UNITED
STATES




SECURITIES
AND EXCHANGE COMMISSION




WASHINGTON, D.C.
20549




FORM
10-K




ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE




SECURITIES
EXCHANGE ACT OF 1934




FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2008




Commission File No.
001-28911




GULF
ONSHORE, INC.




Nevada


(State or
other jurisdiction of incorporation or organization)




01-28911
                
                91-1869677(Commission
      File Number)
                
                (IRS
      Employer Identification
Number)







4310
Wiley Post Road, Suite 201, Addison, Texas 75001




(PRINCIPAL EXECUTIVE
OFFICES)




972 /
788-4500




(ISSUER'S TELEPHONE
NUMBER)




Securities
registered under Section 12(b) of the Exchange Act: None




Securities registered under
Section 12(g) of the Exchange Act: Common Stock, $0.001 par
value




Check whether the issuer is not
required to file reports pursuant to Section 13 or 15 (d) of the Exchange Act.[
]




Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the 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 there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B contained in this
form, and no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
[X]




Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 under the Exchange Act).
Yes [X] No [ ]




The issuer's revenues for its most
recent fiscal year were $447,412.




As of December 31, 2008, the aggregate
market value of the common stock held by non-affiliates based on the closing
sale price of Common Stock was $171,322. For the purposes of the foregoing
calculation only, all directors, executive officers, related parties and holders
of more than 10% of the issued and outstanding common stock of the registrant
have been deemed affiliates.




As of
April 14, 2009, the issuer had 14,687,279 shares of common stock outstanding.
Documents incorporated by reference: none Transitional Small Business Disclosure
Format (check one): Yes [ ] No [X]















PART
I




ITEM 1. DESCRIPTION
OF BUSINESS


Gulf
Onshore, Inc.  (“We” or “the Company”), was incorporated under the
laws of the State of Colorado, on February 29, 1996, as Patriot Holdings,
Inc.  On August 26, 1999, the Company changed its name to National
Healthcare Technology, Inc., and commenced a business plan to develop Magkelate,
a patented intravenous drug developed to re-establish normal electrolyte balance
in ischemic tissue and certain other patents for medical instruments and medical
instrument technology.  On January 14, 2000, the Company filed its
Form 10SB12G.  In 2002, the Company ceased its medical technology
business following the death of Magkelate’s inventor.  The Company
conducted no substantial business until 2005.





In
July 2005, the Company acquired Es3, Inc., a Nevada Corporation ("Es3"),
pursuant to the terms of an Exchange Agreement (the "Exchange Agreement") by and
among the Company, Crown Partners, Inc., a Nevada corporation ("Crown
Partners"), Es3, and certain stockholders of Es3 (the "Es3 Stockholders"). Under
the terms of the Exchange Agreement, the Company acquired all of the outstanding
capital stock of Es3 in exchange for the issuance of 191,828 shares of the
Company's common stock (adjusted for splits) to the Es3 Stockholders, Crown
Partners and certain consultants. The transactions effected by the Exchange
Agreement were accounted for as a reverse merger, and recapitalization. In
addition, the Company changed its accounting year-end from September 30 to
December 31, which was Es3's accounting year-end.  The Company then
commenced business manufacturing and marketing products under the name Special
Stone Surfaces.  The Company sold its shares in Es3 in October 2005,
and thereafter conducted no substantial business until 2006.





In April
2006, the Company acquired oil and gas leases in Oklahoma from Summit Oil &
Gas, Inc. in exchange for issuance of common stock, and commenced the business
of oil and gas exploration and production, mineral lease purchasing and all
activities associated with acquiring, operating and maintaining the assets of
such operations.  In June 2007, the Company changed its name to
Brighton Oil & Gas, Inc., and converted to a Nevada
corporation.  In October 2007, the Company acquired oil and gas leases
in Texas from K & D Equity Investments, Inc. (“K & D”), a Texas
corporation, in a transaction that resulted in K & D acquiring a majority
stake in the Company.   The Company also entered into a Line of
Credit Agreement with South Beach Live, Inc., a Florida corporation, to provide
it with working capital of up to $100,000 on a revolving credit line. The
Agreement permitted South Beach the right to repayment on demand, or to convert
amounts owed for shares.





On March
25, 2008 the Company changed its name to Gulf Onshore, Inc.  On June 6,
2008, the Company entered into an Asset Acquisition Agreement with K & D to
acquire additional oil and gas leases and a Stock Purchase Agreement (“SPA”)
with South Beach Live, Inc., a Florida corporation, to purchase 100% of the
common shares of Curado Energy Resources, Inc., a Texas corporation (“Curado”).
Curado is registered with the Texas Railroad Commission as an oil and gas well
operator, and is the operator for the Leases.   The Company
acquired the Leases into Curado, in exchange for 10,000,000 shares issued to K
& D and a promissory note for $250,000, payable in one year at 10% interest
payable to South Beach.   The Company consolidated the operations
of Curado Energy Resources, Inc.





Throughout
3Q and into the beginning of 4Q 2008, declining oil prices and increased
operating costs made continued oil and gas operations unprofitable, and the
Company was continually drawing down on its Line of Credit Agreement with South
Beach. In exchange for concessions from South Beach regarding further cash
advances and future stock conversions, in August 2008, the Company agreed to
grant South Beach a security interest in its Curado shares.





On
October 6, 2008, in the face of further oil price declines and general economic
conditions, the Company and South Beach entered into an Accord and Satisfaction
Agreement under which the Company surrendered its interest in the Putnam “M” oil
and gas lease in Throckmorton Co., Texas in exchange for a complete release on
the Promissory Note and Line of Credit.  In addition, the Company
waived any claim on the shares of Curado common stock that secured the
Promissory Note or the assets of Curado.  As a result, the Company’s
4Q 2008, financial statements reflect the disposition of Curado and its assets,
and furthermore that the Company has, once again, become a Development Stage
Company seeking a new business partner or acquisition.  A Form 8-K
reflecting this transaction was timely filed.




The Company is in the development stage as
defined in Statement of Financial Accounting Standards No. 7.








2




ITEM
1A. RISK FACTORS




Not
required for smaller reporting companies.




ITEM 2.
PROPERTIES


The
Company currently leases an office at 4310 Wiley Post Road, Suite 201, Addison,
Texas 75001, from a related party.  The lease is month-to-month and
therefore as of December 31, 2008, the Company had no future rental
commitments.




ITEM
3. LEGAL PROCEEDINGS




We are
not a party to any material pending legal proceeding and no such action by or,
to the best of our knowledge, against us have been threatened.




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




None.













3




PART
II




ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS







Market
information: Our common stock is quoted on the over-the-counter market and
quoted on the National Association of Securities Dealers Electronic Bulletin
Board ("OTC Bulletin Board") under the symbol "GFON". The high and low bid
prices for the common stock, as reported by the National Quotation Bureau, Inc.,
are indicated for the periods described below. Such prices are inter-dealer
prices without retail markups, markdowns or commissions, and may not necessarily
represent actual transactions.










Fiscal
      Year Ending December 2008
            
            HIGH
            
            LOWQuarter Ending March
      31, 2007
            
            0.09
            
            0.04Quarter
      Ending June 30, 2007
            
            0.30
            
            0.10Quarter Ending
      September 30, 2007
            
            0.20
            
            0.08Quarter Ending
      December 31, 2007
            
            0.20
            
            0.07Fiscal Year Ending December
      2008
            
            HIGH
            
            LOWQuarter Ending March
      31, 2008
            
            7.40
            
            0.90Quarter Ending June
      30, 2008
            
            2.50
            
            0.25Quarter Ending
      September 30, 2008
            
            2.10
            
            0.22Quarter Ending
      December 31, 2008
            
            0.30
            
            0.09






Holders




As of December 31, 2008, there were 147
shareholders of record,  including CEDE&Co., which holds shares
for the beneficial interest of an unknown number of shareholders in brokerage
accounts.




Dividends




We have not declared or paid cash
dividends or made distributions in the past, and we do not anticipate that we
will pay cash dividends or make distributions in the foreseeable future. We
currently intend to retain and reinvest future earnings, if any, to finance and
expand our operations.




Recent Sales of
Unregistered Securities




During
the fiscal year ended December 31, 2008, we have not sold any shares in
unregistered offerings.  As set out below, we have issued securities
in exchange for services, properties and for debt, using exemptions available
under the Securities Act of 1933.







ITEM
6. SELECTED FINANCIAL DATA




Not
applicable for smaller reporting companies.





4


ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.




This
report contains 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. When used in this Form 10-K, the words
"anticipate", "estimate", "expect", "project" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks, uncertainties and assumptions including the possibility that the
Company's proposed plan of operation will fail to generate projected revenues.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected. The Company's actual results could
differ materially from those set forth on the forward looking statements as a
result of the risks set forth in the Company's filings with the Securities and
Exchange Commission, general economic conditions, and changes in the assumptions
used in making such forward looking statements.




General


The
Company has been engaged in the business of oil and gas exploration and
production, mineral lease purchasing and all activities associated with
acquiring, operating and maintaining the assets of such operations since April.
2006. The Company’s activities in the oil and gas business prior to 3Q 2007,
however, when it undertook a change of management, were desultory, at best; the
Company generated no revenues and recorded a complete impairment of all oil and
gas related assets, effective December 31, 2007.  On June 6, 2008, the
Company acquired leases in Throckmorton and Shackelford Co. Texas, and an
operating company, Curado Energy Resources, Inc..  Nearly all of its
revenues during 2008 were generated from its operation of these
leases.  Declining oil and gas prices and an inability to obtain
funding for its Re-Work Development Program and additional acquisitions in 3Q
and 4Q 2008 rendered its oil and gas business unprofitable.  The
Company divested itself of its oil and gas properties in 4Q 2008 and is
exploring other business opportunities.




Results
for the years ended December 31, 2008 and 2007




Revenue:
For the year ended December 31, 2008, the Company had revenue of $447,412, vs.
revenue of $12,239 during the year ended December 31, 2007.  The
increase in revenue is directly related to the oil and gas lease acquisitions in
June through their former operating company, Curado Energy Resources
(CERI).  CERI contributed 81% or $361,405 of the Company’s 2008
revenues in the four months the Company owned CERI.  During the fourth
quarter of 2008, the Company had $0 revenues as it no longer has any properties
vs. revenues during the same period of 2007 of $12,239.




Expenses:Expenses for the year ended December 31, 2008 were -$3,571,943 vs.
$13,952,699 for the year ended December 31, 2007.  2008 expenses
include a one-time non-recurring gain of $6,285,651 due to the voiding of former
Director contracts (see Note 9).   In 2008 we incurred an
impairment of $2,400,000 related to acquired oil properties due to writing down
to predecessor cost.  Adjusted expenses, not including depreciation
expense of $2,338, were $311,470.  Expenses for the year ended
December 31, 2007 include impairment costs of $5,030,000 and related party
professional fee contracts entered into by former Directors of $8,644,000,
therefore, adjusted expenses, not including depreciation of $33, were
$278,666.  The adjusted net increase of ($32,804) is mainly related to
increased audit fees of $32,000 due to the acquisition of Curado Energy
Resources.




