UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM 10-K/A


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




For
the fiscal year ended December 31, 2009





 ̈
            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
registrant as specified in its charter)





Nevada
            
            98-0171619(State
      or Other Jurisdiction of
            
            (I.R.S.
      EmployerIncorporation
      or Organization)
            
            Identification
      Number)





17470
      North Pacesetter Way
              Scottsdale,
      AZ
            
            85255(Address
      of Principal Executive Offices)
            
            (Zip
      Code)





(480) 305-2052





(Registrant’s
telephone number)





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


None
            
            None(Title
      of each class)
            
            (Name
      of each exchange on which
registered)





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


Common
Stock, $0.001 par value


(Title of
class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


YES
       ̈
              
              NO
      x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


YES
       ̈
              
              NO
      x





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


YES
      x
              
              NO
       ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


YES
       ̈
              
              NO
       ̈




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K.  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer, or a small reporting company. See
definition of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer  ̈
            Accelerated
      filer  ̈Non-accelerated
      filer   ̈(do not check if
      smaller reporting company)
            Smaller
      reporting company x





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


YES
       ̈
              
              NO
      x





The
aggregate market value of the voting stock held by non-affiliates of the
Registrant as of June 30, 2008 was $ 402,600.76 (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.





As of
March 23, 2010, there were outstanding 27,060,561 shares of registrant’s common
stock, par value $0.001 per share.





DOCUMENTS
INCORPORATED BY REFERENCE





Exhibits
incorporated by reference are referred under Part IV.





EXPLANATORY
NOTE
  This Annual Report on Form 10-K/A amends the Annual
Report on Form 10-K of American Petro-Hunter, Inc., a Nevada corporation (the
“Company,” “we,” “us,” or “our”) originally filed with the SEC on March 26,
2010, to among other things, add a
discussion of production activities to Item 2 - Properties, to make certain
changes to our financial statements, to add a discussion of our oil and gas
properties to Note 2 to the financial statements and to revise Note 4 to the
financial statements - Investments in Mineral
Properties.











TABLE
OF CONTENTS





PagePART
      IITEM
      1 — BUSINESS
              3ITEM
      1A — RISK FACTORS
              5ITEM
      1B — UNRESOLVED STAFF COMMENTS
              11ITEM
      2 — PROPERTIES
              11ITEM
      3 — LEGAL PROCEEDINGS
              12ITEM
      4 — RESERVED
              12PART
      IIITEM
      5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
      ISSUER PURCHASES OF EQUITY SECURITIES
              12ITEM
      6 — SELECTED FINANCIAL DATA
              13ITEM
      7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN
      OF OPERATIONS
              13ITEM
      7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
              17ITEM
      8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
              17ITEM
      9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE
              17ITEM
      9A(T) — CONTROLS AND PROCEDURES
              17ITEM
      9B — OTHER INFORMATION
              17PART
      IIIITEM
      10 — DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE
    GOVERNANCE
              17ITEM
      11 — EXECUTIVE COMPENSATION
              19ITEM
      12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
      RELATED STOCKHOLDER MATTERS
              20ITEM
      13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
              21ITEM
      14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES
              22PART
      IVITEM
      15 — EXHIBITS, FINANCIAL STATEMENT SCHEDULES
              22SIGNATURES
              24INDEX
      TO FINANCIAL STATEMENTS
              F-1INDEX
      TO EXHIBITS
              25EXHIBIT
      31.1EXHIBIT
      31.2EXHIBIT
      32




2





PART
I





ITEM 1 — BUSINESS





Background





We
are





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 changed our focus
to the exploration and eventual exploitation of oil and gas.





On April
6, 2009, we entered into a Participation Agreement with Archer Exploration, Inc.
(“Archer”) to participate in the drilling for natural gas on a prospect located
in Stanislaus County, California. Pursuant to the agreement, we agreed to pay to
Archer $200,000 for all costs in connection with the acquisition and operation
of the prospect until completion of an initial test well, which includes
historic engineering and geological development of prospect as well as costs for
a seismic program required to finalize and define the initial well location, in
exchange for a 25% working interest in the prospect. The assignment of the 25%
interest will only be made upon the successful completion of the initial test
well. The seismic shoot began on August 10, 2009. The results of the seismic
indicate the need to reprocess the data and potentially add additional seismic
lines to identify the test well locations.





On May 4,
2009, we entered into a binding Letter of Intent with S&W Oil & Gas, LLC
(“S&W”) to acquire a 25% working interest and 81.5% net revenue interest on
all commercial production in the 750-acre Poston Prospect #1 Lutters oilfield in
Southwest Trego County, Kansas, for a purchase price of $64,536 which we have
paid. Management believes this prospect contains a potential multi well program
and that the available transportation and support infrastructure will support a
requisite storage tank battery at the location. On May 13, 2009, drilling began
on the prospect with a planned total depth of 4,500 feet, and on May 19, 2009,
we announced the well had reached a total depth of 4,400 feet encountering both
oil and gas over a 46 foot interval. The oil was excellent quality 35 degree
light oil and tests resulted in 65% oil cut with 10% gas and mud with no water.
The #1 Lutters Well was completed on June 16, 2009. The Company then made a
casing election set pipe following well logging. Oil production on the #1
Lutters Well began on June 18, 2009 and on July 9, 2009, we announced that 770
barrels of oil had been shipped from the #1 Lutters Well for the 11 days of
production in June 2009. As of August 2009, we had begun receiving revenue from
this oilfield and have experienced average production of approximately 70 to 75
barrels per day since August 2009. The next well planned for the Poston Project
was designated as the #2 Lutters Well, which was drilled to a total depth of
4,320 feet where we encountered good oil shows during drilling and in initial
drill stem tests from a target zone. After further drilling, we encountered good
oil shows but we did not complete drilling of the well for commercial production
because of the oil’s permeability and porosity. However, management believes the
project itself remains viable as there are additional offset opportunities for
this project.





On June
4, 2009, we entered into a Participation Agreement with Archer to participate in
the drilling for natural gas on a 668-acre prospect known as the Victory
Prospect located in Sacramento County, California. The Victory Prospect is
located approximately 20 miles south of the city of Sacramento and is within the
“Eastside Stratigraphic Trend” along the southern edge of the Sacramento Valley
which is within a larger region that contains some of the most prolific gas
reservoirs in the Sacramento Valley, accounting for over 400 BCF of gas produced
to date. The Victory Prospect is very close to an existing pipeline offering a
convenient, low cost and rapid tie-in to enable gas sales. Pursuant to the
agreement, we paid Archer $142,000 for costs in connection with the acquisition
and operation of the prospect until completion of an initial test well in
exchange for a 25% working interest in the prospect. These costs included the
prospect fee, re-payment of pro-rata cost for the already-completed and
interpreted 3D seismic shoot, as well as geological and engineering costs. The
assignment of the 25% interest will only be made upon the successful completion
of the initial test well. In July 2009, a seismic shoot was completed on the
prospect. Based on the favorable results of the survey, we began drilling the
Archer-Myers #1 in this well location, which was drilled to a total depth of
7,950 feet. In connection with drilling, we paid $158,150 for our working
interest share of the drilling costs. The target sands were encountered at 7,713
and contained gas shows. However, after drilling, it was determined the gas
volumes were insufficient to warrant completion of the well as a viable
producer.





3





On June
11, 2009, we entered into a binding Letter of Intent with S&W to participate
in the drilling for oil and natural gas in the 1,760-acre Brinkman Prospect
located in Clark County, Kansas, approximately 20 miles south of Dodge City The
project is proximal to historic oil production primarily from Marmaton Limestone
with secondary objectives in the Morrow Sand. Of significance, over 49,000
barrels has been produced from a seismic anomaly to the northeast of the chosen
drilling location as well as Langdon Sands that has produced cumulative gas
production in excess of 1 BCF. We paid S&W a total of $22,833.28 for land
acquisition, leasing and seismic costs for a 25% working interest in the
prospect. In addition, we agreed to pay $56,466.66 to cover dry-hole cased
drilling costs associated with the first exploratory oil well and 25% of all
further going forward costs such as completion and related infrastructure costs.
If a successful commercial well is established, we will receive an 81.5% net
revenue interest in the prospect. On July 28, 2009, drilling on the Brinkman
Prospect commenced and by August 14, 2009, drilling was completed. Several oil
and gas shows in the well were tested and deemed not commercially viable and was
plugged and abandoned. We will work with the engineering team to determine if
the prospect has any future potential for commercial hydrocarbon
production.





On June
19, 2009, we entered into a binding Letter of Intent with S&W to participate
in the drilling for oil and natural gas in the Rooney Project located in
southwestern Ford County, Kansas. The Rooney Project is located in southwestern
Ford County, Kansas 20 miles due south of Dodge City. The project consists of 8
sections totaling 5,120 acres and the large contiguous acreage block represents
the first land position we acquired that management considers to be a “core”
land holding that could, with future successful development, provide the basis
for the requisite production necessary to meet our intermediate and long term
goals. The Rooney Project is directly adjacent to the north edge of existing
Morrow Sand oil and gas production. An analog well designated as 3-30-25W in the
Morrow pool has cumulatively produced 344,448 barrels of oil and 933,622 MCF
gas. There are multiple wells within 2 miles of our acreage that have produced
in the 35,000 to 40,000 barrel range from discrete sand channels. It is these
sand channels that we were attempting to identify through the completion of a 3D
seismic shoot across the entire acreage. Based on 3D seismic shoot we have
developed a minimum of 5 target locations for new wells. Under the terms of the
agreement with S&W, we paid S&W a total of $113,333.12 for land
acquisition and leasing costs and agreed to pay up to $216,666.64 for the 3D
seismic shoot costs that include processing and interpretation as well as 50% of
all further going forward costs such as completion and related infrastructure
costs. If a successful commercial well is established, S&W will assign 50%
of the working interest and 81.5% net revenue interest in the prospect to us.
Drilling at the #24-1 Double H Oil Well site in the Rooney Project commenced on
November 12, 2009, and we successfully discovered both oil and gas. On December
9th we announced the preliminary findings from the initial drill stem tests at
the #24-1 Double H Oil Well. A 12 foot pay zone was encountered that produced
excellent quality 44 degree oil in the tubing up to the surface from 5,400 feet
of depth with fluid test results returning 99% oil cut. Subsequent to our fiscal
year ended December 31, 2010, on January 4, 2010, the #24-1 Double H well at the
Rooney Prospect commenced oil production and we have entered into an oil
purchase contract with the National Co-op Refinery Association of McPherson
Kansas to purchase all production at the Rooney lease at a premium to Kansas
common oil prices of $3.85 per barrel above the daily price. This price premium
reflects the quality of the 44 degree oil being produced at Rooney. In February
2010, we began drilling a second well at the Rooney Project, the Shelor 23-2
Well, which is planned for a total depth of 4,500 feet. We plan to drill 10
wells in the Rooney Prospect for the fiscal year 2010 which represents an
investment of approximately $2.5 million.





On August
25, 2009, we entered into a binding Letter of Intent with S&W to participate
in the drilling for oil in the Colby Prospect located in Thomas County, Kansas.
The 500 acre block has a well defined 3D seismic anomaly that includes 7
potential zones to be tested. We agreed to pay S&W cash in an amount to be
determined for dry-hole cased drilling costs as well as 25% of all further going
forward costs such as completion and related infrastructure costs. If a
successful commercial well is established, S&W will assign 25% of the
working interest and 81.5% net revenue interest in the Prospect to us. On
October 20, 2009, we began drilling operations at the #1 Keck Well, and on
November 4, 2009, drilling operations at this well ended. While the well
successfully encountered oil and gas in the target horizons, there were no
adequate reservoirs in order to complete the well as a commercial producer.
Management believes that Colby remains a viable prospect, and further work and
analysis will be required in order to fully develop the Colby
lease.





On
September 8, 2009, we entered into a Participation Agreement with Archer to
participate in the drilling for natural gas on the Wurster Gas Project, a
prospect located in Sacramento County, California, 20 miles south of the city of
Sacramento. The Wurster Prospect target lies due east of the Victory Gas Project
in which the Company also has a 25% working interest. This project targets
Winters sandstones which have, in the Sacramento Valley, have accounted for over
400 BCF of gas production to-date along the Upper Cretaceous Winters “Eastside
Stratigraphic Trend.” Pursuant to the Participation Agreement, we have paid
Archer $25,000 for costs in connection with the acquisition and operation of the
prospect up to the drilling of an initial test well in exchange for a 25%
working interest in the prospect. Further, we are responsible for and have paid
$125,000 for dry hole costs. We are also responsible for 25% of all expenditures
in connection with the development and operation of the prospect for drilling.
We may elect not to participate in additional expenditures in connection with
the prospect at which time we will forfeit any interests we have in the
prospect. On October 8, 2009, we began drilling operations at the Wurster Gas
Prospect – Archer-Tsakopoulos #2 well, which was planned as a 7,800 foot test
for gas indicated by 3D seismic tests. We increased our working interest in the
Archer-Tsakopoulos #2 well up to 36% by purchasing an additional 11% through the
payment of a pro-rata share for the seismic reprocessing and drilling costs in
the amount of $66,000. On November 4, 2009, drilling at this well ended. While
the well successfully encountered oil and gas in the target horizons, there were
no adequate reservoirs in order to complete the well as a commercial
producer.





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 2009 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.





Major
Customers





For the
year ended December 31, 2009, sales from our Lutters #1 Well to National
Cooperative Refinery Association (NCRA) accounted for 100% of our oil and gas
production revenues.





Employees





As of
December 31, 2009, we had no employees. We currently utilize temporary contract
labor throughout the year to address business and administrative
needs.





