**FORM      10-QSB**

| x | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|---|--------------------------------------------------------------------------------------------------------------------------------------|

| o | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|---|---------------------------------------------------------------------------------------------------------------------------------------|

**Forster      Drilling Corporation**

| Nevada                                                                                    |                  91-2070995             |
|-------------------------------------------------------------------------------------------|--------------------------------------------------------|
|  (State                or other jurisdiction of incorporation or organization)  |  (IRS                Employer Identification No.) |
|                                                                                      |                                                   |
| 2425                Fountainview, #305, Houston,                Texas                |                  77057                            |
| (Address                of principal executive                offices)                    |   (Zip                Code)                  |

**APPLICABLE      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS      DURING THE PRECEDING FIVE YEARS**

**APPLICABLE      ONLY TO CORPORATE ISSUERS**

----

----

**Forster      Drilling Corporation**

**INDEX**

|                       |                   |                                                                                                                                                                                                                                                      |   | **Page                No.** |
|----------------------------|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|
| **Part                I**  |                   | Financial                Information                                                                                                                                                                                                                      |   |                        |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                1. | Condensed                Consolidated Financial Statements of Forster Drilling                Corporation                                                                                                                                                 |   | 2                           |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       |                   | Condensed                Consolidated Balance Sheet dated August 31, 2007                (Unaudited)                                                                                                                                                      |   | 3                           |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       |                   | Condensed                Consolidated Statements of Operations for the Nine Months Ended May                31,                2007 and 2006 (Unaudited) and for the Nine Months Ended August 31,                2007                and 2006 (Unaudited) |   | 4                           |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       |                   | Condensed                Consolidated Statements of Stockholders’ Equity for the Nine Months Ended                August 31, 2007 (Unaudited)                                                                                                       |   | 5                           |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       |                   | Condensed                Consolidated Statements of Cash Flows for the Nine Months Ended August                31,                2007 and 2006 (Unaudited)                                                                                               |   | 6                           |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       |                   | Notes                to Consolidated Financial Statements (Unaudited)                                                                                                                                                                                     |   | 7                           |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                2. | Management’s                Discussion and Analysis                                                                                                                                                                                                 |   | 12                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                3. | Controls                and Procedures                                                                                                                                                                                                                    |   | 15                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
| **Part                II** |                   | Other                Information                                                                                                                                                                                                                          |   | 16                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                1. | Legal                Proceedings                                                                                                                                                                                                                          |   | 16                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                2. | Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                |   | 16                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                3. | Defaults                Upon Senior Securities                                                                                                                                                                                                            |   | 16                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                4. | Submission                of Matters to a Vote of Security Holders                                                                                                                                                                                        |   | 16                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                5. | Other                Information.                                                                                                                                                                                                                         |   | 17                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       | Item                6. | Exhibits                and Reports on Form 8-K                                                                                                                                                                                                           |   | 17                          |
|                       |                   |                                                                                                                                                                                                                                                      |   |                        |
|                       |                   | Signatures                                                                                                                                                                                                                                                |   | 18                          |

