SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                                Amendment No. 1

 (Mark One)

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

For the Fiscal Year Ended January 31, 2008
                                       OR
(   )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

Commission File No. 0-33259

                             ENERGAS RESOURCES, INC.
                             -----------------------
                 (Name of Small Business Issuer in its charter)

                Delaware                               73-1620724
         ------------------------               -------------------------
         (State of incorporation)            (IRS Employer Identification No.)

      800 Northeast 63rd Street
       Oklahoma City, Oklahoma                                   73105
   ---------------------------------------                  --------------
   (Address of Principal Executive Office)                     Zip Code

Registrant's telephone number, including Area Code: (405)-879-1752 Securities
registered pursuant to Section 12(b) of the Act: None Securities registered
pursuant to Section 12(g) of the Act:

                                  Common Stock
                                 --------------
                                (Title of Class)

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

Check whether the Company (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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.

                                      X
                                    -----       -----
                                     YES          NO

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best  of  the  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]

The Company's revenues during the year ended January 31, 2008 were $444,027.

Indicate by check mark whether the Company is a shell company (as defined in
Rule 12b-25 of the Exchange Act):
                                     Yes [ ] No [X]

The aggregate market value of the voting stock held by non-affiliates of the
Company, (51,094,790 shares) based upon the closing price of the Company's
common stock on April 25, 2008 was approximately $2,043,791.

As of April 25, 2008 the Company had 82,532,744 outstanding shares of common
stock.

Documents incorporated by reference:      None




                                       1
<PAGE>


           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     This report includes  "forward-looking  statements".  All statements  other
than  statements  of  historical  facts  included in this report,  regarding the
Company's  financial  position,  reserve  quantities  and  net  present  values,
business strategy,  plans and objectives of management of the Company for future
operations and capital expenditures,  are forward-looking  statements.  Although
the Company  believes  that the  expectations  reflected in the  forward-looking
statements and the assumptions  upon which such  forward-looking  statements are
based  are  reasonable,  it can give no  assurance  that such  expectations  and
assumptions  will prove to have been  correct.  Reserve  estimates are generally
different  from the  quantities  of oil and  natural  gas  that  are  ultimately
recovered.



                                       2
<PAGE>

                                    GLOSSARY

      The following terms are used throughout this report:

      BBL. One stock tank barrel, or 42 U.S. gallons liquid volume, usually used
herein in reference to crude oil or other liquid hydrocarbons.

      BTU. A British thermal unit which is the amount of heat required to raise
the temperature of one avoirdupois pound of pure water form 58.5 degrees to 59.5
degrees Fahrenheit under standard conditions.

      DEVELOPED ACREAGE. The number of acres which are allocated or assignable
to producing wells or wells capable of production.

      DEVELOPMENT WELL. A well drilled as an additional well to the same
reservoir as other producing wells on a Lease, or drilled on an offset Lease not
more than one location away from a well producing from the same reservoir.

      EXPLORATORY WELL. A well drilled in search of a new undiscovered pool of
oil or gas, or to extend the known limits of a field under development.

      GROSS ACRES OR WELLS. A well or acre in which a working interest is owned.
The number of gross wells is the total number of wells in which a working
interest is owned.

      LEASE. Full or partial interests in an oil and gas lease, authorizing the
owner thereof to drill for, reduce to possession and produce oil and gas upon
payment of rentals, bonuses and/or royalties. Oil and gas leases are generally
acquired from private landowners and federal and state governments. The term of
an oil and gas lease typically ranges from three to ten years and requires
annual lease rental payments of $1.00 to $2.00 per acre. If a producing oil or
gas well is drilled on the lease prior to the expiration of the lease, the lease
will generally remain in effect until the oil or gas production from the well
ends. The Company is required to pay the owner of the leased property a royalty
which is usually between 12.5% and 16.6% of the gross amount received from the
sale of the oil or gas produced from the well.

      MCF. One thousand cubic feet.

      MCFE. Equivalent cubic feet of gas, using the ratio of six Mcf of natural
gas to one Bbl of crude oil, condensate or natural gas liquids.

      NET ACRES OR WELLS. A net well or acre is deemed to exist when the sum of
fractional ownership working interests in gross wells or acres equals one. The
number of net wells or acres is the sum of the fractional working interests
owned in gross wells or acres expressed as whole numbers and fractions.



                                       3
<PAGE>


      OPERATING COSTS. The expenses of producing oil or gas from a formation,
consisting of the costs incurred to operate and maintain wells and related
equipment and facilities, including labor costs, repair and maintenance,
supplies, insurance, production, severance and other production excise taxes.

      PRODUCING PROPERTY. A property (or interest therein) producing oil or gas
in commercial quantities or that is shut-in but capable of producing oil or gas
in commercial quantities, to which Producing Reserves have been assigned.
Interests in a property may include Working Interests, production payments,
Royalty Interests and other non-working interests.

      PRODUCING RESERVES. Proved Developed Reserves expected to be produced from
existing completion intervals open for production in existing wells.

      PROSPECT. An area in which a party owns or intends to acquire one or more
oil and gas interests, which is geographically defined on the basis of
geological data and which is reasonably anticipated to contain at least one
reservoir of oil, gas or other hydrocarbons.

      PROVED DEVELOPED RESERVES. Proved developed oil and gas reserves are
reserves that can be expected to be recovered through existing wells with
existing equipment and operating methods. Additional oil and gas expected to be
obtained through the application of fluid injection or other improved recovery
techniques for supplementing the natural forces and mechanisms of primary
recovery may be included as "proved developed reserves" only after testing by a
pilot project or after the operation of an installed program has confirmed
through production response that increased recovery will be achieved.

      PROVED RESERVES. Proved oil and gas reserves are the estimated quantities
of crude oil, natural gas, and natural gas liquids which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions, i.e., prices and costs as of the date the estimate is made. Prices
include consideration of changes in existing prices provided only by contractual
arrangements, but not on escalations based upon future conditions.

      (i) Reservoirs are considered proved if economic producibility is
supported by either actual production or conclusive formation testing. The area
of a reservoir considered proved includes (a) that portion delineated by
drilling and defined by gas-oil and/or oil-water contacts, if any; and (b) the
immediately adjoining portions not yet drilled, but which can be reasonably
judged as economically productive on the basis of available geological and
engineering data. In the absence of information on fluid contacts, the lowest
known structural occurrence of hydrocarbons controls the lower proved limit of
the reservoir.

      (ii) Reserves which can be produced economically through application of
improved recovery techniques (such as fluid injection) are included in the
"proved" classification when successful testing by a pilot project, or the
operation of an installed program in the reservoir, provides support for the
engineering analysis on which the project or program was based.


                                       4
<PAGE>

      (iii) Estimates of proved reserves do not include the following: (a) oil
that may become available from known reservoirs but is classified separately as
"indicated additional reserves", (b) crude oil, natural gas, and natural gas
liquids, the recovery of which is subject to reasonable doubt because of
uncertainty as to geology, reservoir characteristics, or economic factors; (c)
crude oil, natural gas, and natural gas liquids, that may occur in undrilled
prospects; and (d) crude oil, natural gas, and natural gas liquids, that may be
recovered from oil shales, coal, gilsonite and other such sources.

        PROVED UNDEVELOPED RESERVES. Proved undeveloped oil and gas reserves are
reserves that are expected to be recovered from new wells on undrilled acreage,
or from existing wells where a relatively major expenditure is required for
recompletion. Reserves on undrilled acreage are limited to those drilling units
offsetting productive units that are reasonably certain of production when
drilled. Proved reserves for other undrilled units can be claimed only where it
can be demonstrated with certainty that there is continuity of production from
the existing productive formation. Proved undeveloped reserves are not
attributable to any acreage for which an application of fluid injection or other
improved recovery technique is contemplated, unless such techniques have been
proved effective by actual tests in the area and in the same reservoir.

         ROYALTY INTEREST. An interest in an oil and gas property entitling the
owner to a share of oil and gas production free of Operating Costs.

         UNDEVELOPED ACREAGE. Lease acres on which wells have not been drilled
or completed to a point that would permit the production of commercial
quantities of oil and gas regardless of whether or not such acreage contains
proved reserves. Undeveloped acreage should not be confused with undrilled
acreage which is "Held by Production" under the terms of a lease.

         WORKING INTEREST. The operating interest under a Lease which gives the
owner the right to drill, produce and conduct operating activities on the
property and a share of production, subject to all Royalty Interests and other
burdens and to all costs of exploration, development and operations and all
risks in connection therewith.

ITEM 1.     DESCRIPTION OF BUSINESS

      The Company was incorporated under the laws of British Columbia, Canada on
November 2, 1989 and on August 20, 2001 the Company became domesticated and
incorporated in Delaware.

      The Company is involved in the exploration and development of oil and gas.
The Company's activities are primarily dependent upon available financial
resources to fund the costs of drilling and completing wells.

      The Company evaluates undeveloped oil and gas prospects and participates
in drilling activities on those prospects which in the opinion of management are
favorable for the production of oil or gas. If, through its review, a
geographical area indicates geological and economic potential, the Company
attempts to acquire Leases or other interests in the area and assemble a


                                       5
<PAGE>

Prospect. The Company normally sells portions of its leasehold interests in a
Prospect to unrelated third parties, thus sharing risks and rewards of the
exploration and development of the Prospect with the joint owners pursuant to an
operating agreement. One or more Exploratory Wells may be drilled on a Prospect,
and if the results indicate the presence of sufficient oil and gas reserves,
additional Development Wells may be drilled on the Prospect. The Company
typically seeks potential joint venture partners for development of its
Prospects.

     In June 2007 and January 2008 the Company  sold its oil and gas  properties
in Kentucky.  For financial  statement  purposes,  the January 2008 sale has not
been  recognized  and  the  properties  involved  in  this  sale  are  shown  as
"Properties Held For Resale" as of January 1, 2008.

     The Company  principally  operates in the Arkoma  Basin in Oklahoma and the
Powder River Basin in Wyoming.

     The Company's  corporate  offices are located at 800 Northeast 63rd Street,
Third Floor,  Oklahoma City,  Oklahoma  73105 and its telephone  number is (405)
879-1752. The Company's web site is www.energasresources.com.

DRILLING ACTIVITIES AND PROVEN RESERVES

      During the periods indicated, the Company drilled or participated in the
drilling of the following wells:

<TABLE>
<S>                      <C>      <C>    <C>      <C>    <C>      <C>    <C>     <C>

                                          Year Ended January 31,
                        ------------------------------------------------------------
                             2005            2006             2007          2008
                             ----            ----             ----          ----
                        Gross     Net   Gross     Net   Gross     Net   Gross    Net
                        -----     ---   -----     ---   -----     ---   -----    ---
Exploratory Wells (1):
  Productive:
   Oil                   --        --      --      --      --       --     --     --
   Gas                    1      .137      --      --      --       --     --     --
   Nonproductive         --        --       1     .24      --       --     --     --

Development Wells (1):
  Productive:
   Oil                    1      .137       1    .137      --       --     --     --
   Gas                   27     9.625       3   2.625      --       --     --     --
  Nonproductive          --        --       1    .137      --       --     --     --

Total Wells (1):
  Productive:
   Oil                    1      .137       1    .137      --       --     --     --
   Gas                   28     9.762       3   2.625      --       --     --     --
  Nonproductive          --        --       2    .377      --       --     --     --

</TABLE>


(1)  Each well completed to more than one producing zone is counted as a single
     well. The Company has royalty interests in certain wells that are not
     included in this table.

                                       6
<PAGE>

     In May  2003 the  Company  arranged  with a  private  investor  to fund the
drilling of two natural gas wells in the Arkoma Basin of eastern  Oklahoma.  The
two wells were drilled in June 2003 and one well was successfully completed as a
gas  well  and  the  other  well  was  a  dryhole.   The  Company  will  receive
approximately  5% of the production from the productive  well,  after payment of
the  Company's  share of  operating  expenses,  until the investor is repaid the
amounts  advanced  to drill and  complete  the wells,  which were  approximately
$490,000. After the amount advanced by the investor has been repaid, the Company
will receive  approximately 25% of the production from the well after payment of
the Company's share of operating expenses

      The following table shows, as of April 25, 2008, by state and basin, the
Company's producing wells, Developed Acreage, and Undeveloped Acreage, excluding
service (injection and disposal) wells:

             Productive Wells (1)  Developed Acreage   Undeveloped Acreage (2)
             --------------------  -----------------   -----------------------
               Gross        Net    Gross         Net    Gross           Net
               -----        ---    -----         ---    -----           ---

   Oklahoma       3         1.5     (3)         (3)      (3)            (3)
   Wyoming        1         .35      40          14    1,720            602
                ---        ----     ---         ---   ------           ----
       Totals     4        1.85      40          14    1,720            602
                ===        ====     ===         ===   ======           ====

(1)  The wells in Oklahoma are gas wells and the wells in Wyoming are oil wells.
(2)  "Undeveloped  Acreage" includes leasehold interests on which wells have not
     been drilled or completed to the point that would permit the  production of
     commercial  quantities  of natural  gas and oil  regardless  of whether the
     leasehold interest is classified as containing proved undeveloped reserves.
(3)  For its Oklahoma wells, the Company's interest is limited to the well bores
     only.