Environmental
Regulation





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. Various permits from governmental bodies are required for drilling
operations to be conducted. Numerous governmental departments issue rules and
regulations to implement and enforce such laws that are often complex and costly
to comply with and that carry substantial administrative, civil and possibly
criminal penalties for failure to comply. Under these laws and regulations, we
may be liable for remediation or removal costs, damages and other costs
associated with releases of hazardous materials (including oil) into the
environment, and such liability may be imposed on us even if the acts that
resulted in the releases were in compliance with all applicable laws at the time
such acts were performed.





The
Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”)
contains provisions requiring the remediation of releases of hazardous
substances into the environment and imposes liability, without regard to fault
or the legality of the original conduct, on certain classes of persons including
owners and operators of contaminated sites where the release occurred and those
companies who transport, dispose of, or arrange for disposal of hazardous
substances released at the sites. Under CERCLA, such persons may be subject to
joint and several liability for the costs of cleaning up the hazardous
substances that have been released into the environment, for damages to natural
resources and for the costs of certain health studies. Third parties may also
file claims for personal injury and property damage allegedly caused by the
release of hazardous substances. Although we handle hazardous substances in the
ordinary course of business, we are not aware of any hazardous substance
contamination for which we may be liable.





Management
believes that we are in compliance in all material respects with the applicable
environmental laws and regulations to which we are subject. We do not anticipate
that compliance with existing environmental laws and regulations will have a
material effect upon our capital expenditures, earnings or competitive position.
To date, we have not been required to spend any material amount on compliance
with environmental regulations. However, changes in the environmental laws and
regulations, or claims for damages to persons, property, natural resources or
the environment, could result in substantial costs and liabilities, and thus
there can be no assurance that we will not incur significant environmental
compliance costs in the future.





ITEM 1A — RISK FACTORS





With the exception of historical
facts stated herein, the matters discussed in this report on Form
10-K 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.





5





Risks
Relating to Our Business





The
duration or severity of the current global economic downturn and disruptions in
the financial markets, and their impact on our Company, are
uncertain.





The oil
and gas industry generally is highly cyclical, with prices subject to worldwide
market forces of supply and demand and other influences. The recent global
economic downturn, coupled with the global financial and credit market
disruptions, have had a historic negative impact on the oil and gas industry.
These events have contributed to an unprecedented decline in crude oil and
natural gas prices, weak end markets, a sharp drop in demand, increased global
inventories, and higher costs of borrowing and/or diminished credit
availability. While we believe that the long-term prospects for oil and gas
remain bright, we are unable to predict the duration or severity of the current
global economic and financial crisis. There can be no assurance that any actions
we may take in response to further deterioration in economic and financial
conditions will be sufficient. A protracted continuation or worsening of the
global economic downturn or disruptions in the financial markets could have a
material adverse effect on our business, financial condition or results of
operations.





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





We have
incurred net losses and other comprehensive losses of $5,284,172 for the period
from January 24, 1996 (inception) to December 31, 2009. 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.





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 26, 2010, our independent auditors stated that our financial
statements for the fiscal year ended December 31, 2009 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 significantly depends on
successful acquisition and subsequent exploration activities. 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.





6





We
are subject to new corporate governance and internal control reporting
requirements, and our costs related to compliance with, or our failure to comply
with existing and future requirements, could adversely affect our
business.




We may face new corporate governance
requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and
regulations subsequently adopted by the SEC and the Public Company Accounting
Oversight Board. These laws, rules and regulations continue to evolve and may
become increasingly stringent in the future.  We are required to
evaluate our internal control over financial reporting under Section 404 of the
Sarbanes-Oxley Act of 2002 (“Section 404 “).  We are a non-accelerated
filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended.  Section 404 requires us to include an internal control
report with our Annual Report on Form 10-K.  That report must include
management’s assessment of the effectiveness of our internal control over
financial reporting as of the end of the fiscal year.  This report
must also include disclosure of any material weaknesses in internal control over
financial reporting that we have identified.  Failure to comply, or
any adverse results from such evaluation could result in a loss of investor
confidence in our financial reports and have an adverse effect on the trading
price of our securities.We strive to continuously evaluate and
improve our control structure to help ensure that we comply with Section 404 of
the Sarbanes-Oxley Act.  The financial cost of compliance with these
laws, rules and regulations is expected to remain substantial.  We
cannot assure you that we will be able to fully comply with these laws, rules
and regulations that address corporate governance, internal control reporting
and similar matters.  Failure to comply with these laws, rules and
regulations could materially adversely affect our reputation, financial
condition and the value of our securities.


Risks
Related to our Oil and Gas Exploration





Our
future operating revenue is dependent upon the performance of our
properties.





Our
future operating revenue depends upon our ability to profitably operate our
existing properties by drilling and completing wells that produce commercial
quantities of oil and gas and our ability to expand our operations through the
successful implementation of our plans to explore, acquire and develop
additional properties. The successful development of oil and gas properties
requires an assessment of potential recoverable reserves, future oil and gas
prices, operating costs, potential environmental and other liabilities and other
factors. Such assessments are necessarily inexact. No assurance can be given
that we can produce sufficient revenue to operate our existing properties or
acquire additional oil and gas producing properties and leases. We may not
discover or successfully produce any recoverable reserves in the future, or we
may not be able to make a profit from the reserves that we may discover. In the
event that we are unable to produce sufficient operating revenue to fund our
future operations, we will be forced to seek additional, third-party funding, if
such funding can be obtained. Such options would possibly include debt
financing, sale of equity interests in our Company, joint venture arrangements,
or the sale of oil and gas interests. If we are unable to secure such financing
on a timely basis, we could be required to delay or scale back our operations.
If such unavailability of funds continued for an extended period of time, this
could result in the termination of our operations and the loss of an investor’s
entire investment.





We
own rights to oil properties that have not yet been developed.





We own
rights to oil and gas properties that have limited or no development. There are
no guarantees that our properties will be developed profitably or that the
potential oil and gas resources on the property will produce as expected if they
are developed.





Title
to the properties in which we have an interest may be impaired by title
defects.





Our
general policy is to obtain title opinions on significant properties that we
drill or acquire. However, there is no assurance that we will not suffer a
monetary loss from title defects or title failure. Additionally, undeveloped
acreage has greater risk of title defects than developed acreage. Generally,
under the terms of the operating agreements affecting our properties, any
monetary loss is to be borne by all parties to any such agreement in proportion
to their interests in such property. If there are any title defects or defects
in assignment of leasehold rights in properties in which we hold an interest, we
will suffer a financial loss.





We
are subject to risks arising from the failure to fully identify potential
problems related to acquired reserves or to properly estimate those
reserves.





Although
we perform a review of the acquired properties that we believe is consistent
with industry practices, such reviews are inherently incomplete. It generally is
not feasible to review in depth every individual property involved in each
acquisition. Ordinarily, we will focus our review efforts on the higher-value
properties and will sample the remainder, and depend on the representations of
previous owners. However, even a detailed review of records and properties may
not necessarily reveal existing or potential problems, nor will it permit a
buyer to become sufficiently familiar with the properties to assess fully their
deficiencies and potential. Inspections may not always be performed on every
well, and environmental problems, such as ground water contamination, are not
necessarily observable even when an inspection is undertaken. Even when problems
are identified, we often assume certain environmental and other risks and
liabilities in connection with acquired properties. There are numerous
uncertainties inherent in estimating quantities of proved oil reserves and
actual future production rates and associated costs with respect to acquired
properties, and actual results may vary substantially from those assumed in the
estimates.





7





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.





Even
if we are able to discover and produce oil or natural gas, 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.





Drilling
for oil and gas involves inherent risks that may adversely affect our future
results of operations and financial condition.





Drilling
for oil and gas involves numerous risks, including the risk that we will not
encounter commercially productive oil and gas reservoirs. The wells we drill or
participate in may not be productive and we may not recover all or any portion
of our investment in those wells. The seismic data and other technologies we use
do not allow us to know conclusively prior to drilling a well that crude or
natural gas is present or may be produced economically. The costs of drilling,
completing and operating wells are often uncertain, and drilling operations may
be curtailed, delayed or canceled as a result of a variety of factors including,
but not limited to:





•
            unexpected
      drilling conditions;




•
            pressure
      or irregularities in formations;





•
            equipment
      failures or accidents;





•
            mechanical
      difficulties, such as lost or stuck oil field drilling and service
      tools;





•
            fires,
      explosions, blowouts and surface
cratering;





•
            uncontrollable
      flows of oil and formation water;





•
            environmental
      hazards, such as oil spills, pipeline ruptures and discharges of toxic
      gases;





•
            other
      adverse weather conditions; and




•
            increase
      in the cost of, or shortages or delays in the availability of, drilling
      rigs and equipment.





Certain
future drilling activities may not be successful and, if unsuccessful, this
failure could have an adverse effect on our future results of operations and
financial condition. While all drilling, whether developmental or exploratory,
involves these risks, exploratory drilling involves greater risks of dry holes
or failure to find commercial quantities of hydrocarbons.





8





Our
oil and gas operations involve substantial costs and are subject to various
economic risks.





Our oil
and gas operations are subject to the economic risks typically associated with
exploration, development and production activities, including the necessity of
significant expenditures to locate and acquire producing properties and to drill
exploratory wells. The cost and length of time necessary to produce any reserves
may be such that it will not be economically viable. In conducting exploration
and development activities, the presence of unanticipated pressure or
irregularities in formations, miscalculations or accidents may cause our
exploration, development and production activities to be unsuccessful. In
addition, the cost and timing of drilling, completing and operating wells is
often uncertain. We also face the risk that the oil and gas reserves may be less
than anticipated, that we will not have sufficient funds to successfully drill
on the property, that we will not be able to market the oil and gas due to a
lack of a market and that fluctuations in the prices of oil will make
development of those leases uneconomical. This could result in a total loss of
our investment.





A
substantial or extended decline in oil and gas prices may adversely affect our
business, financial condition, cash flow, liquidity or results of operations as
well as our ability to meet our capital expenditure obligations and financial
commitments to implement our business plan.





Any
revenues, cash flow, profitability and future rate of growth we achieve will be
greatly dependent upon prevailing prices for oil and gas. Our ability to
maintain or increase our borrowing capacity and to obtain additional capital on
attractive terms is also expected to be dependent on oil and gas prices.
Historically, oil and gas prices and markets have been volatile and are likely
to continue to be volatile in the future. Prices for oil and gas are subject to
potentially wide fluctuations in response to relatively minor changes in supply
of and demand for oil and gas, market uncertainty, and a variety of additional
factors beyond our control. Those factors include:





•
            the
      domestic and foreign supply of oil and natural
  gas;





•
            the
      ability of members of the Organization of Petroleum Exporting Countries
      and other producing countries to agree upon and maintain oil prices and
      production levels;





•
            political
      instability, armed conflict or terrorist attacks, whether or not in oil or
      natural gas producing regions;





•
            the
      level of consumer product demand;





•
            the
      growth of consumer product demand in emerging markets, such as China and
      India;





•
            weather
      conditions, including hurricanes and other natural occurrences that affect
      the supply and/or demand of oil and natural
gas;





•
            domestic
      and foreign governmental regulations and other
  actions;





•
            the
      price and availability of alternative
fuels;





•
            the
      price of foreign imports;





•
            the
      availability of liquid natural gas imports;
and




•
            worldwide
      economic conditions.





These
external factors and the volatile nature of the energy markets make it difficult
to estimate future prices of oil and natural gas. Lower oil and natural gas
prices may not only decrease our revenues on a per unit basis, but may also
reduce the amount of oil we can produce economically, if any. A substantial or
extended decline in oil and natural gas prices may materially affect our future
business, financial condition, results of operations, liquidity and borrowing
capacity. While our revenues may increase if prevailing oil and gas prices
increase significantly, exploration and production costs and acquisition costs
for additional properties and reserves may also increase.





9




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




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 governmental bodies are required for
drilling operations to be conducted and 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.




The
unavailability or high cost of drilling rigs, equipment, supplies, personnel and
oil field services could adversely affect our ability to execute our exploration
and development plans on a timely basis and within our budget.




Our
industry is cyclical and, from time to time, there is a shortage of drilling
rigs, equipment, supplies or qualified personnel.  During these periods,
the costs and delivery times of rigs, equipment and supplies are substantially
greater.  In addition, the demand for, and wage rates of, qualified
drilling rig crews rise as the number of active rigs in service increases. 
As a result of increasing levels of exploration and production in response to
strong prices of oil and natural gas, the demand for oilfield services and
equipment has risen, and the costs of these services and equipment are
increasing.  If the unavailability or high cost of drilling rigs,
equipment, supplies or qualified personnel were particularly severe in areas
where we operate, we could be materially and adversely affected.




We
depend on the skill, ability and decisions of third party operators to a
significant extent.




The
success of the drilling, development and production of the oil properties in
which we have or expect to have a working interest is substantially dependent
upon the decisions of such third-party operators and their diligence to comply
with various laws, rules and regulations affecting such properties.  The
failure of any third-party operator to make decisions, perform their services,
discharge their obligations, deal with regulatory agencies, and comply with
laws, rules and regulations, including environmental laws and regulations in a
proper manner with respect to properties in which we have an interest could
result in material adverse consequences to our interest in such properties,
including substantial penalties and compliance costs.  Such adverse
consequences could result in substantial liabilities to us or reduce the value
of our properties, which could negatively affect our results of
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 future 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 will be 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 current operations comply, in all material
respects, with all applicable environmental regulations.





10





Risks
Related to our Common Stock




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.




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
markets.




Although
our common stock is quoted on the OTCBB 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.  Furthermore, our stock price may be impacted by factors that are
unrelated or disproportionate to our operating performance.  These market
fluctuations, as well as general economic, political and market conditions, such
as recessions, interest rates or international currency fluctuations may
adversely affect the market price and liquidity of our common
stock.