----

**PART      I**

**ITEM      1.**
**FINANCIAL      STATEMENTS**

----

**FORSTER      DRILLING CORPORATION**

**CONSOLIDATED      BALANCE SHEET**

**(Unaudited)**

|                                                                                                                                     |   | August                31, |        |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|-------------|
|                                                                                                                                          |   | 2007                      |        |
|                                                                                                                                     |   |                      |        |
| **ASSETS**                                                                                                                               |   |                      |        |
| Current                assets:                                                                                                           |   |                      |        |
| Cash                and cash equivalents                                                                                                 |   | $                         | -           |   |
| Trade                accounts receivable, net                                                                                            |   |                      | 494,900     |   |
| Prepaid                insurance and other                                                                                               |   |                      | 25,662      |   |
|                                                                                                                                     |   |                      |        |   |
| Total                current assets                                                                                                      |   |                      | 520,562     |   |
|                                                                                                                                     |   |                      |        |   |
| Land                                                                                                                                     |   |                      | 180,335     |   |
| Building                                                                                                                                 |   |                      | 323,665     |   |
| Drilling                rigs and related equipment                                                                                       |   |                      | 5,719,061   |   |
| Transportation,                office and other equipment                                                                                |   |                      | 207,899     |   |
| Construction                in progress: drilling rigs and related equipment                                                             |   |                      | 5,896,914   |   |
| Total                fixed assets                                                                                                        |   |                      | 12,327,874  |   |
| Accumulated                depreciation                                                                                                  |   |                      | (497,440    | ) |
| Net                fixed assets                                                                                                          |   |                      | 11,830,434  |   |
|                                                                                                                                     |   |                      |        |   |
| Other                assets                                                                                                              |   |                      | 101,383     |   |
|                                                                                                                                     |   |                      |        |   |
| Total                assets                                                                                                              |   | $                         | 12,452,379  |   |
|                                                                                                                                     |   |                      |        |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                            |   |                      |        |   |
|                                                                                                                                     |   |                      |        |   |
| Current                liabilities:                                                                                                      |   |                      |        |   |
| Notes                payable, net of unamortized discount of $965,005                                                                    |   | $                         | 2,755,495   |   |
| Notes                payable to related parties, net of unamortized discount of                $5,961                                    |   |                      | 716,689     |   |
| Current                portion of long-term debt                                                                                         |   |                      | 794,426     |   |
| Accounts                payable, including cash overdraft of $286,501                                                                    |   |                      | 2,505,874   |   |
| Wages                payable                                                                                                             |   |                      | 79,411      |   |
| Taxes                payable                                                                                                             |   |                      | 865,921     |   |
| Accrued                liabilities                                                                                                       |   |                      | 231,290     |   |
| Deferred                revenue                                                                                                          |   |                      | 42,911      |   |
| Settlement                payable                                                                                                        |   |                      | 835,000     |   |
| Advances                from stockholders                                                                                                |   |                      | 157,690     |   |
| Other                current liabilities                                                                                                 |   |                      | 47,491      |   |
| Total                current liabilities                                                                                                 |   |                      | 9,032,198   |   |
|                                                                                                                                     |   |                      |        |   |
| Long                term debt, net of current maturities                                                                                 |   |                      | 1,327,676   |   |
|                                                                                                                                     |   |                      |        |   |
| Total                liabilities                                                                                                         |   |                      | 10,359,874  |   |
|                                                                                                                                     |   |                      |        |   |
| Stockholders’                equity:                                                                                               |   |                      |        |   |
| Preferred                stock, $0.25 par value per share, 12,500,000                shares authorized, 5,831 issued and outstanding     |   |                      | 1,459       |   |
| Common                stock, $0.002 par value per share, 100,000,000                shares authorized, 45,655,790 issued and outstanding |   |                      | 91,312      |   |
| Additional                paid-in capital                                                                                                |   |                      | 12,522,599  |   |
| Accumulated                deficit                                                                                                       |   |                      | (10,522,865 | ) |
| Total                stockholders’ equity                                                                                          |   |                      | 2,092,505   |   |
| Total                liabilities and stockholders’ equity                                                                          |   | $                         | 12,452,379  |   |