      The following table shows, as of April 25, 2008 the status of Company's
gross acreage.

                              Held by Production     Not Held by Production
                              ------------------     ----------------------

      Oklahoma                         (1)                     (1)
      Wyoming                          40                   1,720

(1)  For its Oklahoma wells, the Company's interest is limited to the well bores
     only.

      Acres Held By Production remain in force so long as oil or gas is produced
from the well on the particular lease. Leased acres which are not Held By
Production require annual rental payments to maintain the lease until the first
to occur of the following: the expiration of the lease or the time oil or gas is
produced from one or more wells drilled on the lease acreage. At the time oil or
gas is produced from wells drilled on the leased acreage the lease is considered
to be Held By Production.

      The Company does not own any Overriding Royalty Interests.

                                       7
<PAGE>

     Title to properties is subject to royalty, overriding royalty, carried, net
profits,  working  and other  similar  interests  and  contractual  arrangements
customary in the oil and gas  industry,  to liens for current  taxes not yet due
and to  other  encumbrances.  As is  customary  in the  industry  in the case of
undeveloped properties, little investigation of record title is made at the time
of  acquisition  (other than a preliminary  review of local  records).  Drilling
title opinions are always prepared before  commencement of drilling  operations;
however, as is customary in the industry.

      The following table shows the Company's net production of oil and gas,
average sales prices and average production costs during the periods presented:

                                    Year Ended January 31,
                                ------------------------------
Production Data:                2006        2007         2008
                                ----        ----         ----
   Production -
      Oil (Bbls)               2,962       1,417         1,501
      Gas (Mcf)              130,748      97,836        59,515
   Average sales price -
      Oil (Bbls)            $  50.16    $  47.67       $ 56.48
      Gas (Mcf)             $   7.96    $   6.04       $  5.88
   Average production -
       costs per MCFE       $   3.49    $   2.43       $  2.90


      Production costs may vary substantially among wells depending on the
methods of recovery employed and other factors, but generally include severance
taxes, administrative overhead, maintenance and repair, labor and utilities.

      The Company is not obligated to provide a fixed and determined quantity of
oil or gas in the future. During the last three fiscal years, the Company has
not had, nor does it now have, any long-term supply or similar agreement with
any government or governmental authority.

      Below are estimates of the Company's net Proved Reserves and the present
value of estimated future net revenues from such Reserves based upon the
standardized measure of discounted future net cash flows relating to proved oil
and gas reserves in accordance with the provisions of Statement of Financial
Accounting Standards No. 69, "Disclosures about Oil and Gas Producing
Activities" (SFAS No. 69). The standardized measure of discounted future net
cash flows is determined by using estimated quantities of Proved Reserves and
the periods in which they are expected to be developed and produced based on
period-end economic conditions. The estimated future production is priced at
period-end prices, except where fixed and determinable price escalations are
provided by contract. The resulting estimated future cash inflows are then
reduced by estimated future costs to develop and produce reserves based on
period-end cost levels. No deduction has been made for depletion, depreciation
or for indirect costs, such as general corporate overhead. Present values were
computed by discounting future net revenues by 10% per year.


                                       8
<PAGE>

<TABLE>
<S>                             <C>        <C>         <C>        <C>       <C>       <C>
                                                      January 31,
                               -----------------------------------------------------------
                                    2006                    2007                 2008
                               ---------------        ---------------      ---------------
                                Oil        Gas         Oil        Gas      Oil        Gas
                               (Bbls)     (Mcf)       (Bbls)     (Mcf)    (Bbls)     (Mcf)

Proved reserves                 41,180   1,764,909    22,143   1,942,040  53,909    746,499
Estimated future net cash
   flows from proved oil
   and  gas reserves              $8,227,331             $7,383,384           $3,865,249

Present value of future net
  cash flows from proved
  oil and gas reserves            $4,992,059             $4,416,660           $2,077,673

</TABLE>

      The Company's Proved Reserves include only those amounts which the Company
reasonably expects to recover in the future from known oil and gas reservoirs
under existing economic and operating conditions, at current prices and costs,
under existing regulatory practices and with existing technology. Accordingly,
any changes in prices, operating and development costs, regulations, technology
or other factors could significantly increase or decrease estimates of Proved
Reserves.

      In general, the volume of production from natural gas and oil properties
owned by the Company declines as reserves are depleted. Except to the extent the
Company acquires additional properties containing proved reserves or conducts
successful exploration and development activities, or both, the proved reserves
of the Company will decline as reserves are produced. Volumes generated from
future activities of the Company are therefore highly dependent upon the level
of success in acquiring or finding additional reserves and the costs incurred in
doing so.

GOVERNMENT REGULATION

      Various state and federal agencies regulate the production and sale of oil
and natural gas. All states in which the Company plans to operate impose
restrictions on the drilling, production, transportation and sale of oil and
natural gas.

      Under the Natural Gas Act of 1938, the Federal Energy Regulatory
Commission (the "FERC") regulates the interstate transportation and the sale in
interstate commerce for resale of natural gas. The FERC's jurisdiction over
interstate natural gas sales has been substantially modified by the Natural Gas
Policy Act under which the FERC continued to regulate the maximum selling prices
of certain categories of gas sold in "first sales" in interstate and intrastate
commerce.

      The Natural Gas Wellhead Decontrol Act (the "Decontrol Act") deregulated
natural gas prices for all "first sales" of natural gas. Because "first sales"
include typical wellhead sales by producers, all natural gas produced from
natural gas properties is sold at market prices, subject to the terms of any


                                       9
<PAGE>

private contracts which may be in effect. The FERC's jurisdiction over natural
gas transportation is not affected by the Decontrol Act.

      The Company's sales of natural gas will be affected by intrastate and
interstate gas transportation regulations which are designed to foster
competition by, among other things, transforming the role of interstate pipeline
companies from wholesale marketers of natural gas to the primary role of gas
transporters. All natural gas marketing by the pipelines is required to divest
to a marketing affiliate, which operates separately from the transporter and in
direct competition with all other merchants. Pipelines must provide open and
nondiscriminatory transportation and transportation-related services to all
producers, natural gas marketing companies, local distribution companies,
industrial end users and other customers seeking service.

      FERC has pursued other policy initiatives that have affected natural gas
marketing. Most notable are (1) the large-scale divestiture of interstate
pipeline-owned gas gathering facilities to affiliated or non-affiliated
companies; (2) further development of rules governing the relationship of the
pipelines with their marketing affiliates; (3) the publication of standards
relating to the use of electronic bulletin boards and electronic data exchange
by the pipelines to make available transportation information on a timely basis
and to enable transactions to occur on a purely electronic basis; (4) further
review of the role of the secondary market for released pipeline capacity and
its relationship to open access service in the primary market; and (5)
development of policy and promulgation of orders pertaining to its authorization
of market-based rates (rather than traditional cost-of-service based rates) for
transportation or transportation-related services upon the pipeline's
demonstration of lack of market control in the relevant service market. The
Company does not know what effect the FERC's other activities will have on the
access to markets, the fostering of competition and the cost of doing business.

      As a result of these changes, sellers and buyers of natural gas have
gained direct access to the particular pipeline services they need and are
better able to conduct business with a larger number of counter parties. The
Company believes these changes generally have improved the access to markets for
natural gas while, at the same time, substantially increasing competition in the
natural gas marketplace. The Company cannot predict what new or different
regulations the FERC and other regulatory agencies may adopt or what effect
subsequent regulations may have on production and marketing of natural gas from
the Company's properties.

      In the past, Congress has been very active in the area of natural gas
regulation. However, as discussed above, the more recent trend has been in favor
of deregulation and the promotion of competition in the natural gas industry.
Thus, in addition to "first sales" deregulation, Congress also repealed
incremental pricing requirements and natural gas use restraints previously
applicable. There are other legislative proposals pending in the Federal and
State legislatures which, if enacted, would significantly affect the petroleum
industry. At the present time, it is impossible to predict what proposals, if
any, might actually be enacted by Congress or the various state legislatures and
what effect, if any, these proposals might have on the production and marketing
of natural gas by the Company. Similarly, and despite the trend toward federal
deregulation of the natural gas industry, whether or to what extent that trend


                                       10
<PAGE>

will continue or what the ultimate effect will be on the production and
marketing of natural gas by the Company cannot be predicted.

      The Company's sales of oil and natural gas liquids will not be regulated
and will be at market prices. The price received from the sale of these products
will be affected by the cost of transporting the products to market. Much of
that transportation is through interstate common carrier pipelines. FERC
regulates interstate transportation rates and adjusts these rates annually based
on the rate of inflation, subject to certain conditions and limitations. Every
five years, the FERC examines the relationship between the annual change in the
applicable index and the actual cost changes experienced by the oil pipeline
industry. The Company is not able to predict with certainty what effect, if any,
these federal regulations or the periodic review of the index by the FERC will
have.

      Federal, state, and local agencies have promulgated extensive rules and
regulations applicable to the Company's oil and natural gas exploration,
production and related operations. Most states require permits for drilling
operations, drilling bonds and the filing of reports concerning operations and
impose other requirements relating to the exploration of oil and natural gas.
Many states also have statutes or regulations addressing conservation matters
including provisions for the unitization or pooling of oil and natural gas
properties, the establishment of maximum rates of production from oil and
natural gas wells and the regulation of spacing, plugging and abandonment of
such wells. The statutes and regulations of some states limit the rate at which
oil and natural gas is produced from the Company's properties. The federal and
state regulatory burden on the oil and natural gas industry increases the
Company's cost of doing business and affects its profitability. Because these
rules and regulations are amended or reinterpreted frequently, the Company is
unable to predict the future cost or impact of complying with those laws.

COMPETITION AND MARKETING

      The Company will be faced with strong competition from many other
companies and individuals engaged in the oil and gas business, many are very
large, well established energy companies with substantial capabilities and
established earnings records. The Company may be at a competitive disadvantage
in acquiring oil and gas prospects since it must compete with these individuals
and companies, many of which have greater financial resources and larger
technical staffs. It is nearly impossible to estimate the number of competitors;
however, it is known that there are a large number of companies and individuals
in the oil and gas business.

      Exploration for and production of oil and gas are affected by the
availability of pipe, casing and other tubular goods and certain other oil field
equipment including drilling rigs and tools. The Company depends upon
independent drilling contractors to furnish rigs, equipment and tools to drill
its wells. Higher prices for oil and gas may result in competition among
operators for drilling equipment, tubular goods and drilling crews which may
affect the Company's ability expeditiously to drill, complete, recomplete and
work-over its wells. However, the Company has not experienced and does not
anticipate difficulty in obtaining supplies, materials, drilling rigs, equipment
or tools.


                                       11
<PAGE>


      The Company does not refine or otherwise process crude oil and condensate
production. Substantially all of the crude oil and condensate production from
the Company's well is sold at posted prices under short-term contracts, which is
customary in the industry.

      The market for oil and gas is dependent upon a number of factors beyond
the Company's control, which at times cannot be accurately predicted. These
factors include the proximity of wells to, and the capacity of, natural gas
pipelines, the extent of competitive domestic production and imports of oil and
gas, the availability of other sources of energy, fluctuations in seasonal
supply and demand, and governmental regulation. In addition, there is always the
possibility that new legislation may be enacted which would impose price
controls or additional excise taxes upon crude oil or natural gas, or both.
Oversupplies of natural gas can be expected to recur from time to time and may
result in the gas producing wells being shut-in. Increased imports of natural
gas, primarily from Canada, have occurred and are expected to continue. Such
imports may adversely affect the market for domestic natural gas.

      The market price for crude oil is significantly affected by policies
adopted by the member nations of Organization of Petroleum Exporting Countries
("OPEC"). Members of OPEC establish prices and production quotas among
themselves for petroleum products from time to time with the intent of
controlling the current global supply and consequently price levels. The Company
is unable to predict the effect, if any, that OPEC or other countries will have
on the amount of, or the prices received for, crude oil and natural gas produced
and sold from the Company's wells.

      Gas prices, which were once effectively determined by government
regulations, are now largely influenced by competition. Competitors in this
market include producers, gas pipelines and their affiliated marketing
companies, independent marketers, and providers of alternate energy supplies,
such as residual fuel oil. Changes in government regulations relating to the
production, transportation and marketing of natural gas have also resulted in
significant changes in the historical marketing patterns of the industry.
Generally, these changes have resulted in the abandonment by many pipelines of
long-term contracts for the purchase of natural gas, the development by gas
producers of their own marketing programs to take advantage of new regulations
requiring pipelines to transport gas for regulated fees, and an increasing
tendency to rely on short-term contracts priced at spot market prices.

GENERAL

      The Company has never been a party to any bankruptcy, receivership,
reorganization, readjustment or similar proceedings. Since the Company is
engaged in the oil and gas business, it does not allocate funds to product
research and development in the conventional sense. The Company does not have
any patents, trade-marks, or labor contracts. With the exception of the
Company's oil and gas leases, the Company does not have any licenses,
franchises, concessions or royalty agreements. Backlog is not material to an
understanding of the Company's business. The Company's business is not subject
to renegotiation of profits or termination of contracts or subcontracts at the
election of federal government.


