UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





**FORM
10-KSB**





[X]
    ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
      
      For
      the fiscal year endedDecember
      31, 2004[ 
       ]
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT





For the transition period from _________
to ________


Commission file number:**333-82636******
      **Delta
      Oil & Gas, Inc.**(Name
      of small business issuer in its charter)****
      **Colorado**
    ****
      **91-2102350**(State or other jurisdiction of incorporation or organization)
    (I.R.S. Employer Identification No.)**1122
      6****th****Avenue**
      **Seattle,
      Washington**
    **98109**(Address
      of principal executive offices)
    (Zip
      Code)Issuer’s
      telephone number866-355-3644Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class
    Name
      of each exchange on which registeredNone
    Not
      ApplicableSecurities
      registered under Section 12(g) of the Exchange Act:None(Title
      of class)





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





Check if
disclosure of delinquent filers in response to Item 405 of Regulation S-B is not
contained in this form, and no disclosure will be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [ ]





State
issuer’s revenue for its most recent fiscal year: $9,041





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of such
common equity, as of a specified date within the past 60 days. $40,057,848
as of March 22, 2005 . ****





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date.


41,296,750
Common Shares as of March 22, 2005





Transitional
Small Business Disclosure Format (Check One): Yes: __; No X





1
 ***Table of Contents***




**TABLE OF CONTENTS**








PagePART IItem
      1:
    Description of
      Business
    3Item
      2:
    Description of
      Property
    7Item
      3:
    Legal Proceedings
    7Item
      4:
    Submission of Matters to a
      Vote of Security Holders
    7PART IIItem
      5:
    Market for Common Equity and Related
      Stockholder Matters
    8Item
      6:
    Management’s Discussion and
      Analysis
    10Item
      7:
    Financial Statements
    13Item
      8:
    Changes In and Disagreements With
      Accountants on Accounting and Financial Disclosure
    14Item
      8A:
    Controls and Procedures
    14Item
      8B:
    Other Information
    15PART IIIItem
      9:
    Directors, Executive Officers,
      Promoters and Control Persons; Compliance With Section 16(a) of the
      Exchange Act
    16Item
      10:
    Executive Compensation
    18Item
      11:
    Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters
    19Item
      12:
    Certain Relationships and
      Related Transactions
    19Item
      13:
    Exhibits
    20Item
      14:
    Principal Accountant Fees and
      Services
    20





2
 ***Table of Contents***


**PART I**





**Item
1:**  **Description
of Business**


****


**Company
Overview**





We were
incorporated under the laws of the State of Colorado on January 9, 2001 under
the name "Delta Oil & Gas, Inc." We are engaged in the exploration,
development, acquisition and operation of oil and gas properties. Because oil
and gas exploration and development requires significant capital and our assets
and resources are limited, we participate in the oil and gas industry through
the purchase of small interests in either producing wells or oil and gas
exploration and development projects.





**Description
of Business**





We are an
exploration company focused on developing North American oil and natural gas
reserves. The Company's current focus is on the exploration of its land
portfolio comprised of working interests in highly prospective acreage in the
Southern Alberta Foothills area and is looking to expand its portfolio to
include acreage in the US. The disclosure that follows discusses each property
that we have an interest in.





**Liberty
Valance Well**





On
February 7, 2001, we acquired an 8.9% working interest in a production gas well
styled the Liberty Valance RD1 Gas Unit (“Liberty Valance” or the “well”). The
well is located in the Rancho Capay Gas Field in Glenn County, California. Our
interest was acquired by us at a cost of $90,000. The well is operated by
Production Specialties Company (the “operator”) pursuant to an Operating
Agreement dated December 29, 2000. Under the Operating Agreement, we are
considered a non-operator. The operator markets each non-operator’s share of gas
production from the well and deducts all royalty burdens and operating expenses
prior to the distribution of revenues.





Proved
reserves are estimated quantities of natural gas and oil that geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. Proved developed reserves are proved reserves that reasonably can be
expected to be recovered through existing wells with existing equipment and
operating methods.


Proved
natural gas and oil reserve quantities at December 31, 2004 and 2003, and the
related discounted future net cash flows before income taxes are based on
estimates prepared by an independent consulting engineer. Such estimates have
been prepared in accordance with guidelines established by the SEC.
 
 Our net
ownership interests in estimated quantities of proved natural gas and oil
reserves and changes in net proved reserves for the Liberty Valance Well are
summarized below:
 
  3
 ***Table of Contents***




NATURAL
      GAS
      (MCF)Reserves,
      December 31, 2002
    3,846Extensions
      and revisions
    3,099Production
    (3,497)Reserves,
      December 31, 2003
    3,448Extensions
      and revisions
    (493)Production
    (1,671)Reserves,
      December 31, 2004
    1,284


The
standardized measure of discounted future net cash flows relating to our
ownership interests in provide natural gas and oil reserves for the Liberty
Valance Well is shown below:







2004
    2003Change
      due to current year operations:Sales
      of natural gas and oil, net of natural gas and oil
      operating
      Expenses
    $
      7,068
    $
      8,203Changes
      due to revisions in standardized variables:Prices
    (10,077)
    (9,935)Net
      Change
    (3,009)
    (1,732)Beginning
      of year
    5,130
    6,862End
      of year
    $
      2,121
    $
      5,130




**Coalinga
Prospect**





On July
5, 2001, we acquired for consideration of $50,000, the right to participate to
the extent of a 2.5% working interest in the Coalinga Prospect in Fresno County,
California. The Coalinga Prospect is approximately 5,000 acres in oil and gas
leases. Some of the $50,000 consideration paid for our 2.5% interest on July 5,
2001, compensated our predecessors in interest for shared development cost
attributed to the 2.5% interest paid through that date. Since July 5, 2001, we
have paid $108,690 toward development of the Coalinga Prospect.





The first
prospect was tested with a 12,000 foot well known as Olympic Coalinga No. 1.
Even though certain intervals encountered totaling 49 feet returned excellent
resistivity, the well was dry and is capped. We are obligated to contribute 2.5%
of all drilling costs in the Coalinga Prospect in order to share in any
recovery. We expended $108,690 on Olympic Coalinga No. 1 which was a dry hole.
No drilling in the Coalinga Prospect is taking place at the present time.
Accordingly, the entirety of the Coalinga Prospect at the present time is
undeveloped acreage consisting of 8,360 acres of which our interest is
2.5%.




4
 ***Table of Contents***




**Todd
Creek (Twp. 9 Range 2W5) and Hillspring Prospect (Twp. 5, 6 Range 29-30W4M)**





On
November 26, 2004, through our wholly owned Canadian subsidiary, Delta Oil &
Gas (Canada), Inc., we entered into two agreements (the "Agreements") with Win
Energy Corporation, ("Win") an Alberta based Oil & Gas Exploration Company,
in order to acquire an interest in lands and leases owned by Win. Subsequent to
the reporting period on or about January 25, 2005, we paid Win the full purchase
price set forth in the Agreements and acquired a working interest in two
prospective properties known as Todd Creek and Hillspring. Both properties are
located approximately 90 miles south of Calgary, Alberta in the Southern Alberta
Foothills belt.





Todd
Creek





We
acquired a 20% working interest in 13.75 sections of land (8800 acres) in Todd
Creek for the purchase price of $597,263 (US dollars). We also have an option to
acquire an additional 15% interest in 7 additional sections of land (4,480
acres). This option terminates on December 31, 2006.





Included
in the acquisition is a test well that has been drilled and cased. Under the
terms of this agreement, Win shall assume all costs of drilling and completing
or abandoning the test well up to gross costs of $1,330,000. Thereafter, we will
assume responsibility for 20% of all costs, risks, and expenses relating to the
test well.





Hillspring
Prospect





We
acquired a 10% working interest in one section of land (640 acres) in Hillspring
for the purchase price of $414,766 (US dollars). We also have an option to
acquire an additional 10% working interest in 1.25 sections in the immediate
area. This option terminates on July 1, 2005.





**Marketing
of Production**





Each oil
and/or gas property that we now own and those that we may later acquire a
percentage interest in will have an operator who will be responsible for
marketing production. However, the Liberty-Valance well and the Coalinga
Prospect are subject to contractual restrictions that require that non-operators
such as us consent to the terms and conditions of any sales contract before it
is entered into.





Any
non-operator who chooses to do so may negotiate and enter into a sales contract
with third parties for the sale of its share of oil and/or gas.





**Competition**





The oil
and gas industry is highly competitive in all its phases. Properties in which we
have an interest will encounter strong competition from many other oil and gas
producers, including many that possess substantial financial resources, in
acquiring economically desirable producing properties and exploratory drilling
prospects, and in obtaining equipment and labor to operate and maintain their
properties.