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

----

**FORSTER      DRILLING CORPORATION **

**CONSOLIDATED      STATEMENTS OF OPERATIONS **

**Three      Months Ended August 31, 2007 and 2006**

**Nine      Months Ended August 31, 2007 and 2006**

**(Unaudited)**

|                                                                |   | Three                    Months Ended                    August                    31, 2007 |       | Three                    Months Ended                    August                    31, 2006 |   | Nine                    Months Ended                    August                    31, 2007 |   | Nine                    Months Ended                    August                    31, 2006 |       |
|---------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|------------|
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |
| REVENUES:                                                           |   |                                                                                   |       |                                                                                        |   |                                                                                  |   |                                                                                       |       |
| Contract                    drilling revenues                       |   | $                                                                                           | 2,327,631  |                                                                                        | $      | -                                                                                          |   | $                                                                                          | 5,781,607  |   | $ | - |   |
| Sales                    of rigs and component parts                |   |                                                                                        | -          |                                                                                        |   | 1,200,000                                                                                  |   |                                                                                       | -          |   |   | 1,466,000 |   |
| Total                    revenues                                   |   |                                                                                        | 2,327,631  |                                                                                        |   | 1,200,000                                                                                  |   |                                                                                       | 5,781,607  |   |   | 1,466,000 |   |
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| COST                    OF SALES:                                   |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| Contract                    drilling revenues                       |   |                                                                                        | 1,231,863  |                                                                                        |   | -                                                                                          |   |                                                                                       | 3,205,315  |   |   | - |   |
| Sale                    of rigs and component parts                 |   |                                                                                        | -          |                                                                                        |   | 1,000,050                                                                                  |   |                                                                                       | -          |   |   | 1,112,050 |   |
| Total                    cost of sales                              |   |                                                                                        | 1,231,863  |                                                                                        |   | 1,000,050                                                                                  |   |                                                                                       | 3,205,315  |   |   | 1,112,050 |   |
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| GROSS                    PROFIT                                     |   |                                                                                        | 1,095,768  |                                                                                        |   | 199,950                                                                                    |   |                                                                                       | 2,576,292  |   |   | 353,950 |   |
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| Operating                    expenses:                              |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| Rig                    refurbishment and related expenses           |   |                                                                                        | 288,637    |                                                                                        |   | 109,561                                                                                    |   |                                                                                       | 686,597    |   |   | 337,568 |   |
| Depreciation                    and amortization expense            |   |                                                                                        | 147,251    |                                                                                        |   | 2,810                                                                                      |   |                                                                                       | 425,319    |   |   | 8,410 |   |
| Taxes                                                               |   |                                                                                        | 9,337      |                                                                                        |   | -                                                                                          |   |                                                                                       | 24,755     |   |   | - |   |
| Consulting                    and professional fees                 |   |                                                                                        | 479,367    |                                                                                        |   | -                                                                                          |   |                                                                                       | 1,385,829  |   |   | - |   |
| Salaries                    and wages                               |   |                                                                                        | -          |                                                                                        |   | -                                                                                          |   |                                                                                       | -          |   |   | - |   |
| Other                    general and administrative expenses        |   |                                                                                        | 190,989    |                                                                                        |   | 1,596,996                                                                                  |   |                                                                                       | 790,213    |   |   | 2,405,880 |   |
| Total                    operating expenses                         |   |                                                                                        | 1,115,581  |                                                                                        |   | 1,709,367                                                                                  |   |                                                                                       | 3,312,713  |   |   | 2,751,858 |   |
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| OPERATING                    LOSS                                   |   |                                                                                        | (19,813    | )                                                                                           |   | (1,509,417                                                                                 | )      |                                                                                       | (736,421   | ) |   | (2,397,908 |  ) |
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| Other                    expenses:                                  |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| Cost                    of reverse merger                           |   |                                                                                        | -          |                                                                                        |   | 500,000                                                                                    |   |                                                                                       | -          |   |   | 500,000 |   |
| Loss                    on settlement of debt                       |   |                                                                                        | 835,000    |                                                                                        |   | 264,233                                                                                    |   |                                                                                       | 835,000    |   |   | 264,233 |   |
| Other                    expenses                                   |   |                                                                                        | 6,650      |                                                                                        |   | 26,222                                                                                     |   |                                                                                       | 15,529     |   |   | 26,222 |   |
| Interest                    expense                                 |   |                                                                                        | 854,030    |                                                                                        |   | 428,914                                                                                    |   |                                                                                       | 1,927,129  |   |   | 488,186 |   |
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| LOSS                                                                |   | $                                                                                           | (1,715,493 | )                                                                                           | $      | (2,728,786                                                                                 | )      | $                                                                                          | (3,514,079 | ) | $ | (3,676,549 | ) |
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| Basic                    and diluted net loss per share             |   | $                                                                                           | (.03       | )                                                                                           | $      | (.06                                                                                       | )      | $                                                                                          | (.08       | ) | $ | (.09 | ) |
|                                                                |   |                                                                                        |       |                                                                                        |   |                                                                                       |   |                                                                                       |       |   |   |   |   |
| Weighted                    average common shares  outstanding |   |                                                                                        | 44,847,738 |                                                                                        |   | 42,943,636                                                                                 |   |                                                                                       | 44,847,738 |   |   | 39,403,567 |   |