ITEM 1B — UNRESOLVED STAFF
COMMENTS




None.




ITEM 2 —
PROPERTIES




Facilities




Our
corporate headquarters are located at 17470 North Pacesetter Way, Scottsdale,
AZ 85255.




Reserves
  As of the end of the 2009 fiscal year, the
Company has no proved reserves.
  Production, Production Prices and
Production Costs
  Sales of oil during the 2009 fiscal year
amounted to $77,728 for 1,242 barrels at an average price of $62.58 per barrel
and at an average production cost per barrel of
$10.54.   Production costs are expected to increase as production
increases.  Prior to the 2009 fiscal year we had not had any oil
production.  We have not had any gas production.  All of our
oil production has occurred in the United
States.
  Past and Present Development
Activities
  During the 2009 fiscal year we drilled
seven exploratory wells in the United States, of which two were net productive
and five did not contain sufficient volumes to warrant completion for commercial
production.  We did not drill any development wells during the 2009
fiscal year.  As of the end of the 2009 fiscal year, no additional
wells were being drilled.  We undertook no exploratory or development
activity in 2008 or 2007.





11


Delivery
Commitments
  As of the end of the 2009 fiscal year, we
had no delivery commitments for fixed and determinable quantities of oil or
natural gas.  On January 4, 2010, we entered into an oil purchase
contract with the National Co-op Refinery Association of McPherson Kansas to
purchase all production at the Rooney lease at a premium to Kansas common oil
prices of $3.85 per barrel above the daily price.  This price premium
reflects the quality of the 44 degree oil being produced at
Rooney.
  Properties, Wells, Operations, Acreage and
Current Activities
  The following table sets forth our
interest in wells and acreage as of August 13,
2010.





Number of Productive Wells
                    
                    
                    Developed Acreage(3)
                    
                    
                    Undeveloped AcreageGross (1)
                    
                    
                    Net (2)
                    
                    
                    Gross (1)
                    
                    
                    Net (2)
                    
                    
                    Gross (1)
                    
                    
                    Net (2)Oil
                    
                    
                    4
                    
                    
                    
                    1.015
                    
                    
                    
                    440
                    
                    
                    
                    230
                    
                    
                    
                    10,133
                    
                    
                    
                    3,383Gas
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    1,040
                    
                    
                    
                    260


(1)
A gross well or acre is a well or acre in which we own an interest.


(2)
A net well or acre is deemed to exist when the sum of fractional ownership
interests in wells or acres equals 1.


(3)
Developed acreage is acreage assignable to productive wells.




As of August 13, 2010, our acreage subject to leases has
the minimum remaining lease terms set forth in the following
table.




Property
                
                Gross
                  Acreage
                
                
                Net
                  Acreage
                
                Minimum Remaining Lease TermsTrego
      County, KS (Poston Prospect)
                
                
                750
                
                
                
                152.8
                
                Held
      by productionClark
      County, KS (Brinkman Prospect)
                
                
                1,760
                
                
                
                358.6
                
                1
      yearFord
      County, KS (Rooney Prospect)
                
                
                7,040
                
                
                
                2,868.8
                
                3
      monthsThomas
      County, KS (Colby Prospect)
                
                
                500
                
                
                
                101.9
                
                1
      yearSacramento
      County, CA (Wurster Gas Project)
                
                
                1,040
                
                
                
                260
                
                6
      monthsPayne
      County, OK (Bay Prospect)
                
                
                523
                
                
                
                131
                
                2
      years




All
of our oil and gas interests and acreage are located in, and all of our drilling
and other development activities have occurred in, the United
States.





ITEM 3 — LEGAL
PROCEEDINGS




None.




ITEM 4 — RESERVED




Not
applicable.





PART
II




ITEM 5 — MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES




Market
Information




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




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 2009
                  
                  High
                  
                  
                  LowFirst
      Quarter (March 31, 2009)
                  
                  $
                  .40
                  
                  
                  $
                  .02Second
      Quarter (June 30, 2009)
                  
                  $
                  .59
                  
                  
                  $
                  .25Third
      Quarter (September 30, 2009)
                  
                  $
                  .55
                  
                  
                  $
                  .35Fourth
      Quarter (December 31, 2009)
                  
                  $
                  .68
                  
                  
                  $
                  .22




Fiscal 2008
                  
                  High
                  
                  
                  LowFirst
      Quarter (March 31, 2008)
                  
                  $
                  .15
                  
                  
                  $
                  .06Second
      Quarter (June 30, 2008)
                  
                  $
                  .06
                  
                  
                  $
                  .04Third
      Quarter (September 30, 2008)
                  
                  $
                  .07
                  
                  
                  $
                  .03Fourth
      Quarter (December 31, 2008)
                  
                  $
                  .08
                  
                  
                  $
                  .03





12





The
closing price for our common stock on December 31, 2009 was $0.58.




Stockholders




As of
March 23, 2010, there were 27,060,561 shares of common stock issued and
outstanding held by 79 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.




ITEM 6 — SELECTED FINANCIAL
DATA




Not
applicable.




ITEM 7 — MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS




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.




Background




We are an
oil and natural gas exploration and production (E&P) Company with current
projects in Kansas and California.  As of December 31, 2009, we had no
producing wells in California and one producing wells in Kansas, and rights for
the exploration and production of oil and gas on more than an aggregate
of  11,100 acres in those states.  Typically, our interest in a
well arises from a contract with another entity pursuant to which provide
financial support for certain costs incurred in the exploration and development
of a project, which may include land costs, seismic or other exploration, and
test drilling.  In exchange, we typically receive an interest in the
proceeds from the project’s production.




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 changed our focus to the exploration and eventual
exploitation of oil and gas.




On April
6, 2009, we entered into a Participation Agreement with Archer Exploration, Inc.
(“Archer”) to participate in the drilling for natural gas on a prospect located
in Stanislaus County, California.  Pursuant to the agreement, we agreed to
pay to Archer $200,000 for all costs in connection with the acquisition and
operation of the prospect until completion of an initial test well in exchange
for a 25% working interest in the prospect.  The assignment of the 25%
interest will only be made upon the successful completion of the initial test
well.  The seismic shoot began on August 10, 2009.  The results of the
seismic indicate the need to reprocess the data and potentially add additional
seismic lines to identify the test well locations.





13





On May 4,
2009, we entered into a binding Letter of Intent with S&W Oil & Gas, LLC
(“S&W”) to acquire a 25% working interest and 81.5% net revenue interest in
the 750-acre Poston Prospect #1 Lutters oilfield in Southwest Trego County,
Kansas, for a purchase price of $64,536.  On May 13, 2009, drilling began
on the prospect and the #1 Lutters Well was completed on June 16, 2009. 
Oil production on the #1 Lutters Well began on June 18, 2009 and as of August
2009, we have begun receiving revenue from this oilfield with average production
of approximately 70 to 75 barrels per day since August 2009.  The next well
planned for the Poston Project was designated as the #2 Lutters Well. 
Preliminary drilling at #2 Lutters Well tested positive for oil.  After
further drilling, we encountered good oil shows but we did not complete drilling
of the well for commercial production because of the oil’s permeability and
porosity.  However, the project itself remains viable as there are
additional offset opportunities for this project.




On June
4, 2009, we entered into a Participation Agreement with Archer to participate in
the drilling for natural gas on a 668-acre prospect located in Sacramento
County, California.  Pursuant to the agreement, we agreed to pay to Archer
$142,000 for all costs in connection with the acquisition and operation of the
prospect until completion of an initial test well in exchange for a 25% working
interest in the prospect.  The assignment of the 25% interest will only be
made upon the successful completion of the initial test well.  In July
2009, a seismic shoot was completed on the prospect.  Based on the
favorable results of the survey, we began drilling in this well location. 
However, after drilling, although we encountered good gas shows, the gas volumes
were insufficient to warrant completion of the well as a viable
producer.




On June
11, 2009, we entered into a binding Letter of Intent with S&W to participate
in the drilling for oil and natural gas in the 1,760-acre Brinkman Prospect
located in Clark County, Kansas.  We agreed to pay S&W a total of
$22,833.28 for land acquisition, leasing and seismic costs for a 25% working
interest in the prospect.  In addition, we agreed to pay $56,466.66 to
cover dry-hole cased drilling costs associated with the first exploratory oil
well and 25% of all further going forward costs such as completion and related
infrastructure costs.  If a successful commercial well is established, the
Company will receive an 81.5% net revenue interest in the prospect.  On
July 28, 2009, drilling on the Brinkman Prospect commenced and by August 14,
2009, drilling was completed.  Several oil and gas shows in the well were
tested and deemed not commercially viable.  We will work with the
engineering team to determine if the prospect has any future potential for
commercial hydrocarbon production.




On June
19, 2009, we entered into a binding Letter of Intent with S&W to participate
in the drilling for oil and natural gas in the Rooney Prospect located in
southwestern Ford County, Kansas.  The prospect consists of 8 sections
totaling 5,120 acres.  We agreed to pay S&W a total of $113,333.12 for
land acquisition and leasing costs and up to $216,666.64 for the 3D seismic
shoot costs that include processing and interpretation as well as 50% of all
further going forward costs such as completion and related infrastructure
costs.  If a successful commercial well is established, S&W will assign
50% of the working interest and 81.5% net revenue interest in the prospect to
us. Drilling at the #24-1 Double H Oil Well site commenced on November 12, 2009
and we successfully discovered both oil and gas.   Subsequent to our
fiscal year ended December 31, 2009, on January 4, 2010, the #24-1 Double H well
at the Rooney Prospect commenced oil production, and we have entered into an oil
purchase contract with the National Co-op Refinery Association of McPherson
Kansas to purchase all production at the Rooney lease at a premium to Kansas
common oil prices of $3.85 per barrel above the daily price.  This price
premium reflects the quality of the 44 degree oil being produced at
Rooney.  In February 2010, we began drilling a second well, the Shelor 23-2
Well.  We plan to drill one well each month in the Rooney Prospect for the
fiscal year 2010.




On August
25, 2009, we entered into a binding Letter of Intent with S&W to participate
in the drilling for oil in the Colby Prospect located in Thomas County,
Kansas.  We agreed to pay S&W cash in an amount to be determined for
dry-hole cased drilling costs as well as 25% of all further going forward costs
such as completion and related infrastructure costs.  If a successful
commercial well is established, S&W will assign 25% of the working interest
and 81.5% net revenue interest in the Prospect to us.  On October 20, 2009,
we began drilling operations at the #1 Keck Well with a planned well depth of
5,000 feet, and on November 4, 2009, drilling operations at this well
ended.  While the well successfully encountered oil and gas in the target
horizons, there were no adequate reservoirs in order to complete the well as a
commercial producer.  The Colby remains a viable prospect, and further work
and analysis will be required in order to fully develop the Colby
lease.




On
September 8, 2009, we entered into a Participation Agreement with Archer to
participate in the drilling for natural gas on a prospect located in Sacramento
County, California.  Pursuant to the Agreement, we agreed to pay to Archer
$25,000 for all costs in connection with the acquisition and operation of the
prospect up to the drilling of an initial test well in exchange for a 25%
working interest in the prospect.  Further, we are responsible for its
proportionate share of the dry hole costs, which is $125,000.  We are also
responsible for 25% of all expenditures in connection with the development and
operation of the prospect for drilling.  We may elect not to participate in
additional expenditures in connection with the prospect at which time we will
forfeit any interests it has in the prospect.  On October 8, 2009, we began
drilling operations at the Wurster Gas Prospect – Archer-Tsakopoulos #2
well.  We increased our working interest in the Archer-Tsakopoulos #2 well
up to 36% by purchasing an additional 11% through the payment of a pro-rata
share for the seismic reprocessing and drilling costs in the amount of
$66,000.  On November 4, 2009, drilling at this well ended.  While the
well successfully encountered oil and gas in the target horizons, there were no
adequate reservoirs in order to complete the well as a commercial
producer.




Development




Our
future operations are dependent upon the identification and successful
completion of additional long-term or permanent equity financings, the support
of creditors and shareholders, and, ultimately, the achievement of profitable
operations.  There can be no assurances that we will be successful, which
would in turn significantly affect our ability to meet our business
objectives.  If not, we will likely be required to reduce operations or
liquidate assets.  We will continue to evaluate our projected expenditures
relative to our available cash and to seek additional means of financing in
order to satisfy our acquisition, working capital and other cash
requirements.





14





We
continue to operate with very limited administrative support, and our current
officers and directors continue to be responsible for many duties to preserve
our working capital.  We expect no significant changes in the number of
employees over the next 12 months.





We have
initiated drilling operations on several prospects, and as such we may have some
significant ongoing capital expenditures.  We believe that, with our
current efforts to raise capital, we will have sufficient cash resources to
satisfy our needs over the next 12 months.  Our ability to satisfy cash
requirements thereafter will determine whether we achieve our business
objectives.  Should we require additional cash in the future, there can be
no assurance that we will be successful in raising additional debt or equity
financing on terms acceptable to our Company, if at all.




Critical
Accounting Policies




The
preparation of financial statements in conformity with United States generally
accepted accounting principles requires management of our Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.




The
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. 
We believe certain critical accounting policies affect our more significant
judgments and estimates used in the preparation of the financial
statements.  A description of our critical accounting policies is set forth
in our Annual Report on Form 10-K for the year ended December 31, 2008.  As
of, and for the year ended December 31, 2009, there have been no material
changes or updates to our critical accounting policies.




Results
of Operations




The
discussion and financial statements contained herein are for our fiscal year
ended December 31, 2009 and December 31, 2008.  The following discussion
regarding our financial statements should be read in conjunction with our
financial statements included herewith.