**Patents,
Licenses, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor
Contracts**





We do not
own, either legally or beneficially, any patent or trademark.




5
 ***Table of Contents***





**Employees**





We have
no employees other than our sole officer, Mr. Douglas Bolen.





****


**Research
and Development**





We did
not incur any research and development expenditures for the fiscal years ended
December 31, 2003 and December 31, 2004.





**Government
Regulation**





The
federal government and various state and local governments have adopted laws and
regulations regarding the protection of human health and the environment. These
laws and regulations may require the acquisition of a permit by operators before
drilling commences, prohibit drilling activities on certain lands lying within
wilderness areas, wetlands, or where pollution might cause serious harm, and
impose substantial liabilities for pollution resulting from drilling operations,
particularly with respect to operations in onshore and offshore waters or on
submerged lands. These laws and regulations may increase the costs of drilling
and operating wells. Because these laws and regulations change frequently, the
costs of compliance with existing and future environmental regulations cannot be
predicted with certainty.





The
transportation and certain sales of natural gas in interstate commerce are
heavily regulated by agencies of the federal government. Production of any oil
and gas by properties in which we have an interest will be affected to some
degree by state regulations. States have statutory provisions regulating the
production and sale of oil and gas, including provisions regarding
deliverability. Such statutes, and the regulations promulgated in connection
therewith, are generally intended to prevent waste of oil and gas and to protect
correlative rights to produce oil and gas between owners of a common reservoir.
State regulatory authorities may also regulate the amount of oil and gas
produced by assigning allowable rates of production to each well or pro-ration
unit.





Any
exploration or production on Federal land will have to comply with the Federal
Land Management Planning Act which has the effect generally of protecting the
environment. Any exploration or production on private property whether owned or
leased will have to comply with the Endangered Species Act and the Clean Water
Act. The costs of complying with environmental concerns under any of these acts
varies on a case by case basis. In many instances the cost can be prohibitive to
development. Environmental costs associated with a particular project must be
factored into the overall cost evaluation of whether to proceed with the
project.





There are
no costs to us at the present time in connection with compliance with
environmental laws. Costs, however, could occur at any time through industrial
accident or in connection with a new project. Costs could extend into the
millions of dollars for which we could be totally liable. In the event of
liability, we would be entitled to contribution from other owners so that our
percentage share of a particular project would be the percentage share of our
liability on that project. However, other owners may not be willing or able to
share in the cost of the liability. Even if liability is limited to our
percentage share, any significant liability would wipe out our assets and
resources.




6
 ***Table of Contents***





**Item
2:**  **Description
of Property**





On March
1, 2005, we entered into a 12 month lease of office space at Suite 300-1055 West
Hastings Street, Vancouver, British Columbia, Canada for the sum of CDN $1,295
per month.





On March
1, 2005, we also rented a virtual office on a month-to-month basis located at
Suite 1600, 144 4 th Avenue
S.W., Calgary, Alberta T2P 3N4 for CDN $295.00 per month.





We
maintain our corporate office at 1122 6th Avenue North, Seattle, Washington
98109. This office space is an office sharing arrangement being provided as an
accommodation to us where we can receive mail and perform other minimal
corporate functions.





**Item
3:**   **Legal Proceedings**





We are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.




Our agent
for service of process in Nevada is Cane Clark LLP, 3273 E. Warm Springs, Rd.,
Las Vegas, Nevada 89120.





**Item
4:**  **Submission
of Matters to a Vote of the Security Holders**





No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 2004.




7
 ***Table of Contents***





**PART II**








**Item
5:**  **Market
for Common Equity and Related Stockholder Matters**





Our
common stock is currently quoted on the OTC Bulletin Board, which is sponsored
by the National Association of Securities Dealers (“NASD”). The OTC Bulletin
Board is a network of security dealers who buy and sell stock. The dealers are
connected by a computer network that provides information on current "bids" and
"asks", as well as volume information. Our shares are quoted on the OTC Bulletin
Board under the symbol “ DOIG”.





The
following table sets forth the range of high and low bid quotations for our
Common Stock for each of the periods indicated as reported by the NASD OTCBB.
These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.





**Market
Information**





Fiscal
      Year Ending December 31, 2004Quarter
      Ended
    
    High
      $
    
    Low
      $December
      31, 2004
    
    5.25
    
    0.75Fiscal
      Year Ending December 31, 2005Quarter
      Ended
    
    High
      $
    
    Low
      $March
      31, 2005
    
    1.19
    
    0.85





On March
30, 2005 closing price per share of our common stock, as reported by the NASD
OTC Bulletin Board, was $1.00.





On
November 24, 2004, our board of directors approved a five and one-half forward
split of our common stock. The forward split took effect on December 15, 2004.
Any fractional shares created by this forward split were rounded up to the next
whole share. Following this stock split, the number of outstanding shares of our
common stock increased from 7,508,500 shares to approximately 41,296,750
shares.





Each
shareholder was required to surrender their old certificate to the transfer
agent in order to receive a new certificate which reflects the forward split. We
have obtained a new CUSIP number, which is 24778R 20 9. Our common stock began
trading under a new symbol DOIG effective December 15, 2004.





**Penny
Stock**





Until our
shares qualify for inclusion in the Nasdaq system, the public trading, if any,
of our common stock will be on the OTC Bulletin Board. As a result, an investor
may find it more difficult to dispose of, or to obtain accurate quotations as to
the price of, the common stock offered. Our common stock is subject to
provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), commonly referred to as the "penny stock
rule." Section 15(g) sets forth certain requirements for transactions in penny
stocks, and Rule 15g-9(d)incorporates the definition of "penny stock" that is
found in Rule 3a51-1 of the Exchange Act. The SEC generally defines "penny
stock" to be any equity security that has a market price less than $5.00 per
share, subject to certain exceptions. If our common stock is deemed to be a
penny stock, trading in the shares will be subject to additional sales practice





8
 ***Table of Contents***





requirements
on broker-dealers who sell penny stocks to persons other than established
customers and accredited investors. "Accredited investors" are persons with
assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
together with their spouse. For transactions covered by these rules,
broker-dealers must make a special suitability determination for the purchase of
such security and must have the purchaser’s written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the first
transaction, of a risk disclosure document, prepared by the SEC, relating to the
penny stock market. A broker-dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative, and current
quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information for the penny stocks held in an account and
information on the limited market in penny stocks. Consequently, these rules may
restrict the ability of a broker-dealer to trade and/or maintain a market in our
common stock and may affect the ability of our shareholders to sell their
shares.





**Holders
of Our Common Stock**





As of
March 22, 2005, there are 29 registered holders of our common
stock.





**Dividends**





There are
no restrictions in our articles of incorporation or bylaws that prevent us from
declaring dividends. The Nevada Revised Statutes, however, do prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:





1.  we would
not be able to pay our debts as they become due in the usual course of business;
or





2.  our total
assets would be less than the sum of our total liabilities plus the amount that
would be needed to satisfy the rights of shareholders who have preferential
rights superior to those receiving the distribution.





We have
not declared any dividends, and we do not plan to declare any dividends in the
foreseeable future.





**Securities
Authorized for Issuance Under Equity Compensation Plans**





During
the year ended December 31, 2004, we did not adopt any equity compensation
plans.





**Recent
Sales of Unregistered Securities**





The
information set forth below relates to our issuances of securities without
registration under the Securities Act of 1933 during the past three
years.





Subsequent
to the reporting period on February 1, 2005, we completed an offering of
1,200,000 Units at $1.00 per Unit to a total of three (3) investors. Each Unit
consisted of one (1) share of common stock, par value $0.001, and one (1)
Warrant (the "Warrant") to purchase one (1) share of common stock, exercisable
for five (5) years from the closing of the offering. The exercise price for the
Warrant was priced at $1.50. The total amount we received from this offering was
$1,200,000. Assuming that all of the warrants are exercised by the investors,
the gross proceeds received from the warrants will equal $1,800,000.





We
completed this offering pursuant to Regulation S of the Securities Act. Each
purchaser represented to us that he was a non-US person as defined in Regulation
S. We did not engage in a distribution of this offering in the United States.
Each purchaser represented his intention to acquire the securities for
investment only and not with a view toward distribution. We requested our stock
transfer agent to affix appropriate legends to





9
 ***Table of Contents***





the stock
certificate issued to each purchaser in accordance with Regulation S and the
transfer agent affixed the appropriate legends. Each investor was given adequate
access to sufficient information about us to make an informed investment
decision. None of the securities were sold through an underwriter and
accordingly, there were no underwriting discounts or commissions involved. No
registration rights were granted to any of the purchasers .