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

----

**FORSTER      DRILLING CORPORATION **

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ EQUITY **

**November      30, 2006 through August 31, 2007**

**(Unaudited)**

|                                            |   | Preferred                Stock |   | Common                Stock |   | AdditionalPaid-In |   |   |       |    |   |
|-------------------------------------------------|--------|--------------------------------|--------|-----------------------------|--------|-------------------|--------|--------|------------|---------|--------|
|                                            |   | Shares                         |   | Par                         |   | Shares            |   | Par    |       | Capital |   | Accumulated                Deficit |   | Total |   |
| Balance                November 30, 2006        |   |                           | 5,831  |                        | $      | 1,459             |   |   | 44,228,525 |    | $      | 88,458 |   | $ | 10,246,581 |   | $ | (7,008,786 | ) | $ | 3,327,712 |   |
|                                            |   |                           |   |                        |   |              |   |   |       |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued for services       |   |                           | -      |                        |   | -                 |   |   | 92,500     |    |   | 185 |   |   | 165,240 |   |   | - |   |   | 165,425 |   |
| Shares                issued as severance pay   |   |                           |   |                        |   |              |   |   | 100,000    |    |   | 200 |   |   | 98,800 |   |   |   |   |   | 99,000 |   |
| Shares                issued with new loans     |   |                           | -      |                        |   | -                 |   |   | 1,065,900  |    |   | 2,131 |   |   | 1,838,132 |   |   | - |   |   | 1,840,263 |   |
| Shares                issued for converted debt |   |                           | -      |                        |   | -                 |   |   | 168,865    |    |   | 338 |   |   | 165,525 |   |   | - |   |   | 165,863 |   |
| Warrants                                        |   |                           | -      |                        |   | -                 |   |   | -          |    |   | - |   |   | 8,321 |   |   | - |   |   | 8,321 |   |
| Net                loss                         |   |                           | -      |                        |   | -                 |   |   | -          |    |   | - |   |   | - |   |   | (3,514,079 | ) |   | (3,514,079 | ) |
|                                            |   |                           |   |                        |   |              |   |   |       |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                August 31, 2007          |   |                           | 5,831  |                        | $      | 1,459             |   |   | 45,655,790 |    | $      | 91,312 |   | $ | 12,522,599 |   | $ | (10,522,865 | ) | $ | 2,092,505 |   |

