (803,000
            )
            
            (0.16
            )Options
                outstanding and exercisable at December 31, 2006
            
            
            -
            
            $
            -





F-17


**AMERICAN
      PETRO-HUNTER INC.**


**(A
      Development Stage Company)**





**NOTES
      TO FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**





**9.**
            **INCOME
                TAXES**





Deferred
      tax assets of the Company are as follows:





**2006**
            
            2005Loss
                carryforwards
            
            **$**
            **1,038,000**
            
            $
            1,011,000Less:
                Valuation allowance
            
            
            **(1,038,000**
            **)**
            
            (1,011,000
            )Deferred
                tax asset recognized
            
            **$**
            **-**
            
            $
            -





As
      at
      December 31, 2006, the Company has net operating loss carry-forwards of
      approximately $3,054,000 (2005 - $2,975,000), which expire between 2017 and
      2026.





A
      valuation allowance has been recorded to reduce the net benefit recorded in
      the
      financial statements related to these deferred assets. The valuation allowance
      is deemed necessary as a result of the uncertainty associated with the ultimate
      realization of these deferred tax assets.





The
      provision for income taxes differs from the amount computed by applying the
      statutory federal income tax rate of 34% (2005 - 34%) to net loss for the year.
      The sources and tax effect of the differences are as follows:





**2006**
            
            2005Computed
                “expected” tax benefit
            
            **$**
            **25,000**
            
            $
            22,000Change
                in valuation allowance
            
            
            **(25,000**
            **)**
            
            (22,000
            )Income
                tax provision
            
            **$**
            **-**
            
            $
            -




**10.**
            **SUBSEQUENT
                EVENT**





Subsequent
      to the year end, the Company completed an offering of 800,000 units at a price
      of $0.05 per unit for the total proceeds of $40,000. Each unit is comprised
      of
      one common share and one share purchase warrant exercisable into an additional
      common share at a price of $0.15 for a period of 3 years from the date of
      closing.


F-18


**INDEX
      TO EXHIBITS**




**Exhibit
                Number**
            
            **Name**3.1(1)
            
            Amended
                and Restated Articles of Incorporation4.1(2)
            
            1998
                Directors and Officers Option Plan4.2(3)
            
            Amended
                1998 Key Personnel Compensation Plan4.3(4)
            
            2000
                Stock Option Plan4.4(5)
            
            2001
                Stock Option Plan10.1(6)
            
            Sale
                Agreement between Wolf Industries Inc. and Gorda Technology Holdings
                Limited10.2(6)
            
            License
                Agreement between Wolf Industries Inc. and Andrew Engineering Inc.,
                et
                al10.3(7)
            
            Asset
                Purchase Agreement between Wolf Industries Inc. and Andrew Engineering
                Inc.10.4(7)
            
            Agreement
                between Wolf Industries Inc., Andrew Engineering Inc., Andrew Rawicz
                and
                GPT Management10.5(8)
            
            Letter
                of Intent with Galloway Financial Services10.6(8)
            
            Letter
                Agreement with Dancing Star Resources10.7(8)
            
            Assignment
                of Lease with Exor Oil Company, LLC10.8
            
            Loan
                Agreement with VCF Capital Corp.10.9
            
            Form
                of Securities Purchase Agreement31.1
            
            Rule
                13(a) — 14(a)/15(d) — 14(a) Certification (Principal Executive
                Officer)31.2
            
            Rule
                13(a) — 14(a)/15(d) — 14(a) Certification (Principal Financial
                Officer)32
            
            Section
                1350 Certifications




**Footnotes
      to Exhibits Index**





(1)
            
            Incorporated
                by reference to Form 10-SB12G dated June 19, 1997.(2)
            
            Incorporated
                by reference to Form S-8 dated September 10, 1998.(3)
            
            Incorporated
                by reference to Form S-8 dated December 9, 1998.(4)
            
            Incorporated
                by reference to Form S-8 dated October 20, 2000.(5)
            
            Incorporated
                by reference to Form S-8 dated October 2, 2001.(6)
            
            Incorporated
                by reference to Form 10-QSB for the period ending March 31,
                1998.(7)
            
            Incorporated
                by reference to Form 10-QSB for the period ending June 30,
                1999.(8)
            
            Incorporated
                by reference to Form 10-QSB for the period ending September 30,
                2001.


F-19