Operating Profit
(Loss): For the year ended December 31, 2008, the Company had a net
operating profit of $3,789,191 vs. a net operating loss of $13,940,460 for the
year ended December 31, 2007.  Please see the explanations in Expenses above.




Net Income
(Loss): The net income for the year ended December 31, 2008 was
$3,559,617 vs. a net loss of $15,007,117 for the year ended December 31, 2007,
and a net loss of $49,511,884 for the period January 27, 2005 to December 31,
2008.  The increase in the profit is related to the items listed above
(volume and expenses). Adjusting for the one time gain and write-off the Company
would have lost $323,796 during this period.




Plan
of Operation








5





In
September 2007, the Company appointed new officers and directors who have
significant experience in oil and gas development activities.  On
October 19, 2007, the Company issued 50,000,000 shares of restricted stock to
K&D Investments for oil properties in Throckmorton County, Texas
(Walker-Buckler Trust 380-381).   The Company recorded the transaction
at fair market value of $5,000,000 and on December 31, 2007, recorded impairment
expense related to the property of $5,000,000 resulting in a net capitalized
amount of $0.






On
October 29, 2007, the Company paid $30,000 to an individual for oil properties
in Throckmorton County, Texas (Putnam M Well).   The Company recorded
the transaction at fair market value of $30,000 and on December 31, 2007,
recorded impairment expense related to the property of $30,000 resulting in a
net capitalized amount of $0.







In Q4
2007 and Q1 2008, the Company effected two separate 1:10 reverse share split,
reducing our total issued and outstanding shares of common stock to 1,328,198
(and reducing K & D’s ownership to 500,000 shares). At that time, we also
changed our name to Gulf Onshore, Inc.; our shares now trade on the
Over-the-Counter Bulletin Board under the symbol GFON. Shortly thereafter, we
moved into larger offices at 4310 Wiley Post Blvd., Ste. 201, Addison,
Texas.





Effective
June 1, 2008, the Company acquired all of the common stock of Curado Energy,
Inc. from South Beach Live, Inc. (“SBL”) in exchange for a $250,000 note.
Contemporaneously, we acquired, through Curado, additional oil and gas leases in
Throckmorton Co. and Shackelford Co., Texas from K & D in exchange for the
issuance of an additional 10,000,000 shares of common stock. As a result of the
transaction, K & D became the owner of approximately 87% of the Company’s
outstanding shares.  The Company generated $92,583 in revenues from
these leases in June 2008, comprising a significant portion of its Q2 2008
revenues.





Also in
Q2 2008, the Company contracted to acquire oil and gas leases in Anderson Co.,
Texas from Roboco Oil, Inc. These leases cover approximately 1,000 acres, and
hold two producing wells. The transaction was scheduled to close on September 1,
2008. Under the terms of the contract, the Company was to pay $700,000 for these
leases, comprised of 20,000 shares of common stock and $680,000 cash.
Ultimately, on October 25, 2008 the Company informed ROBOCO that we would not be
going forward with this arrangement due to the declining oil and gas prices and
its inability to arrange suitable financing and the 20,000 shares, valued at
$22,500 were written-off to consulting expenses.





All of
these transactions were covered in timely filed Forms 8-K, and, in accordance
with the representations made therein, SEC-qualified reserve reports the
Throckmorton Co. and Shackelford Co. properties were filed, along with pro-forma
consolidated financial information.





During Q3
2008, the Company continued to implement its Re-Work/Development Plan on its
West Texas properties.   In July 2008, the Company entered into a
Consulting Agreement with Parabolic, LLC; the Company paid Parabolic 80,000
shares of common stock (restricted) to provide investor relations and financial
public relations services.  In August, 2008, the Company and Roboco
extended the closing date for the Anderson Co., Texas lease acquisition to
October 18, 2008, to permit the Company to further review the status of certain
of the leases; the Company paid Roboco 10,000 shares of common stock
(restricted) for the extension.  Also in August 2008, SBL exercised
its rights under its Line of Credit Agreement with the Company, requiring the
issuance of 490,000 shares of common stock in partial satisfaction of amounts
owed to SBL.  Subsequently, the Company renegotiated its promissory
note agreement with SBL granting it a security interest in the Curado shares
owned by the Company and consented to SBL’s separate Guarantee Agreement with
Curado, secured by Curado’s assets.  In exchange, the Company obtained
SBL’s agreement that it wouldn’t request any further debt conversions at prices
less than $.25 per share until either an Event of Default or
Maturity.   All of these transactions were covered in timely
filed Forms 8-K.









6






Effective
October 31, 2008, the Company and SBL entered into an Accord and Satisfaction
Agreement.  Under the terms of the Agreement, South Beach released the
Company from any further obligation under the parties’ $250,000 Promissory Note
in exchange for an assignment of the Company’s interest in a (currently)
non-producing oil well, the Putnam M, located in Throckmorton Co., Texas, and a
surrender of any claim to shares of Curado Energy Resources, Inc., the Company’s
wholly-owned subsidiary, currently held by South Beach under a Security
Agreement.  The Company is advised that South Beach has exercised its
rights to these shares and requested re-registration thereof.




The
Company has two subsidiaries, GOI Exploration Technologies, Inc., and Shale Oil,
Inc. subsidiary, both of which have had no transactions since creation, and
therefore have no impact on the financial statements.





We
anticipate that we will have to raise additional capital to fund operations over
the next 12 months.  To the extent that we are required to raise
additional funds to acquire properties, and to cover costs of operations,
we intend to do so through additional public or private offerings of debt
or equity securities.





We
currently have no full-time employees.







ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Not
applicable for smaller reporting companies.







ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




A summary
of the warrant activity for the period ended December 31, 2008 is as
follows:





Warrants
      Outstanding
                  
                  
                  Weighted
      Average Exercise Price
                  
                  
                  Aggregate
      Intrinsic ValueOutstanding,
      December 31, 2007
                  
                  
                  18,000
                  
                  
                  $
                  67.00
                  
                  
                  $
                  -Granted
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Forfeited
      / Canceled
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Exercised
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Outstanding,
      December 31, 2008
                  
                  
                  18,000
                  
                  
                  $
                  67.00
                  
                  
                  $
                  -





The weighted average remaining
contractual life of warrants outstanding is1.10 years atDecember31, 2008.





Outstanding
      Warrants
            
            
            Exercisable
      WarrantsRange
      of Exercise Price
            Number
            Average
      Remaining Contractual Life
            Average
      Exercise Price
            Number$67.00
            18,000
            0.70
            $67.00
            18,000





The
Company estimated the fair value of each stock warrant at the grant date by
using the Black-Scholes option-pricing mode.





The
weighted-average assumptions used in estimating the fair value of warrantsgranted during the year
ended December 31, 2008, and the period ended December 31, 2007 along with
theweighted-average
grant date fair values, were as follows.





2008
              2007Expected
      volatility
              80.0%
              80.0%Expected
      life in years
              5
      years
              5
      yearsRisk
      free interest rate
              5.07%
              5.07%Dividend
      yield
              0%
              0%







During
the period ended December 31, 2008, the Company did not issue any
warrants.








7




As of
December 31, 2008, our executive officers and directors, in the aggregate,
beneficially own approximately 3.4%  of our outstanding common stock.
K&D Equity Investments is our single largest shareholder owning 77.6% of our
common stock.  This concentration of ownership may have the effect of
delaying, deferring or preventing a change in control of the Company, impede a
merger, consolidation, takeover or other business combination involving the
Company or discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of the Company, which in turn could have
an adverse effect on the market price of our common stock.




ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE




There
were no disagreements with accountants on accounting and financial disclosure
during the relevant period.




ITEM 9A. CONTROLS
AND PROCEDURES







Evaluation of Disclosure
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, 2008.  This
evaluation was accomplished under the supervision and with the participation of
our chief executive officer / principal executive officer, and chief financial
officer / principal financial officer who concluded that our disclosure controls
and procedures are not effective to ensure that all material information
required to be filed in the annual report on Form 10-KSB has been made known to
them.




Disclosure,
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by in our reports
filed under the Securities Exchange Act of 1934, as amended (the "Act") is
accumulated and communicated to the issuer's management, including its principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.




Based
upon an evaluation conducted for the period ended December 31, 2008, our Chief
Executive and Chief Financial Officer as of December 31, 2008 and as of the date
of this Report, has concluded that as of the end of the periods covered by this
report, we have identified the following material weakness of our internal
controls:




·
            Reliance
      upon independent financial reporting consultants for review of critical
      accounting areas and disclosures and material non-standard
      transactions.




·
            Lack
      of sufficient accounting staff which results in a lack of segregation of
      duties necessary for a good system of internal
  control.




In order
to remedy our existing internal control deficiencies, as our finances allow, we
will hire additional accounting staff.




Management’s Annual Report
on Internal Control Over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control
system was designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes, in accordance with generally accepted accounting principles in the
United States of America.  Our internal control over financial
reporting includes those policies and procedures that (i) pertain to the
maintenance records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company’s assets that could have a material effect on
the financial statements.








8




Because
of inherent limitations, a system of internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate due to change in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.




Our
management conducted an evaluation of the effectiveness of our internal control
over financial reporting using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control—Integrated Framework at December 31, 2008.   Based on its
evaluation, our management concluded that, as of December 31, 2008, our internal
control over financial reporting was not effective because of limited staff and
a need for a full-time chief financial officer.  A material weakness
is a deficiency, or a combination of control deficiencies, in internal control
over financial reporting such that there is a reasonable possibility that a
material misstatement of the Company’s annual or interim financial statements
will not be prevented or detected on a timely basis.




This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to the attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only management’s report in this annual
report.




Changes in Internal Controls
over Financial Reporting




We have
not yet made any changes in our internal controls over financial reporting that
occurred during the period covered by this report on Form 10-K that has
materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.






















9


PART
III




ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE




Identification
of Directors and Executive Officers of the Company:




As of
December 31, 2008, our officers and directors were as follows:




NAME
              
              AGE
              
              OFFICE
              
              SINCEEarl
      Moore
              
              64
              
              President
      & CEO
              
              2008Jeffery
      Joyce
              
              45
              
              Vice
      President
              
              2008Michelle
      Sherif
              
              35
              
              Secretary and
      Director
              
              2007R. Wayne
      Duke
              
              63
              
              Director and
      Chairman
              
              2007





The Directors named above will serve
until the next annual meeting of our shareholders. Thereafter, Directors will be
elected for one-year terms at the annual shareholders' meeting. Officers will
hold their positions at the pleasure of the Board of Directors. There is no
arrangement or understanding between the Directors and Officers of the Company
and any other person pursuant to which any Director or Officer was or is to be
selected as a Director or Officer of the Company.




There are no family relationships
between or among any Officer and Director.




On
September 25, 2007, Charles Stidham, R. Wayne Duke, Michele Sheriff and E.
Robert Barbee were appointed directors. Concurrently,  Immediately
following the appointment of the new directors, Linda Contreras resigned as
officer and director, and Mr. Stidham succeeded her as Chief Executive Officer
and Chief Financial Officer of the Registrant. Ms. Sheriff was appointed as
Secretary.




On
February 4, 2008, Mr. Duke and Mr. Barbee resigned and Jeffery Joyce and Dean
Elliott were appointed to fill these vacancies.  After the appointment
of the new Directors, Mr. Stidham resigned as President and
Director.  Mr. Joyce was appointed President and Mr. Elliott was
appointed Vice President and Secretary.