                                       12
<PAGE>


         As of April 25, 2008, the Company employed 5 people. The Company's
employees work in management, engineering, and accounting. In addition, 2
contract workers were responsible for the supervision and operation of the
Company's field activities and providing well services.

ITEM 2.     DESCRIPTION OF PROPERTY

      See Item 1 of this report for information concerning the Company's oil and
gas properties.

      The Company's offices are located at 800 Northeast 63rd Street, Oklahoma
City, Oklahoma and consist of 4,800 square feet which is rented on a
month-to-month basis for $3,800 per month. The building is owned by George G.
Shaw, the Company's Chief Executive Officer and a Director.

ITEM 3.     LEGAL PROCEEDINGS.

     None

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

     Not Applicable

ITEM 5.     MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
            OTHER SHAREHOLDER MATTERS.

      The Company's common stock is listed on the OTC Bulletin Board under the
symbol EGSR. The following table shows the high and low sale prices of the
Company's common stock during the periods presented as reported by the NASD. The
closing sale prices reflect inter-dealer prices without adjustment for retail
markups, markdowns or commissions and may not reflect actual transactions.

                                             Closing Sale Price
                                                Common Stock
                                            --------------------
            Quarter Ended                    High            Low
            -------------                    ----            ---

            April 30, 2005                   $0.32          $0.30
            July 31, 2005                    $0.28          $0.27
            October 31, 2005                 $0.40          $0.38
            January 31, 2006                 $0.57          $0.54

            April 30, 2006                   $0.44          $0.40
            July 31, 2006                    $0.14          $0.13
            October 31, 2006                 $0.08          $0.07
            January 31, 2007                 $0.04          $0.03

                                       13
<PAGE>

                                             Closing Sale Price
                                                Common Stock
                                            --------------------
            Quarter Ended                    High            Low
            -------------                    ----            ---

            April 30, 2007                   $0.05          $0.02
            July 31, 2007                    $0.05          $0.02
            October 31, 2007                 $0.04          $0.02
            January 31, 2008                 $0.04          $0.02

      As of April 25, 2008 there were approximately 1,400 holders of the
Company's common stock.

      The market price of the Company's common stock is subject to significant
fluctuations in response to, and may be adversely affected by (i) variations in
quarterly operating results, (ii) developments in the oil and gas industry
generally and more particularly within the geographically and geological areas
that the Company owns and operates properties, and (iii) general stock market
conditions.

      The Company's common stock is subject to the "penny stock" rules. The
penny stock trading rules impose additional duties and responsibilities upon
broker-dealers and salespersons recommending the purchase or sale of a penny
stock. Required compliance with these rules will materially limit or restrict
the ability to resell the Company's common stock, and the liquidity typically
associated with other publicly traded stocks may not exist.

      During the year ended January 31, 2007 neither the Company, any officer or
director of the Company, nor any principal shareholder purchased any shares of
the Company's common stock either from the Company, from third parties in a
private transaction, or as a result of purchases in the open market.

     As of April 25,  2008 the  Company  did not have any  outstanding  options,
warrants or other securities convertible into common stock.

ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATION

      The following discussion of financial condition and results of operations
should be read in conjunction with the consolidated financial statements and the
notes to the consolidated financial statements, which are included elsewhere in
this report.

RESULTS OF OPERATIONS

     The  factors  that most  significantly  affect  the  Company's  results  of
operations are (i) the sale prices of crude oil and natural gas, (ii) the amount
of production sales, (iii) the amount of lease operating expenses,  and (iv) the
level of interest rates on, and amount of,  borrowings.  Sales of production and
level of  borrowings  are  significantly  impacted by the  Company's  ability to

                                       14
<PAGE>

maintain or increase its production from existing oil and gas properties through
its  exploration and  development  activities.  The following table reflects the
average prices  received by the Company for oil and gas, the average  production
cost per BOE, and the amount of oil and gas produced for the periods presented:

                                   Year Ended January 31,
                                -----------------------------
Production Data:                2006        2007         2008
                                ----        ----         ----
   Production -
      Oil (Bbls)               2,962       1,417         1,501
      Gas (Mcf)              130,748      97,836        59,515
   Average sales price -
      Oil (Bbls)           $   50.16   $   47.67      $  56.48
      Gas (Mcf)            $    7.96   $    6.04      $   5.88
   Average production
       costs per MCFE      $    3.49   $    2.43      $   2.90

      Prices received by the Company for sales of crude oil and natural gas have
fluctuated significantly from period to period. The fluctuations in oil prices
during these periods reflect market uncertainty regarding the inability of the
Organization of Petroleum Exporting Countries ("OPEC") to control the production
of its member countries, as well as concerns related to the global supply and
demand for crude oil. Gas prices received by the Company fluctuate with changes
in the spot market price for gas.

      Changes in natural gas and crude oil prices will significantly affect the
revenues and cash flow of the wells and the value of the oil and gas properties.
Declines in the prices of crude oil and natural gas could have a material
adverse effect on the success of the Company's operations and activities,
recoupment of the costs of acquiring, developing and producing the wells and
profitability. The Company is unable to predict whether the prices of crude oil
and natural gas will rise, stabilize or decline in the future.

    In January 2007 the Company entered into an agreement with an unrelated
third party for the sale of all its Pulaski County, Kentucky properties,
gathering systems and equipment for $1,735,000. As of January 31, 2007 the
Company had received cash payments of $557,000 from the third party of which
$200,000 was for the sale of certain royalty rights held by the Company and
$357,000 represented a deposit on the sale of the remainder of properties,
gathering systems, and equipment. The sale of the royalties was completed on
January 25, 2007 and the sale was treated as a reduction in the carrying amount
of the oil and gas properties in accordance with the full cost method of
accounting for oil and gas properties. The remainder of the sale closed on June
1, 2007 and the $357,000 received was recorded as a deposit as of January 31,
2007.

     On January 1, 2008 the Company sold its remaining oil and gas properties in
Kentucky,  as  well as its  gathering  systems,  pipelines  and  equipment,  for
$2,300,000.  For the sale of these  assets,  the  Company  received  a  $100,000
deposit  and a  non-recourse  promissory  note for  $2,200,000.  The note  bears
interest at 7.5% per year and is secured by liens on the oil and gas properties,
wells,  fixtures,  equipment,  and  production  associated  with the  properties

                                       15

<PAGE>

subject to the sale. The note requires payments of $100,000 on April 1, 2008 and
July 1, 2008 and then quarterly interest only payments until the note matures on
January 1, 2010.

     Due to the  non-recourse  nature of the note and the  historical  operating
deficits of the  properties  subject to the sale,  the collection of the note is
not certain.  Accordingly, for financial statement purposes the $100,000 payment
was treated as a deposit and the carrying value of the properties subject to the
sale, reduced by a $701,691  impairment charge,  were reclassified as properties
held for resale.

      Other than the foregoing, the Company does not know of any trends, events
or uncertainties that have had or are reasonably expected to have a material
impact on the Company's net sales, revenues or expenses.

YEAR ENDED JANUARY 31, 2008

      Material changes of certain items in the Company's Statement of Operations
for the year ended January 31, 2008, as compared to the year ended January 31,
2007, are discussed below:

                       Increase (I)
Item                  or Decrease (D)  Reason
----                  ---------------  ------

Oil and Gas Sales             D        Sale of Company's Kentucky oil and gas
                                       properties and decrease of production.

Lease Operating Expense       D        Sale of Company's Kentucky oil and gas
                                       properties.

Property Impairment           I        The Company recorded an impairment
                                       expense of $701,691 in connection with
                                       the January 2008 sale of its oil and gas
                                       properties in Kentucky.

Depreciation, Depletion       D        Sale of Company's Kentucky oil and gas
and Amortization                       properties.

YEAR ENDED JANUARY 31, 2007

    Material changes of certain items in the Company's Statement of Operations
for the year ended January 31, 2007, as compared to the year ended January 31,
2006, are discussed below:

                        Increase (I)
Item                   or Decrease (D) Reason
----                   --------------- ------

Oil and Gas Sales            D         Decrease in gas and oil prices and
                                       production

Lease Operating Expenses     D         Reduction in  production  offset by
                                       higher repair and maintenance expenses


                                       16

<PAGE>

Pipeline and Gathering       D         Reduced production
 Expense

General and Administrative   D         Reduction in number of employees and
                                       professional fees

                       Increase (I)
Item                  or Decrease (D)  Reason
----                  ---------------  ------

Property Impairment          D         As of January 31, 2006 the  Company's
                                       investment  in its proved developed oil
                                       and gas properties  exceeded the present
                                       value of the future net cash flows from
                                       these   properties  by  $520,048.  Under
                                       generally accepted accounting principles,
                                       the net carrying value of proved natural
                                       gas  and  oil  properties cannot exceed
                                       the discounted future net cash flows from
                                       these properties. Accordingly, $520,048
                                       was recorded as additional depreciation
                                       and amortization during fiscal 2006. As
                                       of January 31, 2007 the Company's
                                       investment in its proved developed oil
                                       and gas properties also exceeded the
                                       present  value of the future net cash
                                       flows from these properties,  but the
                                       difference was not as large as in the
                                       previous year.

Interest Expense              I        Increase in interest bearing liabilities
                                       and amortization of loan discount

OIL AND GAS PRICE FLUCTUATIONS

      Fluctuations in crude oil and natural gas prices have significantly
affected the Company's operations and the value of its assets. As a result of
the instability and volatility of crude oil and natural gas prices and at times
the market conditions within the oil and gas industry, financial institutions
are selective in the energy lending area and have reduced the percentage of
existing reserves that may qualify for the borrowing base to support energy
loans.

      The Company's principal source of cash flow is the production and sale of
its crude oil and natural gas reserves which are depleting assets. Cash flow
from oil and gas production sales depends upon the quantity of production and
the price obtained for such production. An increase in prices permits the
Company to finance its operations to a greater extent with internally generated
funds, may allow the Company to obtain equity financing more easily or on better
terms, and lessens the difficulty of attracting financing from industry partners
and non-industry investors. However, price increases heighten the competition
for Leases and Prospects, increase the costs of exploration and development
activities, and, because of potential price declines, increase the risks
associated with the purchase of Producing Properties during times that prices
are at higher levels.

                                       17

<PAGE>

     A decline  in oil and gas  prices  (i)  reduces  the cash  flow  internally
generated by the Company which in turn reduces the funds available for servicing
debt and exploring for and  replacing oil and gas reserves,  (ii)  increases the
difficulty of obtaining equity and debt financing and worsens the terms on which
such financing may be obtained, (iii) reduces the number of Leases and Prospects
which  have  reasonable  economic  terms,  (iv) may cause the  Company to permit
Leases to expire  based  upon the value of  potential  oil and gas  reserves  in
relation to the costs of exploration,  (v) results in marginally  productive oil
and gas  wells  being  abandoned  as  non-commercial,  and  (vi)  increases  the
difficulty  of attracting  financing  from  industry  partners and  non-industry
investors.  However,  price  declines  reduce  the  competition  for  Leases and
Prospects and  correspondingly  reduce the prices paid for Leases and Prospects.
Furthermore,  exploration and production costs generally  decline,  although the
decline may not be at the same rate as that of oil and gas prices.

      The Company's results of operations are somewhat seasonal due to seasonal
fluctuations in the sales prices for natural gas. Although in recent years crude
oil prices have been generally higher in the third and fourth fiscal quarters,
these fluctuations are not believed to be seasonal. Natural gas prices have been
generally higher in the fourth fiscal quarter.

CAPITAL RESOURCES AND LIQUIDITY

     The Company's material sources and (uses) of cash during the year ended
January 31, 2008 were:

      Cash used in operations                                $  (362,848)
      Acquisition and development of oil and gas properties     (575,367)
      Sale of oil and gas properties                           1,178,000
      Loans from related parties                                 (40,650)
      Repayment of notes                                        (699,853)
      Cash on hand at February 1, 2007                           500,718

    The Company's material sources and (uses) of cash during the year ended
January 31, 2007 were:

      Cash used in operations                               $   (146,940)
      Development of oil and gas properties                     (219,167)
      Sale of oil and gas properties in Kentucky and Kansas      400,000
      Purchase of equipment                                     (124,293)
      Loans from related parties                                 214,288
      Sale of common stock                                       132,313
      Loan from Dutchess Private Equities                        500,000
      Repayment of debt                                         (156,688)
      Settlement payments to former joint venture partner       (650,000)
      Cash on hand at February 1, 2006                            50,487

     As a result of the  Company's  continued  losses  and lack of cash there is
substantial  doubt as to the  Company's  ability  to  continue  operations.  The
Company  plans to  generate  profits by  drilling  productive  oil or gas wells.

                                       18

<PAGE>

However,  the Company  will need to raise the funds  required to drill new wells
from third parties willing to pay the Company's share of drilling and completing
the wells.  The Company may also  attempt to raise  needed  capital  through the
private sale of its securities or by borrowing  from third parties.  The Company
may not be successful  in raising the capital  needed to drill oil or gas wells.
In  addition,  any future  wells  which may be drilled by the Company may not be
productive of oil or gas. The  inability of the Company to generate  profits may
force the Company to curtail or cease operations.