**Item
6:** **Management’s Discussion and Analysis**





**Forward-Looking
Statements**





Historical
results and trends should not be taken as indicative of future operations.
Management’s statements contained in this report that are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Actual results may differ materially from those
included in the forward-looking statements. The Company intends such
forward-looking statements to be covered by the safe-harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of complying with
those safe-harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words “believe,”
“expect,” “intend,” “anticipate,” “estimate,” “project,” “prospects,” or similar
expressions. The Company’s ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Factors which could have a
material adverse affect on the operations and future prospects of the Company on
a consolidated basis include, but are not limited to: unanticipated
problems relating to exploration, hazards such as pollution, or other hazards
which cannot be insured against or predicted, changes
in economic conditions, availability of capital, competition, and generally
accepted accounting principles. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements. Further information concerning the Company and
its business, including additional factors that could materially affect the
Company’s financial results, is included herein and in the Company’s other
filings with the Securities and Exchange Commission.





**Results
of Operations**




For the
year ended December 31, 2004, we generated revenues in the amount of $9,041. Our
revenue decreased from the year ended December 31, 2003 when we generated
revenue in the amount of $17,029. Our revenue in both years was generated from
the Liberty Valance Well, our only producing property. We have
retained consultants to prepare reserve reports to provide us with an estimated
value of the remaining reserves in the Liberty Valance Well. Based upon these
reserve reports, the standardized measure of discounted cash flows for the
Liberty Valance Well was estimated to be $5,130 as of December 31, 2003 and
$2,121 as of December 31, 2004. The decrease is our reported revenue is
attributable to the depletion of the reserves in the Liberty Valance Well.
Subsequent to the reporting period, we acquired a working interest in two
properties referred to as Todd Creek and Hillspring. As a result of the
acquisition of these interests, we anticipate that our revenues will increase
during the current year.





We
incurred operating costs and expenses in the amount of $40,615 for the year
ended December 31, 2004. Our expenses for the year ended December 31, 2004
consisted of oil and gas operating expenses in the amount of $1,973, general and
administrative expenses in the amount of $38,529, and $113 for depreciation and
depletion. Our expenses for the year ended December 31, 2003 consisted of oil
and gas operating expenses in the amount of $8,826, general and administrative
expenses in the amount of $29,077, and $3,549. The increase is general and
administrative fees in primarily attributable to an increase in legal fees
associated with the acquisition of the Todd Creek and Hillspring properties. The
reduction in oil and gas





10
 ***Table of Contents***





operating
expenses is primarily attributable to declining producing of the Liberty Valance
Well. As a result of the acquisition of these interests, we anticipate that our
operating expenses will increase during the current year.





Our net
loss for the year ended December 31, 2004 was $31,574, compared to a net loss of
$24,423 in the prior year.





**Assets**





As of
December 31, 2004, we had current assets of $7,863, and total assets in the
amount of $59,135. As of December 31, 2004, our only current asset was accounts
receivable. Our total assets as of December 31, 2003 were $6,480. The increase
in our total assets is attributable to a $50,000 deposit we made on the Todd
Creek and Hillspring properties that was booked as unproved oil and gas
properties.





**Liabilities
and Stockholders Deficit**





Our total
liabilities as of December 31, 2004 were $97,674. Our liabilities primarily
consisted of accounts payable in the amount of $16,679, accrued interest payable
in the amount of $21,648, and $13,122 due to a related party.





**Liquidity
and Capital Resources**





As of
December 31, 2004, we had no cash on hand. Our total current liabilities as of
December 31, 2004 were $60,420. As a result, we had a working capital deficit of
$52,557 on December 31, 2004.





The
revenue we generate from a producing well does not exceed our operating
expenses. As a result, we needed additional financing in order to sustain our
business operations and acquire additional properties. Subsequent to the
reporting period on February 1, 2005, we raised proceeds in the amount of
$1,200,000 through the sale of our equity securities. This financing was
primarily used to acquire the Todd Creek and Hillspring properties. Following
the acquisition of these properties, we still anticipate the need to raise
significant capital through the sale of equity securities on a private or public
basis in order to sustain operations and participate in future drilling and/or
other oil and gas development projects. It is uncertain whether we will be able
to obtain the capital necessary.





We intend
to fund operations over the next twelve months through increased revenue from
oil and gas sales resulting from our property acquisitions and debt and/or
equity financing arrangements, which may be insufficient to fund our capital
expenditures, working capital or other cash requirements for the next twelve
months. The completion of our business plan for the next 12 months is contingent
upon us obtaining additional financing. If we are unable to obtain additional
financing, the full implementation of our business plan will be impaired.





**Off
Balance Sheet Arrangements**





As of
December 31, 2004, there were no off balance sheet arrangements.





**Going
Concern**





Our
independent auditors have stated in their Auditor’s Report that we have suffered
recurring losses and net cash outflows from development stage activities.
T o achieve
profitable operations, we required additional capital for obtaining producing
oil and gas properties through either the purchase of producing wells or





11
 ***Table of Contents***





successful
exploration activity. As a result, our auditor’s concluded that there is a
substantial doubt about our ability to continue as a going concern.


****


**Revenue
Recognition**





We use
the sale method of accounting for natural gas and oil reserves. Under this
method, revenues are recognized based on actual volumes of gas and oil sold to
purchasers. Volumes sold may differ from the volumes to which we are entitled,
based on our interests in the properties. Differences between volumes sold and
entitled volumes create oil and gas imbalances which will be generally reflected
as adjustments to reported proved oil and gas reserves and future cash flows in
the supplemental oil and gas disclosures. If excess takes of natural gas or oil
exceed our estimated remaining proved reserves for a property, a natural gas or
oil imbalance liability will be recorded in the balance sheet.




12
 ***Table of Contents***





**Item
7:**    **Financial Statements**








Index to
Audited Consolidated Financial Statements:





F-2   Independent
Auditor’s Report





F-3   Former
Independent Auditor’s Report





F-4   Balance
Sheets - December 31, 2004 and 2003





F-5   Statements
of Operations - Years Ended December 31, 2004 and December 31, 2003





F-6   Statements
of Cash Flows - Years Ended December 31, 2004 and December 31, 2003





F-7   Statements
of Stockholders’ Equity (Deficiency) - Period from January 9, 2001 (Inception)
to December 31, 2004





F-8   Notes to
Consolidated Financial Statements




13
 ***Table of Contents***







**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**








**FINANCIAL
STATEMENTS**


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








**DECEMBER
31, 2004**




***Table of Contents***




REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM


**To
the Board of Directors and Stockholders of**
 **Delta
Oil & Gas, Inc.**
 **(A
Development Stage Company)**
 
 
 We have
audited the accompanying balance sheet of **Delta
Oil & Gas, Inc.** (the
“Company”) (A Development Stage Company) as at December 31, 2004, the related
statements of operations, stockholders’ (deficiency) and cash flows for the year
ended December
31, 2004. These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 the Company as at December 31, 2004
and the results of its operations and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.
 The
financial statements as of and for the year ended December 31, 2003, and the
cumulative data from January 9, 2001 (inception) to December 31, 2003, were
audited by Morgan & Company, Chartered Accountants, and they expressed an
unqualified opinion in their report dated March 31, 2004, but they have not
performed any auditing procedures since that date.
 The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 1 to the financial statements,
the Company has suffered recurring losses and net cash outflows from operations
since inception. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard to these
matters are also described in Note 1. These financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
 
 
 **/s/ TELFORD SADOVNICK, P.L.L.C.**
 
 **CERTIFIED PUBLIC ACCOUNTANTS**
 
 Bellingham,
Washington
 April 14,
2005




F -
2





****


****


****


**REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**














To the
Board of Directors and the Stockholders of


Delta Oil
& Gas, Inc.


(A
development stage company)





We have
audited the balance sheets of Delta Oil & Gas, Inc. (a development stage
company) as at December 31, 2003 and the statements of operations, cash flows,
and stockholders’ deficiency for the year ended December 31, 2003, and for the
cumulative period from inception, January 9, 2001, to December 31, 2003. These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.





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





In our
opinion, these financial statements present fairly, in all material respects,
the financial position of the Company as at December 31, 2003 and the results of
its operations and its cash flows, and changes in stockholders’ deficiency for
the year ended December 31, 2003, and for the cumulative period from inception,
January 9, 2001, to December 31, 2003, in conformity with United States
generally accepted accounting principles.