Mr. Joyce was appointed as a member of the Board of Directors of
the Company and President effective February 4, 2008.  Mr. Joyce's
expertise is in project management and sales development, having been active in
project management and sales development roles for various real estate concerns
in the Dallas, Texas area.  Mr. Joyce is 43.





Mr.
Elliott, has over 30 years experience in various oil and gas executive positions
varying from mid-size independent oil & gas operators to large fully
integrated publicly traded energy companies. For more than the last five years,
Mr. Elliott has been an independent oil and gas developer. Mr. Elliott has
extensive knowledge in seeking, evaluating, securing, drilling and developing
over 100 oil and gas wells in Texas, Oklahoma and Louisiana. His background also
includes extensive experience in mergers and acquisitions, financing and
hands-on experience in all aspects of oil and gas operations, from prospect to
pipeline.  Mr. Elliott is 54.  Mr. Elliott resigned all his
positions with the Company in 3Q 2008.





Ms.
Sheriff has been Vice-President of Curado Energy Resources in Dallas, Texas
since 2005. Her experience includes drilling operations, field operations
management, oil and gas accounting, land/lease/equipment purchasing, well
operation evaluations, contract preparation, and marketing programs management.
Prior to joining Curado Energy, Ms. Sheriff was employed with AirGATE
Technologies, a Texas- based corporation focusing on enterprise wireless
technology solutions in the area of RFID.  Ms. Sheriff has over 16
years sales and marketing experience developing customer relationships with
Fortune 500 and national corporations.  Ms. Sheriff is
35.








10






On August
7, 2008, the Company (re)appointed R. Wayne Duke, Earl Moore and Mark Smith as
directors. The board also appointed Mr. Moore as Chief Executive Officer and Mr.
Smith as Chief Financial Officer.  On January 20, 2009, Mr. Smith
resigned as an officer and director.  On January 29, 2009, Earl Moore
resigned as an officer and director.





Mr. Duke
has over 25 years of experience in the Maintenance, Repair and Operations in oil
field equipment.  He is Chairman and CEO of USMetrics, Inc., a Dallas,
TX-based supplier of bearings and power transmission equipment, and chairman and
CEO of Industrial Clearinghouse, a private market for sale and barter of
industrial MRO products.   Mr. Duke holds a BBA in Finance and a
Masters Degree in Business from The University of North Texas.




Mr. Moore
has served as the Company’s Director of Oil Field Operations since December
2007.  He has extensive experience as a Project Manager, and drilling
and completion consultant for numerous independent and major oil & gas
exploration companies. During the past 5 years he has consulted on wells for Key
Petroleum, Weldon Corporation, TransAtlantic Petroleum, Marathon Oil, Wentworth
Energy and Anadarko Exploration. Specific duties include Project Manager in
charge of drilling, completion, re-completion or work over operations on both
conventional and horizontal wells




Mr. Smith
received his Public Accounting Certification in 1987 from the Commonwealth of
Massachusetts and has been contracted by the Company on a consulting basis since
early 2007.  He has extensive experience, both domestically and
internationally, in companies ranging in size from privately held $30 MM
entities to Fortune 100 companies.   Mr. Smith received his B.S. from
Boston University in 1986.




On March
30, 2009 the Company announced it acquired the assets of Cannex Therapeutics,
LLC., a California based privately held company in the forefront of the
development of medical cannabis based pharmaceutical products.  The
asset purchase agreement includes all intellectual property rights, formulas,
patents, trademarks, client base, hardware and software pertaining to Cannex's
pharmaceutical cannabis research & development business.  Along
with the Cannex asset purchase the Company appointed Steve W. Kubby as President
& CEO, Richard Cowan as Director & CFO, and Robert Melamede Ph. D., as
Director & Chief Science Officer.




Mr.
Kubby, the founder of Cannex, is an entrepreneur with a wide range of experience
and success in businesses ranging from property management to publishing to
political fundraising. He received his BA in Psychobiology from California State
University and holds a lifetime teaching credential. Mr. Kubby is the executive
director of the American Medical Marijuana Association, an internationally
recognized organization comprised of doctors, lawyers, nurses and patients
working for the rights of medical cannabis patients primarily in the United
States and Canada. Mr. Kubby played a key role in the drafting and passing of
California's historic medical cannabis initiative (Proposition 215) in 1996. He
has also authored two books on drug policy reform. As a widely recognized
medical marijuana pioneer and political leader, Mr. Kubby is intimately familiar
with the legal and regulatory problems involved in developing and marketing
cannabinoid-based pharmaceuticals.




Dr.
Robert Melamede has a Ph.D. in Molecular Biology and Biochemistry from the City
University of New York. Dr. Melamede retired as Chairman of the Biology
Department at University of Colorado, Colorado Springs in 2005, where he
continues to teach and research cannabinoids, cancer, and DNA repair. Dr.
Melamede is recognized as a leading authority on the therapeutic uses of
cannabis, and has authored or co-authored dozens of papers on a wide variety of
scientific subjects. Dr. Melamede also serves on the Editorial Board of The
Journal of the International Association for Cannabis as Medicine, the
Scientific Advisory Board of Americans for Safe Access, Sensible Colorado,
Scientific Advisor for Cannabis Therapeutics as well as a variety other of state
dispensaries and marijuana patient advocacy groups




Mr.
Richard Cowan has a Bachelor of Arts in Economics from Yale University. He has
served on the board of several public companies as a specialist in mergers and
acquisitions with a focus on corporate finance. Mr. Cowan is a former CEO of the
National Organization for the Reform of Marijuana Laws (NORML). Mr. Cowan has
broad knowledge of the medical cannabis world in USA, Canada, and
Europe.




We have
no audit committee. We have a compensation committee that administers our 2006
Employee Stock Option Plan that we adopted in April 2006.








11




Compliance with
Section 16(a) of the Exchange Act




Section 16(a) of the Securities
Exchange Act of 1934 requires the Company's directors and executive officers,
and persons who own more than 10% of a registered class of the Company's equity
securities to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than 10%
shareholders are required by SEC regulations to furnish the
Company  with copies of all Section 16(a) forms they
file.




To our
knowledge, based solely on its review of the copies of such reports furnished to
the company and written representations that no other reports were required
during the fiscal year ended December 31, 2006, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.




Code of
Ethics




Code of Ethics for the Chief Executive
Officer and the Principal Financial Officer




Our Board
of Directors has adopted the Code of Ethical and Professional Standards of
National Healthcare Technology, Inc. and Affiliated Entities Code of Business
Conduct and Ethics that applies to its officers and employees effective on April
11, 2007, a copy of which is filed as an exhibit hereto. We will provide any
person without charge, a copy of our code of ethics, upon receiving a written
request in writing addressed to the Company at the Company's address, attention:
Secretary.




ITEM 11. EXECUTIVE
COMPENSATION




During
fiscal 2008 we paid a total of $50,694 in executive compensation, all of which
was regular compensation. The table below shows the compensation
split:





Cash
      compensation
                
                
                Stock
      issuances
                
                
                Total
      CompensationJeffery
      Joyce
                
                $
                20,694
                
                
                $
                0
                
                
                $
                20,694Earl
      Moore
                
                
                0
                
                
                
                0
                
                
                
                0Mark
      Smith
                
                
                30,000
                
                
                
                0
                
                
                
                30,000$
                50,694
                
                
                $
                0
                
                
                $
                50,694







Employment
Agreements





Currently,
the Company has no employment agreements outstanding.







Compensation of
Directors




Directors are entitled to reimbursement
for reasonable travel and other out-of-pocket expenses incurred in connection
with attendance at meeting of the Board of Directors.




We have
no written employment agreements with our directors.




ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT




There
were 12,597,279 shares of our common stock issued and outstanding on December
31, 2008.  The following tabulates holdings of shares of the Company
by each person who, subject to the above, at the date of this Report, holds of
record or is known by Management to own beneficially more than five percent (5%)
of our common stock and, in addition, by all of our directors and officers
individually and as a group.








12







NAME
      AND
      ADDRESS                         NUMBER
      OF SHARES       PERCENT
              OWNED BENEFICIALLY     OF SHARES
      OWNED
              _______________________          
      ____________________    _________________
              K&D
      Equity
      Investments                    9,700,000                                    
      77.6%
              1692
      Club Hill Drive
              Dallas,
      TX 75248
              Earl
      Moore **                                         
      100,000                                         0.8%
              4310
      Wiley Post Dr., Ste. 201
              Addison,
      TX  75001
              
              R.
      Wayne Duke
      *                                  
      250,000                                       
       2.0%
              4310
      Wiley Post Dr., Ste. 201
              Addison,
      TX  75001
              
              Jeffrey
      Joyce
      *                                        
      50,000                                       
      0.4%
              4310
      Wiley Post Dr., Ste. 201
              Addison,
      TX  75001
              
              Michele
      Sheriff  *                                   
      25,000                                        
      0.2%
              4310
      Wiley Post Dr., Ste. 201
              Addison,
      TX  75001
              
              
              ALL
      DIRECTORS AND
              EXECUTIVE
      OFFICERS                                 
      0                                          
      3.4%










13





Changes
in Control




There are
no arrangements known by us, including any pledge by any person of securities of
the Company, the operation of which may at a subsequent date result in a change
of control of the Company.




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




During
the year the following transactions occurred between the Company and certain
related parties:




Michele
Sheriff, who is Secretary and a director of the Company, is also an officer of
K&D and an officer and director of CESI.  She owns 25,000 shares
of the Company’s common stock but owns none of K&D or CESI.  By
reason of the common officer the Company’s acquisition of leases from K&D
could be considered a related party transaction.  The acquisition was,
however, approved by all of the independent directors of the
Company.




ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES





(1)
AUDIT FEES


The
aggregate fees billed for professional services rendered by our auditors, for
the audit of the registrant's annual financial statements and review of the
financial statements included in the registrant's Form 10-K or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for fiscal year 2008 was $35,000 and in 2007 was
$29,500.





(2)
AUDIT-RELATED FEES


The
aggregate fees billed for professional services rendered by our auditor include
amounts paid for the review of the unaudited financial statements included in
the registrant’s Form 10-Q were $5,000 per quarter





(3) TAX
FEES


NONE





(4) ALL
OTHER FEES


NONE




(5) AUDIT
COMMITTEE POLICIES AND PROCEDURES


Audit
Committee Financial Expert





The
Securities and Exchange Commission has adopted rules implementing
Section 407 of the Sarbanes-Oxley Act of 2002 requiring public companies to
disclose information about “audit committee financial experts.”  As of the
date of this Annual report, we do not have a standing Audit Committee.   The functions of the
Audit Committee are currently assumed by our Board of Directors. 
Additionally, we do not have a member of our Board of Directors that qualifies
as an “audit committee financial expert.”  For that reason, we do not have
an audit committee financial expert.





(6)
If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent
employees.




Not
applicable.