     On July 27, 2006 Energas borrowed  $500,000 from Dutchess Private Equities.
In consideration  for the loan Energas agreed to pay Dutchess  $650,000 no later
than July 26, 2007. The $150,000  difference between the amount borrowed and the
amount  Energas was required to repay was treated as loan discount which will be
amortized  to  interest   expense  over  the  life  of  the  loan.   As  further
consideration for the loan, Energas issued 800,000 shares of its common stock to
Dutchess.  The  800,000  shares  were  valued  at  $116,000  and  treated  as an
additional  loan  discount  that will be amortized to interest  expense over the
term of the loan. Prior to April 30, 2007 Energas used the amounts received from
sales of common  stock  under the Equity  Line of Credit to repay this loan.  In
June 2007 the loan to Dutchess Private Equities was paid in full.

     In January 2007 the Company  entered  into an  agreement  with an unrelated
third  party  for the  sale  of all its  Pulaski  County,  Kentucky  properties,
gathering  systems  and  equipment  for  $1,735,000.  As of January 31, 2007 the
Company had  received  cash  payments of $557,000  from the third party of which
$200,000  was for the sale of certain  royalty  rights  held by the  Company and
$357,000  represented  a deposit  on the sale of the  remainder  of  properties,
gathering  systems,  and  equipment.  The sale of the royalties was completed on
January 25, 2007 and the sale was treated as a reduction in the carrying  amount
of the oil and gas  properties  in  accordance  with the  full  cost  method  of
accounting for oil and gas properties.  The remainder of the sale closed on June
1, 2007 and the  $357,000  received  was recorded as a deposit as of January 31,
2007.

Contractual Obligations

      Except as shown in the following table, as of January 31, 2008, the
Company did not have any material capital commitments, other than funding its
operating losses and repaying outstanding debt. It is anticipated that any
capital commitments that may occur will be financed principally through
borrowings from institutional and private lenders (although such additional
financing has not been arranged) and the sale of shares of the Company's common
stock or other equity securities. However, there can be no assurance that
additional capital resources and financings will be available to the Company on
a timely basis, or if available, on acceptable terms.

      Future payments due on the Company's contractual obligations as of January
31, 2008 are as follows:


                          Total     2008     2009     2010     2011    2012/2013
                          -----     ----     ----     ----     ----    ---------

Office equipment leases   $28,129  $5,375   $6,846   $6,846    $3,917   $5,145

                                       19

<PAGE>

ITEM 7.     FINANCIAL STATEMENTS

      See the financial statements attached to this report.

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

      Not Applicable

ITEM 8A(T).  CONTROLS AND PROCEDURES

     George Shaw, the Company's Chief Executive and Principal Financial Officer,
has  evaluated  the  effectiveness  of the  Company's  disclosure  controls  and
procedures  as of the  end of the  period  covered  by this  report;  and in his
opinion the Company's disclosure controls and procedures are effective to ensure
that material  information  relating to the Company,  including its consolidated
subsidiaries, is made known to him by others within those entities, particularly
during the period in which this report is being prepared,  so as to allow timely
decisions  regarding  required  disclosure.  There  have been no  changes in the
Company's  internal  controls over financial  reporting that occurred during the
quarter ended January 31, 2008 that have materially affected,  or are reasonably
likely to materially  affect,  the  Company's  internal  control over  financial
reporting.  As a result,  no  corrective  actions  with  regard  to  significant
deficiencies  or  material  weakness in the  Company's  internal  controls  were
required.

Management's Report on Internal Control Over Financial Reporting

     The Company's  management is responsible for  establishing  and maintaining
adequate internal control over financial reporting and for the assessment of the
effectiveness  of internal control over financial  reporting.  As defined by the
Securities and Exchange Commission, internal control over financial reporting is
a process  designed  by, or under the  supervision  of the  Company's  principal
executive  officer  and  principal  financial  officer  and  implemented  by the
Company's  Board of  Directors,  management  and  other  personnel,  to  provide
reasonable  assurance  regarding the reliability of financial  reporting and the
preparation  of the  Company's  financial  statements  in  accordance  with U.S.
generally accepted accounting principles.

     The Company's  internal  control over  financial  reporting  includes those
policies and procedures  that (1) pertain to the maintenance of records that, in
reasonable detail,  accurately and fairly reflect the Company's transactions and
dispositions of its assets; (2) provide  reasonable  assurance that transactions
are recorded as  necessary  to permit  preparation  of the  Company's  financial
statements in accordance with U.S. generally accepted accounting principles, and
that its  receipts  and  expenditures  are being  made only in  accordance  with
authorizations  of the  Company's  management  and  directors;  and (3)  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 its financial statements.

                                       20
<PAGE>

     Because  of its  inherent  limitations,  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  because of changes in  conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.

      In connection with the preparation of the Company's annual financial
statements, management undertook an assessment of the effectiveness of its
internal control over financial reporting as of January 31, 2008, based on
criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission, or the COSO
Framework. Management's assessment included an evaluation of the design of the
Company's internal control over financial reporting and testing of the
operational effectiveness of those controls.

      Based on this evaluation, management has concluded that the Company's
internal control over financial reporting was effective as of January 31, 2008.

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

ITEM 8B.    OTHER INFORMATION

      Not Applicable

ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

      The Company's executive officers and directors are listed below. The
Company's directors are generally elected at the annual shareholders' meeting
and hold office until the next annual shareholders' meeting or until their
successors are elected and qualified. The Company's executive officers are
elected by our board of directors and serve at its discretion.

Name                 Age      Position
----                 ---      --------

George G. Shaw       77       President, Principal Financial Officer,
                              Principal Accounting Officer and a Director
G. Scott Shaw        37       Vice President, Secretary and a Director

      The following is a brief description of the business background of the
Company's executive officers and directors:

     GEORGE G. SHAW is the President,  Principal  Financial  Officer,  Principal
Accounting  Officer and a director of the Company.  Mr. Shaw has been an officer
and  director  of the Company  since July 1991.  Mr.  Shaw is the  President  of

                                       21
<PAGE>

Energas  Corporation  and  Energas  Pipeline  Co.,  Inc.,  both  privately  held
companies engaged in oil and gas exploration and gas gathering.  Mr. Shaw is the
father of G. Scott Shaw.

      G. SCOTT SHAW is the Vice President and a director of the Company and has
held these positions since August 1996. Mr. Shaw became the Company's Secretary
in April 2003. Mr. Shaw graduated from Oklahoma State University in 1993 with a
Bachelor of Science degree in Biology. Mr. Shaw is the son of George G. Shaw.

      The Company does not have a compensation committee. The Company's Board of
Directors serves as the Company's Audit Committee. The Company does not have a
financial expert as a member of its Board of Directors. None of the Company's
directors are independent as that term is defined Section 121(A) of the Listing
Standards of the American Stock Exchange.

      The Company has adopted a Code of Ethics which is applicable to the
Company's principal executive, financial, and accounting officers and persons
performing similar functions. The Code of Ethics is available on the Company's
website located at www.energasresources.com

ITEM 10.    EXECUTIVE COMPENSATION

     The  following  table shows the  compensation  during the three years ended
January  31,  2008,  paid or accrued,  to George G. Shaw,  the  Company's  Chief
Executive Officer during those years. None of the Company's  executive  officers
received compensation in excess of $100,000 during the three years ended January
31, 2008.

                                                                All
                                                               Other
                                                               Annual
                                             Stock   Option    Compen-
Name and Principal  Fiscal  Salary   Bonus   Awards  Awards    sation
  Position           Year     (1)     (2)      (3)     (4)       (5)      Total
------------------  ------  ------   -----   ------  ------    --------   -----

George Shaw,        2008  $36,000      --   $15,000      --       --   $51,000
 President          2007  $36,000  $4,500    $5,200      --       --   $45,700
                    2006  $36,000      --   $18,500               --   $54,500

(1)  The dollar value of base salary (cash and non-cash) received.
(2)  The dollar value of bonus (cash and non-cash) received.
(3)  During the periods covered by the table,  the value of the Company's shares
     issued as compensation for services calculated in accordance with FAS 123R.
(4)  The amount  recognized  for  financial  statement  reporting  purposes  and
     calculated  in accordance  with FAS 123R,  for options  awarded  during the
     year.
(5)  All other compensation  received that the Company could not properly report
     in any other column of the table.

     The  following  shows the amounts  which the Company  expects to pay to its
officers  during the twelve month period ending  January 31, 2009,  and the time

                                       22

<PAGE>

which the Company's executive officers plan to devote to the Company's business.
The Company does not have employment agreements with any of its officers.

                                Proposed               Time to Be Devoted
Name                          Compensation            To Company's Business
----                          ------------            ---------------------

George G. Shaw                   $84,000                      100%
G. Scott Shaw                    $72,000                      100%

      The Company does not have any employment agreements with its officers or
employees. The Company does not maintain any keyman insurance on the life or in
the event of disability of any of its officers.

STOCK OPTION AND BONUS PLANS

      Incentive Stock Option Plan. The Company's Incentive Stock Option Plan
authorizes the issuance of up to 2,000,000 shares of the Company's common stock
to persons that exercise options granted pursuant to the Plan. Only Company
employees may be granted options pursuant to the Incentive Stock Option Plan.
The option exercise price is determined by the Company's Board of Directors but
cannot be less than the market price of the Company's common stock on the date
the option is granted.

      Non-Qualified Stock Option Plan. The Company's Non-Qualified Stock Option
Plan authorizes the issuance of up to 1,000,000 shares of the Company's common
stock to persons that exercise options granted pursuant to the Plans. The
Company's employees, directors, officers, consultants and advisors are eligible
to be granted options pursuant to the Plans, provided however that bona fide
services must be rendered by such consultants or advisors and such services must
not be in connection with the offer or sale of securities in a capital-raising
transaction. The option exercise price is determined by the Company's Board of
Directors.

      Stock Bonus Plan. The Company's Stock Bonus Plan allows for the issuance
of up to 4,000,000 shares of common stock. Such shares may consist, in whole or
in part, of authorized but unissued shares, or treasury shares. Under the Stock
Bonus Plan, the Company's employees, directors, officers, consultants and
advisors are eligible to receive a grant of the Company's shares, provided
however that bona fide services must be rendered by consultants or advisors and
such services must not be in connection with the offer or sale of securities in
a capital-raising transaction.

      The following table shows the weighted average exercise price of the
outstanding options granted pursuant to the Company's Incentive and
Non-Qualified Stock Option Plans as of January 31, 2008. The Company's Incentive
and Non-Qualified Stock Option Plans were not approved by the Company's
shareholders.

                                       23
<PAGE>


                                                           Number of Securities
                                                           Remaining Available
                            Number                         For Future Issuance
                         of Securities                         Under Equity
                         to be Issued    Weighted-Average   Compensation Plans
                         Upon Exercise   Exercise Price of (Excluding Securities
                         of Outstanding   of Outstanding        Reflected in
Plan Category             Options  [a]      Options             Column (a))
--------------------------------------------------------------------------------

Incentive Stock Option Plan      --             --              2,000,000
Non-Qualified Stock
   Option Plan                   --             --                750,000

      The following table provides information as of April 25, 2008 concerning
the stock options and stock bonuses granted by the Company pursuant to the
Plans. Each option represents the right to purchase one share of the Company's
common stock.

                                  Total      Shares                  Remaining
                                 Shares   Reserved for   Shares       Options/
                               Reserved   Outstanding   Issued As      Shares
Name of Plan                  Under Plans   Options    Stock Bonus   Under Plans
------------                  ----------- ------------ -----------   -----------

Incentive Stock Option
 Plan                          2,000,000         --          N/A    2,000,000
Non-Qualified Stock Option
 Plan                          1,000,000         --          N/A      750,000
Stock Bonus Plan               4,000,000        N/A    1,836,981    2,163,019


                                       23
<PAGE>

     The  following  table  summarizes  the  options and stock  bonuses  granted
pursuant to the
Plans as of April 25, 2008:

Incentive Stock Options
-----------------------

                                                                  Options
Shares Subject    Exercise    Date of       Expiration        Exercised as of
 To Option          Price      Grant       Date of Option     April  25, 2008
--------------    --------    -------      --------------     ---------------

                                      None.

Non-Qualified Stock Options
---------------------------

                                                                  Options
Shares Subject    Exercise    Date of       Expiration        Exercised as of
 To Option          Price      Grant       Date of Option     April  25, 2008
--------------    --------    -------      --------------     ---------------

    250,000        $0.32      6-30-03          7-15-05            250,000


                                       24
<PAGE>

Stock Bonuses
-------------

                              Shares Issued as
Name                            Stock Bonus (1)          Date Issued
----                          -----------------          -----------

George Shaw                       100,000                 10/30/03
Scott Shaw                        100,000                 10/30/03
Employees and consultants       1,636,981                 various dates
                                ---------
                                1,836,981


     Separate  from its Stock Bonus Plan,  the Company has issued the  following
shares of its common stock to George and Scott Shaw for services rendered.