The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 1(c) to the financial
statements, the Company has incurred a net loss of $271,590 since inception, has
not attained profitable operations and is dependent upon obtaining adequate
financing to fulfil its development activities. These factors raise substantial
doubt that the Company will be able to continue as a going concern. Management’s
plans in regard to these matters are also discussed in Note 1(c). The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.














Vancouver,
Canada “Morgan
& Company”





















F -
3
 ***Table of Contents***





**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**BALANCE
SHEETS**


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





**December
      31****2004**
    
    2003**ASSETS****Current**Cash
    **$**
    **-**
    $
    63Accounts
      receivable
    
    **7,863**
    
    5,032**7,863**
    
    5,095**Natural
      Gas and Oil Properties**Proved
      property
    
    **1,272**
    
    1,272Unproved
      properties
    
    **50,000**
    
    **-****51,272**
    
    1,272**Other
      Equipment**Computer
      equipment
    
    **1,741**
    
    1,741Less:
      Accumulated depreciation
    
    **(1,741)**
    
    (1,628)**-**
    
    113**$**
    **59,135**
    $
    6,480**LIABILITIES****Current**Excess
      of cheques issued over funds on deposit
    **$**
    **5,283**
    $
    -Accounts
      payable
    
    **16,679**
    
    27,283Accrued
      interest payable
    
    **17,362**
    
    11,396Advances
      payable
    
    **7,974**
    
    79,655Due
      to related party
    
    **13,122**
    
    20,000**60,420**
    
    138,334**Promissory
      Note Payable**
    
    **37,254**
    
    35,111**97,674**
    
    173,445**STOCKHOLDERS’
      (DEFICIENCY)****Share
      Capital**Authorized:100,000,000
      common voting stock, par value $0.001 per share25,000,000
      preferred stock, par value $0.001 per shareIssued
      and outstanding:41,296,750
      common stock at December 31, 2004 and 2003
    
    **41,297**
    
    41,297Additional
      paid-in capital
    
    **63,328**
    
    63,328Share
      subscriptions received
    
    **160,000**
    
    -**Deficit
      Accumulated During The Development Stage**
    
    **(303,164)**
    
    (271,590)**(38,539)**
    
    (166,965)**$**
    **59,135**
    $
    6,480




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





F -
4
 ***Table of Contents***


****


**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**STATEMENTS
OF OPERATIONS**


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





Period
      FromJanuary
      9
      2001**Year
      Ended**
      **December
      31**
    (Inception)
      To
      December
      31**2004**
    2003
    2004**Revenue**Natural
      gas and oil sales
    **$**
    **9,041**
    $
    17,029
    $
    86,763**Expenses**Natural
      gas and oil operating expenses
    
    **1,973**
    
    8,826
    
    29,304General
      and administrative expenses
    
    **38,529**
    
    29,077
    
    139,118Depreciation
      and depletion
    
    **113**
    
    3,549
    
    37,312Impairment
      of natural gas and oil properties
    
    **-**
    
    -
    
    65,503Dry
      well costs written off
    
    **-**
    
    -
    
    118,690**40,615**
    
    41,452
    
    389,927**Net
      loss for the period**
    **$**
    **(31,574)**
    $
    (24,423)
    $
    (303,164)**Basic
      and diluted net loss per share**
    **$**
    **(0.01)**
    $
    (0.01)**Weighted
      average number of outstanding shares**
    
    **41,296,750**
    
    41,296,750




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




F -
5
 ***Table of Contents***





DELTA OIL & GAS,
INC.




**(A
Development Stage Company)**





**STATEMENTS
OF CASH FLOWS**


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





Period
      FromJanuary
      9
      2001**Year
      Ended**
      **December
      31**
    (Inception)
      To
      December
      31**2004**
    2003
    2004**Cash
      provided by (used in):**
      **Operating
      Activities**Net
      loss for the period
    **$**
    **(31,574)**
    $
    (24,423)
    $
    (303,164)Items
      not involving cash:Depreciation
      and depletion
    
    **113**
    
    3,549
    
    37,312Impairment
      of natural gas and oil properties
    
    **-**
    
    -
    
    65,503Dry
      well costs written off
    
    **-**
    
    -
    
    118,690**(31,461)**
    
    (20,874)
    
    (81,659)Changes
      in non-cash operating working capital items:Accounts
      receivable
    
    **(2,831)**
    
    (5,032)
    
    (7,863)Accounts
      payable
    
    **(8,587)**
    
    (8,587)
    
    16,679Accrued
      interest payable
    
    **5,966**
    
    11,396
    
    17,362**(38,930)**
    
    (23,097)
    
    (55,481)**Investing
      Activities**Purchase
      of natural gas and oil properties
    
    **(50,000)**
    
    -
    
    (271,036)Purchase
      of other equipment
    
    **-**
    
    -
    
    (1,741)**(50,000)**
    
    -
    
    (272,777)**Financing
      Activities**Issue
      of common stock
    
    **-**
    
    -
    
    104,625Share
      subscriptions received
    
    **160,000**
    
    -
    
    160,000Due
      to related party
    
    **(6,878)**
    
    2,752
    
    13,122Advances
      payable (repaid)
    
    **(71,681)**
    
    17,260
    
    7,974Promissory
      note payable
    
    **2,143**
    
    2,143
    
    37,254**83,584**
    
    22,155
    
    322,975**(Decrease)
      In Cash**
    
    **(5,346)**
    
    (942)
    
    (5,283)**Cash,
      beginning of period**
    
    **63**
    
    1,005
    
    -**Cash
      (Excess of Cheques Issued Over Funds**
      **on
      Deposit), end of period**
    **$**
    **(5,283)**
    $
    63
    $
    (5,283)**Supplemental
      disclosure of cash flow information:**Cash
      paid during the period for:Interest
    **$**
    **-**
    $
    -
    $
    -Income
      taxes
    **$**
    **-**
    $
    -
    $
    -




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




F -
6
 ***Table of Contents***




DELTA OIL & GAS,
INC.




**(A
Development Stage Company)**





**STATEMENT
OF CHANGES IN STOCKHOLDERS’ (DEFICIENCY)**


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





**PERIOD
FROM JANUARY 9, 2001 (INCEPTION) TO DECEMBER 31, 2004**


****


**Common
      Stock**
    **Deficit**
      **Accumulated****Number
      of**
    
    **Additional**
    **Share**
    **During
      The****Common**
    **Par**
    **Paid-in**
    **Subscriptions**
    **Development****Shares**
    **Value**
    **Capital**
    **Received**
    **Stage**
    **Total**Stock
      issued for cash at $0.0002
    13,750,000
    $
    13,750
    $
    (11,250)
    $
    -
    $
    -
    $
    2,500Stock
      issued for cash at $0.0036
    27,500,000
    
    27,500
    
    72,500
    
    -
    
    -
    
    100,000Stock
      issued for cash at $0.045
    46,750
    
    47
    
    2,078
    
    -
    
    -
    
    2,125Net
      loss
    -
    
    -
    
    -
    
    -
    
    (184,407)
    
    (184,407)Balance,
      December 31, 2001
    41,296,750
    
    41,297
    
    63,328
    
    -
    
    (184,407)
    
    (79,782)Net
      loss
    -
    
    -
    
    -
    
    -
    
    (62,760)
    
    (62,760)Balance,
      December 31, 2002
    41,296,750
    
    41,297
    
    63,328
    
    
    
    (247,167)
    
    (142,542)Net
      loss
    -
    
    -
    
    -
    
    -
    
    (24,423)
    
    (24,423)Balance,
      December 31, 2003
    41,296,750
    
    41,297
    
    63,328
    
    -
    
    (271,590)
    
    (166,965)Share
      subscriptions received
    -
    
    -
    
    -
    
    160,000
    
    -
    
    160,000Net
      loss
    -
    
    -
    
    -
    
    -
    
    (31,574)
    
    (31,574)Balance,
      December 31, 2004
    41,296,750
    $
    41,297
    $
    63,328
    $
    160,000
    $
    (303,164)
    $
    (38,539)




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





F -
7
 ***Table of Contents***





**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**NOTES
TO FINANCIAL STATEMENTS**


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





**DECEMBER
31, 2004**


****


**1.**
    **NATURE
      OF OPERATIONS**





a)
    Organization





The
Company was incorporated in the State of Colorado, USA on January 9,
2001.





Effective
December 15, 2004, the Company conducted a forward split of common stock on the
basis of 5 1⁄2 new common stock for every one previously held common stock. All
stock and per unit data included in these financial statements have been
adjusted to retroactively reflect this forward stock split.





b)
    Development
      Stage Activities





The
Company is an independent natural gas and oil development stage enterprise
engaged in the acquisition, exploration, development and production of natural
gas and oil in the United States and Canada. Since inception, the Company has
acquired an 8.9% working interest in a well, which commenced production in
February 2001. In 2004, the Company entered into two participation proposal
agreements to acquire a 10% and 20% working interest, respectively, in lands and
leases in Alberta, Canada.