Financial
Condition as of December 31, 2009




We
reported total current assets of $58,334 at December 31, 2009, consisting of
cash of $38,021, accounts receivable of $5,018, other receivable of $13,184, and
taxes recoverable of $2,111.  Total current liabilities reported of
$914,724 consisted of accounts payable of $184,602, note payable of $35,977, a
convertible debenture (net of discount of $384,021) of $599,285, and a loan
guarantee of $94,860.  The Company had a working capital deficit of
$856,390 at December 31, 2009.




Stockholders’
Deficiency decreased from $453,801 at December 31, 2008 to $147,956 at December
31, 2009.  This decrease is due primarily to the issuance of shares of our
common stock and an increase in additional paid-in capital during the same
period.




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.




Cash
and Cash Equivalents




As of
December 31, 2009, we had cash of $38,021 and did not have any cash
equivalents.  We anticipate that a substantial amount of cash will be used
as working capital and to execute our 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, 2009




For the
fiscal year ended December 31, 2009, we incurred a net loss of
$1,655,978.




General
and administration expenses for the fiscal year end December 31, 2009, amounted
to $348,045 compared to $121,423 in 2008.  Executive compensation for the
2009 fiscal year end is $173,749 compared to $0 in 2008.





15





For
the Fiscal Year Ended December 31, 2008




For the
fiscal year ended December 31, 2008, we incurred a net loss of
$123,823.




Administration
expenses for the fiscal year end amounted to $121,423 compared to $92,554 in
2007. Executive compensation for the 2008 fiscal year end is $0 compared to
$15,000 in 2007.




Period
from inception, January 24, 1996 to December 31, 2009




We have
incurred losses in each period since inception and have an accumulated deficit,
consisting of deficit and accumulated comprehensive losses, of $5,284,172 at
December 31, 2009.  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




As of
December 31, 2009, we had cash of $38,021, and working capital deficiency of
$856,390.  During the year ended December 31, 2009, we funded our
operations from the proceeds of private sales of equity and/or convertible
notes.  We are currently seeking further financing and we believe that will
provide sufficient working capital to fund our operations for at least the next
six months.  Changes in our operating plans, increased expenses,
acquisitions, or other events, may cause us to seek additional equity or debt
financing in the future.




For the
year ended December 31, 2009, we used net cash of $446,782 in operations. 
Net cash from operating activities reflected an increase in impairment expenses,
warrants issued and amortization of $765,229, $238,227 and $197,605,
respectively.




We raised
$1,111,500 during the twelve month period ended December 31, 2009 from the
issuance of common stock and convertible notes.




Our
current cash requirements are significant due to planned exploration and
development of current projects.  We anticipate drilling 10 wells in our
Rooney prospect in 2010 which will cost approximately $2,500,000. 
Accordingly, we expect to continue to use debt and equity financing to fund
operations for the next twelve months, as we look to expand our asset base and
fund exploration and development of our properties.




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 our planned drilling projects and
obligations.  Such working capital will most likely be obtained through
equity or debt 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 Arrangements




There are
no off-balance sheet arrangements.




Capital
Expenditures




We made
capital expenditure investments in nine natural resource projects in the amount
of $1,473,663 during the fiscal year ending December 31, 2009.  Seven of
those investments produced “dry holes” and $765,229 was treated as an impairment
expense.  At December 31, 2009 the company has two investments valued at
cost for a total of $708,434.





Contractual
Obligations




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




Payments Due by PeriodContractual Obligations
                                  At December 31, 2009
                                
                                Total
                                
                                
                                Less than
                                  1 Year
                                
                                
                                1-3 years
                                
                                
                                3-5 years
                                
                                
                                More than
                                  5 yearsConvertible
      Promissory Note @ 18%
                                
                                $
                                1,000,000
                                
                                
                                $
                                1,000,000Total
                                
                                $
                                1,000,000
                                
                                
                                $
                                1,000,000




The above
table outlines our obligations as of December 31, 2009 and does not reflect any
changes in our obligations that have occurred after that date.





16





ITEM 7A — QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK




Not
applicable.




ITEM 8 — FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA




Reference
is made to the financial statements, the reports of our independent registered
public accounting firm, and the notes thereto of this report, which financial
statements, reports, and notes are incorporated herein by
reference.




ITEM 9 — CHANGES IN AND DISAGREEMENT WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE




None.




ITEM 9A(T) — CONTROLS AND
PROCEDURES




Evaluation
of Disclosure Controls and Procedures




Our Chief
Executive Officer and Chief Financial Officer have evaluated our disclosure
controls and procedures as of December 31, 2009 and have concluded that
these disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in the reports that we file or submit
under the Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms and is accumulated and
communicated to our management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.




Management’s
Report on Internal Control Over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f).  Our management conducted an evaluation of the effectiveness of
our internal control over financial reporting based on the framework in Internal
Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.  Based on this evaluation under
the framework in Internal Control – Integrated Framework, our management
concluded that our internal control over financial reporting was effective as of
December 31, 2009.




This
Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.  Our
management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit our company to provide only our management’s report in
this Report.





Changes
in Internal Controls Over Financial Reporting




There
were no changes in our internal control over financial reporting that occurred
during the fourth quarter of 2009 that have materially affected or are
reasonably likely to materially affect our internal control over financial
reporting.




ITEM 9B — OTHER
INFORMATION




None.




PART
III




ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE




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
                
                PositionJohn
      J. Lennon
                
                55
                
                Chairman
      of the Board; Chief Financial Officer and SecretaryDan
      Holladay
                
                50
                
                DirectorRobert
      McIntosh
                
                49
                
                Director;
      President and Chief Executive
Officer





17





Our board
of directors believes that its members encompass a range of talent, skill, and
experience sufficient to provide sound and prudent guidance with respect to our
operations and interests.  The information below with respect to our
directors includes each director’s experience, qualifications, attributes, and
skills that led our board of directions to the conclusion that he or she should
serve as a director.




John J. Lennon.Mr.
Lennon became our President, Chairman and Chief Financial Officer in February
2009.  On June 2, 2009, Mr. Lennon resigned as President, but remained as
our Chief Financial Officer.  From May 30, 2008, until July 6, 2009, Mr.
Lennon served as a Director, Treasurer and VP of Finance of Brite-Strike
Tactical Illumination Products, Inc.  Mr. Lennon is currently President and
a Director of LED Power Group, Inc., President and a Director of UV Flu
Technologies, Inc., and President and a Director of Far East Wind Power
Corp.  Mr. Lennon has served as  President of Chamberlain Capital
Partners since 2004, and served as a Director of American Durahomes from 2006
and Treasurer, VP of Finance and a Director of US Starcom from 2005-2007. 
Chamberlain Capital Partners assists companies in the area of maximizing
shareholder value through increased sales, cost reduction and refined business
strategy.  Mr. Lennon has also assisted companies in obtaining debt
financing, private placements or other methods of funding.  He is
responsible for corporate reporting, press releases, and funding related
initiatives for American Durahomes, a private corporation, and previously for US
Starcom, a public entity. On December 31, 2007, Mr. Lennon was appointed Chief
Executive Officer, President, Chief Financial Officer, Secretary, Treasurer and
director of Explortex Energy Inc., a publicly reporting company, which is a
natural resource exploration company engaged in the participation in drilling of
oil and gas in the United States.  From 1987 to 2004, Mr. Lennon served as
Senior Vice President of Janney Montgomery Scott, Osterville, MA, Smith Barney
and Prudential Bache Securities, managing financial assets for high net worth
individuals.   Mr. Lennon’s prior executive officer and director
experience provides our Board with a perspective of someone with knowledge in
multiple facets of public and private company operations and
strategy.




Dan Holladay.Mr.
Holladay became a Director of the Company in June 2009.  Mr. Dan Holladay
is oil industry management consultant based in Wichita Kansas.  He
graduated in 1983 graduate from the University of Eastern New Mexico with an
Associate degree in Petroleum Management following extensive studies at the
University of Kansas in geology.  After a short career in a variety of oil
field work, he began a 25 year career as an Investment Adviser for firms such as
AG Edwards where he advised high net worth clients.  Recently, Mr. Holladay
has been working as an independent oil industry management consultant where he
has been identifying, evaluating and assisting companies and individuals on a
variety of Kansas based oil and gas prospects for both exploration and
production projects.  On July 30, 2009, Mr. Holladay filed for personal
bankruptcy in the United States Bankruptcy Court for the Sedgwick County, Kansas
(Case No. 09CV4118) and was discharged under Chapter 7 on January 25,
2010.  The Board has considered Mr. Holladay’s bankruptcy filing and
determined that it has no bearing on his efforts on behalf f our company. 
Mr. Holladay’s background as an oil industry management consultant, and his 25
year career as an investment advisor, provides a unique perspective to our
Board.




Robert McIntosh.On June
2, 2010, Mr. McIntosh became our President and Chief Executive Officer. 
Prior to that, Mr. McIntosh had been our Chief Operating Officer and a Director
on our Board since March 2009.  Prior to joining our company, Mr. McIntosh
served as President of Silver Star Energy, Inc. from September 2003 to May 2008
and as President of Bancroft Uranium, Inc. from July 2008 to December
2008.  Mr. McIntosh has been a businessman and consulting geologist for the
past 25 years.  He is experienced both as a resource exploration
geoscientist alongside noteworthy strengths in all facets of corporate
development.  Since 1983 his career has taken him across the Americas and
abroad where he has been instrumental in the design, implementation, execution
and management of programs in the oil, gas, precious and base metals segments of
the resource sector.  His skills encompass virtually every aspect of oil
& gas exploration, well completion and production techniques alongside a
diverse experience in project acquisition, negotiations, contracts, and project
divestitures within the petroleum industry.  He has developed significant
expertise and industry contacts in his various roles across the publicly traded
market sector as well as with private junior E&P companies.  Mr.
McIntosh has successfully assisted his clients and stakeholders in the U.S.A.
and Canada on projects that ultimately became producing properties where he has
contributed in full field exploitation programs with additional traditional and
secondary forms of drilling and completions, along with ongoing well site
supervision aimed at fully optimizing the overall asset.  Mr. McIntosh’s
business experience, and his 25 year career as a consulting geologist, give him
unique insights into our challenges, opportunities, and operations.




Except as
set forth above, no officer or director has been involved in any material legal
proceeding.




There are
no arrangements, understandings, or family relationships pursuant to which our
executive officers were selected.




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, John J. Lennon currently meets the definition of an “audit
committee financial expert” within the meaning of Item 407(d)(5) of Regulation
S-K.  Mr. Lennon is not an independent director.  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.





18





Section
16(a) Beneficial Ownership Reporting Compliance




Based
solely upon a review of Forms 3, 4 and 5 delivered to us as filed with the
Securities Exchange Commission, as of December 31, 2009, all of 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.




Subsequent
to our fiscal year ended December 31, 2009, in connection with his acquisition
of 50,000 shares of our common stock on February 9, 2010, Dan Holladay was
required to file a Form 4 no later than February 11, 2010.  Mr.
Holladay filed the Form 4 on March 19, 2010.




Subsequent
to our fiscal year ended December 31, 2009, in connection with his acquisition
of 200,000 shares of our common stock on February 9, 2010, Robert McIntosh was
required to file a Form 4 no later than February 11, 2010.  Mr. McIntosh
instead filed a Form 3 in error with respect to such shares on February 10,
2010, and subsequently filed a Form 4 on March 19, 2010 to correct this
error.





Code
of Ethics




On July 20, 2009, our Board
of Directors adopted a Code of Ethical Conduct that provides an ethical standard
for all employees, officers and directors.  A copy of the Code of
Ethical Conduct is filed as Exhibit 14.1 totheAnnual Report on Form
10-K.


ITEM 11 — 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
principal financial officer and by each other executive officer whose total
annual salary and bonus exceeded $100,000 during the fiscal periods ended
December 31, 2009 and December 31, 2008.  Other than as set forth below, no
executive officer’s total annual compensation exceeded $100,000 during our last
fiscal period.




Summary
Compensation Table





Name and Principal Po sition (a)
                                                                                
                                                                                Year
                                                                                  (b)
                                                                                
                                                                                Salary
                                                                                  ($)
                                                                                  (c)
                                                                                
                                                                                
                                                                                Bonus
                                                                                  ($)
                                                                                  (d)
                                                                                
                                                                                
                                                                                Stock
                                                                                  Awards
                                                                                  ($)
                                                                                  (e)
                                                                                
                                                                                
                                                                                Option
                                                                                  Awards
                                                                                  ($)
                                                                                  (f)
                                                                                
                                                                                
                                                                                Non
                                                                                  Equity
                                                                                  Incentive
                                                                                  Plan
                                                                                  Compensation
                                                                                  ($)
                                                                                  (g)
                                                                                
                                                                                
                                                                                Non-qualified
                                                                                  Deferred
                                                                                  Compensation
                                                                                  Earnings
                                                                                  ($)
                                                                                  (h)
                                                                                
                                                                                
                                                                                All Other
                                                                                  Compensation
                                                                                  ($)
                                                                                  (i)
                                                                                
                                                                                
                                                                                Total
                                                                                  ($)
                                                                                  (j)John
      J. Lennon,
                                                                                
                                                                                2009
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-Chairman
      of the Board, Chief Financial Officer (1)
                                                                                
                                                                                2008
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-Gregory
      Leigh Lyons
                                                                                
                                                                                2009
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-Former
      Chairman of the Board, President, and Chief Financial Officer
      (2)
                                                                                
                                                                                2008
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                30,000
                                                                                
                                                                                
                                                                                $
                                                                                30,000Robert
      McIntosh
                                                                                
                                                                                2009
                                                                                
                                                                                $
                                                                                114,000
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                28,500
                                                                                
                                                                                
                                                                                $
                                                                                142,500Director,
      President and Chief Executive Officer (3)
                                                                                
                                                                                2008
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-
                                                                                
                                                                                
                                                                                $
                                                                                -0-





(1)
            Mr.
      Lennon became our President, Chairman and Chief Financial Officer on
      February 13, 2009.  Mr. Lennon resigned as President on June 2,
      2009.