                              Shares Issued for
Name                         Services Rendered           Date Issued

George Shaw                     100,000                  10/30/05
Scott Shaw                      100,000                  10/30/05
George Shaw                     150,000                   10/2006
Scott Shaw                      150,000                   10/2006
George Shaw                     750,000                    9/2007
Scott Shaw                      750,000                    9/2007


ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table shows the ownership of the Company's common stock as of
April  25,  2008 by (i)  each  person  who is  known  to the  Company  to be the
beneficial owner of more than 5% the Company's common stock,  (ii) each director
and  executive  officer of the  Company,  and (iii) all  executive  officers and
directors  of the Company as a group.  All  persons  listed have sole voting and
investment  power with respect to their shares unless otherwise  indicated,  and
there are no family  relationships among the executive officers and directors of
the  Company,  except that George G. Shaw is the father of G. Scott Shaw.  As of
April 25,  2008 the Company did not have any  outstanding  options,  warrants or
other securities convertible into common stock.

                                       25

<PAGE>

                                                   Shares          Percent of
                                                Beneficially      Outstanding
Name and address                                   Owned            Shares
----------------                                ------------      -----------

George G. Shaw                                19,201,849 (1)           23%
Third Floor, 800 Northeast 63rd Street
Oklahoma City, Oklahoma 73105

G. Scott Shaw                                   3,443,305               4%
800 Northeast 63rd Street
Oklahoma City, Oklahoma 73105

Terry R. and Marguerite S. Tyson                8,792,800              11%
16250 County Rd. U
Lipscomb, TX  79056-6304

Executive Officers and Directors as a group    22,645,154              27%
 (two persons)

(1)  Includes (i) 2,024,916 shares held by Energas Corporation, (ii) 3,460,320
     shares held by Energas Pipeline Co., Inc. and (iii) 1,585,000 shares of
     common stock held by Mr. Shaw. Energas Corporation and Energas Pipeline
     Co., Inc. are controlled by Mr. Shaw.

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The Company's  offices are located at 800 Northeast  63rd Street,  Oklahoma
City, Oklahoma.  The office space is occupied under an unwritten  month-to-month
lease requiring rental payments of $3,800 per month to George Shaw, the owner of
the building. During the years ended January 31, 2008, 2007 and 2006 the Company
paid rent of $45,600, $49,400, and $45,600,  respectively. In addition, Mr. Shaw
owns Energas  Pipeline Company that operates the natural gas gathering system to
which the Company's four wells in Atoka County,  Oklahoma are connected.  During
the years  ended  January  31,  2008,  2007 and 2006  Energas  Pipeline  Company
received $12,451, $16,820 and $14,495, respectively, for operating the gathering
system.

      As of January 31, 2008 the Company had borrowed $49,962 from Mr. Shaw.
These loans are non-interest bearing, unsecured, and do not have fixed terms of
repayment. The amounts borrowed from Mr. Shaw were used to fund the Company's
operations.

     The  Company  believes  that the rent paid to Mr. Shaw and the terms of the
other transactions  between the Company and its officers and directors discussed
above were fair and  reasonable and were upon terms as least as favorable as the
Company could have obtained from unrelated third parties.

                                       26

<PAGE>

     During the six months  ended June 30,  2004,  the  Company  sold  5,000,000
shares  of  common  stock  and  5,000,000  warrants  to  private  investors  for
$1,500,000.  Each  warrant  entitled  the  holder to  purchase  one share of the
Company's  common  stock  at a price  of $0.50  per  share at any time  prior to
January 31, 2006. As of January 31, 2007 warrants to purchase  3,506,000  shares
had been  exercised  and the  remaining  warrants  had expired.  Terry Tyson,  a
principal  shareholder of the Company,  purchased 600,000 shares of common stock
and 600,000 warrants in this offering, of which 120,000 warrants were exercised.

      Transactions with the Company's officers, directors, and principal
shareholders may continue and may result in conflicts of interest between the
Company and these individuals. Although these persons have fiduciary duties to
the Company and its shareholders, there can be no assurance that conflicts of
interest will always be resolved in favor of Company and its shareholders.
Neither the Company's Articles of Incorporation nor Bylaws contain any
provisions for resolving potential or actual conflicts of interest.

ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K

Exhibit
  No.       Description of Exhibit                                Page Number
--------    ----------------------                                -----------

3.1         Certificate of Incorporation                                 *

3.2         Bylaws                                                       *

3.3         Certificate of Domestication in Delaware                     *

10.7        Gas Purchase Agreement, dated March 1, 1991 between
            Registrant and Energas Pipeline Company.                     *

10.8        Gas Purchase Agreement, dated March 1, 1991 between
            Registrant and Energas Pipeline Company.                     *

10.9        Gas Gathering Agreement, dated July 1, 1992 between
            Energas Pipeline  Company,  Inc. and A.T. Gas
            Gathering Systems, Inc.                                      *

10.10       Gas Purchase Agreement, dated February 13, 1997,
            between Panenergy Field Services, Inc. and Energas
            Pipeline Company.                                            *

10.11       Gas Purchase Agreement, dated October 1, 1999, between
            Registrant and Ozark Gas Gathering, L.L.C.                   *

21.         Registrant's Subsidiaries                                    *

23.         Consent of Accountants                                     _____

31.         Rule 13a-14(a)/15d-14(a) certifications

32.         Section 1350 certifications

*    Incorporated  by  referenced  to the same exhibit  filed with the Company's
     initial registration statement on Form 10-SB.

**   Incorporated  by  reference to the same  exhibit  filed with the  Company's
     report on Form 8-K dated June 27, 2005.

                                       27
<PAGE>

 ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

      Murrell, Hall, McIntosh & Co., PLLP served as the Company's independent
public accountants during the fiscal years ended January 31, 2008 and 2007. The
following table shows the aggregate fees billed to the Company during the years
ended January 31, 2008 and 2007 by Murrell, Hall, McIntosh & Co., PLLP.

                                                  2008           2007
                                                  ----           ----

      Audit Fees                           $53, 386.15     $71,959.50
      Audit-Related Fees                            --             --
      Financial Information Systems                 --             --
      Design and Implementation Fees                --             --
      Tax Fees                                      --             --
      All Other Fees                                --             --

    Audit fees represent amounts billed for professional services rendered for
the audit of the Company's annual financial statements and the reviews of the
financial statements included in the Company's 10-Q reports during the fiscal
year. Before Murrell, Hall, McIntosh & Co., PLLP was engaged by the Company to
render audit services, the engagement was approved by the Company's Board of
Directors.



                                       28
<PAGE>


             Report of Independent Registered Public Accounting Firm

To the Board of Directors
Energas Resources, Inc.

We have audited the accompanying consolidated balance sheet of Energas
Resources, Inc. and its subsidiaries as of January 31, 2008, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years ended January 31, 2008 and 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 audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Energas Resources,
Inc. and its subsidiaries as of January 31, 2008, and the consolidated results
of its operations and its consolidated cash flows for the years ended January
31, 2008 and 2007 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 has incurred recurring losses from operations,
which raise substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters also are described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


/s/ Murrell, Hall, McIntosh & Co PLLP

April 30, 2008
Oklahoma City, Oklahoma





<PAGE>

                             ENERGAS RESOURCES, INC.
                           CONSOLIDATED BALANCE SHEET
                                January 31, 2008


                                     ASSETS

Current Assets
  Cash                                                         $         28,904
  Accounts receivable                                                    52,326
                                                               -----------------
      Total Current Assets                                               81,230
                                                               -----------------
Property and Equipment
     Oil and gas properties, using full cost accounting
     Proved properties                                                2,380,633
     Unproved properties                                                 16,845
     Pipelines                                                                -
                                                               -----------------
                                                                      2,397,478

 Less accumulated depreciation, depletion, and
  amortization, including impairment of $280,201                       (904,302)
                                                               -----------------
                                                                      1,493,176
 Other, net of accumulated depreciation of $30,287                       11,691
                                                               -----------------
                                                                      1,504,867

Properties held for resale, net of impairment of $701,691             2,300,000
                                                               -----------------
 Total Assets                                                  $      3,886,097
                                                               =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts payable and accrued expenses                                357,473
   Due to related parties                                                49,962
   Other current liabilities                                             11,992
                                                               -----------------
      Total Current Liabilities                                         419,427
                                                               -----------------

Asset Retirement Obligation                                              41,627
Deposit on sale                                                         100,000

Stockholders' Equity
    Common stock, $.001 par value 100,000,000 shares
     authorized 82,532,744 shares issued and outstanding
     at January 31, 2008                                                 82,533
   Additional paid in capital                                        19,025,907
   Retained (deficit)                                               (15,783,397)
                                                               -----------------
Total Stockholders' Equity                                            3,325,043
                                                               -----------------
Total Liabilities and Stockholders' Equity                     $      3,886,097
                                                               =================



See  accompanying  summary of accounting  policies and notes to the consolidated
financial statements.


                                      F-1

<PAGE>


                             ENERGAS RESOURCES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                              Years Ended January 31,
                                               2008            2007
                                               ----            ----

Revenue
   Oil and gas sales                       $  431,959     $  630,529
   Pipeline revenue                            12,068         13,831
                                        --------------  ------------
Total Revenue                                 444,027        644,360

Operating Expenses
   Lease operating expense                    119,002        258,583
   Pipeline and gathering expense              82,824        173,824
   General and administrative expense         638,201        739,164
   Property impairment                        701,691        445,148
   Depreciation, depletion and amortization   178,563        334,535
                                        --------------  ------------
      Total Operating Expenses              1,720,281      1,951,254
                                        --------------  ------------
Operating (Loss)                           (1,276,254)    (1,306,894)
                                        --------------  ------------

Other (Expenses) Income
   Other income                                   187            703
   Settlement expense                               -        (20,000)
   Loss on disposal of asset                  (31,060)       (30,907)
   Interest expense                          (162,208)      (159,184)
                                        --------------  ------------
      Total Other (Expense)                  (193,081)      (209,388)
                                        --------------  ------------

Net (Loss) before Income Taxes             (1,469,335)    (1,516,282)

Provision for income taxes                          -              -
                                        --------------  ------------

Net (Loss)                              $  (1,469,335)  $ (1,516,282)
                                        ==============  ============

Net (Loss) per Share, Basic and Diluted $       (0.02)  $      (0.02)
                                        ==============  ============

Weighted average of number of shares
  outstanding                              79,237,416     63,129,982
                                         =============  ============


See  accompanying  summary of accounting  policies and notes to the consolidated
financial statements.


                                      F-2

<PAGE>


                             ENERGAS RESOURCES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     FOR THE YEAR ENDED JANUARY 31, 2007 AND
                                JANUARY 31, 2008

<TABLE>
<S>                                         <C>            <C>              <C>             <C>            <C>

                                               Common Stock             Additional                        Total
                                          ---------------------          Paid-In       Accumulated     Shareholders'
                                          Shares         Amount          Capital         Deficit          Equity
                                          ------         ------          -------       -----------     -------------

Balance, January 31, 2006               58,231,966    $   58,232        $18,103,125   $(12,797,780)    $  5,363,577

Net loss                                         -             -                  -     (1,516,282)      (1,516,282)

Stock issued for equity line of credit     257,810           258            132,055              -          132,313
Stock issued for loan repayment          3,696,032         3,696            177,733              -          181,429
Stock issued for loan discount             800,000           800            115,200              -          116,000
Stock issued for consulting services       254,668           255             14,745              -           15,000
Conversion of related party notes
   payable to stock                     10,433,333        10,433            302,567              -          313,000
Employee stock plan                        799,105           799             26,901              -           27,700
                                      ------------- -------------     --------------  -------------    -------------
Balance, January 31, 2007               74,472,914        74,473         18,872,326    (14,314,062)       4,632,737

Net loss                                                                                (1,469,335)      (1,469,335)

Employee stock plan                     2,600,000          2,600             49,400              -           52,000
Stock issued for accounts payable       1,258,930          1,259             31,355              -           32,614
Stock issued for loan repayment         4,200,900          4,201             72,826              -           77,027
                                      ------------- -------------     --------------  -------------    -------------
Balance, January 31, 2008              82,532,744   $     82,533      $  19,025,907   $(15,783,397)    $  3,325,043
                                      ============= =============     ==============  =============    =============

</TABLE>


See  accompanying  summary of accounting  policies and notes to the consolidated
financial statements.