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

----

**FORSTER      DRILLING CORPORATION **

**CONSOLIDATED      STATEMENTS OF CASH FLOWS **

**Nine      Months Ended August 31, 2007 and 2006**

**(Unaudited)**

|                                                                                       |   | Nine                Months Ended August 31, 2007 |       | Nine                Months Ended August 31, 2006 |   |
|--------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|--------------------------------------------------|--------|
|                                                                                       |   |                                             |       |                                             |   |
| **Cash                flows from operating activities:**                                   |   |                                             |       |                                             |   |
| Net                loss                                                                    |   | $                                                | (3,514,079 | )                                                | $      | (3,676,549 | ) |
| Adjustments                to reconcile net loss to net cash used in operating activities: |   |                                             | -          |                                             |   | - |   |
| Stock-based                compensation expense                                            |   |                                             | 266,925    |                                             |   | 1,175,203 |   |
| Amortization                of beneficial conversion feature                               |   |                                             | 681,138    |                                             |   | 382,418 |   |
| Amortization                of debt discount                                               |   |                                             | 812,453    |                                             |   | 7,242 |   |
| Depreciation                                                                               |   |                                             | 425,316    |                                             |   | 8,410 |   |
| Loss                on settlement of debt                                                  |   |                                             | 835,000    |                                             |   | 264,233 |   |
| Cost                of merger                                                              |   |                                             | -          |                                             |   | 500,000 |   |
| Interest                paid with common stock                                             |   |                                             | 3,770      |                                             |   | - |   |
| (Increase)                decrease in accounts receivable                                  |   |                                             | (294,900   | )                                                |   | 13,411 |   |
| Decrease                in inventories                                                     |   |                                             | -          |                                             |   | 112,770 |   |
| (Increase)                decrease in prepaids                                             |   |                                             | 303,053    |                                             |   | - |   |
| Increase                in other assets                                                    |   |                                             | (12,535    | )                                                |   | - |   |
| Increase                in accounts payable                                                |   |                                             | 1,516,202  |                                             |   | 280,778 |   |
| Decrease                in deferred revenue                                                |   |                                             | (291,307   | )                                                |   | - |   |
| Increase                in accrued expenses & other liabilities                        |   |                                             | 179,457    |                                             |   | 202,705 |   |
| Settlement                of payable with issuance of stock                                |   |                                             | 7,092      |                                             |   | - |   |
| Non                cash warrants                                                           |   |                                             | 8,321      |                                             |   | - |   |
| Net                cash provided from operating activities                                 |   |                                             | 925,906    |                                             |   | (729,379 | ) |
|                                                                                       |   |                                             |       |                                             |   |   |   |
| **Cash                flows from investing activities:**                                   |   |                                             |       |                                             |   |   |   |
| Purchases                of fixed assets                                                   |   |                                             | (5,523,765 | )                                                |   | (2,579,490 | ) |
| Net                cash used in investing activities                                       |   |                                             | (5,523,765 | )                                                |   | (2,579,490 | ) |
|                                                                                       |   |                                             |       |                                             |   |   |   |
| **Cash                flows from financing activities:**                                   |   |                                             |       |                                             |   |   |   |
| Proceeds                from sale of common stock                                          |   |                                             | -          |                                             |   | 2,921,369 |   |
| Proceeds                from stock payable                                                 |   |                                             | -          |                                             |   | 70,500 |   |
| Proceeds                from related party borrowings                                      |   |                                             | 175,000    |                                             |   | 252,000 |   |
| Proceeds                from third party borrowings                                        |   |                                             | 5,319,250  |                                             |   | 1,183,000 |   |
| Advances                from customers                                                     |   |                                             | 527,491    |                                             |   | - |   |
| Advances                from related parties                                               |   |                                             | 210,550    |                                             |   | 17,940 |   |
| Payments                on related party borrowings                                        |   |                                             | (170,700   | )                                                |   | (168,232 | ) |
| Payments                on third party borrowings                                          |   |                                             | (1,488,011 | )                                                |   | (919,000 | ) |
| Net                cash provided by financing activities                                   |   |                                             | 4,573,580  |                                             |   | 3,357,577 |   |
|                                                                                       |   |                                             |       |                                             |   |   |   |
| Increase                (decrease) in cash and cash equivalents                            |   |                                             | (24,279    | )                                                |   | 48,708 |   |
| Cash                and cash equivalents, beginning of period                              |   |                                             | 24,279     |                                             |   | - |   |
| Cash                and cash equivalents, end of period                                    |   | $                                                | -          |                                             | $      | 48,708 |   |
|                                                                                       |   |                                             |            |                                             |   |   |   |
| **Supplemental                Cash Flow Disclosures:**                                     |   |                                             |            |                                             |   |  |   |
| Cash                paid for income taxes                                                  |   | $                                                | -          |                                             | $      | - |   |
| Cash                paid for interest                                                      |   |                                             | 111,098    |                                             |   | 17,106 |   |
| **Non-cash                investing and financing activities:**                            |   |                                             |       |                                             |   |   |   |
| Paid                debt with common stock                                                 |   |                                             | 805,500    |                                             |   | 627,000 |   |
| Purchased                drilling rig parts with note payable to seller                    |   |                                             | 58,750     |                                             |   | 627,000 |   |
| Discount                on notes payable                                                   |   |                                             | 579,575    |                                             |   | 47,382 |   |
| Discount                of notes for beneficial conversion feature                         |   |                                             | 391,391    |                                             |   | 382,418 |   |

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

----

**FORSTER      DRILLING CORPORATION**

**NOTE      1 - BASIS OF PRESENTATION **

Forster      Drilling Corporation (“Forster”) have been prepared in accordance with      accounting principles generally accepted in the United States of America and      the      rules of the Securities and Exchange Commission, and should be read in      conjunction with the audited consolidated financial statements and notes thereto      contained in the Form 10-KSB      filed on March 15, 2007 and incorporated herein by reference. In the opinion      of      management, all adjustments, consisting of normal recurring adjustments,      necessary for a fair presentation of financial position and the results of      operations for the interim periods presented have been reflected herein. The      results of operations for interim periods are not necessarily indicative of      the      results to be expected for the full year. Notes to the financial statements      which would substantially duplicate the disclosures contained in the audited      financial statements for fiscal 2006 as reported in the Form 10-KSB have been      omitted. 