The
Company is subject to several categories of risk associated with its development
stage activities. Natural gas and oil exploration and production is a
speculative business, and involves a high degree of risk. Among the factors that
have a direct bearing on the Company’s prospects are uncertainties inherent in
estimating natural gas and oil reserves, future hydrocarbon production, and cash
flows, particularly with respect to wells that have not been fully tested and
with wells having limited production histories; access to additional capital;
changes in the price of natural gas and oil; availability and cost of services
and equipment; and the presence of competitors with greater financial resources
and capacity.





c)
    Going
      Concern





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.





As shown
in the accompanying financial statements, since inception, the Company has
suffered recurring losses and net cash outflows from development stage
activities.. To achieve profitable operations, the Company requires additional
capital for obtaining producing oil and gas properties through either the
purchase of producing wells or successful exploration activity. Management
believes that sufficient funding will be available to meet its business
objectives including anticipated cash needs for working capital and is currently
evaluating several financing options. However, there can be no assurance that
the Company will be able to obtain sufficient funds to continue the development
of and, if successful, to commence the sale of its products under development.
As a result of the foregoing, there exists substantial doubt about the Company’s
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.





F -
8
 ***Table of Contents***





**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**NOTES
TO FINANCIAL STATEMENTS**


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





**DECEMBER
31, 2004**





**2.**
    **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





a)
    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 amounts 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 periods. Actual results could differ from those estimates. Significant
estimates with regard to these financial statements include the estimate of
proved natural gas and oil reserve quantities and the related present value of
estimated future net cash flows therefrom (see unaudited information,
“Supplemental Natural Gas and Oil Disclosures”).





b)
    Cash





Cash
consists of cash on deposit with high quality major financial institutions, and
to date has not experienced losses on any of its balances. The carrying amounts
approximated fair market value due to the liquidity of these
deposits.





c) Environmental
Protection and Reclamation Costs





The
operations of the Company have been, and may be in the future be affected from
time to time in varying degrees by changes in environmental regulations,
including those for future removal and site restorations costs. Both the
likelihood of new regulations and their overall effect upon the Company may vary
from region to region and are not predictable.





The
Company’s policy is to meet or, if possible, surpass standards set by relevant
legislation, by application of technically proven and economically feasible
measures. Environmental expenditures that relate to ongoing environmental and
reclamation programs will be charged against statements of operations as
incurred or capitalized and amortized depending upon their future economic
benefits. The Company does not currently anticipate any material capital
expenditures for environmental control facilities because all property holdings
are at early stages of exploration. Therefore, estimated future removal and site
restoration costs are presently considered minimal.





d)
    Natural
      Gas and Oil Properties





The
Company accounts for its natural gas and oil producing activities using the full
cost method of accounting as prescribed by the United States Securities and
Exchange Commission (“SEC”). Accordingly, all costs associated with the
acquisition of properties and exploration with the intent of finding proved
natural gas and oil reserves contribute to the discovery of proved reserves,
including the costs of abandoned properties, dry holes, geophysical costs, and
annual lease rentals are capitalized. All general corporate costs are expensed
as incurred. In general, sales or other dispositions of oil and gas properties
are accounted for as adjustments to capitalized costs, with no gain or loss
recorded. Depetion of evaluated natural gas and oil properties is computed on
the units of production method, based on all proved reserves on a
country-by-country basis. Unevaluated natural gas and oil properties are
assessed at least annually for impairment either individually or on an aggregate
basis. The net capitalized costs of evaluated natural gas and oil properties
(full cost ceiling limitation) are not to exceed their related estimated future
net revenues discounted at 10%, and the lower of cost or estimated fair value of
unproved properties, net of tax considerations.





F -
9
 ***Table of Contents***





**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**NOTES
TO FINANCIAL STATEMENTS**


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





**DECEMBER
31, 2004**





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





d)
    Natural
      Gas and Oil Properties (Continued)





The
Company adopted Statement of Financial Accounting Standards No. 143 (“SFAS
143”), "Accounting for Asset Retirement Obligations" in 2003, which requires
that an asset retirement obligation (“ARO”) associated with the retirement of a
tangible long-lived asset be recognized as a liability in the period in which it
is incurred and becomes determinable, with an offsetting increase in the
carrying amount of the associated asset. The cost of the tangible asset,
including the initially recognized ARO, is depleted, such that the cost of the
ARO is recognized over the useful life of the asset. The ARO is recorded at fair
value, and accretion expense is recognized over time as the discounted liability
is accreted to its expected settlement value. The fair value of the ARO is
measured using expected future cash flow, discounted at the Company’s
credit-adjusted risk-free interest rate. Management has determined that the
Company’s asset retirement obligation, which primarily relates to the plugging
and abandonment of its natural gas property, is not significant. Accordingly, no
liability has been recorded.





e)
    Joint
      Ventures





All
exploration and production activities are conducted jointly with others and,
accordingly, the accounts reflect only the Company’s proportionate interest in
such activities.





f)
    Revenue
      Recognition





The
Company uses the sales method of accounting for natural gas and oil revenues.
Under this method, revenues are recognized upon the
passage of title, net of royalties. Revenues from natural gas production are
recorded using the sales method. When sales volumes exceed the Company’s
entitled share, an overproduced imbalance occurs. To the extent the overproduced
imbalance exceeds the Company’s share of the remaining estimated proved natural
gas reserves for a given property, the Company records a liability. At December
31, 2004 and 2003, the Company had no overproduced imbalances.





g)
    Other
      Equipment





Computer
equipment is stated at cost. Provision for depreciation on computer equipment is
calculated using the straight-line method over the estimated useful life of
three years.





h)
    Impairment
      of Long-Lived Assets





In the
event that facts and circumstances indicate that the costs of long-lived assets,
other than oil and gas properties, may be impaired, and evaluation of
recoverability would be performed. If an evaluation is required, the estimated
future undiscounted cash flows associated with the asset would be compared to
the asset’s carrying amount to determine if a write-down to market value or
discounted cash flow value is required. Impairment of natural gas and oil
properties is evaluated subject to the full cost ceiling as described under
Natural Gas and Oil Properties.





F -
10
 ***Table of Contents***





**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**NOTES
TO FINANCIAL STATEMENTS**


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





**DECEMBER
31, 2004**





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





i)
    Loss
      Per Share





In
February 1997, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards No. 128 (“SFAS 128”), "Earnings Per
Share". Under SFAS 128, basic and diluted earnings per share are to be
presented. Basic earnings per share is computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
in the period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares.





j)
    Income
      Taxes





The
Company follows the liability method of accounting for income taxes under which
deferred tax assets and liabilities are recognized for the future tax
consequences of (i) temporary differences between the tax bases of assets and
liabilities, and their reported amounts in the financial statements, and (ii)
operating loss and tax credit carryforwards for tax purposes. Deferred tax
assets are reduced by a valuation allowance when, based upon management’s
estimates, it is more likely than not that a portion of the deferred tax assets
will not be realized in a future period.





k)
    Financial
      Instruments





The
Company’s financial instruments consist of cheques issued in excess of funds on
deposit, accounts receivable, accounts payable, accrued interest payable,
advances payable, and amounts due to related parties.





It is
management’s opinion that the Company is not exposed to significant interest or
credit risks arising from these financial instruments. The fair value of these
financial instruments approximates their carrying values.





l) Foreign
currency translation





United
States funds are considered the Company’s functional currency. Transaction
amounts denominated in foreign currencies are translated into their United
States dollar equivalents at exchange rates prevailing at the transaction date.
Monetary assets and liabilities are adjusted at each balance sheet date to
reflect exchange rates prevailing at that date, and non-monetary assets and
liabilities are translated at the historical rate of exchange. Gains and losses
arising from restatement of foreign currency monetary assets and liabilities at
each year-end are included in statements of operations.





m)
    Stock
      Based Compensation





The
Company accounts for employee stock based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25 - “Accounting
for Stock Issued to Employees”, and related interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
fair value of the Company’s common stock at the date of the grant over the
amount an employee must pay to acquire the common stock. Non-employee stock
based compensation is accounted for using the fair value method in accordance
with SFAS No. 123 - “Accounting for Stock Based Compensation”.