                                      F-3

<PAGE>


                             ENERGAS RESOURCES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        Years Ended January  31,
                                                          2008          2007
                                                          ----          ----
Cash Flows From Operating Activities
   Net (Loss)                                       $ (1,469,335)  $ (1,516,282)
   Adjustments to reconcile net loss to net cash
      provided by operating activities
      Depreciation, depletion and amortization           178,563        334,535
        Property impairment                              701,691        445,148
        Loss on disposal of asset                         31,060         30,907
        Amortization of loan discount                    133,000        133,000
        Stock issued for salaries                         52,000         27,700
        Stock issued for consulting                            -         15,000
        (Increase) Decrease in Accounts receivable        16,585        123,445
          Prepaid expense                                    400          8,084
        Increase (Decrease) in Accounts payable and
            accrued expenses                            (109,765)      (112,407)
          Deposits held                                  100,000        357,000
          Asset retirement obligation                      2,953          6,930
                                                   -------------- --------------
        Net Cash Flows Provided by (Used By)
             Operating Activities                       (362,848)      (146,940)

Cash Flows From Investing Activities
   (Investment in) oil and gas properties               (575,367)      (219,167)
   Sale of oil and gas properties                      1,178,000        400,000
   (Purchase of) property and equipment                        -       (124,293)
                                                   -------------- --------------
   Net Cash Provided By (Used By) Investing
    Activities                                           602,633         56,540

Cash Flows from Financing Activities
   Advances from (Repayments to) related parties
       and stockholders                                  (40,650)       214,288
   Sale of common stock                                        -        132,313
   Loan proceeds                                               -        500,000
   Payments on notes payable                            (699,853)      (156,688)
   Settlement payments                                         -       (650,000)
                                                   -------------- --------------
   Net Cash Provided By Financing Activities            (740,503)        39,913

Increase (Decrease) in Cash                             (500,718)       (50,487)
Cash at Beginning of Year                                529,622        580,109
                                                   -------------- --------------
Cash at End of Period                              $      28,904  $     529,622
                                                   ============== ==============

Supplemental Information:
   Interest Paid in Cash                           $      29,208  $      36,878
   Income Taxes Paid                               $           -  $           -

   Non-Cash Transactions:
      Debt converted into 10,433,333 shares of
       common stock                                $           -  $     313,000
      Stock issued for salaries                    $      52,000  $      27,700
      Stock issued for consulting                  $           -  $      15,000
      Asset Retirement Obligation                  $       2,546  $       3,465
      Stock issued for payments on accounts
       payables                                    $      32,614  $           -
      Stock issued for payments on notes payables  $      77,027  $     181,429

See  accompanying  summary of accounting  policies and notes to the consolidated
financial statements.

                                      F-4

<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

1.  NATURE OF OPERATIONS

Energas Resources, Inc. (the "Company") was originally incorporated in 1989 in
British Columbia, Canada as a public company listed on the Canadian Venture
Exchange. In 2001, the Company registered as a Delaware corporation becoming a
United States domestic corporation. In 2002, its registration statement filed
with the Securities and Exchange Commission became effective and its stock is
traded in the Over the Counter (OTC) market.

The Company is primarily engaged in the operation, development, production,
exploration and acquisition of petroleum and natural gas properties in the
United States through its wholly-owned subsidiaries, A.T. Gas Gathering Systems,
Inc. ("AT GAS"), and TGC, Inc. ("TGC"). In addition, the Company owns and
operates natural gas gathering systems, located in Oklahoma and Kentucky, which
serve wells operated by the Company for delivery to a mainline transmission
system. The majority of the Company's operations are maintained and occur
through AT GAS and TGC. AT GAS is a company incorporated in the state of
Oklahoma and TGC is a company incorporated in the state of Kentucky.

2.  GOING CONCERN

The Company is in the process of acquiring and developing petroleum and natural
gas properties with adequate production and reserves to operate profitability.
However, in excess of 32% of the Company's proved reserves are proved not
producing or proved undeveloped and will require substantial funds to bring into
production. As of January 31, 2008, the Company had incurred losses for the
years ended January 31, 2008 and 2007 of $(1,469,335) and $(1,516,282),
respectively. The Company's ability to continue as a going concern is dependent
upon obtaining financing and achieving profitable levels of operations. The
Company is currently seeking additional funds and additional mineral interests
through private placements of equity and debt instruments. There can be no
assurance that its efforts will be successful.

The consolidated financial statements do not give effect to any adjustments that
might be necessary if the Company is unable to continue as a going concern.

3.  SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, AT Gas and TGC. All
significant inter-company items have been eliminated in consolidation.

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


                                      F-5
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

Revenue recognition - Oil and natural gas revenue is recognized at the time
title is transferred to the customer. Pipeline revenue is earned as a gathering
fee at the time the gas is delivered to the customer.

Petroleum and natural gas properties - The Company employs the full cost method
of accounting for petroleum and natural gas properties whereby all costs
relating to exploration and development of reserves are capitalized. Such costs
include land acquisition costs, geological and geophysical costs, costs of
drilling both productive and non-productive wells, and related overhead.

Capitalized costs, excluding costs relating to unproven properties, are depleted
using the unit-of-production method based on estimated proven reserves, as
prepared by an independent engineer. For the purposes of the depletion
calculation, proven reserves are converted to a common unit of measure on the
basis of their approximate relative energy content. Investments in unproved
properties are not amortized until the proved reserves associated with the
projects can be determined or until impairment occurs. If an assessment of such
properties indicates that properties are impaired, the amount of impairment is
added to the capitalized cost base to be amortized.

Under the full cost method, the net book value of natural gas and oil
properties, less related deferred income taxes, may not exceed a calculated
"ceiling". The ceiling is the estimated after-tax future net revenue from proved
natural gas and oil properties, discounted at 10% per annum plus the lower of
cost or fair market value of unproved properties. In calculating future net
revenues, prices and costs in effect at the time of the calculation are held
constant indefinitely, except for changes that are fixed and determinable by
existing contracts. The net book value is compared to the ceiling on an annual
basis. The excess, if any, of the net book value above the ceiling is required
to be written off as an expense.

Proceeds on disposal of properties are normally applied as a reduction of the
capitalized costs without recognition of a gain or loss, unless such amounts
would significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case gain or loss would be recognized.
Abandonment of properties are accounted for as adjustments of capitalized costs
with no loss recognized, unless such adjustment would significantly alter the
relationship between capitalized costs and proved reserves of oil and gas
attributable to a cost center.

Long-lived assets - The Company reviews its long-lived assets for impairment
whenever changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. For purposes of evaluating the recoverability of
long-lived assets, the recoverability test is performed using estimated
undiscounted net cash flows to be generated by the asset.



                                      F-6
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

Equipment - Equipment is recorded at cost and depreciated on the Straight-line
basis over the following periods:

                  Computer equipment         5-7 years
                  Truck                        7 years
                  Office equipment           5-7 years
                  Computer software            5 years
                  Gathering systems           30 years

Asset Retirement Obligations - In accordance with the provisions of SFAS No. 143
Accounting for Asset Retirement Obligations the Company records the fair value
of its liability for asset retirement obligations in the period in which it is
incurred and a corresponding increase in the carrying amount of the related long
live assets. Over time, the liability is accreted to its present value at the
end of each reporting period, and the capitalized cost is depreciated over the
useful life of the related assets. Upon settlement of the liability, the Company
will either settle the obligation for its recorded amount or incur a gain or
loss upon settlement. The Company's asset retirement obligations relate to the
plugging and abandonment of its natural gas properties.

Accounts Receivable - Management periodically assesses the collectibility of the
Company's accounts receivable. Accounts determined to be uncollectible are
charged to operations when that determination is made.

Earnings per share - The Company follows SFAS No. 128 Earnings per Share, for
computing and presenting earnings per share, which requires, among other things,
dual presentation of basic and diluted earnings per share on the face of the
statement of operations. Basic EPS is computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities, options or warrants were exercised or converted into common shares
or resulted in the issuance of common shares that then share in the earnings of
the entity. For the years ended January 31, 2008 and 2007, no options or
warrants were considered common stock equivalents as their effect would be
anti-dilutive.

Stock-based compensation - Effective February 1, 2006, the beginning of the
Company's first fiscal quarter of 2006, the Company adopted the fair value
recognition provisions of SFAS 123R, using the modified-prospective transition
method. Under this transition method, stock-based compensation expense will be
recognized in the consolidated financial statements for granted, modified, or
settled stock options. Compensation expense recognized included the estimated
expense for stock options granted on and subsequent to February 1, 2006, based
on the grant date fair value estimated in accordance with the provisions of SFAS
123R, and the estimated expense for the portion vesting in the period for
options granted prior to, but not vested as of February 1, 2006, based on the
grant date fair value estimated in accordance with the original provisions of
SFAS 123. Results for prior periods have not been restated, as provided for
under the modified-prospective method.


                                      F-7
<PAGE>

SFAS 123R requires forfeitures to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from those
estimates. In the Company's pro forma information required under SFAS 123R for
the periods prior to fiscal 2007, the Company accounted for forfeitures as they
occurred.

Upon adoption of SFAS 123R, the Company is using the Black-Scholes
option-pricing model as its method of valuation for share-based awards granted
beginning in fiscal 2007. The Company's determination of fair value of
share-based payment awards on the date of grant using an option-pricing model is
affected by the Company's stock price as well as assumptions regarding a number
of highly complex and subjective variables. These variables include, but are not
limited to the Company's expected stock price volatility over the term of the
awards, and certain other market variables such as the risk free interest rate.

Since no options were granted, modified or settled during the years ended
January 31, 2008 and 2007, there was no stock-based compensation expense
included in net income for these periods subject to the option pricing
considerations discussed above.

Cash and cash equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.

Concentration of credit risk - The Company maintains its cash in bank deposit
accounts which, at times, may exceed federally insured limits. The Company has
not experienced any losses in such accounts and believes it is not exposed to
any significant risk.

Income taxes - Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for future timing
differences between the financial statement carrying amounts and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered.

In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an
Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 is intended to clarify
the accounting for uncertainty in income taxes recognized in a company's
financial statements and prescribes the recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also provides
guidance on de-recognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition.



                                      F-8
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

Under FIN 48, evaluation of a tax position is a two-step process. The first step
is to determine whether it is more-likely-than-not that a tax position will be
sustained upon examination, including the resolution of any related appeals or
litigation based on the technical merits of that position. The second step is to
measure a tax position that meets the more-likely-than-not threshold to
determine the amount of benefit to be recognized in the financial statements. A
tax position is measured at the largest amount of benefit that is greater than
50 percent likely of being realized upon ultimate settlement.

Tax positions that previously failed to meet the more-likely-than-not
recognition threshold should be recognized in the first subsequent period in
which the threshold is met. Previously recognized tax positions that no longer
meet the more-likely-than-not criteria should be de-recognized in the first
subsequent financial reporting period in which the threshold is no longer met.

The adoption of FIN 48 at February 1, 2007 did not have a material effect on the
Company's financial position.

Reclassifications - Certain prior period amounts have been reclassified to
conform to current period presentation.

New Accounting Pronouncements - In February 2006, the FASB issued Statement No.
155, "Accounting for Certain Hybrid Financial Instruments" ("SFAS No. 155"),
which amends FASB Statements No. 133 and 140. This Statement permits fair value
remeasurement for any hybrid financial instrument containing an embedded
derivative that would otherwise require bifurcation, and broadens a Qualified
Special Purpose Entity's ("QSPE") permitted holdings to include passive
derivative financial instruments that pertain to other derivative financial
instruments. This Statement is effective for all financial instruments acquired,
issued or subject to a remeasurement event occurring after the beginning of an
entity's first fiscal year beginning after September 15, 2006. This Statement
has no current applicability to the Company's financial statements. The adoption
of this Statement on February 1, 2007 did not have a material impact on the
Company's financial position, results of operations, or cash flows.

In March 2006, the FASB issued Statement No. 156, "Accounting for Servicing of
Financial Assets - an amendment of FASB Statement No. 140" ("SFAS No. 156").
This Statement is effective for fiscal years beginning after September 15, 2006.
This Statement requires that all separately recognized servicing assets and
servicing liabilities be initially measured at fair value, if practicable. This
Statement has no current applicability to the Company's financial statements.
The adoption of this Statement on February 1, 2007 did not have a material
impact on the Company's financial position, results of operations, or cash
flows.





                                      F-9
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

In June 2006, the FASB issued Interpretation 48, "Accounting for Uncertainty in
Income Taxes" ("FIN 48"), an interpretation of FASB Statement No. 109,
"Accounting for Income Taxes." FIN 48 clarifies the accounting and reporting for
income taxes where interpretation of the law is uncertain. FIN 48 prescribes a
comprehensive model for the financial statement recognition, measurement,
presentation and disclosure of income tax uncertainties with respect to
positions taken or expected to be taken in income tax returns. FIN 48 is
effective for fiscal years beginning after December 15, 2006. This Statement has
no current applicability to the Company's financial statements. The adoption of
this Statement on February 1, 2007 did not have a material impact on the
Company's financial position, results of operations, or cash flows.

 In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 addresses how companies should measure fair value
when they are required to use a fair value measure for recognition or disclosure
purposes under GAAP. SFAS No. 157 defines fair value, establishes a framework
for measuring fair value and expands disclosures about fair value measurements.
SFAS No. 157 is effective for fiscal years beginning after November 15, 2007,
with earlier adoption permitted. Management is assessing the impact of the
adoption of this Statement.