**NOTE      2 - GOING CONCERN**

**NOTE      3 - NOTES PAYABLE AND NOTES PAYABLE TO RELATED PARTIES **

|                                                                                                                              |   |                    |               |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------------------|
| Proceeds                                                                                                                          |   | $                            | 2,496,000          |   |
|   Less:                discount for common stock                                                                        |   |                         | (1,030,862         | ) |
|             discount                for beneficial conversion feature |   |                         | (736,923           | ) |
|              repayment                of principal               |   |                         | (                - | ) |
|   Add:                amortization of discount                                                                          |   |                         | 940,182            |   |
|   Balance                at August 31, 2007                                                                             |   |                         | 1,668,397          |   |
|   Less:                related party portion                                                                            |   |                         | (-                 | ) |
|   Third                party portion at August 31, 2007                                                                 |   | $                            | 1,668,397          |   |

----

|                                                                                                                              |   |                    |     |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|----------|
| Proceeds                                                                                                                          |   | $                            | 715,000  |   |
|   Less:                discount for common stock                                                                        |   |                         | (327,168 | ) |
|             discount                for beneficial conversion feature |   |                         | (387,832 | ) |
|              repayment                of principal               |   |                         | (15,000  | ) |
|   Add:                amortization of discount                                                                          |   |                         | 577,598  |   |
|     Balance                at August 31, 2007                                                                 |   | $                            | 562,598  |   |
|   Less:                related party portion                                                                            |   |                         | (50,000  | ) |
|   Third                party portion at August 31, 2007                                                                 |   | $                            | 512,598  |   |

----

**NOTE      4 -**
**      LONG TERM DEBT **

| Long                  term debt at August 31, 2007 consists of:                                                                 |   |   |                       |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------|
| Note                  Payable to Independence Bank, collateralized by company                  vehicle,                         |   |   |                       |
| incurs                  interest at an annual rate of 8.5% and will mature on July 28,                  2009,                   |   |   |                       |
| due                  in 36 monthly payments of approximately $935                                                               |   | $      | 20,508                     |   |
|                                                                                                                            |   |   |                       |   |
| Note                  Payable to Daimler Chrysler, collateralized by company                  vehicle,                          |   |   |                       |   |
| incurs                  interest at an annual rate of 8.7% and will mature on June 6,                  2011,                    |   |   |                       |   |
| due                  in 60 monthly payments of approximately $697                                                               |   |   | 27,928                     |   |
|                                                                                                                            |   |   |                       |   |
| Note                  Payable to Sterling Bank, collateralized by drilling rig #41,                                             |   |   |                       |   |
| incurs                  interest at an annual rate of Wall Street Prime plus one                                                |   |   |                       |   |
| percentage                  point (currently 9.25%) and will mature on                                                          |   |   |                       |   |
| February                  16, 2010, due in 36 monthly payments of approximately                                                 |   |   |                       |   |
| $8,316                  including interest                                                                                      |   |   | 221,706                    |   |
|                                                                                                                            |   |   |                       |   |
| Note                  Payable to Sterling Bank, secured by a first lien deed of trust                  on                       |   |   |                       |   |
| Odessa                  real property, incurs interest at an annual rate of prime plus                  1%                      |   |   |                       |   |
| and                  will mature on October 11, 2011, due in 59 monthly payments                  of                            |   |   |                       |   |
| approximately                  $1,333 plus interest and one balloon payment of $161,353                                         |   |   |                       |   |
| plus                  any unpaid accrued interest upon maturity                                                                 |   |   | 226,667                    |   |
|                                                                                                                            |   |   |                       |   |
| Note                  Payable to Sterling Bank, collateralized by two CAT engines on                  Rig                  #12, |   |   |                       |   |
| incurs                  interest at an annual rate of Wall Street Prime plus 3 percentage                                       |   |   |                       |   |
| points                  (currently $11.25%) and will mature on December 9, 2009,                  due                           |   |   |                       |   |
| in                  32 annual installments of approximately $8,373 including                  interest                          |   |   | 211,257                    |   |
|                                                                                                                            |   |   |                       |   |
| Note                  Payable to Independence Bank, collateralized by rigs and rig                  parts                       |   |   |                       |   |
| and                  an assignment of any customer contract on the drilling                  rigs,                              |   |   |                       |   |
| incurs                  interest at a rate of Wall Street prime plus 3 percentage                  points                       |   |   |                       |   |
| (currently                  11.25%) and will mature on December 15, 2009, due in                                                |   |   |                       |   |
| 36                  monthly payments of approximately $10,208 plus interest                  when                               |   |   |                       |   |
| the                  entire remaining unpaid balance is then due                                                                |   |   | 1,414,036                  |   |
|                                                                                                                            |   |   |                       |   |
| Total                  notes payable                                                                                            |   |   | 2,122,102                  |   |
|                                                                                                                            |   |   |                       |   |
| Less                  current installments                                                                                      |   |   | (                  794,426 | ) |
|                                                                                                                            |   |   |                       |   |
| Long-term                  debt                                                                                                 |   | $      | 1,327,676                  |   |