(2)
            Mr.
      Lyons resigned all his positions with us on February 13,
    2009.





(3)
            Mr.
      McIntosh became our President and Chief Executive Officer on June 2,
      2009.





Mr.
Lennon did not incur any compensation for the fiscal year ended December 31,
2008.  Mr. Lennon, through his affiliate, Chamberlain Capital Partners,
entered into a Management and Governance Consultant Agreement with us on
February 13, 2009, whereby he agreed to provide us with management and
governance consulting services, including of liaising with our officers and
employees concerning matters relating to the management and corporate governance
of our day to day operations, accounting, regulatory compliance, marketing and
investor relations issues.  Our board of directors approved the agreement
and transaction on February 13, 2009.  In consideration of services
rendered, we agreed to pay Chamberlain Capital Partners a fee in the amount of
$2,500 per month, together with applicable taxes and out-of-pocket expenses for
specialized services.  The agreement is for a one year term commencing
February 13, 2009 and continuing until February 13, 2010 and is subject to
termination upon 30 day prior written notice by either party.  This
agreement has not continued into 2010.





19





Mr. Lyons
billed a total of $30,000 for the fiscal year ended December 31, 2008 and $2,500
for the fiscal year ended December 31, 2007 in accordance with a consulting
agreement approved by the board of directors on December 21, 2007, whereby Mr.
Lyons, through his affiliate, Sound Energy Advisors, LLC (“SEA”), agreed to
provide us with management and governance consulting services, including of
liaising with our officers and employees concerning matters relating to the
management and corporate governance of our day to day operations, accounting,
regulatory compliance, marketing and investor relations issues.  In
consideration of services rendered, we agreed to pay SEA a fee in the amount of
$2,500 per month, together with applicable taxes and out-of-pocket expenses for
specialized services.  The agreement is for a two year term commencing
December 1, 2007 and continuing until November 30, 2009 and is subject to
termination upon 30 day prior written notice by either party. The agreement was
terminated on February 13, 2009.




Mr.
McIntosh billed a total of $142,500 for the fiscal year ended December 31, 2009
in accordance with a business consultant agreement with Mr. McIntosh dated March
15, 2009 whereby it was agreed that Mr. McIntosh would provide us with corporate
management consulting services for a monthly fee of $15,000.  The term of
the agreement is twelve months and is subject to termination upon 30 days prior
written notice by either party.  The terms of this agreement continue on a
month-by-month basis.




Director
Compensation




Our board
of directors are reimbursed for actual expenses incurred in attending Board
meetings.  There are no other compensation arrangements with directors, and
the directors did not receive any compensation in the fiscal year ending
December 31, 2009, except as indicated below.




Director
Compensation




Name (a)
                                                              
                                                              Fees
      earned or
                                                                paid
      in cash
                                                                (b)
                                                              
                                                              Stock
                                                                awards
                                                                ($)
                                                                (c)
                                                              
                                                              Option
                                                                awards
                                                                ($)
                                                                (d)
                                                              
                                                              Non-equity
                                                                incentive
                                                                plan
                                                                compensation
                                                                ($)
                                                                (e)
                                                              
                                                              Nonqualified
                                                                incentive
      plan
                                                                compensation
                                                                ($)
                                                                (f)
                                                              
                                                              All
      other
                                                                compensation
                                                                ($)
                                                                (g)
                                                              
                                                              Total
                                                                ($)
                                                                (h)Dan
      Holladay (1)
                                                              
                                                              $
                                                              17,375
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              17,375





(1)
            Mr.
      Holladay became a Director in June
2009.




ITEM 12 — SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS




The
following table sets forth, as of March 10, 2010, 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 sixty days of March 10, 2010.  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)John
      J. Lennon
                            104
      Swallow Hill Drive
                            Barnstable,
      Massachusetts
                          
                          Common
                          
                          
                          -
                          
                          
                          
                          -Robert
      B. McIntosh
                            17470
      N Pacesetter ‘Way
                            Scottsdale,
      AZ 85255
                          
                          Common
                          
                          
                          200,000
                          
                          
                          
                          0.7391
                          %Dan
      Holladay
                            5813
      E 17
                            Wichita,
      KS 67208
                          
                          Common
                          
                          
                          50,000
                          
                          
                          
                          0.1848
                          %All
      Executive Officers and Directors as a Group (3 persons)
                          
                          Common
                          
                          
                          250,000
                          
                          
                          
                          0.9239
                          %





20







(1)
            Consists
      of the aggregate total of shares of common stock held by the named
      individual directly.  Based upon information furnished to us by the
      directors and executive officers or obtained from our stock transfer books
      showing 27,060,561 shares of common stock outstanding as of March 23,
      2010.  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 23, 2010, 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.





Equity
Compensation Plan Information




The
company has no active equity compensation plans and there are currently no
outstanding options from prior plans.




ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE




Related
Party Transactions




On March
15, 2009 we entered into a business consultant agreement with Robert McIntosh,
our President, Chief Executive Officer and director, whereby it was agreed that
Mr. McIntosh will provide us with corporate management consulting services for a
monthly fee of $15,000.  The term of the agreement is twelve months and is
subject to termination upon 30 days prior written notice by either party. 
This agreement will continue into 2010 on a month-by-month basis until further
notice.




Review,
Approval or Ratification of Transactions with Related Persons




Although
we adopted a Code of Ethical Conduct on July 20, 2009, we still rely on our
board to review related party transactions on an ongoing basis to prevent
conflicts of interest.  Our board reviews a transaction in light of the
affiliations of the director, officer or employee and the affiliations of such
person’s immediate family. Transactions are presented to our board for approval
before they are entered into or, if this is not possible, for ratification after
the transaction has occurred.  If our board finds that a conflict of
interest exists, then it will determine the appropriate remedial action, if
any.  Our board approves or ratifies a transaction if it determines that
the transaction is consistent with the best interests of the Company.  For
the above transaction, the board approved and ratified the transaction, finding
it in the best interest of the Company.




Director
Independence




During
fiscal 2009, we had one independent director on our board, Mr. Holladay. 
We evaluate independence by the standards for director independence established
by applicable laws, rules, and listing standards including, without limitation,
the standards for independent directors established by The New York Stock
Exchange, Inc., The NASDAQ National Market, and the Securities and Exchange
Commission.




Subject
to some exceptions, these standards generally provide that a director will not
be independent if (a) the director is, or in the past three years has been,
an employee of ours; (b) a member of the director’s immediate family is, or
in the past three years has been, an executive officer of ours; (c) the
director or a member of the director’s immediate family has received more than
$120,000 per year in direct compensation from us other than for service as a
director (or for a family member, as a non-executive employee); (d) the
director or a member of the director’s immediate family is, or in the past three
years has been, employed in a professional capacity by our independent public
accountants, or has worked for such firm in any capacity on our audit;
(e) the director or a member of the director’s immediate family is, or in
the past three years has been, employed as an executive officer of a company
where one of our executive officers serves on the compensation committee; or
(f) the director or a member of the director’s immediate family is an
executive officer of a company that makes payments to, or receives payments
from, us in an amount which, in any twelve-month period during the past three
years, exceeds the greater of $1,000,000 or two percent of that other company’s
consolidated gross revenues.





21





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 by Berkovits & Company, LLP for the fiscal periods
shown.




December 31, 2009
                      
                      
                      December 31, 2008Audit
      Fees
                      
                      $
                      0
                      
                      
                      $
                      16,950Audit
      — Related Fees
                      
                      
                      0
                      
                      
                      
                      0Tax
      Fees
                      
                      
                      0
                      
                      
                      
                      0All
      Other Fees
                      
                      
                      0
                      
                      
                      
                      0Total
                      
                      $
                      0
                      
                      
                      $
                      16,950





The
following table shows the fees paid or accrued by us for the audit and other
services provided by Weaver & Martin, LLC for the fiscal periods
shown.





December 31, 2009
                    
                    
                    December 31, 2008Audit
      Fees
                    
                    $
                    11,000
                    
                    
                    $
                    6,000Audit
      — Related Fees
                    
                    
                    7,250
                    
                    
                    
                    0Tax
      Fees
                    
                    
                    0
                    
                    
                    
                    0All
      Other Fees
                    
                    
                    0
                    
                    
                    
                    0Total
                    
                    $
                    18,250
                    
                    
                    $
                    6,000





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
2009.   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%.





PART
IV




ITEM
15 — EXHIBITS, FINANCIAL STATEMENT SCHEDULES




(a)           Financial
Statements and Financial Statement Schedules




(1)   Financial
Statements are listed in the Index to Financial Statements of this
report.




(b)   Exhibits





Exhibit Number
                  
                  Name3.1(1)
                  
                  
                  Amended
      and Restated Articles of Incorporation3.2(1)
                  
                  
                  Bylaws10.10(2)
                  
                  
                  Management
      and Governance Consultant Agreement with Sound Energy Advisors,
      LLC10.11(3)
                  
                  
                  Management
      and Governance Consultant Agreement with Chamberlain Capital
      Partners10.12(3)
                  
                  
                  Business
      Consultant Agreement with Bakerview Investor Relations,
    Inc.10.13(5)
                  
                  
                  Management
      and Governance Consultant Agreement with Robert
McIntosh10.14(6)
                  
                  
                  Participation
      Agreement with Archer Exploration, Inc.10.15(7)
                  
                  
                  Letter
      of Intent with S&W Oil & Gas, LLC dated May 4,
    2009.





22





10.16(8)
              
              
              Participation
      Agreement with Archer Exploration, Inc. dated June 4,
  2009.10.17(9)
              
              
              Letter
      of Intent with S&W Oil & Gas, LLC dated June 11,
    2009.10.18(10)
              
              
              Letter
      of Intent with S&W Oil & Gas, LLC dated June 23,
    2009.10.19(11)
              
              
              Note
      Purchase Agreement dated August 13, 2009.10.20(12)
              
              
              Letter
      of Intent with S&W Oil & Gas, LLC dated August 25,
      2009.10.21(13)
              
              
              Participation
      Agreement with Archer Exploration, Inc. dated September 8,
      2009.10.22(14)
              
              
              Secured
      Convertible Promissory Note dated September 15, 200914.1
              
              
              Code
      of Ethical Conduct16(4)
              
              
              Letter
      from Berkovits & Company, LLP21
              
              
              List
      of Subsidiaries (None)31.1
              
              
              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 10-KSB for the year ended December 31,
      2007.





(3)
            Incorporated
      by reference to Form 10-K for the year ended December 31,
      2008.





(4)
            Incorporated
      by reference to Form 8-K dated March 23,
2009.





(5)
            Incorporated
      by reference to Form 8-K dated March 27,
2009.





(6)
            Incorporated
      by reference to Form 8-K dated April 10,
2009.





(7)
            Incorporated
      by reference to Form 8-K dated May 6,
2009.





(8)
            Incorporated
      by reference to Form 8-K dated June 5,
2009.





(9)
            Incorporated
      by reference to Form 8-K dated June 11,
2009.





(10)
            Incorporated
      by reference to Form 8-K dated June 23,
2009.





(11)
            Incorporated
      by reference to Form 10-QSB for the period ended June 30,
      2009.





(12)
            Incorporated
      by reference to Form 8-K dated August 27,
2009.





(13)
            Incorporated
      by reference to Form 8-K dated September 14,
  2009.





(14)
            Incorporated
      by reference to Form 8-K dated September 24,
  2009.





23





SIGNATURES




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





AMERICAN PETRO-HUNTER,
INC.





Dated: January 28,
      2011
                /s/
      Robert B.  McIntoshBy:
      Robert B. McIntoshIts:
      President and Chief Executive Officer(Principal
      Executive 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/
      Robert B.  McIntosh
                          
                          President,
      Chief Executive Officer and Director
                          
                          January
      28, 2011Robert
      B.  McIntosh
                          
                          (Principal
      Executive Officer)/s/
      John J. Lennon
                          
                          Chief
      Financial Officer, Secretary and Chairman of the Board
                          
                          January
      28, 2011John
      J. Lennon
                          
                          (Principal
      Financial Officer and Principal Accounting Officer)/s/
      Dan Holladay
                          
                          Director
                          
                          January
      28, 2011Dan
      Holladay





24





AMERICAN
PETRO-HUNTER INC.


(A
Development Stage Company)




FINANCIAL
STATEMENTS




DECEMBER
31, 2009 AND 2008


(Stated
in U.S. Dollars)




American
Petro-Hunter Inc.


Index
to Financial Statements


December
31, 2009


INDEX


PageIndependent
      Registered Public Accounting Firms’ Reports
                
                F-2Financial
      StatementsBalance
      Sheets as of December 31, 2009 and 2008
                
                F-3Statements
      of Operations for the years ended December 31, 2009 and 2008 and for the
      period from January 24, 1996 (inception) to December 31,
    2009
                
                F-4Statements
      of Cash Flows for the years ended December 31, 2009 and 2008 and for the
      period from January 24, 1996 (inception) to December 31,
    2009
                
                F-5Statements
      of Changes in Stockholders’ Deficit for the period from January 24, 1996
      (inception) through December 31, 2009
                
                F-6Notes
      to Financial Statements
                
                F-7





F-1





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Stockholders


American
Petro-Hunter, Inc.




We have audited the accompanying balance
sheet of American Petro-Hunter, Inc. (A Development Stage Company) as of
December 31, 2009 and 2008 and the related statements of operations,
stockholders’ deficit, and cash flows for the years then
ended.  American Petro-Hunter, Inc.’s management is responsible for
these financial statements.  Our responsibility is to express an
opinion on these financial statements based on our audit.