In September 2006, the FASB issued Statement No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans" ("SFAS No. 158"), an
amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158 requires
(a) recognition of the funded status (measured as the difference between the
fair value of the plan assets and the benefit obligation) of a benefit plan as
an asset or liability in the employer's statement of financial position, (b)
measurement of the funded status as of the employer's fiscal year-end with
limited exceptions, and (c) recognition of changes in the funded status in the
year in which the changes occur through comprehensive income. The requirement to
recognize the funded status of a benefit plan and the disclosure requirements
are effective as of the end of the fiscal year ending after December 15, 2006.
The requirement to measure the plan assets and benefit obligations as of the
date of the employer's fiscal year-end statement of financial position is
effective for fiscal years ending after December 15, 2008. This Statement has no
current applicability to the Company's financial statements. Management adopted
this Statement on January 31, 2007 and the adoption of SFAS No. 158 did not have
a material impact to the Company's financial position, results of operations, or
cash flows.

In September 2006, the Securities Exchange Commission issued Staff Accounting
Bulletin No. 108 ("SAB No. 108"). SAB No. 108 addresses how the effects of prior
year uncorrected misstatements should be considered when quantifying
misstatements in current year financial statements. SAB No. 108 requires
companies to quantify misstatements using a balance sheet and income statement
approach and to evaluate whether either approach results in quantifying an error
that is material in light of relevant quantitative and qualitative factors. When
the effect of initial adoption is material, companies will record the effect as
a cumulative effect adjustment to beginning of year retained earnings and
disclose the nature and amount of each individual error being corrected in the
cumulative adjustment. SAB No. 108 was effective beginning January 1, 2007 and


                                      F-10
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

the initial adoption of SAB No. 108 did not have a material impact on the
Company's financial position, results of operations, or cash flows.

In February 2007, the FASB issued Statement No. 159 "The Fair Value Option for
Financial Assets and Financial Liabilities" (SFAS 159). This statement permits
companies to choose to measure many financial assets and liabilities at fair
value. Unrealized gains and losses on items for which the fair value option has
been elected are reported in earnings. SFAS 159 is effective for fiscal years
beginning after November 15, 2007. The Company is currently assessing the impact
of SFAS 159 on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in
Consolidated Financial Statements--an amendment of Accounting Research Bulletin
No. 51 (SFAS 160). SFAS 160 establishes new accounting and reporting standards
for the non-controlling interest in a subsidiary and for the deconsolidation of
a subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. The Company does not believe that SFAS 160 will have a
material impact on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities--an amendment of FASB Statement No. 133 (FAS
161). FAS 161 changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity's financial position, financial performance, and
cash flows. The guidance in FAS 161 is effective for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008, with
early application encouraged. This Statement encourages, but does not require,
comparative disclosures for earlier periods at initial adoption. The Company is
currently assessing the impact of FAS 161.

4.  ACQUISITIONS AND RELATED DEBT

On December 16, 2005 in settlement of the arbitration case with Double G Energy,
the Company entered into an agreement with Double G Energy to repurchase all of
Double G Energy's interests in the Company's wells in Pulaski County, Kentucky
for $1,000,000. Payment terms of the agreement were for an initial payment of
$250,000 at the date of settlement; $100,000 per month January 2006 through July
2006; final payment of $50,000 in August 2006.

5.  SALE OF OIL AND GAS PROPERTIES

Effective April 1, 2006, the Company sold its 16.75% Working Interest in three
Kansas wells for $200,000. The proceeds from these sales were treated as a
reduction in the carrying amount of oil and gas properties in accordance with
the requirements of the full cost method of accounting for oil and gas
properties.


                                      F-11
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

As of June 1, 2007 the Company had finalized a sales agreement for the sale of
all Pulaski County, Kentucky properties, gathering systems and equipment for
$1,635,560. The Company received cash payments totaling $1,604,500 and in
October 2007 agreed to a sales price adjustment reducing the price by $31,060.
The sales price adjust was recorded in the carrying amount of oil and gas
properties in accordance with the requirements of the full cost method of
accounting for oil and gas properties.

On January 1, 2008 the Company finalized a sales agreement for the sale of all
remaining Kentucky properties, gathering systems, pipelines and equipment for
$2,300,000. The Company received a $100,000 deposit and a non-recourse note
receivable for $2,200,000 due on January 1, 2010, with interest of 7.5%, secured
by first mortgage liens on real property; lien and security interest in all
wells, fixtures and equipment; and collateral assignment of production and
proceeds from the properties. The note calls for payments of $100,000 on April
1, 2008 and July 1, 2008 and then quarterly interest only payments until
maturity.

Staff Accounting Bulletin 104, Topic 13, "Revenue Recognition," specifies three
conditions before revenue can be recognized. These conditions are (1) delivery
has occurred or services have been rendered, (2) the sellers price to the buyer
is fixed and determinable and (3) collection is reasonably assured. Due to the
non-recourse nature of the note and the historical operating deficits generated
by the properties, the transaction failed the "collection is reasonably assured"
test. Therefore, the $100,000 payment received was treated as a deposit and the
carrying value of the properties subject to the sales agreement as reduced by a
$701,691 impairment to the anticipated sales price, were reclassified as
properties held for resale. No depletion, depreciation or amortization was taken
on these properties subsequent to the closing of the sales agreement.

6.  EQUITY LINE OF CREDIT

On September 20, 2004, the Company entered into an equity line of credit
agreement with Dutchess Private Equities Fund II, L.P. The purpose of the equity
line of credit is to provide a possible source of funding for the Company's oil
and gas exploration activities or for working capital.

Under the equity line of credit agreement, Dutchess Private Equities has agreed
to provide the Company with up to $10,000,000 of funding prior to October 14,
2007. During this period, the Company may request a drawdown under the equity
line of credit by selling shares of its common stock to Dutchess Private
Equities, and Dutchess Private Equities will be obligated to purchase the
shares. The minimum and maximum amounts the Company can draw down at any one
time are determined using a formula contained in the equity line of credit
agreement. The Company is under no obligation to request any drawdown under the
equity line of credit. Through January 31, 2008, the company has drawn a sum of
$1,107,365, which was repaid by the issuance of 7,689,486 shares of the
Company's common stock.


                                      F-12
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

7.  PROMISSORY NOTE

On July 26, 2006 the Company borrowed $500,000 under a promissory note
agreement. The face value of the note is $650,000 and does not bear interest.
Accordingly the Company has recorded a discount of $150,000 to the face value of
the note and the discount was recognized as interest expense over the one-year
term of the note.

As additional consideration the Company issued 800,000 of restricted common
stock valued at $116,000. The value of the common stock has been recorded as an
additional discount to the value of the promissory note, which will be
recognized as interest expense over the term of the note.

During the year ended January 31, 2008 proceeds of $77,027 from the equity line
of credit agreement were applied to the note payable. Amortization of the loan
discount in the amount of $133,000 for the year ended January 31, 2008, is
included in interest expense.

As of January 31, 2008 this promissory note has been paid in full with
additional prepayment penalties of $20,002 which have been included in interest
expense.

8.  RELATED PARTY

George G. Shaw, the Company's President,  owns Energas Corporation (Corp.) which
operates the Company's wells in Oklahoma and Wyoming. Corp. received an overhead
fee from the Company of $18,522 and $18,522 for the years ended January 31, 2008
and 2007, respectively, for operation of the wells.

George G. Shaw, the Company's President, owns Energas Pipeline Company
(Pipeline) that operates the natural gas gathering system to which the Company's
four wells in Atoka County, Oklahoma are connected. The Company sells gas from
these wells to Pipeline, these sales were approximately $131,000 and $156,000
during the years ended January 31, 2008 and 2007, respectively. The price the
Company receives for the gas sold is the market price less a marketing and
transportation fee of $0.10 per mcf that is deducted from the sales price.
During the years ended January 31, 2008 and 2007 Energas Pipeline Company
received $12,451 and $16,820, respectively, in marketing and transportation
fees.

The Company's offices are occupied under an unwritten month-to-month lease
requiring rental payments of $3,800 per month to George G. Shaw, the Company's
President and owner of the building. During each of the years ended January 31,
2008 and 2007 the Company paid rent of $45,600 and $45,600 to the Company's
President.



                                      F-13
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

9. INCOME TAXES

As of January 31, 2008, the Company has approximately $13,037,000 of net
operating losses expiring through 2028 that may be used to offset future taxable
income but are subject to various limitations imposed by rules and regulations
of the Internal Revenue Service. The net operating losses are limited each year
to offset future taxable income, if any, due to the change of ownership in the
Company's outstanding shares of common stock. In addition, at January 31, 2008,
the Company had an unused Canadian net operating loss carry-forward of
approximately $395,000, expiring through 2008. These net operating loss
carry-forwards may result in future income tax benefits of approximately
$4,567,000; however, because realization is uncertain at this time, a valuation
reserve in the same amount has been established. Deferred income taxes reflect
the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes.

A reconciliation of the provision (benefit) for income taxes with the amounts
determined by applying the U.S. federal income tax rate to income before income
taxes is as follows:

                                                        Year Ended January 31
                                                          2008          2007
                                                     ---------------------------

Computed at the federal statutory rate of 34%           $ (489,000)  $ (448,000)
State tax (benefit) at statutory rates                     (57,000)     (59,000)
Change in valuation allowance                              546,000      507,000
                                                     ---------------------------
Income tax expense                                      $        -   $        -

Significant components of the Company's deferred tax liabilities and assets are
as follows:

                                                          As of January 31
                                                          2008          2007
                                                     ---------------------------

Deferred tax liabilities - timing in full cost pool     $ (466,000)  $ (404,000)
Deferred tax assets - net operating losses               5,084,000    4,476,000
Valuation allowance for deferred tax assets             (4,618,000)  (4,072,000)
                                                     ---------------------------
Net deferred tax assets                                 $        -   $        -


The valuation allowance increased $546,000 and $507,000 for the years ending
January 31, 2008 and 2007, respectively.


                                      F-14
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

The ability of the Company to utilize NOL carryforwards to reduce future federal
taxable income and federal income tax of the Company is subject to various
limitations under the Internal Revenue Code of 1986, as amended. The utilization
of such carryforwards may be limited upon the occurrence of certain ownership
changes, including the issuance or exercise of rights to acquire stock, the
purchase or sale of stock by 5% stockholders, as defined in the Treasury
regulations, and the offering of stock by the Company during any three-year
period resulting in an aggregate change of more than 50% in the beneficial
ownership of the Company.

10. EARNINGS PER SHARE

SFAS 128 requires a reconciliation of the numerator and denominator of the basic
and diluted earnings per share (EPS) computations.

The following reconciles the components of the EPS computation for the years
ended January 31, 2008 and 2007:

                                                     2008              2007
                                                     ----              ----
Basic (loss) per share computation Numerator:
  Net loss                                        $ (1,469,335)     $(1,516,282)

Denominator:
  Weighted average common shares outstanding        79,237,416       63,129,982
Basic (loss) per share                            $      (0.02)     $     (0.02)

Diluted (loss) per share Numerator:
  Net loss                                        $ (1,469,335)     $(1,516,282)

Denominator:
  Weighted average common shares outstanding        79,237,416       63,129,982
Diluted (loss) per share                          $      (0.02)     $     (0.02)


11.   ASSET RETIREMENT OBLIGATION

Effective June 1, 2003, the Company adopted SFAS 143, Accounting for Asset
Retirement Obligations. Upon adoption of SFAS 143, the Company recorded an asset
retirement obligation liability of $20,770 and an increase to net properties and
equipment of $20,770.



                                      F-15
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

The following table provides a roll forward of the asset retirement obligations:

                                               Year Ended        Year Ended
                                            January 31, 2008   January 31, 2007
                                            ----------------   ----------------

  Asset retirement obligation beginning
        balance                              $     103,687         $    96,756
    Liabilities incurred                                --                  --
    Liabilities transferred to purchaser           (65,013)                 --
    Accretion expense                                2,953               6,931
                                             --------------        ------------
  Asset retirement obligation ending balance $      41,627         $   103,687
                                             =============         ============

12. OPTIONS AND WARRANTS

The Company has issued stock options and stock warrants as follows:

                     Outstanding    Granted   Exercised  Outstanding
           Exercise  January 31,      or         or      January 31,  Expiration
            Price       2007      (Cancelled)  Expired       2008         Date
           --------  -----------  ----------- ---------- -----------  ----------


Warrants  $   0.50     714,286          --     714,286          --    10/01/07


13.  OPERATING LEASES

The Company has two office equipment leases through October 2012. All leases are
warranted with full maintenance.

Additionally, the minimum annual rental commitments as of January 31, 2008 under
noncancellable leases are as follows: 2009 - $6,846; 2010 - $6,846; 2011 -
$3,917; 2013 - $2,940 and 2012 - $2,205.

14.   MAJOR PURCHASERS

The Company's natural gas and oil production is sold under contracts with
various purchasers. Natural gas sales to one purchaser approximated 68% of total
natural gas and oil revenues for the year ended January 31, 2008.

The Company sells gas to Energas Pipeline Company, which is owned by George G.
Shaw, the Company's President. For the years ended January 31, 2008 and 2007
these sales were approximately $131,000 and $156,000, respectively.


                                      F-16
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

15.  FINANCIAL INSTRUMENTS

The carrying amount of cash, receivables, deposits, accounts payable, and
accrued expenses approximates fair value due to the short maturity of those
instruments. The carrying amounts of notes payable approximate fair value due to
the variable nature of the interest rates of the notes payable.