----

| August                  31, 2008     |   | $      | 794,426   |   |
|--------------------------------------|--------|--------|-----------|--------|
| 2009                                 |   |   | 824,221   |   |
| 2010                                 |   |   | 318,067   |   |
| 2011                                 |   |   | 22,705    |   |
| 2012                                 |   |   | 162,683   |   |
| 2013                  and thereafter |   |   | -         |   |
|                                      |   | $      | 2,122,102 |   |

**NOTE      5 - LEASING ARRANGEMENTS**

| August                  31, 2008     |   | $      | 65,307        |   |
|--------------------------------------|--------|--------|---------------|--------|
| 2009                                 |   |   | 67,909        |   |
| 2010                                 |   |   | 54,744        |   |
| 2011                  and thereafter |   |   | -             |   |
|                                      |   | $      |  187,960 |   |

**NOTE      6 - STOCKHOLDERS EQUITY **

| ·  | 192,500                shares resulting in a charge to the income statement of                $264,425. |
|--------------|---------------------------------------------------------------------------------------------------------|

| ·  | Issued                convertible notes requiring 1,065,900 shares and beneficial conversion                features and discounts totaling $1,838,132 resulting in a charge                to                additional paid in capital. |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                      |
| ·  | 168,865                shares in payment of outstanding debt and related                interest.                                                                                                                                         |

**NOTE      7-COMMITMENTS AND CONTINGENCIES**

**.**

----

**NOTE**
**8**
**      - CONCENTRATIONS**

**NOTE      9 - RELATED PATY TRANSACTIONS**

**NOTE      10 - SUBSEQUENT EVENTS **

----

| **ITEM              2.**  | **MANAGEMENT’S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATIONS.** |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------|

**Forward      Looking Statements**

**Overview**

----

**Recent      Transactions**

**Results      of Operations**

**Liquidity**

*Historical      Financial Data*

** **

*Credit      Facilities and Outstanding Debt*

----

*Need      for Additional Capital*

**Contractual      Commitments**

|                             |   |   |  Payments                due by period |   |
|----------------------------------|--------|--------|---------------------------------------------|--------|
|                             |   |   | Less                than 1 year             |   |   | 1                -                3 Years |   |   | 3                -                5 Years |   |   | More                than 5 Years |   |
| Credit                Facilities |   | $      | 5,570,326                                   |   | $ | 1,618,647 |   | $ | 503,455 |   |   | - |   |

| Operating                Leases |   | $ | 65,307 |   | $ | 122,653 |   |   | - |   |   | - |   |
|---------------------------------|--------|---|--------|--------|---|---------|--------|--------|---|--------|--------|---|--------|

| Employment                and consulting contracts |   | $ | 150,000 |   | $ | 150,000 |   |   | - |   |   | - |   |
|----------------------------------------------------|--------|---|---------|--------|---|---------|--------|--------|---|--------|--------|---|--------|

| Total |   | $ | 5,785,633 |   | $ | 1,891,300 |   | $ | 503,455 |   |   | - |   |
|-------|--------|---|-----------|--------|---|-----------|--------|---|---------|--------|--------|---|--------|