F -
11
 ***Table of Contents***


****


**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**NOTES
TO FINANCIAL STATEMENTS**


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





**DECEMBER
31, 2004**


****


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





a)
    In
      November 2004, FASB issued Statement of Financial Accounting Standards No.
      151 (“SFAS 151”), “Inventory Costs”. This Statement amends the guidance in
      ARB No. 43, Chapter 4, Inventory Pricing, “to clarify the accounting for
      abnormal amounts of idle facility expense, freight, handling costs and
      wasted material (spoilage). In addition, this Statement requires that
      allocation of fixed production overheads to the costs of conversion be
      based on the normal capacity of the production facilities. The provisions
      of this Statement will be effective for the Company beginning with its
      fiscal year ending 2006. The Company has determined that the adoption of
      SFAS 151 does not have an impact on its results of operations or financial
      position.





b)
    In
      December 2004, FASB issued Statement of Financial Accounting Standards No.
      153 (“SFAS 153”), “Exchanges of Non-monetary Assets - an amendment of
      APB Opinion No. 29”. This Statement amended APB Opinion 29 to eliminate
      the exception of non-monetary exchanges of similar productive assets and
      replaces it with a general exception for exchanges of non-monetary assets
      that do not have commercial substance. A non-monetary exchange has
      commercial substance if the future cash flows of the entity are expected
      to change significantly as a result of the exchange. The Company has
      determined that the adoption of SFAS 153 does not have an impact on its
      results of operations or financial
position.





c) In
December 2004, FASB issued Statement of Financial Accounting Standards No. 123
(revised 2004) (“SFAS 123 (revised 2004)”), “Share-Based Payment”. This
Statement


requires that the cost resulting from all share-based transactions be recorded
in the financial statements. The Statement establishes fair value as the
measurement objective in


accounting for share-based payment arrangements and requires all entities to
apply a fair-value-based measurement in accounting for share-based payment
transactions with


employees. The Statement also establishes fair value as the measurement
objective for transactions in which an entity acquires goods or services from
non-employees in


share-based payment transactions. The Statement replaces FASB Statement No. 123
“Accounting for Stock-Based Compensation” and supercedes APB Opinion No. 25


“Accounting for Stock Issued to Employees”. The provisions of this Statement
will be effective for the Company beginning with its fiscal year ending 2007.
The Company has


determined that the adoption of SFAS 123 (revised 2004) does not have an impact
on its results of operations or financial position.




**4.**  **NATURAL
GAS AND OIL EXPLORATION RISK**





The
Company’s future financial condition and results of operations will depend upon
prices received for its natural gas and oil production and the cost of finding,
acquiring, developing and producing reserves. Substantially all of its
production is sold under various terms and arrangements at prevailing market
prices. Prices for natural gas and oil are subject to fluctuations in response
to changes in supply, market uncertainty and a variety of other factors beyond
its control. Other factors that have a direct bearing on the Company’s prospects
are uncertainties inherent in estimating natural gas and oil reserves and future
hydrocarbon production and cash flows, particularly with respect to wells that
have not been fully tested and with wells having limited production histories;
access to additional capital; changes in the price of natural gas and oil;
availability and cost of services and equipment; and the presence of competitors
with greater financial resources and capacity.




F -
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**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**NOTES
TO FINANCIAL STATEMENTS**


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





**DECEMBER
31, 2004**





**5.**
    **NATURAL
      GAS AND OIL PROPERTIES**





a)
    Proved
      Property





On
February 7, 2001, the Company acquired an 8.9% working interest in a gas well
located in California at a cost of $90,000. The well commenced production in
February 2001 following re-drilling of the well.





**2004**
    
    2003Proved
      property
    **$**
    **102,346**
    $
    102,346Less:
      Accumulated depletion
    
    **(101,074)**
    
    (101,074)**$**
    **1,272**
    $
    1,272








b)
    Unproved
      Properties





On
November 26, 2004, the Company entered into two participation proposal
agreements to acquire a 10% and 20% working interest, respectively, in lands and
leases, known as Todd Creek and Hillspring, both in Alberta, Canada. The Company
has paid a $50,000 deposit relating to these agreements.








**6.**
    **ADVANCES
      PAYABLE**





Advances
payable are repayable on demand, unsecured and bear interest at 6.5% per annum.





**7.   
**PROMISSORY
NOTE PAYABLE****




**2004**
    2003Unsecured
      loan, repayable January 4, 2006, together with accrued interest at a rate
      of 6.5%
    **$**
    **37,254**
    $
    35,111








**8.**
    **INCOME
      TAX**





The
provision for income taxes differs from the result which would be obtained by
applying the statutory income tax rate of 34% (2003 - 34%) to income before
income taxes. The difference results from the following items:





**2004**
    2003Computed
      expected (benefit of) income taxes
    **$**
    **(10,735)**
    $
    (8,304)Increase
      in valuation allowance
    
    **10,735**
    
    8,304Income
      tax provision
    **$**
    **-**
    $
    -








F -
13
 ***Table of Contents***





**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**NOTES
TO FINANCIAL STATEMENTS**


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





**DECEMBER
31, 2004**





**8.**
    **INCOME
      TAX**(Continued)





Significant
components of the Company’s deferred income tax assets are as
follows:





**2004**
    2003Total
      income tax operating loss carry forward
    **$**
    **237,062**
    $
    205,488Statutory
      tax rate
    
    **34%**
    
    34%Deferred
      income tax asset
    
    **80,601**
    
    69,866Valuation
      allowance
    
    **(80,601)**
    
    (69,866)Net
      deferred tax asset
    **$**
    **-**
    $
    -





The
Company has incurred operating losses and approximately $237,062, which, if
unutilized, will expire through to 2024. Future tax benefits, which may arise as
a result of these losses, have not been recognized in these financial
statements, and have been offset by a valuation allowance. The following table
lists the fiscal year in which the loss was incurred and the expiration date of
the operating loss carry forwards:





Income
      Tax Operating Loss Carry ForwardAmount
    Expiration
      Date2001
    $132,030
    20212002
    49,035
    20222003
    24,423
    20232004
    31,574
    2024Total
      income tax operating loss carry forward
    $237,062








**9.**
    **RELATED
      PARTY TRANSACTIONS**





Amounts
paid to related parties were based on exchange amounts, which represented the
amounts agreed upon by the related parties. Amounts paid or payable to related
parties not disclosed elsewhere include the following:





a)
    During
      the year ended December 31, 2004, $2,500 (2003 - $1,274) was paid to a
      director as administration fees;





b)
    As
      at December 31, 2004, accounts payable includes $4,825 (2003 - $4,825) due
      to the director;





c)
    As
      at December 31, 2004, accrued interest payable includes $13,193 (2003 -
      $4,775) due to related party.




F -
14
 ***Table of Contents***




**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**NOTES
TO FINANCIAL STATEMENTS**


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





**DECEMBER
31, 2004**





**10.**
    **SUBSEQUENT
      EVENTS**





Subsequent
to December 31, 2004:





a)
    The
      Company approved a stock option plan.





b)
    On
      February 1, 2005, the Company completed an offering and issued 1,200,000
      units at a price of $1 per unit. Each unit consists of one common stock
      and one common stock purchase warrant exercisable within 5 years at an
      exercise price of $1.50. The total amount received under this offering was
      $1,200,000, of which $160,000 had been received prior to December 31,
      2004.





c)
    On
      March 1, 2005, the Company entered into a consulting agreement with a
      contractor who will provide certain corporate development and consulting
      services to the Company. The term of this agreement will commence on March
      1, 2005, and will continue on a month-to-month basis until either party
      gives notice of termination. The Company will pay $2,500 Canadian funds
      per month. In addition, the Company granted incentive stock options to the
      contractor to acquire up to 25,000 common shares at a price of US$1 per
      share, with vesting as follows: 10,000 options upon execution of the
      agreement, and 5,000 options on each of June 1, 2005, September 1, 2005
      and December 1, 2005. The options are exercisable until February 28,
      2010.





d)
    On
      February 8, 2005, the Company formed a new subsidiary company named Delta
      Oil & Gas (Canada) Inc. in British Columbia, Canada under the
      provincial Business Corporations Act (BC),





e)
    Further
      to two participation proposal agreements entered into by the Company on
      November 26, 2004, on or about January 25, 2005 the Company acquired a
      working interest in two prospective properties, as
  follows:





i)
    a
      20% working interest in 13.75 sections (8,800 acres) of land in Todd
      Creek, Alberta, Canada, for the purchase price of $597,263. The Company
      also has an option to acquire an additional 15% interest in 7 additional
      sections (4,480 acres) of land. The option terminates on December 31,
      2006. Included in the acquisition is a test well that has been drilled and
      cased. Under the terms of this agreement, the selling party will assume
      all costs of drilling and completing or abandoning the test well, up to
      gross costs of $1,330,000. Thereafter, the Company will assume
      responsibility of 20% of all costs, risks and expenses relating to the
      test well.





ii)
    a
      10% working interest in one section (640 acres) of land in Hillspring,
      Alberta, Canada, for the purchase price of $414,766. The Company also has
      an option to acquire an additional 10% working interest in an additional
      1.25 sections in the immediate area. This option terminates on July 1,
      2005.