16.  CONTINGENCIES

In the normal course of its operations, the Company may, from time to time, be
named in legal actions seeking monetary damages. While the outcome of these
matters cannot be estimated with certainty, management does not expect, based
upon consultation with legal counsel, that they will have a material effect on
the Company's business or financial condition or results of operations.

17.  STOCK-BASED COMPENSATION

Incentive Stock Option Plan. The Company's Incentive Stock Option Plan
authorizes the issuance of up to 2,000,000 shares of the Company's common stock
to persons that exercise options granted pursuant to the Plan. Only Company
employees may be granted options pursuant to the Incentive Stock Option Plan.
The option exercise price is determined by the Company's Board of Directors but
cannot be less than the market price of the Company's common stock on the date
the option is granted.

Non-Qualified Stock Option Plan. The Company's Non-Qualified Stock Option Plan
authorizes the issuance of up to 1,000,000 shares of the Company's common stock
to persons that exercise options granted pursuant to the Plans. The Company's
employees, directors, officers, consultants and advisors are eligible to be
granted options pursuant to the Plans, provided however that bona fide services
must be rendered by such consultants or advisors and such services must not be
in connection with the offer or sale of securities in a capital-raising
transaction. The option exercise price is determined by the Company's Board of
Directors.

Stock Bonus Plan. The Company's Stock Bonus Plan allows for the issuance of up
to 4,000,000 shares of common stock. Such shares may consist, in whole or in
part, of authorized but unissued shares, or treasury shares. Under the Stock
Bonus Plan, the Company's employees, directors, officers, consultants and
advisors are eligible to receive a grant of the Company's shares, provided
however that bona fide services must be rendered by consultants or advisors and
such services must not be in connection with the offer or sale of securities in
a capital-raising transaction.

The following table shows the weighted average exercise price of the outstanding
options granted pursuant to the Company's Incentive and Non-Qualified Stock
Option Plans as of January 31, 2008. The Company's Incentive and Non-Qualified
Stock Option Plans were not approved by the Company's shareholders.


                                      F-17
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

<TABLE>
<S>                                <C>               <C>                  <C>

                                                                      Number of
                                                                     Securities
                                                                      Remaining
                                                                    Available For
                                                                   Future Issuance
                          Number of Securities                       Under Equity
                           to be Issued Upon                      Compensation Plans
                              Exercise of     Weighted-Average  (Excluding Securities
                              Outstanding     Exercise Price of     Reflected in
   Plan Category              Options [a]    Outstanding options     column [a]
---------------------------------------------------------------------------------

Incentive Stock                    --                  --            2,000,000
Option Plan
Non-Qualified Stock
Option Plan                        --                  --              750,000
</TABLE>

The following table provides information as of January 31, 2008 concerning the
stock options and stock bonuses granted by the Company pursuant to the Plans.
Each option represents the right to purchase one share of the Company's common
stock.

                                       Shares
                     Total Shares    Reserved for                   Remaining
                    Reserved Under   Outstanding   Shares Issued  Options/Shares
   Name of Plan          Plans         Options     As Stock Bonus  Under Plans
--------------------------------------------------------------------------------
Incentive Stock
 Option Plan           2,000,000              --            N/A       2,000,000
Non-Qualified
 Stock Option Plan     1,000,000              --            N/A         750,000
Stock Bonus Plan       4,000,000              --      1,836,981       2,163,019

The following table summarizes the options and stock bonuses granted pursuant to
the Plans as of January 31, 2008:

Incentive Stock Options

                                                                      Options
                                                                     Exercised
                                                                       as of
 Shares Subject to                                     Expiration   January 31,
      Option         Exercise Price   Date of Grant  Date of Option     2007
--------------------------------------------------------------------------------
None                         --              --             --           --




                                      F-18
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

Non-Qualified Stock Options

                                                                      Options
                                                                     Exercised
                                                                       as of
 Shares Subject to                                     Expiration   January 31,
      Option         Exercise Price   Date of Grant  Date of Option     2007
--------------------------------------------------------------------------------
250,000                   $0.32         6-30-03          7-15-05      250,000


Stock Bonus Plan

                              Shares Issued as
  Name                         Stock Bonus (1)            Date Issued
-----------------------------------------------------------------------------

George Shaw                       100,000                   10/30/03
Scott Shaw                        100,000                   10/30/03
Employees and consultants       1,836,981              Various dates
                              -----------
                                2,036,981

(1) In October 2006 the Company issued 150,000 shares of its restricted common
stock to George Shaw and 150,000 shares to Scott Shaw for services rendered.
However the shares issued in October 2006 were not issued pursuant to the
Company's Stock Bonus Plan.

The number of shares issued is determined by the daily average market price of
the stock on a monthly basis. Compensation expense recognized under this program
for the year ended January 31, 2007 was $27,700 for 799,105 shares.

Restricted Stock awards. On October 3, 2007 the Company awarded 2,600,000 shares
of restricted common stock valued at $52,000 to employees for services rendered.
The awarded shares were not from the Stock Bonus Plan.


18.  SUBSEQUENT EVENTS

On April 11, 2008 the Company sold the Ainsworth #1-33 well for $615,000 less
sales expenses of $24,600. The Ainsworth #1-33 net capitalized cost at January
31, 2008 was approximately $328,499.



                                      F-19
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

19.  SFAS 69 SUPPLEMENTAL DISCLOSURES (UNAUDITED)

Net Capitalized Costs

The Company's aggregate capitalized costs related to natural gas and oil
producing activities are summarized as follows:

                                                     January 31, 2007
Natural gas and oil           January                    Held for
properties and                31, 2008   Held for use      sale        Total
                              --------------------------------------------------
  Related lease equipment:
  Proved                     $2,380,633   $5,202,576   $1,165,433    $6,368,009
  Unproved                       16,845      144,483            -       144,483
  Pipeline facilities                 -    1,028,101      652,304     1,680,405
                              --------------------------------------------------
                              2,397,478    6,375,160    1,817,737     8,192,897

Accumulated depreciation,
  depletion and impairment     (904,302)  (2,208,931)     (82,737)   (2,291,668)
                              --------------------------------------------------
  Net capitalized costs      $1,493,176   $4,166,229   $1,735,000    $5,901,229
                              ==================================================


Properties held for resale at January 31, 2008 were not included in the January
31, 2008 reserve report, therefore they are not included in this table.

Unproved properties not subject to amortization consisted mainly of leasehold
acquired through acquisitions. The Company will continue to evaluate its
unproved properties; however, the timing of the ultimate evaluation and
disposition of the properties has not been determined.

Costs Incurred

Costs incurred in natural gas and oil property acquisition, exploration and
development activities that have been capitalized are summarized as follows:

                                             Years Ended January 31,
                                              2008             2007
                                              ----             ----

Development costs                      $     575,367       $    219,167
Acquisition of pipelines                           -            124,293
                                       -------------       ------------
                                       $     575,367       $    343,460
                                       =============       ============



                                      F-20
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

Results of Operations for Natural Gas and Oil Producing Activities

The Company's results of operations from natural gas and oil producing
activities are presented below for the fiscal years ended January 31, 2008 and
2007. The following table includes revenues and expenses associated directly
with the Company's natural gas and oil producing activities. It does not include
any interest costs and general and administrative costs and, therefore, is not
necessarily indicative of the contribution to consolidated net operating results
of the Company's natural gas and oil operations.

                                                  Years Ended January 31,
                                                   2008           2007
                                                   ----           ----

        Production revenues                   $  431,959     $   630,529
        Production and transportation costs     (201,826)       (432,677)
        Impairment of property                  (701,691)       (245,148)
        Depletion expense                       (126,315)       (273,184)
                                              -----------    ------------
                                                (597,873)       (320,480)
        Imputed income tax provision (1)               -               -
                                              -----------    ------------
        Results of operation for natural
         gas/oil producing activity           $ (597,873)    $  (320,480)
                                              ===========    ============

(1)  The imputed income tax provision is hypothetical (at the statutory rate)
     and determined without regard to the Company's deduction for general and
     administrative expenses, interest costs and other income tax credits and
     deductions, nor whether the hypothetical tax provision will be payable.

Natural Gas and Oil Reserve Quantities

The following schedule contains estimates of proved natural gas and oil reserves
attributable to the Company. Proved reserves are estimated quantities of natural
gas and oil that geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions. Proved developed reserves are those which are
expected to be recovered through existing wells with existing equipment and
operating methods. Reserves are stated in thousand cubic feet (mcf) of natural
gas and barrels (bbl) of oil. Geological and engineering estimates of proved
natural gas and oil reserves at one point in time are highly interpretive,
inherently imprecise and subject to ongoing revisions that may be substantial in
amount. Although every reasonable effort is made to ensure that the reserve
estimates are accurate, due to their nature reserve estimates are generally less
precise than other estimates presented in connection with financial statement
disclosures.



                                      F-21
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

                                          Gas - mcf        Oil - bbls
                                        ---------------  ----------------
Proved reserves:
     Balance, January 31, 2006              1,764,909            41,180
      Purchase of reserves-in-place                 -                 -
      Extensions and discoveries                    -                 -
      Revisions of previous estimates         274,967           (17,620)
      Production                              (97,836)           (1,417)
                                        ---------------  ----------------
     Balance, January 31, 2007              1,942,040            22,143
                                        ---------------  ----------------
      Purchase of reserves-in-place
      Extensions and discoveries                    -
      Sale of reserves in place            (1,136,665)           (3,256)
      Revisions of previous estimates             615            36,521

          Production                          (59,491)           (1,499)
                                        ---------------  ----------------
     Balance, January 31, 2008                746,499            53,909
                                        ===============  ================
Proved developed reserves:
     Balance, January 31, 2007                955,770            18,712
     Balance, January 31, 2008                746,499            18,237

Standardized Measure of Discounted Future Net Cash Flows:

The following schedule presents the standardized measure of estimated discounted
future net cash flows from the Company's proved reserves for the fiscal years
ended January 31, 2007 and 2006. Estimated future cash flows are based on
independent reserve data. Because the standardized measure of future net cash
flows was prepared using the prevailing economic conditions existing at January
31, 2007 and 2006, it should be emphasized that such conditions continually
change. Accordingly, such information should not serve as a basis in making any
judgment on the potential value of the Company's recoverable reserves or in
estimating future results of operations.

                                            Years Ended January 31,
                                              2008           2007
                                              ----           ----

Future production revenues (1)             $8,271,034    $13,464,890
Future production costs                    (2,566,873)    (3,847,860)
Future development costs                     (624,258)      (789,000)
Future income tax                          (1,214,654)    (1,444,646)
                                         ------------   ------------
Future net cash flows                       3,865,249      7,383,384
Effect of discounting future annual
    cash flows at 10%                      (1,787,576)    (2,966,724)
                                         ------------   ------------
Standardized measure of discounted
    net cash flows                       $  2,077,673   $  4,416,660
                                         ============   ============


                                      F-22
<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2008 AND 2007

(1)  The weighted average natural gas and oil wellhead prices used in computing
     the Company's reserves were $6.06 per mcf and $69.15 per bbl at January 31,
     2008 as compared to $7.84 per mcf and $55.80 per bbl at January 31, 2007.

The following schedule contains a comparison of the standardized measure of
discounted future net cash flows to the net carrying value of proved natural gas
and oil properties at January 31, 2008 and 2007:

                                                   Years Ended January 31,
                                                   2008             2007
                                                   ----             ----
Standardized measure of discounted future
     net cash flows                             $ 2,077,673    $ 4,416,660
Proved natural gas & oil property net of
     Accumulated depreciation, depletion and
     amortization, including impairment of
     $280,201                                     1,479,331      4,416,660
                                                ------------   ------------
Standardized measure of discounted future
     net cash flows in excess of net
     carrying value of proved natural gas &
     oil properties                             $   598,342    $        -
                                                ============   ============

The following reconciles the change in the standardized measure of discounted
future net cash flow for the years ended January 31, 2008 and 2007.

                                                   Years Ended January 31,
                                                   2008             2007
                                                   ----             ----

Beginning balance                             $   4,416,660  $   4,992,059
Sales of oil and gas produced, net of
   net of production costs                         (230,133)      (211,953)
Net changes in prices and production costs       (1,751,017)    (1,173,335)
Sales of reserves in place                       (1,014,763)      (141,981)
Revisions of estimates, less related
 production Costs                                   349,596        926,529
Accretion of discount                                77,338         71,236
Net change in income taxes                          229,992        (45,895)
                                              --------------  --------------

Ending balance                                $   2,077,673   $  4,416,660
                                              ==============  ==============



                                      F-23
<PAGE>


                                   SIGNATURES

      In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 30th day of April 2008.

                             ENERGAS RESOURCES, INC.


                                  By:  /s/ George G. Shaw
                                       --------------------------------------
                                       George G. Shaw, President, Principal
                                       Accounting Officer and Principal
                                       Financial Officer


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

                                     Title                    Date

/s/ George G. Shaw
------------------------
George G. Shaw                      Director             April 30, 2008



/s/ George G. Shaw
------------------------
G. Scott Shaw                       Director             April 30, 2008







<PAGE>


                             ENERGAS RESOURCES, INC.

                                   FORM 10-KSB

                                    EXHIBITS