14


PART
IV





ITEM 15. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES





(a)
Exhibits filed with report:





31.1
                      Certification
      by Steven W. Kubby, Chief Executive Officer, as
      required  under  Section  302 of
      Sarbannes-Oxley  Act of 2002, attached
hereto.31.2
                      Certification
      by Richard Cowen, Chief Financial Officer, as
      required  under  Section  302 of
      Sarbannes-Oxley  Act of 2002, attached
hereto.32.1
                      Certification
      as required under Section 906 of Sarbannes-Oxley Act of 2002, attached
      hereto.







(b) Reports on Form
8-K:




The
Company issued the following 8-K’s during 2008:




February
11, 2008:  Departure and appointment of directors.




March 21,
2008:  Reverse stock split and name change.




April 23,
2008:  Change of auditors.




June 6,
2008:  Acquisition of leases from K&D, and CESI.




June 15,
2008:   Closing on acquisition of leases from K&D, and
CESI.




June 24,
2008:  Acquisition of leases from Roboco.




August
18, 2008:  Departure and appointment of directors.




August
28, 2008:  Revise South Beach Note and Security Agreement; extend
Roboco contract.




October
31, 2008:  Termination of Roboco contract; South Beach release and
termination of CESI ownership.












15









SIGNATURES




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




Gulf
Onshore, Inc.





By:
      /s/ Steven W.
      Kubby
              Steven W. Kubby
              Chief Executive Officer, Director
              
              Dated:
      April 15, 2009







In accordance with the Exchange
Act, this report has been duly signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates
indicated.











By:  /s/ Richard
      Cowen
                Richard Cowen
                CFO, Director
                
                
                Dated: April, 15,
      2009








16


GULF ONSHORE,
INC.




(A DEVELOPMENT STAGE
COMPANY)




CONSOLIDATED
FINANCIAL STATEMENTS




DECEMBER 31, 2008




C O N T E N T
S




Reports of
      Independent Registered Public Accounting Firms
              
              F-2 and
      F-3Consolidated
      Balance Sheets
              
              F-4Consolidated
      Statements of Operations
              
              F-5Consolidated
      Statements of Changes in Shareholders' Equity/(Deficit)
              
              F-6Consolidated
      Statements of Cash Flows
              
              F-7Notes to
      Consolidated Financial Statements
              
              F-8 -
      F-16






































F-1


REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








The Board
of Directors and Stockholders


Gulf
Onshore, Inc.





We have
audited the accompanying consolidated balance sheet of Gulf Onshore, Inc. (a
Development Stage Company) (the Company) as of December 31, 2008, and the
related consolidated statements of operations, shareholders' equity (deficit)
and cash flows for the year ended December 31, 2008 and for the period from
January 25, 2005 (inception) to December 31, 2008 . 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 the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We
believe that our audit provides a reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company as
of December 31, 2008, and the consolidated results of its operations and its
cash flows for the year ended December 31, 2008 and for the period from January
25, 2005 (inception) to December 31, 2008, in conformity with accounting
principles generally accepted in the United States of America.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company had an accumulated deficit of $49,511,884 and
negative working capital at December 31, 2008. These factors raise substantial
doubt about its ability to continue as a going concern. Management’s plans
concerning these matters are also described in Note 2. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.








/ s/ Turner, Stone &
Company, LLP.







Dallas,
Texas




April
14, 2009












F-2




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 The Board
of Directors and Stockholders
 Brighton
Oil & Gas, Inc.
 
 We have
audited the accompanying balance sheet of Brighton Oil & Gas, Inc. as of
December 31, 2007, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the year ended December 31, 2007 . 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 the standards of the Public Company
Accounting Oversight Board (United States).  Those standards required
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We
believe that our 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 of December 31,
2007, and the results of its operations and its cash flows for the year ended
December 31, in conformity with accounting principles generally accepted in the
United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company had accumulated deficit of $53,071,501 as of December
31, 2007 and net losses of $15,007,117 for the year ended December 31,
2007. These factors raise substantial doubt about its ability to continue as a
going concern. Management’s plans concerning these matters are also described in
Note 2. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
 
 / s/ Kabani & Company,
Inc.
 Kabani
& Company, Inc.
 
 Los
Angeles, California
  August
10, 2008














F-3


GULF
      ONSHORE, INC.
                  (A DEVELOPMENT STAGE COMPANY)
                  
                  CONSOLIDATED
      BALANCE SHEETS
                  DECEMBER 31, 2008 and DECEMBER 31,
      2007ASSETS
                
                2008
                
                
                2007Current
      assets:Cash
                
                $
                580
                
                
                $
                4,769Accounts
      receivable
                
                
                0
                
                
                
                11,675Total
      Current Assets
                
                
                580
                
                
                
                16,444Property
      and equipment, net
                
                
                1,567
                
                
                
                1,967TOTAL
      ASSETS
                
                $
                2,147
                
                
                $
                18,411LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
                
                $
                359,179
                
                
                $
                329,583Accrued
      expenses
                
                
                45,415
                
                
                
                1,432,525Accrued
      interest payable to affiliate
                
                
                136,346
                
                
                
                64,860Due
      to former officers
                
                
                0
                
                
                
                5,000,000Loan
      payable to affiliate
                
                
                814,742
                
                
                
                814,742Line-of-Credit
      to affiliate
                
                
                (3,031
                )
                
                
                66,657Total
      Current Liabilities
                
                
                1,352,651
                
                
                
                7,708,367Stockholders'
      DeficitPreferred
      Stock, $.001 par value, 1,000,000 shares authorized,
                  0
      shares issued and outstanding at December 31, 2008 and
2007
                
                
                0
                
                
                
                0Common
      Stock, $.001 par value, 300,000,000 shares authorized,12,517,279
      issued and outstanding as of December 31, 2008 and 1,328,198 at December
      31, 2007
                
                
                12,597
                
                
                
                1,328Additional
      paid in capital
                
                
                48,148,783
                
                
                
                45,380,217Accumulated
      deficit
                
                
                (49,511,884
                )
                
                
                (53,071,501
                )Total
      stockholders' deficit
                
                
                (1,350,504
                )
                
                
                (7,689,956
                )TOTAL LIABILITIES
      AND STOCKHOLDERS' DEFICIT
                
                $
                2,147
                
                
                $
                18,411









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






F-4











GULF ONSHORE,
      INC.
              (A DEVELOPMENT
      STAGE COMPANY)
              CONSOLIDATED
      STATEMENTS OF OPERATIONS
              FOR THE YEARS
      ENDED DECEMBER 31, 2008 AND 2007
              AND THE CUMULATIVE PERIOD FROM
      JANUARY 27, 2005 (INCEPTION) TO DECEMBER 31,
  2008,




December
      31, 2008
                
                
                December
      31, 2007
                
                
                Period
      from January 27, 2005 (inception) to December 31, 2008REVENUE
      FROM OIL & GAS OPERATIONS
                
                $
                447,412
                
                
                $
                12,239
                
                
                $
                459,651Lease
      Operating Expenses
                
                
                230,164
                
                
                
                -
                
                
                
                230,164PROFIT
      FROM OIL & GAS OPERATIONS
                
                
                217,248
                
                
                
                12,239
                
                
                
                229,487OPERATING
      EXPENSESProfessional
      fees
                
                
                191,371
                
                
                
                8,719,580
                
                
                
                31,190,962Technology
      license royalties
                
                
                -
                
                
                
                -
                
                
                
                160,417Impairment
      of oil and gas well lease
                
                
                2,400,000
                
                
                
                5,030,000
                
                
                
                7,486,000Net
      gain on settlement of liabilities (Note 9)
                
                
                (6,285,651
                )
                
                
                -
                
                
                
                (5,935,451
                )Other
      general and administrative
                
                
                152,479
                
                
                
                203,119
                
                
                
                15,788,354Total
      operating expenses
                
                
                (3,541,801
                )
                
                
                13,952,699
                
                
                
                48,690,282NET
      OPERATING PROFIT (LOSS)
                
                
                3,759,049
                
                
                
                (13,940,460
                )
                
                
                (48,460,795
                )Beneficial
      conversion feature
                
                
                (32,335
                )
                
                
                (1,066,657
                )
                
                
                (1,098,992
                )Interest  expense
                
                
                (71,486
                )
                
                
                
                
                
                
                (71,486
                )Interest
      income
                
                
                1,439
                
                
                
                
                
                
                
                1,439Loss
      on disposition of subsidiary
                
                
                (97,050
                )
                
                
                -
                
                
                
                117,950NET
      INCOME (LOSS) BEFORE INCOME TAXES
                
                $
                3,559,617
                
                
                $
                (15,007,117
                )
                
                $
                (49,511,884
                )Income
      tax provision
                
                
                (1,210,270
                )
                
                
                -
                
                
                
                -Income
      tax credit
                
                
                1,210,270
                
                
                
                -
                
                
                
                -NET
      INCOME (LOSS)
                
                $
                3,559,617
                
                
                $
                (15,007,117
                )
                
                $
                (49,511,884
                )NET
      INCOME (LOSS) PER SHARE - BASIC
                
                $
                0.60
                
                
                $
                (20.14
                )NET
      INCOME (LOSS) PER SHARE - DILUTED
                
                $
                0.60
                
                
                $
                (20.14
                )WEIGHTED
      AVERAGE SHARES OUTSTANDING - BASIC
                
                
                5,919,245
                
                
                
                745,159WEIGHTED
      AVERAGE SHARES OUTSTANDING -  DILUTED
                
                
                5,937,245
                
                
                
                745,159









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

















F-5








GULF ONSHORE,
      INC.
              Consolidated Statement of
      Shareholders' Equity / (Deficit)
              For the Period from January
      27, 2005 (inception) to December 31,
2008




AdditionalCommon
                                    
                                    
                                    Paid-in
                                    
                                    
                                    Prepaid
                                    
                                    
                                    AccumulatedShares
                                    
                                    
                                    Par
                                    
                                    
                                    Capital
                                    
                                    
                                    Consulting
                                    
                                    
                                    Deficit
                                    
                                    
                                    TotalsBalance
      at January 27, 2005
                                    
                                    
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -Founder’s
      Stock Issued
                                    
                                    
                                    83,800
                                    
                                    
                                    
                                    84
                                    
                                    
                                    
                                    (84
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    0Stock
      Issued for Debt
                                    
                                    
                                    8,000
                                    
                                    
                                    
                                    8
                                    
                                    
                                    
                                    399,992
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    400,000Shares
      Issued for License Agreement
                                    
                                    
                                    86,188
                                    
                                    
                                    
                                    86
                                    
                                    
                                    
                                    (86
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    0Effect
      of Reverse Merger
                                    
                                    
                                    13,840
                                    
                                    
                                    
                                    14
                                    
                                    
                                    
                                    (200,014
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (200,000
                                    )Divestiture
      of Subsidiary to Related Party
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    544,340
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    544,340Net
      Loss
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (807,600
                                    )
                                    
                                    
                                    (807,600
                                    )Balance
      at December 31, 2005
                                    
                                    
                                    191,828
                                    
                                    
                                    
                                    192
                                    
                                    
                                    
                                    744,148
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (807,600
                                    )
                                    
                                    
                                    (63,200
                                    )Shares
      Issued for Employment
                                    
                                    
                                    45,500
                                    
                                    
                                    
                                    46
                                    
                                    
                                    
                                    8,487,455
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    8,487,500Shares
      Issued for Services
                                    