We
conducted our audit 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.  The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting.  Our audit 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. Our
audit of the financial statements includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We believe that
our audit provides 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 American Petro-Hunter, Inc. as of
December 31, 2009 and 2008 and the results of its operations, stockholders’
deficit, and cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.




The
accompanying financial statements have been prepared assuming that 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 and is
dependent upon the continued sale of its securities or obtaining debt financing
for funds to meet its cash requirements. These factors raise substantial doubt
about the Company’s ability to continue as a going concern.  The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.




/s/
Weaver & Martin, LLC


Weaver
& Martin, LLC


Kansas
City, Missouri


March 26,
2010





F-2





American
Petro-Hunter, Inc.


(A
Development Stage Company)


Balance
Sheets


(Expressed
in U.S. Dollars)





December 31,2009
                                    
                                    
                                    2008AssetsCurrent
      assets:Cash
                                    
                                    $
                                    38,021
                                    
                                    
                                    $
                                    136Accounts
      receivable
                                    
                                    
                                    5,018
                                    
                                    
                                    
                                    -Other
      receivable
                                    
                                    
                                    13,184
                                    
                                    
                                    
                                    -Taxes
      recoverable
                                    
                                    
                                    2,111
                                    
                                    
                                    
                                    2,003Total
      current assets
                                    
                                    
                                    58,334
                                    
                                    
                                    
                                    2,139Investments
      in mineral properties
                                    
                                    
                                    708,434
                                    
                                    
                                    
                                    -Total
      assets
                                    
                                    $
                                    766,768
                                    
                                    
                                    $
                                    2,139Liabilities
      and Stockholders' (Deficit)Liabilities:Accounts
      payable and other liabilities
                                    
                                    $
                                    184,602
                                    
                                    
                                    $
                                    223,770Due
      to related party
                                    
                                    
                                    -
                                    
                                    
                                    
                                    123,877Note
      payable
                                    
                                    
                                    35,977
                                    
                                    
                                    
                                    25,000Convertible
      debenture, net of discount of $384,021
                                    
                                    
                                    599,285
                                    
                                    
                                    
                                    -Loan
      guarantee
                                    
                                    
                                    94,860
                                    
                                    
                                    
                                    83,293Total
      liabilities
                                    
                                    
                                    914,724
                                    
                                    
                                    
                                    455,940Stockholders'
      equityCommon
      stock, $0.001 par value, 200,000,000 shares authorized, 23,748,561 and
      10,065,019 shares issued and outstanding as of December 31, 2009 and 2008,
      respectively
                                    
                                    
                                    23,749
                                    
                                    
                                    
                                    10,065Common
      stock to be issued; 1,830,825 and 800,000 as of December 31, 2009 and
      2008, respectively
                                    
                                    
                                    1,831
                                    
                                    
                                    
                                    40,000Additional
      paid-in capital
                                    
                                    
                                    5,110,636
                                    
                                    
                                    
                                    3,124,328Accumulated
      comprehensive gain (loss)
                                    
                                    
                                    (8,114
                                    )
                                    
                                    
                                    (8,114
                                    )(Deficit)
      accumulated during development stage
                                    
                                    
                                    (5,276,058
                                    )
                                    
                                    
                                    (3,620,080
                                    )Total
      stockholders' (deficit)
                                    
                                    
                                    (147,956
                                    )
                                    
                                    
                                    (453,801
                                    )Total
      liabilities and stockholders' (deficit)
                                    
                                    $
                                    766,768
                                    
                                    
                                    $
                                    2,139




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





F-3





American
Petro-Hunter, Inc.


(A
Development Stage Company)


Statements
of Operations


(Expressed
in U.S. Dollars)




For the
                                                            
                                                            
                                                            For the PeriodYear Ended
                                                            
                                                            
                                                            from January 24,December 31,
                                                            
                                                            
                                                            1996 (inception) to2009
                                                            
                                                            
                                                            2008
                                                            
                                                            
                                                            December 31, 2009(unaudited)Revenue
                                                            
                                                            $
                                                            77,728
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            77,728Cost of Good soldProduction Expenses
                                                            
                                                            
                                                            13,090
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            13,090Gross profit
                                                            
                                                            
                                                            64,638
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            64,638Expenses:General and
    administrative
                                                            
                                                            
                                                            348,045
                                                            
                                                            
                                                            
                                                            121,423
                                                            
                                                            
                                                            
                                                            2,152,336Executive compensation
                                                            
                                                            
                                                            173,749
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            573,237Rent
                                                            
                                                            
                                                            915
                                                            
                                                            
                                                            
                                                            2,400
                                                            
                                                            
                                                            
                                                            60,213Impairment expense
                                                            
                                                            
                                                            765,229
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            1,100,180Total expenses
                                                            
                                                            
                                                            1,287,938
                                                            
                                                            
                                                            
                                                            123,823
                                                            
                                                            
                                                            
                                                            3,885,966Net loss before other income
      (expense)
                                                            
                                                            
                                                            (1,223,300
                                                            )
                                                            
                                                            
                                                            (123,823
                                                            )
                                                            
                                                            
                                                            (3,821,328
                                                            )Other income and
    (expense):Interest expense
                                                            
                                                            
                                                            (265,440
                                                            )
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            (265,440
                                                            )Loan placement fee
                                                            
                                                            
                                                            (238,227
                                                            )
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            (238,227
                                                            )Loss from loan
guarantee
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            (84,858
                                                            )Loss from settlement of
      debt
                                                            
                                                            
                                                            (14,971
                                                            )
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            (14,971
                                                            )Income from debt
      forgiveness
                                                            
                                                            
                                                            85,960
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            85,960Total other income
      (expenses)
                                                            
                                                            
                                                            (432,678
                                                            )
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            (517,536
                                                            )Net loss from continuing
      operations
                                                            
                                                            
                                                            (1,655,978
                                                            )
                                                            
                                                            
                                                            (123,823
                                                            )
                                                            
                                                            
                                                            (4,338,864
                                                            )Net loss from discontinued
      operations
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            (937,194
                                                            )Net loss
                                                            
                                                            
                                                            (1,655,978
                                                            )
                                                            
                                                            
                                                            (123,823
                                                            )
                                                            
                                                            
                                                            (5,276,058
                                                            )Other comprehensive gain (loss) Foreign
      currency translation gain
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            81,146
                                                            
                                                            
                                                            
                                                            (8,114
                                                            )Comprehensive loss
                                                            
                                                            $
                                                            (1,655,978
                                                            )
                                                            
                                                            $
                                                            (42,677
                                                            )
                                                            
                                                            $
                                                            (5,284,172
                                                            )Weighted average number of common
      shares outstanding - basic and fully diluted
                                                            
                                                            
                                                            20,348,579
                                                            
                                                            
                                                            
                                                            9,327,295Net (loss) per share - basic and fully
      diluted
                                                            
                                                            $
                                                            (0.08
                                                            )
                                                            
                                                            $
                                                            (0.005
                                                            )




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





F-4





American
Petro-Hunter, Inc.


(A
Development Stage Company)


Statement
of Cash Flows


(Expressed
in U.S. Dollars)





For
      the PeriodFor the
                                                    
                                                    
                                                    For the
                                                    
                                                    
                                                    from January 24,Year ended
                                                    
                                                    
                                                    Year ended
                                                    
                                                    
                                                    1996 (inception) toDecember 31, 2009
                                                    
                                                    
                                                    December 31, 2008
                                                    
                                                    
                                                    December 31, 2009(unaudited)Cash flows from operating activitiesNet (loss)
                                                    
                                                    $
                                                    (1,655,978
                                                    )
                                                    
                                                    $
                                                    (123,823
                                                    )
                                                    
                                                    $
                                                    (5,276,058
                                                    )Adjustments to reconcile net (loss) to
      net cash used in operating activities:Accrued interest on note
      payable
                                                    
                                                    
                                                    12,841
                                                    
                                                    
                                                    
                                                    2,959
                                                    
                                                    
                                                    
                                                    16,400(Gain) loss from loan
      guarantee
                                                    
                                                    
                                                    11,567
                                                    
                                                    
                                                    
                                                    (19,931
                                                    )
                                                    
                                                    
                                                    94,860Warrants issued for
      services
                                                    
                                                    
                                                    238,227
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    366,227Shares issued for
    services
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    992,558Amortization of
discount
                                                    
                                                    
                                                    197,605
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    197,605Impairment expense
                                                    
                                                    
                                                    765,229
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    772,729Changes in operating assets and
      liabilities:(Increase) decrease in accounts
      receivable
                                                    
                                                    
                                                    (5,018
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (5,018
                                                    )(Increase) decrease in other
      receivable
                                                    
                                                    
                                                    (13,184
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (13,184
                                                    )(Increase) decrease in taxes
      recoverable
                                                    
                                                    
                                                    (108
                                                    )
                                                    
                                                    
                                                    481
                                                    
                                                    
                                                    
                                                    (2,111
                                                    )Increase (decrease) in accounts payable
      and other liabilities
                                                    
                                                    
                                                    125,914
                                                    
                                                    
                                                    
                                                    (1,880
                                                    )
                                                    
                                                    
                                                    1,962,962Increase (decrease) in due to related
      parties
                                                    
                                                    
                                                    (123,877
                                                    )
                                                    
                                                    
                                                    (15,023
                                                    )
                                                    
                                                    
                                                    (107,170
                                                    )Net cash (used) by operating
      activities
                                                    
                                                    
                                                    (446,782
                                                    )
                                                    
                                                    
                                                    (157,217
                                                    )
                                                    
                                                    
                                                    (1,000,200
                                                    )Cash flows from investing
      activitiesAcquisition of investments in mineral
      properties
                                                    
                                                    
                                                    (1,473,663
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (1,473,663
                                                    )Net cash provided by investing
      activities
                                                    
                                                    
                                                    (1,473,663
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (1,473,663
                                                    )Cash flows from financing
      activitiesProceeds from sale of common stock, net
      of share issuance costs
                                                    
                                                    
                                                    111,500
                                                    
                                                    
                                                    
                                                    70,000
                                                    
                                                    
                                                    
                                                    648,168Proceeds from warrant
      exercise
                                                    
                                                    
                                                    645,524
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    645,524Proceeds from note
    payable
                                                    
                                                    
                                                    218,000
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    243,000Proceeds from convertible
      debenture
                                                    
                                                    
                                                    1,000,000
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,000,000Payments for convertible
      debenture
                                                    
                                                    
                                                    (16,694
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (16,694
                                                    )Net cash provided by financing
      activities
                                                    
                                                    
                                                    1,958,330
                                                    
                                                    
                                                    
                                                    70,000
                                                    
                                                    
                                                    
                                                    2,519,998Foreign currency translation effect on
      cash
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    81,146
                                                    
                                                    
                                                    
                                                    (8,114
                                                    )Net increase (decrease) in
      cash
                                                    
                                                    
                                                    37,885
                                                    
                                                    
                                                    
                                                    (6,071
                                                    )
                                                    
                                                    
                                                    38,021Cash - beginning
                                                    
                                                    
                                                    136
                                                    
                                                    
                                                    
                                                    6,207
                                                    
                                                    
                                                    
                                                    -Cash - ending
                                                    
                                                    $
                                                    38,021
                                                    
                                                    
                                                    $
                                                    136
                                                    
                                                    
                                                    $
                                                    38,021Supplemental
    disclosures:Interest paid
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    -Income taxes paid
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    -Non-cash transactions:Warrants issued for
      services
                                                    
                                                    $
                                                    238,227
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    366,227Shares issued for
    services
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    992,558Note payable converted to common
      stock
                                                    
                                                    $
                                                    219,864
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    219,864Accounts payable converted to common
      stock
                                                    
                                                    $
                                                    165,082
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    165,082




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





F-5





American
Petro-Hunter, Inc.