F -
15
 ***Table of Contents***





**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**SUPPLEMENTAL
NATURAL GAS AND OIL DISCLOSURE (Unaudited)**


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





**DECEMBER
31, 2004**








The
following disclosures provide unaudited information required by Statement of
Financial Accounting Standards No. 69 (“SFAS 69”), “Disclosures About Oil and
Gas Producing Activities”.





Capitalized
Costs Incurred





Capitalized
costs incurred in natural gas and oil property acquisition, exploration and
development activities are summarized below:





**2004**
    2003Property
      acquisition costs: proved
    **$**
    **90,000**
    $
    90,000Development
      costs
    
    **12,346**
    
    12,346Exploration
      costs
    
    **-**
    
    -**102,346**
    
    102,346Property
      acquisition costs: unproved
    
    **50,000**
    
    -Total
      costs incurred
    **$**
    **152,346**
    $
    102,346





Natural
Gas and Oil Reserves





Proved
reserves are estimated quantities of natural gas and oil that geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. Proved developed reserves are proved reserves that reasonably can be
expected to be recovered through existing wells with existing equipment and
operating methods.





Proved
natural gas and oil reserve quantities at December 31, 2004 and 2003, and the
related discounted future net cash flows before income taxes are based on
estimates prepared by an independent consulting engineer. Such estimates have
been prepared in accordance with guidelines established by the SEC.





The
Company’s net ownership interests in estimated quantities of proved natural gas
and oil reserves and changes in net proved reserves, all of which are located in
the continental United States, are summarized below:





NATURALGAS(MCF)Reserves,
      December 31, 2002
    3,846Extensions
      and revisions
    3,099Production
    (3,497)Reserves,
      December 31, 2003
    3,448Extensions
      and revisions
    (493)Production
    (1,671)Reserves,
      December 31, 2004
    1,284


****


****


F -
16
 ***Table of Contents***


****


**DELTA
OIL & GAS, INC.**


**(A
Development Stage Company)**





**SUPPLEMENTAL
NATURAL GAS AND OIL DISCLOSURE (Unaudited)**


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





**DECEMBER
31, 2004**








Standardized
Measure





The
standardized measure of discounted future net cash flows relating to the
Company’s ownership interests in proved natural gas and oil reserves is shown
below:





**2004**
    2003Future
      cash flows
    **$**
    **8,193**
    $
    15,828Future
      operating expenses
    
    **5,837**
    
    10,597Future
      net cash flows
    
    **2,356**
    
    5,23110%
      annual discount for estimated timing of cash flows
    
    **(235)**
    
    (101)Standardized
      measure of discounted future net cash flows
    **$**
    **2,121**
    $
    5,130





Future
cash flows are computed by applying fiscal year-end prices of natural gas and
oil to year-end quantities of proved natural gas and oil reserves. Future
operating expenses and development costs are computed primarily by the Company’s
petroleum engineers by estimating the expenditures to be incurred in developing
and producing the Company’s proved natural gas and oil reserves at the end of
the year, based on year end costs and assuming continuation of existing economic
conditions.





Future
income taxes are based on year-end statutory rates, adjusted for tax basis and
applicable tax credits. A discount factor of 10 percent was used to reflect the
timing of future net cash flows. The standardized measure of discounted future
net cash flows is not intended to represent the replacement cost of fair value
of the Company’s natural gas and oil properties. An estimate of fair value would
also take into account, among other things, the recovery of reserves not
presently classified as proved, anticipated future changes in prices and costs,
and a discount factor more representative of the time value of money and the
risks inherent in reserve estimate of natural gas and oil producing
operations.





Change in
Standardized Measure





Changes
in the standardized measure of future net cash flows relating to proved natural
gas and oil reserves are summarized below:





**2004**
    2003Changes
      due to current year operations:Sales
      of natural gas and oil, net of natural gas and oil operating
      expenses
    **$**
    **7,068**
    $
    8,203Changes
      due to revisions in standardized variables:Prices
    
    **(10,077)**
    
    (9,935)Net
      change
    
    **(3,009)**
    
    (1,732)Beginning
      of year
    
    **5,130**
    
    6,862End
      of year
    **$**
    **2,121**
    $
    5,130




F -
17
 ***Table of Contents***





**Item
8:**  **Changes
in and Disagreements With Accountants on Accounting and Financial****Disclosure**





No events
occurred during the reporting period requiring disclosure under Item 304(b) of
Regulation S-B.





Morgan
and Company (the "Former Accountant") resigned as our principal accountants on
April 4, 2005. We engaged Telford Sadovnick, P.L.L.C., CPA’s ("Telford") as
our principal accountants effective April 5, 2005. The decision to change
accountants was approved by our board of directors.  We did not consult
with Telford on any matters prior to retaining such firm as our principal
accountants.





The
Former Accountant's report dated March 31, 2004 on our balance sheets as of
December 31, 2003 and 2002, and the statements of operations, cash flows, and
changes in stockholders' deficiency for the years ended December 31, 2003 and
2002, and for the cumulative period from inception, January 9, 2001, to December
31, 2003 did not contain an adverse opinion or disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope, or accounting principles.





In
connection with the audited balance sheets as of December 31, 2003 and 2002, and
the statements of operations, cash flows, and changes in stockholders'
deficiency for the years ended December 31, 2003 and 2002, and for the
cumulative period from inception, January 9, 2001, to December 31, 2003, there
were no disagreements with the Former Accountant on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to the satisfaction of the
Former Accountant would have caused them to make reference thereto in their
report on the financial statements for such periods.





In
connection with the audited balance sheets as of December 31, 2003 and 2002, and
the statements of operations, cash flows, and changes in stockholders'
deficiency for the years ended December 31, 2003 and 2002, and for the
cumulative period from inception, January 9, 2001, to December 31, 2003, and the
subsequent reviews of interim periods through April 4, 2005, the Former
Accountant did not advise us with respect to any of the matters described in
paragraphs (a)(1)(v)(A) through (D) of Item 304 of Regulation S-K.








**Item
8A:**   **Controls and Procedures**





We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of December 31, 2004. This evaluation was carried
out under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer, Mr. Douglas Bolen. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that, as of December 31, 2004, our disclosure controls and procedures are
effective. There have been no significant changes in our internal controls over
financial reporting during the quarter ended December 31, 2004 that have
materially affected or are reasonably likely to materially affect such controls.





Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.





14
 ***Table of Contents***





Limitations
on the Effectiveness of Internal Controls





Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. An internal control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.





**Item
8B:**   **Other Information**





None





15
 ***Table of Contents***




**PART III**


****


**Item
9:**  **Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act**





The
following information sets forth the names of our directors and executive
officers, their ages and their present positions with the Company as of March
31, 2005.





*Name*
    *Age*
    *Office(s) Held*
      **Douglas Bolen
    39
    President, Chief Executive Officer and Chief Financial
    OfficerMatthew Philipchuck
    33
    Director





**Douglas
N. Bolen, B.A., LL.B.**





Mr.
Douglas Bolen **** has been
our Chief Executive Officer and Director since April 15, 2004. Mr. Bolen
received a Bachelor of Arts from the University of Regina, Saskatchewan in 1991
and his Bachelor of Laws from the University of Saskatchewan in 1995. Mr. Bolen
is a member in good standing of the Law Society of Saskatchewan, the Regina Bar
Association and the Canadian Bar Association. From 1995 to 1999, Mr. Bolen
articled and practiced law at Balfour Moss, Barristers and Solicitors, a large
Regina, Canada based law firm with a practice concentration in the area of
Corporate Commercial law. From 1999 to the present, Mr. Bolen has been providing
consulting services to small to medium sized US based businesses.





**Mr.
Matthew Philipchuk**





Mr.
Philipchuk was appointed as a member of our board of directors in February 2005.
From 1995 to the present, Matthew Philipchuck has been President, VP Operations
and a co-founder of Odin Capital Inc., a Calgary-based Oil & Gas exploration
company. In 2004, Mr. Philipchuk co-founded Win Energy Corporation, an oil and
gas company based in Calgary, Alberta, Canada. He currently holds the position
of VP Operations at Win Energy Corporation. In this capacity, he manages
operations, public relations and administration as well as assists in corporate
finance and joint ventures.





Set forth
below is a brief description of the background and business experience of our
former executive officers and directors.