                                    
                                    171,080
                                    
                                    
                                    
                                    171
                                    
                                    
                                    
                                    28,798,329
                                    
                                    
                                    
                                    (7,633,750
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    21,164,750Shares
      Issued for Lease Agreement
                                    
                                    
                                    6,770
                                    
                                    
                                    
                                    7
                                    
                                    
                                    
                                    406,193
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (350,200
                                    )
                                    
                                    
                                    56,000Net
      Loss
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (36,906,584
                                    )
                                    
                                    
                                    (36,906,584
                                    )Balance
      at December 31, 2006
                                    
                                    
                                    415,178
                                    
                                    
                                    
                                    415
                                    
                                    
                                    
                                    38,436,125
                                    
                                    
                                    
                                    (7,633,750
                                    )
                                    
                                    
                                    (38,064,384
                                    )
                                    
                                    
                                    (7,261,594
                                    )Shares
      Issued For Services
                                    
                                    
                                    63,021
                                    
                                    
                                    
                                    63
                                    
                                    
                                    
                                    528,285
                                    
                                    
                                    
                                    (387,500
                                    )
                                    
                                    
                                    
                                    
                                    
                                    
                                    140,848Shares
      Issued for Debt Conversion
                                    
                                    
                                    350,000
                                    
                                    
                                    
                                    350
                                    
                                    
                                    
                                    349,650
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    350,000Amortization
      of Beneficial Conversion Feature
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    1,066,657
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    1,066,657Amortization
      of shares issued for services
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    8,021,250
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    8,021,250Shares
      Issued for Properties
                                    
                                    
                                    500,000
                                    
                                    
                                    
                                    500
                                    
                                    
                                    
                                    4,999,500
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    5,000,000Net
      loss
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (15,007,117
                                    )
                                    
                                    
                                    (15,007,117
                                    )Balance
      at December 31, 2007
                                    
                                    
                                    1,328,198
                                    
                                    
                                    
                                    1,328
                                    
                                    
                                    
                                    45,380,217
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    (53,071,501
                                    )
                                    
                                    
                                    (7,689,956
                                    )Amortization
      of Beneficial Conversion Feature
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    32,335
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    32,335Cancellation
      and Amortization of Shares
                                    
                                    
                                    (919
                                    )
                                    
                                    
                                    (1
                                    )
                                    
                                    
                                    1
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    0Issuance
      of Shares for Cash
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    10
                                    
                                    
                                    
                                    19,990
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    20,000Shares
      Issued for Debt Conversion
                                    
                                    
                                    990,000
                                    
                                    
                                    
                                    990
                                    
                                    
                                    
                                    98,010
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    99,000Purchase
      of Subsidiary with Stock
                                    
                                    
                                    10,000,000
                                    
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    2,490,000
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    2,500,000Issuance
      of Stock for Services
                                    
                                    
                                    270,000
                                    
                                    
                                    
                                    270
                                    
                                    
                                    
                                    128,230
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    128,500Net
      Income
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    3,559,617
                                    
                                    
                                    
                                    3,559,617Balance
      at December 31, 2008
                                    
                                    
                                    12,597,279
                                    
                                    
                                    $
                                    12,597
                                    
                                    
                                    $
                                    48,148,783
                                    
                                    
                                    $
                                    0
                                    
                                    
                                    $
                                    (49,511,884
                                    )
                                    
                                    $
                                    (1,350,504
                                    )







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




F-6











GULF
ONSHORE, INC.


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


AND
THE CUMULATIVE PERIOD FROM JANUARY 27, 2005 (INCEPTION) TO DECEMBER 31,
2008


2008
                  
                  
                  2007
                  
                  
                  Period
      from January 27, 2005 (inception) to Dec 31, 2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income (Loss)
                  
                  $
                  3,559,617
                  
                  
                  $
                  (15,007,117
                  )
                  
                  $
                  (49,511,884
                  )Adjustments
      to reconcile net income (loss) to cash used in operating
      activities:Depreciation
      and depletion
                  
                  
                  2,338
                  
                  
                  
                  33
                  
                  
                  
                  6,182Amortization
      on investment in Custer leasehold
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  9,333Impairment
      on oil lease investments
                  
                  
                  2,400,000
                  
                  
                  
                  5,030,000
                  
                  
                  
                  7,476,667Write
      off oil and gas properties
                  
                  
                  100,000
                  
                  
                  
                  -
                  
                  
                  
                  100,000Stock 
      issued for services
                  
                  
                  128,500
                  
                  
                  
                  140,848
                  
                  
                  
                  29,442,811Amortization
      of prepaid consulting fees
                  
                  
                  -
                  
                  
                  
                  8,021,250
                  
                  
                  
                  8,021,250Amortization
      of beneficial conversion feature
                  
                  
                  32,335
                  
                  
                  
                  1,066,657
                  
                  
                  
                  1,098,992Shares
      to be issued
                  
                  
                  (5,000,000
                  )
                  
                  
                  5,000,000
                  
                  
                  
                  -Loss
      on disposition of subsidiary
                  
                  
                  97,050
                  
                  
                  
                  -
                  
                  
                  
                  97,050Changes
      in certain assets and liabilities:(Increase)
      decrease in accounts receivable
                  
                  
                  11,675
                  
                  
                  
                  (11,675
                  )
                  
                  
                  -Increase  in
      accrued interest to affiliate
                  
                  
                  71,487
                  
                  
                  
                  64,860
                  
                  
                  
                  948,057Increase
      in accounts payable
                  
                  
                  29,596
                  
                  
                  
                  853
                  
                  
                  
                  359,179Decrease
      in accounts payable related party
                  
                  
                  (
      69,688
                  )
                  
                  
                  -
                  
                  
                  
                  (3,031
                  )Increase
      (decrease) in accrued expenses
                  
                  
                  (1,387,111
                  )
                  
                  
                  113,000
                  
                  
                  
                  45,415Increase
      in Others
                  
                  
                  1,950
                  
                  
                  
                  -
                  
                  
                  
                  1,950CASH
      FLOWS USED IN OPERATING ACTIVITIES:
                  
                  
                  (22,251
                  )
                  
                  
                  (581,291
                  )
                  
                  
                  (1,908,029
                  )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of oil & gas leases
                  
                  
                  -
                  
                  
                  
                  (30,000
                  )
                  
                  
                  (30,000
                  )Purchase
      of property, plant & equipment
                  
                  
                  (1,938
                  )
                  
                  
                  (2,000
                  )
                  
                  
                  (42,890
                  )CASH
      FLOWS USED IN INVESTING ACTIVITIES
                  
                  
                  (1,938
                  )
                  
                  
                  (32,000
                  )
                  
                  
                  (72,890
                  )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from convertible note - related party, net
                  
                  
                  -
                  
                  
                  
                  551,342
                  
                  
                  
                  951,342Sale
      of Stock for Cash
                  
                  
                  20,000
                  
                  
                  
                  -
                  
                  
                  
                  20,000Loans
      payable to affiliates
                  
                  
                  -
                  
                  
                  
                  66,657
                  
                  
                  
                  1,008,997CASH
      FLOWS PROVIDED BY FINANCING ACTIVITIES
                  
                  
                  20,000
                  
                  
                  
                  617,999
                  
                  
                  
                  1,980,339NET
      INCREASE IN CASH &CASH EQUIVALENTS
                  
                  
                  (4,189
                  )
                  
                  
                  4,708
                  
                  
                  
                  580CASH
      &CASH EQUIVALENTS, BEGINNING OF PERIOD
                  
                  
                  4,769
                  
                  
                  
                  61
                  
                  
                  
                  -CASH
      &CASH EQUIVALENTS, END OF PERIOD
                  
                  $
                  580
                  
                  
                  $
                  4,769
                  
                  
                  $
                  580SUPPLEMENTAL
      CASH FLOW INFORMATION:Issuance
      of commons stock for services
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  -Related
      party note payable
                  
                  $
                  250,000
                  
                  
                  
                  -
                  
                  
                  $
                  250,000Net
      liabilities assumed with recapitalization
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  200,000Divestiture
      of subsidiary to related party
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  544,340Common
      stock issued for debt
                  
                  $
                  99,000
                  
                  
                  
                  350,000
                  
                  
                  $
                  1,149,000Common
      stock issued for acquiring oil & gas leases
                  
                  $
                  2,500,000
                  
                  
                  
                  5,000,000
                  
                  
                  $
                  7,906,200
  The accompanying notes are an integral
part of these consolidated financial statements.








F-7


(A
DEVELOPMENT STAGE COMPANY)




NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




DECEMBER 31,
2008




1. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES




A. Organization and General Description
of Business


Gulf
Onshore, Inc.  (“We” or “the Company”), was incorporated under the
laws of the State of Colorado, on February 29, 1996, as Patriot Holdings,
Inc..  On August 26, 1999, the Company changed its name to National
Healthcare Technology, Inc., and commenced a business plan to develop Magkelate,
a patented intravenous drug developed to re-establish normal electrolyte balance
in ischemic tissue and certain other patents for medical instruments and medical
instrument technology.  On January 14, 2000, the Company filed its
Form 10SB12G.  In 2002, the Company ceased its medical technology
business following the death of Magkelate’s inventor.  The Company
conducted no substantial business until 2005.





In
July 2005, the Company acquired Es3, Inc., a Nevada Corporation ("Es3"),
pursuant to the terms of an Exchange Agreement (the "Exchange Agreement") by and
among the Company, Crown Partners, Inc., a Nevada corporation ("Crown
Partners"), Es3, and certain stockholders of Es3 (the "Es3 Stockholders"). Under
the terms of the Exchange Agreement, the Company acquired all of the outstanding
capital stock of Es3 in exchange for the issuance of 191,828 shares of the
Company's common stock (adjusted for splits) to the Es3 Stockholders, Crown
Partners and certain consultants. The transactions effected by the Exchange
Agreement were accounted for as a reverse merger, and recapitalization. In
addition, the Company changed its accounting year-end from September 30 to
December 31, which was Es3's accounting year-end.  The Company then
commenced business manufacturing and marketing products under the name Special
Stone Surfaces.  The Company sold its shares in Es3 in October 2005,
and thereafter conducted no substantial business until 2006,





On April
3, 2006, the Company acquired a group of oil and gas leases in Oklahoma in
exchange for issuance of common stock and commenced the business
of  oil and gas exploration and production, mineral lease purchasing
and all activities associated with acquiring, operating and maintaining the
assets of such operations.  On June 6, 2007, the Company changed its
name from National Healthcare Technology, Inc., to Gulf Oil & Gas, Inc., and
converted to a Nevada corporation.  The Company acquired additional
oil and gas leases during 2007, all for issuance of common stock; in October
2007, the Company acquired leases from K & D Equity Investments, Inc., a
Texas corporation in a transaction that effected a change of control, with K
& D acquiring a majority stake in the Company.   The Company
also entered into a Line of Credit Agreement with South Beach Live, Inc., a
Florida corporation, to provide it with working capital of up to $100,000 on a
revolving credit line. The Agreement permitted South Beach the right to
repayment on demand, or to convert amounts owed for shares.