Statement
of Stockholders’ Equity (Deficit)


(Expressed
in U.S. Dollars)




Deficitaccumulated
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                TotalCommon Stock
                                                                
                                                                
                                                                Additional
                                                                
                                                                
                                                                Deferred
                                                                
                                                                
                                                                Common
                                                                
                                                                
                                                                during the
                                                                
                                                                
                                                                Accumulated
                                                                
                                                                
                                                                Stockholder'sPaid-in
                                                                
                                                                
                                                                Comp
                                                                
                                                                
                                                                Stock to
                                                                
                                                                
                                                                development
                                                                
                                                                
                                                                Comp.
                                                                
                                                                
                                                                EquityShares
                                                                
                                                                
                                                                Amount
                                                                
                                                                
                                                                Capital
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                be issued
                                                                
                                                                
                                                                stage
                                                                
                                                                
                                                                gain(loss)
                                                                
                                                                
                                                                (Deficit)Shares issued for cash, net of issue
      costs
                                                                
                                                                
                                                                10,497,300
                                                                
                                                                
                                                                $
                                                                10,497
                                                                
                                                                
                                                                $
                                                                296,833
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                307,330Net income
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                4,856
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                4,856Balance at 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 at 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
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                1,988,606Unrealized foreign exchange
      loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (8,258
                                                                )
                                                                
                                                                
                                                                (8,258
                                                                )Net loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (1,798,830
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (1,798,830
                                                                )Balance at 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 at 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 at 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 at 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 at December 31,
      2002*
                                                                
                                                                
                                                                5,620,639
                                                                
                                                                
                                                                
                                                                5,621
                                                                
                                                                
                                                                
                                                                2,869,003
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (3,071,804
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (197,180
                                                                )Shares issued
                                                                
                                                                
                                                                430,000
                                                                
                                                                
                                                                
                                                                430
                                                                
                                                                
                                                                
                                                                25,370
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                25,800Other comprehensive loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                17,920
                                                                
                                                                
                                                                
                                                                (17,920
                                                                )
                                                                
                                                                
                                                                -Net loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (57,652
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (57,652
                                                                )Balance at 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
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                53,774Other comprehensive loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (9,773
                                                                )
                                                                
                                                                
                                                                (9,773
                                                                )Net loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (134,058
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (134,058
                                                                )Balance at 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
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                86,969Other comprehensive loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (6,156
                                                                )
                                                                
                                                                
                                                                (6,156
                                                                )Net loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (70,711
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (70,711
                                                                )Balance at December 31,
      2005*
                                                                
                                                                
                                                                8,265,019
                                                                
                                                                
                                                                
                                                                8,265
                                                                
                                                                
                                                                
                                                                3,036,128
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (3,316,305
                                                                )
                                                                
                                                                
                                                                (33,849
                                                                )
                                                                
                                                                
                                                                (305,761
                                                                )Other comprehensive loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (6,380
                                                                )
                                                                
                                                                
                                                                (6,380
                                                                )Net loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (72,398
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (72,398
                                                                )Balance at December 31,
      2006*
                                                                
                                                                
                                                                8,265,019
                                                                
                                                                
                                                                
                                                                8,265
                                                                
                                                                
                                                                
                                                                3,036,128
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (3,388,703
                                                                )
                                                                
                                                                
                                                                (40,229
                                                                )
                                                                
                                                                
                                                                (384,539
                                                                )Other comprehensive loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (49,031
                                                                )
                                                                
                                                                
                                                                (49,031
                                                                )Share subscription received in
      advance
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                60,000
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                60,000Net loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (107,554
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (107,554
                                                                )Balance at December 31,
      2007*
                                                                
                                                                
                                                                8,265,019
                                                                
                                                                
                                                                
                                                                8,265
                                                                
                                                                
                                                                
                                                                3,036,128
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                60,000
                                                                
                                                                
                                                                
                                                                (3,496,257
                                                                )
                                                                
                                                                
                                                                (89,260
                                                                )
                                                                
                                                                
                                                                (481,124
                                                                )Share issued for subscription recd in
      07
                                                                
                                                                
                                                                1,200,000
                                                                
                                                                
                                                                
                                                                1,200
                                                                
                                                                
                                                                
                                                                58,800
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (60,000
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -Common stock sold at $0.05 per
      share
                                                                
                                                                
                                                                600,000
                                                                
                                                                
                                                                
                                                                600
                                                                
                                                                
                                                                
                                                                29,400
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                30,000Share subscription received in
      2008
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                40,000
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                40,000Other comprehensive gain
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                81,146
                                                                
                                                                
                                                                
                                                                81,146Net loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (123,823
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (123,823
                                                                )Balance at December 31,
    2008
                                                                
                                                                
                                                                10,065,019
                                                                
                                                                
                                                                
                                                                10,065
                                                                
                                                                
                                                                
                                                                3,124,328
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                40,000
                                                                
                                                                
                                                                
                                                                (3,620,080
                                                                )
                                                                
                                                                
                                                                (8,114
                                                                )
                                                                
                                                                
                                                                (453,801
                                                                )Shares owed at December 31, 2008
      issued
                                                                
                                                                
                                                                800,000
                                                                
                                                                
                                                                
                                                                800
                                                                
                                                                
                                                                
                                                                39,200
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (40,000
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -Shares issued for cash
                                                                
                                                                
                                                                2,250,000
                                                                
                                                                
                                                                
                                                                2,250
                                                                
                                                                
                                                                
                                                                42,750
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                45,000Shares issued for accts payable
      conversion
                                                                
                                                                
                                                                8,254,088
                                                                
                                                                
                                                                
                                                                8,254
                                                                
                                                                
                                                                
                                                                156,828
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                165,082Shares issued for notes payable
      conversion
                                                                
                                                                
                                                                879,454
                                                                
                                                                
                                                                
                                                                880
                                                                
                                                                
                                                                
                                                                218,984
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                219,864Warrants issued for
    services
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                238,227
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                238,227Warrant exercise
                                                                
                                                                
                                                                1,500,000
                                                                
                                                                
                                                                
                                                                1,500
                                                                
                                                                
                                                                
                                                                223,500
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                225,000Shares sold for cash, not issued at
      year-end
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                66,310
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                190
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                66,500Warrant exercise, not issued yet at
      year-end
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                418,883
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                1,641
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                420,524Warrants issued with
debt
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                581,626
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                581,626Net loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (1,655,978
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (1,655,978
                                                                )Balance at December 31,
    2009
                                                                
                                                                
                                                                23,748,561
                                                                
                                                                
                                                                $
                                                                23,749
                                                                
                                                                
                                                                $
                                                                5,110,636
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                1,831
                                                                
                                                                
                                                                $
                                                                (5,276,058
                                                                )
                                                                
                                                                $
                                                                (8,114
                                                                )
                                                                
                                                                $
                                                                (147,956
                                                                )







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





F-6





American
Petro-Hunter Inc.


(A
Development Stage Company)


Notes
to Financial Statements


(Expressed
in U.S. Dollars)


December
31, 2009




1.
            Nature
      and Continuance of Operations


American
Petro-Hunter Inc. (the “Company”) was incorporated in the State of Nevada on
January 24, 1996 as Wolf Exploration Inc.  On March 17, 1997, Wolf
Exploration Inc. changed its name to Wolf Industries Inc.; on November 21, 2000,
they changed its name to Travelport Systems Inc., and on August 17, 2001,
changed its name to American Petro-Hunter Inc.




The
Company is evaluating the acquisition of certain natural resource projects with
the intent of developing such projects.  The Company focus is currently in
locating and assessing potential acquisition targets, including real property,
oil and gas companies.




Going
Concern


These
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) 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 is at a development stage and has minimal revenues, has limited assets
and has accumulated deficit and comprehensive losses during the development
period of $5,284,172 and requires additional funds to maintain its
operations.  Management’s plan in this regard is to raise equity financing
as required.  There can be no assurance that sufficient funding will be
obtained.  The foregoing matters raise substantial doubt about the
Company’s ability to continue as a going concern.  The condensed 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.




Development
Stage Activities


The
Company is in the development stage.  We have had minimal revenue from our
current operations.  To generate revenue, our new business plan is to focus
development of our natural resource projects.  Based upon our business
plan, we are a development stage enterprise.  Accordingly, we present our
financial statements in conformity with the accounting principles generally
accepted in the United States of America that apply in establishing operating
enterprises.  As a development stage enterprise, we disclose the deficit
accumulated during the development stage and the cumulative statements of
operations and cash flows from our inception to the current balance sheet
date.




2.
            Significant
      Accounting Policies


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




Principles
of accounting


These
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP).




Income
taxes


The
Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC
740-10-25”).  Under ASC 740-10-25, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.  Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.  Under ASC 740-10-25, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.




Revenue
Recognition


It is our
policy that revenues will be recognized in accordance with ASC subtopic 605-10
(formerly SEC Staff Accounting Bulletin (SAB) No. 104, “Revenue
Recognition.”).  Under ASC 605-10, product revenues are recognized when
persuasive evidence of an arrangement exists, delivery has occurred, the sales
price is fixed and determinable and collectability is reasonably
assured.




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-7





Net
loss per share


In
accordance with ASC subtopic 260-10, the basic loss per common share is computed
by dividing net loss available to common stockholders by the weighted average
number of common shares outstanding.  Diluted loss per common share is
computed similar to basic loss per common share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive.




Financial
instruments


The
Company’s financial instruments consist of cash and cash equivalents, accounts
receivable, accounts payable, notes 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 from these financial
instruments.  The fair values of these financial instruments approximate
their carrying values because of their relatively short-term maturities. 
See Note 5 for further details.




Reclassifications


Certain
comparative figures have been reclassified to conform to the current period’s
presentation.





Oil and Gas
Properties




We follow
the successful efforts method of accounting for oil and gas exploration and
production activities.  All costs for development wells, related plant
and equipment, proved mineral interests in oil and gas properties are
capitalized.  Costs of exploratory wells are capitalized pending
determination of whether the wells found proved reserves.  Cost of
wells that are assigned proved reserves remain capitalized. All other
exploratory wells and costs are expensed.




Depreciation,
depletion and amortization of all capitalized costs of proved oil and gas
producing properties are expensed using the straight-line method over the life
of each well.   Period valuation provisions for impairment of
capitalized costs of unproved mineral interests are expensed. The costs of
unproved properties are excluded from amortization until the properties are
evaluated.




Unproved
properties are assessed periodically individually when drilling and flow testing
results indicate whether there is an economic resource or not. All capitalized
costs associated with properties that have been determined to be a “dry-hole”
are impaired when that determination is made.  Proved properties are
assessed periodically for impairment on an individual basis.  Events
that can trigger the test for possible impairment include significant decreases
in the market value of a property, significant change in the extent or manner of
use or change in property and the expectation that a property will be sold or
otherwise disposed of significantly sooner than the previously estimated useful
life.  The assessment is done by comparing each property’s carrying
value to their associated estimated undiscounted future net cash
flows.  Impaired properties are written down to their estimated fair
values.  The resulting impairment would be expensed to operations as
impairment expense in the period in which it was determined that the impairment
was indicated and calculated.




3.
            Recent
      Accounting Pronouncements


The FASB
issued ASC subtopic 855-10 (formerly SFAS 165 “Subsequent
Events”), incorporating guidance on subsequent events into
authoritative accounting literature and clarifying the time following the
balance sheet date which management reviewed for events and transactions that
may require disclosure in the financial statements.  The Company has
adopted this standard.  The standard increased our disclosure by requiring
disclosure reviewing subsequent events.  ASC 855-10 is included in the
“Subsequent Events” accounting guidance.




In April
2009, the FASB issued ASC subtopic 820-10 (formerly Staff Position
No. FAS 157-4,Determining Fair Value When Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly”) .  ASC 820-10 provides guidance on how to determine the
fair value of assets and liabilities when the volume and level of activity for
the asset/liability has significantly decreased.  FSP 157-4 also
provides guidance on identifying circumstances that indicate a transaction is
not orderly.  In addition, FSP 157-4 requires disclosure in interim
and annual periods of the inputs and valuation techniques used to measure fair
value and a discussion of changes in valuation techniques.  The Company
determined that adoption of FSP 157-4 did not have a material impact on its
results of operations and financial position.




In
July 2006, the FASB issued ASC subtopic 740-10 (formerly Interpretation No.
(“FIN”) 48, “Accounting
for Uncertainty in Income Taxes ”).  ASC 740-10 sets forth a
recognition threshold and valuation method to recognize and measure an income
tax position taken, or expected to be taken, in a tax return.  The
evaluation is based on a two-step approach.  The first step requires an
entity to evaluate whether the tax position would “more likely than not,” based
upon its technical merits, be sustained upon examination by the appropriate
taxing authority.  The second step requires the tax position to be measured
at the largest amount of tax benefit that is greater than 50 percent likely of
being realized upon ultimate settlement.  In addition, previously
recognized benefits from tax positions that no longer meet the new criteria
would no longer be recognized.  The application of this Interpretation will
be considered a change in accounting principle with the cumulative effect of the
change recorded to the opening balance of retained earnings in the period of
adoption.  Adoption of this new standard did not have a material impact on
our financial position, results of operations or cash flows.




In April
2008, the FASB issued ASC 815-40 (formerly Emerging Issues Task Force (“EITF”)
07-05, “Determining whether
an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock
”).  ASC815-40 applies to any freestanding financial instruments or
embedded features that have the characteristics of a derivative, and to any
freestanding financial instruments that are potentially settled in an entity’s
own common stock.  ASC 815-40 is effective for financial statements issued
for fiscal years beginning after December 15, 2008.  The adoption of this
pronouncement did not have a material impact on its financial position, results
of operations or cash flows.





F-8





In
June 2009, the FASB issued ASC 105Accounting Standards
Codification TMand the
Hierarchy of Generally Accepted Accounting Principles .  The FASB
Accounting Standards Codification TM (the “Codification”) has become the source
of authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
accordance with Generally Accepted Accounting Principles (“GAAP”).  All
existing accounting standard documents are superseded by the Codification and
any accounting literature not included in the Codification will not be
authoritative.  Rules and interpretive releases of the SEC issued under the
authority of federal securities laws, however, will continue to be the source of
authoritative generally accepted accounting principles for SEC
registrants.  Effective September 30, 2009, all references made to
GAAP in our consolidated financial statements will include references to the new
Codification.  The Codification does not change or alter existing GAAP and,
therefore, will not have an impact on our financial position, results of
operations or cash flows.




In June
2009, the FASB issued changes to the consolidation guidance applicable to a
variable interest entity (VIE).  FASB ASC Topic 810, “Consolidation,”
amends the guidance governing the determination of whether an enterprise is the
primary beneficiary of a VIE, and is, therefore, required to consolidate an
entity, by requiring a qualitative analysis rather than a quantitative
analysis.  The qualitative analysis will include, among other things,
consideration of who has the power to direct the activities of the entity that
most significantly impact the entity’s economic performance and who has the
obligation to absorb losses or the right to receive benefits of the VIE that
could potentially be significant to the VIE.  This standard also requires
continuous reassessments of whether an enterprise is the primary beneficiary of
a VIE.  FASB ASC 810 also requires enhanced disclosures about an
enterprise’s involvement with a VIE.  Topic 810 is effective as of the
beginning of interim and annual reporting periods that begin after November 15,
2009.  This will not have an impact on the Company’s financial position,
results of operations or cash flows.