*Name*
    *Age*
    *Office(s) Previously Held*
    *Period of Service*
      **Pamela Starek
    38
    President, Director
    January 2001 - April 2004





Pamela
Starek, Former President





From 1995
to 1998, Ms. Starek was the corporate secretary for and an executive for
Corporate Concepts Inc., a management company specializing in managing public
companies that trade on the Canadian Venture Exchange. From 1997 to 1999, Ms.
Starek was a partner and owner of International Canadian Model Management Corp.,
an international talent company. From 1999 to the present, Ms. Starek serves as
the corporate secretary for a number of publicly traded companies that trade on
the Canadian Venture Exchange. In 1984, Ms. Starek completed the General Studies
Certificate from Douglas College in New Westminster, BC. From 1984 to 1986 she
studied at the University of British Columbia. In 1994, Ms. Starek completed the





16
 ***Table of Contents***





Entrepreneurial
Business Development program at the British Columbia Institute of Technology in
Burnaby, BC. Pamela resigned as President in April 2004.





**Family
Relationships**





There are
no family relationships between or among the directors, executive officers or
persons nominated or chosen by the Company to become directors or executive
officers.





**Involvement
in Certain Legal Proceedings**





To the
best of our knowledge, during the past five years, none of the following
occurred with respect to a present or former director or executive officer: (1)
any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (2) any conviction in a criminal
proceeding or being subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses); (3) being subject to any order, judgment
or decree, not subsequently reversed, suspended or vacated, of any court of any
competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business,
securities or banking activities; and (4) being found by a court of competent
jurisdiction (in a civil action), the SEC or the Commodities Futures Trading
Commission to have violated a federal or state securities or commodities law,
and the judgment has not been reversed, suspended or vacated.





**Term
of Office**





Our
Directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the board.





**Significant
Employees**





Other
than our President, Douglas N. Bolen, we do not have any significant employees.





**Audit
Committee**





We do not
have a separately-designated standing audit committee. The entire board of
directors is acting as our audit committee.





**Section
16(a) Beneficial Ownership Reporting Compliance**





Our
officers, directors and shareholders owning greater than ten percent of our
shares are not required to comply with Section 16(a) of the Securities Exchange
Act of 1934 because we do not have a class of securities registered under
Section 12 of the Securities Exchange Act of 1934.





**Code
of Ethics Disclosure**





We
adopted a Code of Ethics for Financial Executives, which include our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, as required by sections 406
and 407 of the Sarbanes-Oxley Act of 2002. The Code of Ethics is list as an
exhibit to this annual report and is incorporated by reference.





17
 ***Table of Contents***





**Item
10:**  **Executive
Compensation**





The table
below summarizes all compensation awarded to, earned by, or paid to our
executive officers for each of the last three completed fiscal
years.





Annual
      Compensation
    Long
      Term CompensationName
    Title
    Year
    Salary
      ($)
    Bonus
      ($)
    Other
      Annual Compensation
      ($)
    Restricted
      Stock Awarded
      ($)
    Warrants
      &
      Options
      (#)
    LTIP
      payouts
      ($)
    All
      Other Compensation
      ($)Douglas
      Bolen
    Director,
      CEO, and CFO
    2004
      2003
      2002
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    1,900
      0
      0Pamela
      Starek
    Former
      President, Director
    2004
      2003
      2002
    0
      1,274
      3,398
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0Steve
      Burwell
    Former
      Secretary
    2004
      2003
      2002
    0
      0
      500
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0





**Compensation
to Directors**





During
August 2004, Mr. Bolen received a one-time payment of $1,900 in exchange for
research on a company project.





Mr.
Philipchuk was appointed as a member of our board of directors in February 2005.
Commencing in March 2005, Mr. Philipchuk will receive $2,000 in Canadian dollars
on a monthly basis for services rendered as a member of our board of directors.





**Stock
Option Grants**





We did
not grant any stock options to our executive officers or employees during the
year ended December 31, 2004.





18
 ***Table of Contents***





**Item
11:**  **Security
Ownership of Certain Beneficial Owners and Management and related**


**Stockholder Matters**





The
following table sets forth information regarding the beneficial ownership of our
shares of common stock at April 15, 2005 by (i) each person known by us to be
the beneficial owner of more than 5% of our outstanding shares of common stock,
(ii) each of our directors, (iii) our executive officers, and (iv) by all
directors and executive officers as a group. Each person named in the table, has
sole voting and investment power with respect to all shares shown as
beneficially owned by such person.





**Title
      of class**
    **Name
      and address of beneficial owner**
    **Amount
      of beneficial**
      **ownership**
    **Percent
      of class****Current Executive Officers and Director**sCommon
    Douglas N. Bolen
      Suite 509-456 Moberly Rd.
      Vancouver, British Columbia
      Canada, V5Z 4L7
    500,000
    1.2%Common
    Matthew Philipchuk
      2111 36thAvenue SW
      Calgary, Alberta
      Canada, T2T 2Hi
    400,000
    0.97%Total of All Current Executive Officers and Directors
    900,000
    2.2%More than 5% Beneficial HoldersCommon
    Pamela Starek
      2288 Marstrand Avenue, Suite 111
      Vancouver, BC Canada V6K 4S9
    12,850,000
    31.1%








The
percent of class is based on 41,296,750 shares of common stock issued and
outstanding as of April 15, 2005.





As used
in this table, "beneficial ownership" means the sole or shared power to vote, or
to direct the voting of, a security, or the sole or shared investment power with
respect to a security (i.e., the power to dispose of, or to direct the
disposition of, a security). In addition, for purposes of this table, a person
is deemed, as of any date, to have "beneficial ownership" of any security that
such person has the right to acquire within 60 days after such
date.





**Item
12:**   **Certain Relationships and Related
Transactions**





Except as
set forth below, none of our directors or executive officers, nor any proposed
nominee for election as a director, nor any person who beneficially owns,
directly or indirectly, shares carrying more than 5% of the voting rights
attached to all of our outstanding shares, nor any members of the immediate
family (including spouse, parents, children, siblings, and in-laws) of any of
the foregoing persons has any material interest, direct or indirect, in any
transaction during the last two years or in any presently proposed transaction
which, in either case, has or will materially affect us


·
    On
      or about January 25, 2005, we acquired from Win Energy Corporation a
      working interest in two prospective properties known as Todd Creek and
      Hillspring. Both properties are located








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approximately 90 miles south of Calgary, Alberta in the Southern Alberta
Foothills belt. Mr. Philipchuck co-founded Win Energy Corporation and serves as
their VP


Operations. Mr. Philipchuck was appointed as a member of our board of directors
in February 2005.


**Item
13:**  **Exhibits**





Exhibit
      Number
    Description3.1
    Articles
      of Incorporation13.2
    By-Laws110.1
    Agreement
      to Acquire Interest in Todd Creek210.2
    Agreement
      to Acquire Interest in Hillspring210.3
    Amendment
      to Todd Creek and Hillspring Agreements214.1
    Code
      of Ethics331.1
    Certification
      of Chief Executive Officer pursuant to Securities Exchange Act Rule
      13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
    Certification
      of Chief Financial Officer pursuant to Securities Exchange Act Rule
      13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.
    Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002





1 Incorporated
by reference to Registration Statement on Form SB-2 filed on February 13,
2002


2 Incorporated
by reference to current report on Form 8-K filed on February 15,
2002


3 Incorporated
by reference to annual report on Form 10-KSB for the year ended December 31,
2003





**Item
14:**   **Principal Accountant Fees and
Services**





**Audit
Fees**





The
aggregate fees billed by our auditors for professional services rendered in
connection with a review of the financial statements included in our quarterly
reports on Form 10-QSB and the audit of our annual consolidated financial
statements for the fiscal years ended December 31, 2003 and 2004 were $2,474 and
$5,310 respectively.





**Audit-Related
Fees**





Our
auditors did not bill any additional fees for assurance and related services
that are reasonably related to the performance of the audit or review of our
financial statements.





**Tax
Fees**





The
aggregate fees billed by our auditors for professional services for tax
compliance, tax advice, and tax planning were $0 and $0 for the fiscal years
ended December 31, 2003 and 2004.








**All
Other Fees**





The
aggregate fees billed by our auditors for all other non-audit services, such as
attending meetings and other miscellaneous financial consulting, for the fiscal
years ended December 31, 2003 and 2004 were $1,120 and $0 respectively.








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**SIGNATURES**





Pursuant
to the requirements of Section 13 and 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.








**Delta
      Oil & Gas, Inc.**By:
    /s/
      Douglas BolenDouglas
      BolenPresidentDate:
      April 15, 2005





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