On March
25, 2008 the Company changed its name to Gulf Onshore, Inc.  On June 6,
2008, the Company entered into an Asset Acquisition Agreement with K & D to
acquire additional leases (the “Leases”) in exchange for common stock and a
Stock Purchase Agreement (“SPA”) with South Beach Live, Inc., a Florida
corporation, to purchase 100% of the common shares of Curado Energy Resources,
Inc., a Texas corporation (“Curado”). Curado is registered with the Texas
Railroad Commission as an oil and gas well operator, and is the operator for the
Leases.   The Company acquired the Leases into Curado, in
exchange for shares issued to K & D.  The Company
issued  South Beach a promissory note for $250,000, payable in 1 year
at 10% interest.   The Company consolidated the operations of
Curado Energy Resources, Inc.





Throughout
3Q 2008, declining oil prices and increased operating costs made continued oil
and gas operations on the Leases unprofitable, and the Company was continually
drawing down on its Line of Credit Agreement with South Beach. In exchange for
concessions from South Beach regarding further cash advances and future stock
conversions, in August 2008, the Company agreed to grant South Beach a security
interest in its South Beach shares.





On
October 6, 2008, in the face of further oil price declines and general economic
conditions, the Company and South Beach entered into an Accord and Satisfaction
Agreement under which the Company surrendered its interest in the Putnam “M” oil
and gas lease in Throckmorton Co., Texas in exchange for a complete release on
the Promissory Note and Line of Credit.  In addition, the Company
waived any claim on the shares of Curado common stock that secured the
Promissory Note or the assets of Curado.  As a result, the Company’s
4Q 2007, financial statements will reflect the disposition of Curado and its
assets, and furthermore that the Company has, once again, become a Development
Stage Company seeking a new business partner or acquisition.  A Form
8-K reflecting this transaction was timely filed.




B.
Basis of Presentation





The
Company prepares its financial statements on the accrual basis of
accounting.  All intercompany balances and transactions are
eliminated.  Investments in subsidiaries are reported using the equity
method.  The financial statements include the accounts of Curado
Energy Resources Inc., a former operating subsidiary, Inc., for the period from
June 2008 through September 2008.






F-8






Gulf
Onshore, Inc., up until the June 30, 2008 filing has filed as a Development
Stage Company, as defined by SFAS 7, “Accounting and Reporting by Development
Stage Enterprises”.  The Company no longer is devoting substantially
all of its efforts to establish a new business and has begun principal
operations.  Also, the Company has begun to generate significant
revenues, particularly through its former subsidiary, Curado Energy Resources,
Inc




C.
Stock Splits




On March
6, 2008 the Directors of Gulf Onshore, Inc. (the “Company) announced a one for
ten (1:10) stock split (the “Reverse Split”) and a contemporaneous one for ten
(1:10) reduction in the number of the Company’s authorized shares of common
stock, par value $0.001 (the "Common Stock"), in accordance with the procedure
authorized by N.R.S. §78.207. The Directors determined that it would be in the
Company's best interest to effect the Reverse Split and approved this corporate
action by unanimous written consent. The Reverse Split did not require
shareholder approval.  All shares referenced, except where otherwise
noted, are net of the Reverse Split.




D. Use of Estimates




The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Estimates and assumptions are reviewed periodically and the effects of revisions
are reflected in the financial statements in the period they are
determined.




E. Cash and Cash
Equivalents




Cash and cash equivalents include cash
in hand and cash in time deposits, certificates of deposit and all highly
liquid debt instruments with original maturities of three months or
less.





F.
Long-Lived Assets & Impairment on oil lease investments




Effective
January 1, 2002, the Company adopted Statement of Financial Accounting Standards
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
144”), which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
the Results of Operations for a Disposal of a Segment of a Business.” The
Company periodically evaluates the carrying value of long-lived assets to be
held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets’ carrying amounts. In that event, a
loss is recognized based on the amount by which the carrying amount exceeds the
fair market value of the long-lived assets. Loss on long-lived assets to be
disposed of is determined in a similar manner, except that fair market values
are reduced for the cost of disposal.




During
the year ended December 31, 2007, the Company had acquired two oil & gas
leases in two separate transactions. One lease was acquired for cash
consideration of $30,000 and the other lease was acquired in exchange of
50,000,000 (pre reverse split of March 1, 2008) shares. The lease was valued at
the fair market value of the shares which was $5,000,000




As of
December 31, 2007, the Company estimated the future cash flows expected to
result from the use and eventual disposition of the two oil & well gas
leases. Based on its review, the Company determined that the carrying value of
the assets is not recoverable and hence the leases were determined to be
impaired as of December 31, 2007. The Company recorded an impairment loss of
$5,030,000 for the year ended December 31, 2007.




In June
2008 the Company acquired eleven oil well leases in a related party transaction
with the majority shareholder, K&D Investments, for 10,000,000
shares.  The value of the stock at the time of the transaction was
$2,500,000 and the predecessor cost was $100,000.  Therefore, an
impairment of $2,400,000 was recorded related to the transaction and the net
cost recorded on the Company’s balance sheet is $100,000.  The Leases
were acquired into Curado Energy Resources, Inc., the operator of the Leases,
which the Company acquired from South Beach Live, Inc., its most significant
creditor.





Throughout
3Q 2007, declining oil prices and increased operating costs made continued oil
and gas operations on the Leases unprofitable, and the Company was continually
drawing down on its Line of Credit Agreement with South Beach. In exchange for
concessions from South Beach regarding further cash advances and future stock
conversions, in August 2007, the Company agreed to grant South Beach a security
interest in its South Beach shares.




On
October 6, 2008, in the face of further oil price declines and general economic
conditions, the Company and South Beach entered into an Accord and Satisfaction
Agreement under which the Company surrendered its interest in the Putnam “M” oil
and gas lease in Throckmorton Co., Texas in exchange for a complete release on
the Promissory Note and Line of Credit.  In addition, the Company
waived any claim on the shares of Curado common stock that secured the
Promissory Note or the assets of Curado.  As a result, the Company’s
4Q 2007, financial statements will reflect the disposition of Curado and its
assets, and furthermore that the Company has, once again, become a Development
Stage Company seeking a new business partner or acquisition.  A Form
8-K reflecting this transaction was timely filed.








F-9







G.
Fair Value of Financial Instruments





Statement
of Financial Accounting Standard No. 107, Disclosures About Fair Value of
Financial Instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the balance
sheet qualifying as financial instruments are a reasonable estimate of fair
value.




H. Technology License and
Royalties




The
Company's former principal business activity focused on oil and gas
exploration.   We have divested ourselves of all oil and gas
properties and are investigating other business opportunities.  We
have no technology licenses or rights to any royalties.




I. Stock-Based
Compensation




In
December 2004, the FASB issued SFAS No. 123 (revised 2004),
‘‘Share-Based Payment’’ (‘‘SFAS 123R’’), which requires the measurement of all
employee share-based payments to employees, including grants of employee stock
options, using a fair-value-based method and the recording of such expense in
the consolidated statements of operations. In March 2005, the SEC issued Staff
Accounting Bulletin No. 107 (“SAB 107”) regarding the SEC’s interpretation
of SFAS 123R and the valuation of share-based payments for public companies. The
Company has adopted SFAS 123R and related FASB Staff Positions (“FSPs”) as of
January 01, 2006 and will recognize stock-based compensation expense using the
modified prospective method.




J. Income
Taxes




The Company accounts for income taxes
using the Financial Accounting Standards Board Statements of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires the
establishment of a deferred tax asset or liability for the recognition of future
deductible or taxable amounts and operating loss and tax credit carry forwards.
Deferred tax expense or benefit is recognized as a result of timing differences
between the recognition of assets and liabilities for book and tax purposes
during the year.




Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Deferred tax assets are recognized for deductible temporary differences
and operating loss, and tax credit carry forwards. A valuation allowance is
established to reduce that deferred tax asset if it is "more likely than not"
that the related tax benefits will not be realized.




K. Basic and Diluted Net Earnings
(loss) per Share




The Company adopted the provisions of
SFAS No. 128, "Earnings Per Share" ("EPS"). SFAS No. 128 provides for the
calculation of basic and diluted earnings per share. Basic EPS includes no
dilution and is computed by dividing income or loss available to common
shareholders by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution of securities that could
share in the earnings or losses of the entity. For the periods January 1, 2008
to December 31, 2008 and from inception through December 31, 2008, basic and
diluted loss per share are the same since the calculation of diluted per share
amounts would result in an anti-dilutive calculation.




L.
Development Stage Enterprise




The
Company is a development stage enterprise, as defined in Financial Accounting
Standards Board No.7. The Company did commence significant operations in the
fiscal second quarter of 2008 and generated a total of $447,412 of revenue in
the following four month period.  In October 2008, the Company
divested itself of its operating company, Curado Energy Resources, Inc., (see
note xx) and no longer has significant operations.  Beginning with the
fiscal fourth quarter of 2008 the Company again became a development stage
company.




M.
Recent Accounting Pronouncements





In June
2003, the Securities and Exchange Commission (“SEC”) adopted final rules under
Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404 (b)”), as amended by
SEC Release No. 33-8760 on December 15, 2006.  Commencing with the
Company’s Annual Report for the year ending December 31, 2008, the Company is
required to include a report of management on the Company’s internal control
over financial reporting.  The internal control report must include a
statement of management’s responsibility for establishing and maintaining
adequate internal control over financial reporting for the Company; of
management’s assessment of the effectiveness of the Company’s internal control
over financial reporting as of its year-end and of the framework used by
management to evaluate the effectiveness of the Company’s internal control over
financial reporting.





In June
2008, the SEC approved a one year extension of the compliance data for smaller
public companies to meet the Section 404 (b) auditor attestation requirement of
the Sarbanes-Oxley Act regarding the Company’s internal control over financial
reporting on whether it believes that the Company has maintained, in all
material respects, effective internal control over financial
reporting.








F-10





In 2007,
the FASB issued the following:





-
            SFAS
      No. 141: (Revised 2007), “Business
Combinations”





-
            SFAS
      No. 159:  “The Fair Value Option for Financial Assets and
      Financial Liabilities”





-
            SFAS
      No. 160:  “Noncontrolling Interest in Consolidated Financial
      Statements”





In 2008,
the FASB issued the following:





-
            SFAS
      No. 161: “Disclosures about Derivative Instruments and Hedging
      Activities”





-
            SFAS
      No. 162:  “The Hierarchy of Generally Accepted Accounting
      Principles”





-
            SFAS
      No. 163:  “Accounting for Financial Guarantee Insurance
      Contracts”





Management
has reviewed these new standards and believes that they have no material impact
on the financial statements of the Company.







N.
Reclassifications





For
comparative purposes, certain prior period consolidated financial statements
have been reclassified to conform with report classifications of the current
year.







2. GOING
CONCERN




The accompanying consolidated financial
statements have been prepared in conformity with generally accepted accounting
principles, which contemplate the continuation of the Company as a going
concern. The Company reported an accumulated deficit of $49,511,884 and had a
stockholder’s deficit of $1,358,504 at December 31, 2008.




In view
of the matters described, there is substantial doubt as to the Company's ability
to continue as a going concern without a significant infusion of
capital.  At December 31, 2008, the Company had no operations. In view
of the matters described, there is substantial doubt as to the Company's ability
to continue as a going concern without a significant infusion of capital. There
can be no assurance that management will be successful in implementing its
plans. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.