**Off-Balance      Sheet Arrangements**

**Critical      Accounting Policies**

*Use      of Estimates in Financial Statement Preparation.*

**       **

*Property      and Equipment.*

*Revenue      Recognition*

----

*Basic      and Diluted Net Loss Per Common Share. *

*Share-Based      Payments.*

**Newly      Issued Accounting Pronouncements. **

** **

**ITEM      3. **
**CONTROLS      AND PROCEDURES.**

**Evaluation      of Disclosure Controls and Procedures**

----

**Changes      in Internal Control Over Financial Reporting**

**PART      II**

**ITEM      1. **
**LEGAL      PROCEEDINGS.**

**ITEM      2. **
**UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**

**ITEM      3.**
**DEFAULTS      UPON SENIOR SECURITIES.**

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

----

**ITEM      5. **
**OTHER      INFORMATION.**

**ITEM      6. **
**EXHIBITS      AND REPORTS ON FORM 8-K.**

| **Exhibit                  No.** |   | **Identification                of                Exhibit**                                                                                                                                                                                                         |
|----------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |   |                                                                                                                                                                                                                                                                |
| 31.1                             |   | Certification                  Pursuant to Section 302 of the Sarbanes-Oxley Act provided by F.                  E.                  Forster, III, Chief Executive Officer                                                                                          |
|                             |   |                                                                                                                                                                                                                                                                |
| 31.2                             |   | Certification                  Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Bud                  Najvar,                  Chief Financial Officer                                                                                                  |
|                             |   |                                                                                                                                                                                                                                                                |
| 32.1                             |   | Certification                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                  906 of                  the Sarbanes-Oxley Act of 2002 provided by F. E. Forster, III,                  Chief                  Executive Officer |
|                             |   |                                                                                                                                                                                                                                                                |
| 32.2                             |   | Certification                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                  906 of                  the Sarbanes-Oxley Act of 2002 provided by Bud Najvar, Chief Financial                  Officer                          |

----

**SIGNATURES**

|         |                                                     |                                     |
|--------------|----------------------------------------------------------|------------------------------------------|
|         | **FORSTER DRILLING              CORPORATION**            |
|    |                                                |                                |
|              | By:                                            | /s/ F.              E. FORSTER, III |
|         | F.              E. Forster, III, Chief Executive Officer |
|         |                                                          |
|         | Date: October 22, 2007                                   |

| Signature                                                          |   |  Title                                                                 |   |   Date              |
|--------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|-------------------------------|
|                                                               |   |                                                                        |   |                          |
| /s/ F.              E. FORSTER, IIIF.              E. Forster, III |   | Chairman of the Board and              Chief              Executive Officer |   | October 22, 2007              |
|                                                               |   |                                                                        |   |                          |
|                                                               |   |                                                                        |   |                          |
| /s/ BUD                NAJVAR                            |   | Chief              Financial Officer                                        |   | October 22,              2007 |

----

**EXHIBIT      INDEX**

|                             |   |                                                                                                                                                                                                                                                                          |
|----------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit                  No.** |   |  **Identification                  of Exhibit**                                                                                                                                                                                                                          |
|                             |   |                                                                                                                                                                                                                                                                          |
| 31.1                             |   | Certification                    Pursuant to Section 302 of the Sarbanes-Oxley Act provided by                    F. E.                    Forster, III, Chief Executive Officer                                                                                              |
|                             |   |                                                                                                                                                                                                                                                                          |
| 31.2                             |   | Certification                    Pursuant to Section 302 of the Sarbanes-Oxley Act provided by                    Bud Najvar,                    Chief Financial Officer                                                                                                      |
|                             |   |                                                                                                                                                                                                                                                                          |
| 32.1                             |   | Certification                    Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                    906 of                    the Sarbanes-Oxley Act of 2002 provided by F. E. Forster, III,                    Chief                    Executive Officer |
|                             |   |                                                                                                                                                                                                                                                                          |
| 32.2                             |   | Certification                    Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                    906 of                    the Sarbanes-Oxley Act of 2002 provided by Bud Najvar, Chief                    Financial                    Officer         |

----