In June
2009, the FASB issued Financial Accounting Standards Codification No. 860 -
Transfers and Servicing. FASB ASC No. 860 improves the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets.  FASB ASC No. 860 is effective as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter.  The
adoption of FASB ASC No. 860 will not have an impact on the Company’s financial
statements.




International
Financial Reporting Standards


In
November 2008, the Securities and Exchange Commission (“SEC”) issued for comment
a proposed roadmap regarding potential use of financial statements prepared in
accordance with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board.  Under the proposed
roadmap, the Company would be required to prepare financial statements in
accordance with IFRS in fiscal year 2014, including comparative information also
prepared under IFRS for fiscal 2013 and 2012.  The Company is currently
assessing the potential impact of IFRS on its financial statements and will
continue to follow the proposed roadmap for future developments.




4.
            Investments
      in Mineral Properties








S&W
Oil & Gas, LLC - Poston Prospect






S&W
Oil & Gas, LLC – Rooney Prospect






F-9





5.
            Fair
      Value Measurements


The
Company adopted ASC Topic 820-10 at the beginning of 2009 to measure the fair
value of certain of its financial assets required to be measured on a recurring
basis.  The adoption of ASC Topic 820-10 did not impact the Company’s
financial condition or results of operations.  ASC Topic 820-10 establishes
a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value.  The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3
measurements).  ASC Topic 820-10 defines fair value as the price that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants on the measurement date.  A fair
value measurement assumes that the transaction to sell the asset or transfer the
liability occurs in the principal market for the asset or liability.  The
three levels of the fair value hierarchy under ASC Topic 820-10 are described
below:




Level
1 – Valuations based on quoted prices in active markets for identical
assets or liabilities that an entity has the ability to access.





Level
2 – Valuations based on quoted prices for similar assets and liabilities in
active markets, quoted prices for identical assets and liabilities in markets
that are not active, or other inputs that are observable or can be corroborated
by observable data for substantially the full term of the assets or
liabilities.




Level
3 – Valuations based on inputs that are supportable by little or no market
activity and that are significant to the fair value of the asset or
liability.




The
following table presents a reconciliation of all assets and liabilities measured
at fair value on a recurring basis as of December 31, 2009:




Level
      1
                    
                    
                    Level
      2
                    
                    
                    Level
      3
                    
                    
                    Fair
      ValueCash
                    
                    $
                    38,021
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    38,021Accounts
      receivable
                    
                    
                    -
                    
                    
                    
                    15,018
                    
                    
                    
                    -
                    
                    
                    
                    5,018Other
      receivable
                    
                    
                    -
                    
                    
                    
                    13,184
                    
                    
                    
                    -
                    
                    
                    
                    13,184Accounts
      payable
                    
                    
                    -
                    
                    
                    
                    184,602
                    
                    
                    
                    -
                    
                    
                    
                    184,602Notes
      payable
                    
                    
                    -
                    
                    
                    
                    35,977
                    
                    
                    
                    -
                    
                    
                    
                    35,977Loan
      Guarantee
                    
                    
                    -
                    
                    
                    
                    94,860
                    
                    
                    
                    -
                    
                    
                    
                    94,860Total
                    
                    $
                    38,021
                    
                    
                    $
                    333,641
                    
                    
                    $
                    -
                    
                    
                    $
                    371,662





6.
            Debt
      and Debt Guarantee





Notes
Payable


As of
December 31, 2009, the Company has a note payable of $25,000 bearing interest at
12% per annum collateralized by a general security arrangement over all of the
Company’s assets.  The note was payable in full on May 18, 2007 and is
therefore in default as of December 31, 2009.  During year ended December
31, 2009, the Company accrued interest expense of $3,855.  As of December
31, 2009, the balance of the note payable, including accrued interest, is
$35,977.




During
the year ended December 31, 2009, the Company received $218,000 from the
issuance of a convertible note payable.  The note paid 6% interest, was due
on April 14, 2011, and was convertible at $0.25 per share.  The note
accrued interest of $1,863 before the principle and accrued interest balance of
$219,864 was converted into 879,454 shares of common stock.  As of December
31, 2009, there is nothing due relating on this note payable.




Convertible
Debentures


In August
and September of 2009, the company received $1,000,000 from an investor to issue
a convertible debenture, bearing interest at a rate of 18% per annum paid
monthly on any unpaid principle balance to the investor, secured by the assets
of the Company.  $500,000 of the debenture is due on August 13, 2010 and
the other $500,000 is due on September 15, 2010.  The debenture calls for
payments of $15,000 per month to the investor until the debenture is fully
paid.  The holder of the convertible debenture has the right to convert any
portion of the unpaid principle and/or accrued interest at any time at the lower
of $0.35 per share or a 25% discount to the average closing price of the five
proceeding days.  In relation to the debentures, the Company issued
2,857,142 warrants to purchase common shares of the Company for $0.50 per
share.  The warrants have a term of two years.




The
warrants issued and beneficial conversion feature associated with the above
convertible debentures were valued using the black schools option pricing model
and bifurcated out of the debenture proceeds and recorded as additional paid in
capital in the amount of $581,626.  A discount on the convertible debenture
was recorded in the same amount and will be amortized into interest expense over
the life of the debenture using the interest method.  For the year ended
December 31, 2009, $197,605 was amortized into interest expense in relation to
these discounts.  As of December 31, 2009, the balance due on the
convertible debentures, net of the discount of $384,021, was
$599,285.





F-10





Loan
Guarantee


In 2004,
the Company received a demand for payment from Canadian Western Bank (“CWB”)
pursuant to a guarantee provided by the Company in favor of Calgary Chemical, a
former subsidiary.




The
Company divested itself of Calgary Chemical in 1998 under an agreement with a
former president and purchaser.  The agreements 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.




Upon
receipt of the claim, the Company accrued the amount of the claim since in the
opinion of legal counsel it is more likely than not that CWB would prevail in
this action.




Interest
expense


Interest
expense related to all of the above items was $265,440 for the year ended
December 31, 2009.




7.
            Stockholders’
      Equity Transactions




Common
Stock


During
the year ended December 31, 2008, the Company issued 1,200,000 shares of common
stock that was owed but not issued at December 31, 2007.




During
the year ended December 31, 2008, the Company issued 600,000 units at a price of
$0.05 per unit.  Each unit consisted of one common share and one three-year
warrant exercisable into common shares of the Company at a price at $0.15 per
share.




During
the year ended December 31, 2008, the Company received full payment to purchase
800,000 units at a price of $0.05 per unit.  Each unit consisted of one
common share and one three-year warrant exercisable into common shares of the
Company at a price of $0.15 per share.  As of December 31, 2008, these
shares had not been issued.




During
the year ended December 31, 2009, the Company issued 800,000 shares of common
stock that was owed but not issued as of December 31, 2009.




During
the year ended December 31, 2009, the Company issued 2,250,000 units at a price
of $0.02 per share for cash.




During
the year ended December 31, 2009, the Company issued 8,254,088 shares at a price
of $0.02 per share to convert $165,082 of accounts payable.




During
year ended December 31, 2009, the Company issued 879,454 shares at a price of
$0.25 per share to covert a note payable balance of $219,864 (See Note
6).




During
year ended December 31, 2009, the Company issued 1,500,000 shares of common
stock in an exercise of 1,500,000 warrants at a price of $0.15 for total
proceeds of $225,000.




During
the year ended December 31, 2009, the Company sold 190,000 shares of common
stock for $66,500 cash.  As of December 31, 2009, these shares have not
been issued and are shown as common stock owed but not issued.




During
the year ended December 31, 2009, the Company received $420,524 for the exercise
of 1,640,825 warrants to purchase 1,640,825 shares of common stock.  As of
December 31, 2009, these shares have not been issued and are shown as common
stock owed but not issued.




As of
December 31, 2009, there are 23,748,561 shares of common stock outstanding and
1,830,825 shares of common stock owed but not issued.




Warrants


As of
December 31, 2007, there were 1,200,000 warrants outstanding at an exercise
price of $0.15.




During
the year ended December 31, 2008, the Company issued 1,600,000 warrants with an
exercise price of $0.15 as detailed above.




During
the year ended December 31, 2009, the Company issued 2,857,142 warrants with a
convertible debenture.  These warrants have 2 year terms expiring in August
and September of 2011 and an exercise price of $0.50.  See Note 6 for
further details.





F-11





During
the year ended December 31, 2009, the Company issued 1,672,000 warrants for
services.  The warrants had two-year terms and an exercise price of
$0.35.  The warrants were valued using the black scholes option pricing
model and valued at $238,227.  800,000 of these warrants were cancelled
during the year when the service was not performed.




During
year ended December 31, 2009, a total of 3,140,825 warrants were exercised into
common shares of the Company at a price of $0.15 and $0.35 per share to a total
of $645,524 cash.




As of
December 31, 2009, there are 331,175 and 2,857,142 warrants outstanding at an
exercise price of $0.15 and $0.50, respectively.  These warrants will
expire in the years ending December 31, 2011.




8.
            Income
      Taxes


The
Company follows ASC subtopic 740-10 (formerly Statement of Financial Accounting
Standard No. 109, “Accounting for Income Taxes”) for recording the provision for
income taxes.  ASC 740-10 requires the use of the asset and liability
method of accounting for income taxes.  Under the asset and liability
method, deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled.  Deferred income
tax expenses or benefits are based on the changes in the asset or liability each
period.  If available evidence suggests that it is more likely than not
that some portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets to the amount
that is more likely than not to be realized.  Future changes in such
valuation allowance are included in the provision for deferred income taxes in
the period of change.




Deferred
income taxes may arise from temporary differences resulting from income and
expense items reported for financial accounting and tax purposes in different
periods.  Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they
relate.  Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse.




The
Company’s effective income tax rate is higher than would be expected if the
federal statutory rate were applied to income before tax, primarily because of
expenses deductible for financial reporting purposes that are not deductible for
tax purposes during the year ended December 31, 2009.




The
Company’s operations for the year ended December 31, 2009 and 2008 resulted in
losses, thus no income taxes have been reflected in the accompanying statements
of operations.




As of
December 31, 2009, the Company has net operating loss carry-forwards of
approximately $4,510,829 (December 31, 2008 - $3,620,000) which may or may not
be used to reduce future income taxes payable. Current Federal Tax Law limits
the amount of loss available to offset against future taxable income when a
substantial change in ownership occurs.  Therefore, the amount available to
offset future taxable income may be limited.  A valuation allowance has
been recorded to reduce the net benefit recorded in the financial statements
related to this deferred asset.  The valuation allowance is deemed
necessary as a result of the uncertainty associated with the ultimate
realization of these deferred tax assets.




9.
            Subsequent
      Events


In
preparing these financial statements, the Company has evaluated events and
transactions for potential recognition or disclosure through March 22, 2010, the
date the financial statements were issued.


For the
period from January 1, 2010 through March 22, 2010, 3,312,000 shares of common
stock were issued for warrant exercises, private equity placements, employment
agreements, and stock that was owed at the end of 2009.





F-12





INDEX
TO EXHIBITS




Exhibit Number
              
              Name3.1(1)
              
              
              Amended
      and Restated Articles of Incorporation3.2(1)
              
              
              Bylaws10.10(2)
              
              
              Management
      and Governance Consultant Agreement with Sound Energy Advisors,
      LLC10.11(3)
              
              
              Management
      and Governance Consultant Agreement with Chamberlain Capital
      Partners10.12(3)
              
              
              Business
      Consultant Agreement with Bakerview Investor Relations,
    Inc.10.13(5)
              
              
              Management
      and Governance Consultant Agreement with Robert
McIntosh10.14(6)
              
              
              Participation
      Agreement with Archer Exploration, Inc.10.15(7)
              
              
              Letter
      of Intent with S&W Oil & Gas, LLC dated May 4,
    2009.10.16(8)
              
              
              Participation
      Agreement with Archer Exploration, Inc. dated June 4,
  2009.10.17(9)
              
              
              Letter
      of Intent with S&W Oil & Gas, LLC dated June 11,
    2009.10.18(10)
              
              
              Letter
      of Intent with S&W Oil & Gas, LLC dated June 23,
    2009.10.19(11)
              
              
              Note
      Purchase Agreement dated August 13, 2009.10.20(12)
              
              
              Letter
      of Intent with S&W Oil & Gas, LLC dated August 25,
      2009.10.21(13)
              
              
              Participation
      Agreement with Archer Exploration, Inc. dated September 8,
      2009.10.22(14)
              
              
              Secured
      Convertible Promissory Note dated September 15, 200914.1(15)
              
              
              Code
      of Ethical Conduct16(4)
              
              
              Letter
      from Berkovits & Company, LLP21(15)
              
              
              List
      of Subsidiaries31.1
              
              
              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 10-KSB for the year ended December 31,
      2007.





(3)
            Incorporated
      by reference to Form 10-K for the year ended December 31,
      2008.





(4)
            Incorporated
      by reference to Form 8-K dated March 23,
2009.





(5)
            Incorporated
      by reference to Form 8-K dated March 27,
2009.





(6)
            Incorporated
      by reference to Form 8-K dated April 10,
2009.





25





(7)
            Incorporated
      by reference to Form 8-K dated May 6,
2009.





(8)
            Incorporated
      by reference to Form 8-K dated June 5,
2009.





(9)
            Incorporated
      by reference to Form 8-K dated June 11,
2009.





(10)
            Incorporated
      by reference to Form 8-K dated June 23,
2009.





(11)
            Incorporated
      by reference to Form 10-QSB for the period ended June 30,
      2009.





(12)
            Incorporated
      by reference to Form 8-K dated August 27,
2009.





(13)
            Incorporated
      by reference to Form 8-K dated September 14,
  2009.





(14)
            Incorporated
      by reference to Form 8-K dated September 24,
  2009.


(15)
            Incorporated by reference to Form 10-K
      for the year ended December 31,
2009.




26