We anticipate that we will have to
raise additional capital to fund operations over the next 12 months.  To
the extent that we are required to raise additional funds to acquire properties, and to
cover costs of operations, we intend to do so through additional public or private
offerings of debt or equity securities.  There are
no  commitments  or arrangements  for  other  offerings  in  place,  no  guaranties  that  any  such financings would be
forthcoming,  or as to the terms of any such financings.
Any future financing
may involve substantial dilution to existing investors.Wehad beenrelying on our common stock to pay
third parties for services which has resulted substantial dilution to
existing investors.







3. INCOME
TAXES




Deferred
income taxes are reported using the liability method. Deferred tax assets are
recognized for deductible temporary differences and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.   Current year and accumulated deferred tax
benefit at the effective Federal income tax rate of 34% is $17,329,131,and
$17,650,659 respectively and a valuation allowance has been set up for the full
amount because of the unlikelihood that the accumulated deferred tax benefit
will be realized in the future.







At
December 31, 2008, the Company had available federal and state net operating
loss carryforwards amounting to approximately $49,511,884  that are
available to offset future federal and state taxable income and that expire in
various periods through 2028 for federal tax purposes and 2015 for state tax
purposes.  No benefit has been recorded for the loss carryforwards,
and utilization in future years may be limited under Sections 382 and 383
of the Internal Revenue Code if significant ownership changes have occurred or
from future tax legislation changes







The following table sets forth the
significant components of the net deferred tax assets for operation in the US as
of December 31, 2008 and 2007.








F-11








2008
                
                
                2007Net
      operation loss carry forward
                
                $
                49,511,884
                
                
                $
                53,071,501Total
      deferred tax assets
                
                
                16,440,389
                
                
                
                17,650,659Less:
      valuation allowance
                
                
                (16,440,389
                )
                
                
                (17,650,659
                )Net
      deferred tax assets
                
                $
                -
                
                
                $
                -







The provision for income taxes on income consists of the
following for the years ended December 31, 2008 and 2007:





2008
                
                
                2007US
      Current Income Tax Expense (Benefit)
                
                $
                1,210,270
                
                
                $
                (5,102,420
                )Federal
                
                $
                1,210,270
                
                
                $
                (5,102,420
                )State
                
                
                -
                
                
                
                -Total
      Provision for Income Tax
                
                $
                1,210,270
                
                
                $
                (5,102,420
                )





The
following is a reconciliation of the provision for income taxes at the U.S.
federal income tax rate to the income taxes reflected in the Consolidated
Statements of Operations:










December
      31
              2008
            
            December
      31
              2007Tax expense
      (credit) at statutory rate-federal
            
            (34%)
            
            (34%)State tax
      expense net of federal tax
            
            (6)
            
            (6)Valuation
      allowance
            
            40
            
            40Tax expense at
      actual rate
            
            -
            
            -






4. PROFESSIONAL
FEES




Professional
fees, during the years ended December 31, 2008 and 2007, amounted to $191,371
and $8,719,580, respectively.  The professional fees in 2008 are
related to normal operations (auditors, outside consultants and attorneys)
except for the exception noted below.  In 2007 the higher expense is
predominately related to consulting agreements entered into in 2006 and on
January 11, 2007, with related parties.




During
the year ended December 31, 2008 the Company issued 20,000 shares to ROBOCO as
consideration for purchasing specific oil and gas properties.  The
Company never completed the transaction and wrote-off the shares to professional
services totaling $22,500.




During
the year ended December 31, 2007 and 2006, the Company issued shares in exchange
for professional fee to various consultants under separate agreements. The
shares issued were valued at the fair market value pursuant to EITF- 96-18. The
Company issued 1,710,800 shares during the year ended December 31, 2006. Fair
market value of the shares was recorded at $28,798,500 and was expensed over the
term of the services provided. $21,164,750 was expensed during the year ended
December 31, 2006 and the balance of $7,633,750 was recorded as prepaid
consulting to be amortized as the services are performed.




During
the year ended December 31, 2007, the Company issued 630,205 shares to various
consultants under separate agreements and valued them at $528,348. $387,500 of
the total amount was initially recorded as prepaid consulting.




All of
the consulting agreements were completed during the year ended December 31, 2007
and the prepaid consulting of $8,021,250 was amortized to professional fees
expense.




5.  ACCRUED
EXPENSES





As of
December 31, 2008, the accrued expenses comprise of the following:





2008
                      
                      
                      2007Accrued
      consulting fee
                      
                      $
                      0
                      
                      
                      $
                      102,500Accrued
      audit fees
                      
                      
                      30,000
                      
                      
                      
                      25,000Accrued
      dispute settlement
                      
                      
                      13,000
                      
                      
                      
                      13,000Accrued
      payroll taxes
                      
                      
                      0
                      
                      
                      
                      1,285,651Accrued
      compensation costs
                      
                      
                      2,415
                      
                      
                      
                      6,374TOTAL
                      
                      $
                      45,415
                      
                      
                      $
                      1,432,525








F-12






6. EQUITY
TRANSACTIONS





The
Company is authorized to issue 30,000,000 shares of common shares with a par
value of $.001 per share.  These shares have full voting
rights.  There were 12,597,279 issued and outstanding as of December
31, 2008.





The
Company is also authrorized to issue 1,000,000 shares of preferred
stock.  To-date, the Company has not filed any manner of designation
of rights with the State of Nevada and has no preferred shares
outstanding.





A. Issuance of Common
Stock




On January 11, 2007 the company entered into an agreement with
Summitt Oil and Gas, Inc., also an affiliate of the Company, wherein the Company
memorialized its obligation to pay Summitt $350,000 by December 31, 2007 for
monies owed to Summitt. The Company also gave Summitt the right to convert all
or part of this debt into shares of the Company's common stock at $.01 per
share, which right Summitt has exercised. As a result of this conversion,
Summitt was issued 350,000 shares of the Company's common stock, in restricted
form, and the Company has extinguished the debt of $350,000 owed to
Summitt.  The company recorded a beneficial conversion of $350,000 on
the note.  The Company extinguished the debt of $350,000 to the
related party on conversion of the note and recorded $350,000 as interest
expense. Additionally, the Company entered into a consulting agreement with
Summitt wherein the Company agreed to pay Summitt $450,000 and issue Summitt
five million shares of the Company's common stock, in restricted form, in
consideration for Summitt's services through December 31, 2007. During the
twelve month period ended December 31, 2007 the Company amortized
$650,000.  Conversion of this debt into stock is at the discretion of
Summitt and the Company does not have the right to initiate the
conversion.




In April,
2007, pursuant to the terms of a consulting agreement, the Company issued 1,000
shares of its common stock to Claudia J. Zaman, attorney.  The Company
recorded the transaction at the fair market value of shares of $24,000,
recognized $10,000 of expense in April, 2007 and recorded and additional $10,000
of expense in June, 2007.  At September 30, 2007 the prepaid expense
was fully amortized and there was $0 of prepaid legal fees on the balance
sheet.




In April,
2007, pursuant to the terms of a consulting agreement, the Company issued 1,000
shares of its common stock to Stephen Taylor, consultant.  The Company
recorded the transaction at the fair market value of shares of
$48,000.  The full $48,000 was expensed in April 2007.




In April,
2007, pursuant to the terms of a consulting agreement, the Company issued 10,000
shares of its common stock to Dieu Vuong, consultant.  The Company
recorded the transaction at the fair market value of shares of
$180,000.  The full $180,000 was expensed in April 2007.





On June
6, 2008, Gulf Onshore, Inc. (the “Company”), entered into an Asset Purchase
Agreement (the “Agreement”) with K&D Equity Investments, Inc., a Texas
corporation (“K&D”). Under the terms of the Agreement, the Company will
acquire, though Curado Energy Resources, Inc., working interests in ten (10)
oil, gas and mineral leases (the “Leases”) located in Texas, with Net Revenue
Interests (N.R.I.) in these leases ranging from 75% to 84.76%.  Gulf
paid K&D 10,000,000 shares of its $.001 par value common stock for the
Leases. K&D is currently the owner of 9,700,000 shares of the Company’s
common stock, and its president, Jeffrey Joyce, is an officer of the Company.
K&D currently owns approximately 77% of the Company’s issued and outstanding
shares.





On June
6, 2008, the Company entered into a Stock Purchase Agreement (“SPA”) with South
Beach Live, Inc., a Florida corporation, to purchase 100% of the common shares
of Curado Energy Resources, Inc., a Texas corporation (“Curado”). Curado is
registered with the Texas Railroad Commission as an oil and gas well operator,
and is the operator for the Leases. The Company has agreed to issue South Beach
a promissory note for $250,000, payable in 1 year at 10% interest. The Fair
Market Value (“FMV”) of net assets of Curado at the time of the transaction were
$142,909.  This generated an amount of Goodwill of $107,091 which was
reflected in the consolidated financial statements.




On June
13, 2008, the Company issued 500,000 shares of its $.001 par value common stock
to South Beach Live, Inc., a Florida corporation, pursuant to the terms of an
October 4, 2007, Promissory Note.  Under the terms of the Note, the
Company was released from $50,000 of the principal obligation under the Note in
exchange for issuance of these shares.  Provisions of the Note are
fully disclosed in the Company’s Form 10-KSB, filed on April 10,
2008.




In June
and September 2008, pursuant to the terms of a Purchase and Sale Agreement with
ROBOCO ENERGY, INC., the Company issued a total of 20,000 shares in
consideration for the right to purchase certain oil and gas
properties.  The Company never consummated the agreement and wrote-off
the shares totaling $22,500.




B. Warrants




A summary of the warrant activity for
the period ended December 31, 2008 is as follows:











F-13










Warrants
      Outstanding
                  
                  
                  Weighted
      Average Exercise Price
                  
                  
                  Aggregate
      Intrinsic ValueOutstanding,
      December 31, 2007
                  
                  
                  18,000
                  
                  
                  $
                  67.00
                  
                  
                  $
                  -Granted
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -Forfeited /
      Canceled
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -Exercised
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Outstanding,
      December 31, 2008
                  
                  
                  18,000
                  
                  
                  $
                  67.00
                  
                  
                  $
                  -





The weighted average remaining
contractual life of warrants outstanding is 2.10 years at December 31,
2007.





Outstanding
      Warrants
            
            
            Exercisable
      WarrantsRange
      of Exercise Price
            Number
            Average
      Remaining Contractual Life
            Average
      Exercise Price
            Number$0.67
            18,000
            1.10
            $67.00
            18,000





The
Company estimated the fair value of each stock warrant at the grant date by
using the Black-Scholes option-pricing mode.





The
weighted-average assumptions used in estimating the fair value of warrantsgranted during the year
ended December 31, 2008 along with theweighted-average grant
date fair values, were as follows.





2008
              2007Expected
      volatility
              80.0%
              80.0%Expected life
      in years
              5
      years
              5
      yearsRisk
      free interest rate
              5.07%
              5.07%Dividend
      yield
              0%
              0%





C.
Employee Options







On
April 3, 2006, the Board of Directors of the Company authorized and
approvedthe adoption
of the 2006 Stock Option Plan effective April 3, 2006 (the "Plan").The Plan is administered
by the duly appointed compensation committee.  The Planis authorized to grant
stock options of up to 2,500,000 shares of the Company'scommon
stock.  At the time a
stock  option  is  granted  under  the  Plan,  thecompensation  committee  shall
fix and determine the exercise  price and vestingschedules  at
which such shares of common  stock of the
Company may be acquired.As of December 31, 2008
and December 31, 2007, no options to purchase the Company's common stock have
beengranted under
the Plan.





There
were no options outstanding at December 31, 2008.




In
September, 2006, the Board of Directors of the Company authorized and approved
the adoption of the 2006-1 Consultants and Employees Service Plan effective
September 7, 2006 (the "Consultants Plan").  The Plan is administered
by the duly appointed compensation committee.  The Plan is authorized
to grant stock options and make stock awards of up to 38,000 shares of the
Company's common stock.  At the time a
stock  option  is  granted  under  the  Plan,  the
compensation  committee  shall fix and determine the
exercise  price and vestingschedules  at
which such shares of common  stock of the Company may be acquired. The
Consultants Plan was registered on September 15, 2006 and as of December 31,
2006 a total of 37,990 shares had been issued and granted under the Consultants
Plan. During 2008 and 2007 no additional shares were issued.




7. RELATED
PARTY TRANSACTIONS







On
October 4, 2007, the Company entered into a Letter of Credit agreement with
South Beach Live, Inc. (“South Beach”); Michele Sheriff, a director and
Secretary of the Company, is an officer and director of South
Beach.    The line-of-credit has a maximum of $100,000 and
bears interest at 10% per annum, payable quarterly.  The amount due at
December 31 2008 was $0 as the balance was converted to stock during the fiscal
third quarter ended September 30, 2008; during the entire year, South Beach
advanced a total of $99,000 to the Company.  The Promissory Note has
conversion features that permit South Beach to convert amounts owed at $.10 per
share (post-split) and therefore a deemed dividend of $89,717 was recorded of
which $0 was recorded in the three month period ended December 31,
2008.  On June 13, 2008, the Company issued 500,000 shares of its
$.001 par value common stock, and on September 3, 2008 the Company issued
490,000 shares of its $.001 par value common stock to South Beach pursuant to
the terms of the Promissory Note.  Under the terms of the Note, the
Company was released from all of the principal obligation under the Note in
exchange for issuance of these shares.








F-14






On June
6, 2008, the Company entered into a Stock Purchase Agreement (“SPA”) with South
Beach to purchase 100% of the common shares of Curado Energy Resources, Inc., a
Texas corporation (“Curado”). Curado is registered with the Texas Railroad
Commission as an oil and gas well operator, and is the operator for the Leases.
The Company issued South Beach a promissory note for $250,000, payable in 1 year
at 10% interest. The Fair Market Value (“FMV”) of net assets of Curado at the
time of the transaction were $157,040.  This generated an amount of
Goodwill of $92,960 which is reflected in the consolidated financial
statements.   Also on June 6, 2008, the Company entered into an
Asset Purchase Agreement (the “Agreement”) with K&D Equity Investments,
Inc., a Texas corporation (“K&D”); Jeffrey Joyce, a director and President
of the Company, is an officer of K&D. Under the terms of the Agreement, the
Company acquired, though Curado Energy Resources, Inc., working interests in ten
(10) oil, gas and mineral leases in Throckmorton and Shakelford Co.,
Texas  Gulf paid K&D 10,000,000 shares of its $.001 par value
common stock for the Leases.




In
October 2008, the Company and SBL entered into an Accord and Satisfaction
Agreement.  Under the terms of the Agreement, South Beach released the
Company from any further obligation under the parties’ $250,000 Promissory Note
in exchange for an assignment of the Company’s interest in a (currently)
non-producing oil well, the Putnam M, located in Throckmorton Co., Texas, and a
surrender of any claim to shares of Curado Energy Resources, Inc., the Company’s
wholly-owned subsidiary, currently held by South Beach under a Security
Agreement.  The Company is advised that South Beach has exercised its
rights to these shares and requested re-registration thereof.




On March
25, 2009 Summitt Oil & Gas, Inc. (SUMMITT) and 364 Melissa, Ltd. (MELISSA)
entered into a purchase and sale agreement whereas SUMMITT agreed to
assign  its rights with respect to debt of $814,742 plus accrued
interest and to sell 400,000 shares of restricted stock for a total of
$50,000.  The debt comprises the Secured Convertible Note issued on
January 5, 2007, in the amount of $650,000, further advances of $164,742 (total
$814,742) and accrued interest of $136,346.




NOTE 8 – COMMITMENTS AND CONTINGENCIES




A.
            Legal




The
Company is periodically involved in legal actions and claims that arise as a
result of events that occur in the normal course of operations. The Company is
not currently aware of any formal legal proceedings or claims that the Company
believes will have, individually or in the aggregate, a material adverse effect
on the Company's financial position or results of operations.




B.
            Operating
      Leases




The
Company currently leases office space at 4310 Wiley Post Road, Addison, Texas
75001. The lease is a one year lease for $1,000 per month and expires on May 31,
2009.  The Company is not committed to any additional lease
obligations.




C.
            Liabilities




The
Company had a collection notice for $87,183 related to legal billings in 2006
that had not been booked.  The amount was recorded in the third
quarter of 2007.  The billings were related to acquisition work that
was never completed.  The Company contends that the agreement was not
with Gulf Onshore, Inc. but with a potential acquirer and therefore believes
that the accrual is not necessary.  .




On
December 19, 2006, Empire Relations Group Inc. (“Empire”) filed an arbitration
claim against the Company in connection with a consulting agreement entered into
by and between the Company and Empire on September 28, 2006. An arbitration
award in the amount of $13,000 was issued against the Company on March 9, 2007,
which also provided for interest at the rate of nine percent per annum,
commencing 30 days after the date of the award and continuing until paid in
full. The amount has been accrued in the accompanying financials.




Included
in “Accounts payable” on the consolidated balance sheet at December 31, 2008,
the Company has payables totaling $250,000 to two former directors and one
attorney, that were incurred in 2006 and 2005, respectively.




·
            The
      attorney represented a former related party when it was in negotiations to
      acquire the Company in 2005.  The Company’s position is that
      this is not its liability as it did not contract the attorney and will
      pursue a legal opinion in 2009 to reverse the
  liability.


·
            The
      former directors were awarded severance agreements in June 2006 shortly
      before resigning from the Company.  The severance and other fees
      totaled $81,250 for each director for a total of $162,500.  The
      severance was not immediately paid and there has been no correspondence
      concerning payment since they resigned.  The states statute of
      limitations expires in June 2010 and the Company, at that time, will
      accordingly adjust the liabilities to $0 if no demand is
      received.




Included
in “Accounts payable” on the consolidated balance sheet at December 31, 2008,
the Company also has payables totaling $70,000 to various vendors incurred in
2005 through 2007.




·
            There
      is $30,000 balance to a former related party that has not been
      resolved.  This liability was incurred in 2005 and there has
      been no correspondence with the vendor since the signing of the contract
      and unless the vendor contacts the Company, we will accordingly adjust the
      liability to $0 in compliance with the state statutes of limitations of
      four years, in October of 2009.


·
            There
      is $12,175 to a former consultant that is unresolved.  This
      liability was incurred in 2005 and there has been no correspondence with
      the vendor since the liability was incurred.  In the event the
      vendor does not contact the Company, we will accordingly adjust the
      liability to $0 in compliance with the state statutes of limitations of
      four years, in December of 2009.


·
            There
      is approximately $28,000 of other smaller and aged payables that the
      Company will also write-off in future periods using the applicable stature
      of limitations as a guide.








F-15




The
Company is periodically involved in legal actions and claims that arise as a
result of events that occur in the normal course of operations. The Company is
not currently aware of any other formal legal proceedings or claims that the
Company believes will have, individually or in the aggregate, a material adverse
effect on the Company's financial position or results of
operations.






NOTE 9 –
EXTINGUISHMENT OF DEBT




On March
21, 2008 the Board of Directors determined that it was in the best interest of
the Company and its shareholders to void the contracts of two former directors
and extinguish the associated liability and related accrued payroll
taxes.  The contracts originated in 2006 and called for the issuance
of restricted common stock in the amount of $5,000,000.  During 2006 a
liability for $5,000,000 and $1,285,651 of related accrued payroll taxes was
recorded.  Accordingly, during the twelve months ended December 31,
2008, management has recorded a nonrecurring gain in the amount of
$6,285,651.







NOTE
      10 – FAIR VALUE OF FINANCIAL
INSTRUMENTS




In
September 2006, the FASB issued SFAS 157, Fair Value Measurement. SFAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosures about fair
value measurements. SFAS 157 was effective for our financial assets and
liabilities on January 1, 2008. The FASB delayed the effective date of SFAS
157 for all non-financial assets and non-financial liabilities, except those
that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually) to fiscal years beginning after
November 15, 2008.




SFAS
157’s valuation techniques are based on observable and unobservable inputs.
Observable inputs reflect readily obtainable data from independent sources,
while unobservable inputs reflect our market assumptions. The Standard
classifies these inputs into the following hierarchy:




Level 1
Inputs – Quoted prices for identical instruments in active markets.


Level 2
Inputs – Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant value
drivers are observable.


Level 3
Inputs – Instruments with primarily unobservable value drivers.




As of
December 31, 2008, the Company did not have any instruments subject to valuation
under SFAS 157.





NOTE
      11 – SUBSEQUENT EVENTS




On March
30, 2009 the Company announced it acquired the assets of Cannex Therapeutics,
LLC., (CANNEX) a California based privately held company in the forefront of the
development of medical cannabis based pharmaceutical products.  The
asset purchase agreement includes all intellectual property rights, formulas,
patents, trademarks, client base, hardware and software pertaining to Cannex's
pharmaceutical cannabis research & development business.  Along
with the Cannex asset purchase the Company appointed Steve W. Kubby as President
& CEO, Richard Cowan as Director & CFO, and Robert Melamede Ph. D., as
Director & Chief Science Officer.




The
acquisition was completed in association with K & D Equities, Inc. (KDE),
the Company’s majority shareholder.  The parties agreed that the
Company and KDE will pay CANNEX 10,600,000 shares in consideration for the
acquired assets.  KDE will deliver 8,500,000 shares, and Gulf will
issue 2,100,000 shares.  On March 30, 2009 the Company issued CANNEX
2,100,000 shares.




On March
25, 2009 Summitt Oil & Gas, Inc. (SUMMITT) and 364 Melissa, Ltd. (MELISSA)
entered into a purchase and sale agreement whereas SUMMITT agreed to
assign  its rights with respect to debt and to sell 400,000 shares of
restricted stock for a total of $50,000.  The debt comprises the
Secured Convertible Note issued on January 5, 2007, in the amount of $650,000,
accrued interest of $136,346 and further advances in the amount of
$164,742.




On March
31, 2009, ROBOCO returned 10,000 shares that the Company had written-off in 2008
in relation to a deposit for an oil and gas lease purchase.  The
10,000 shares were valued at $2,500 and written-off to consulting
expenses.


F-16