**U.S. SECURITIES AND EXCHANGE        COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

(Mark One)

 

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

 

For the Quarterly Period endedApril 30, 2008

 

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

 

For the transition period from ___________ to        ________

 

Commission File Number000-51427

 

**BLACKSANDS PETROLEUM, INC.**

(Exact name of registrant as specified in its        charter)

 

| **Nevada**                (State of incorporation) | **20-1740044**                (IRS Employer identification No.) |
|----------------------------------------------------|-----------------------------------------------------------------|

 

**Suite 2700, 401 Bay Street**

                             **Toronto, Ontario Canada M5H        2Y4**                   

(Address of principal executive offices)

 

                                                    **(416)        359-7805**                                      

(Registrant’s telephone number including area        code)

 

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

 

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

 

|  | Large                Accelerated Filer o | Accelerated                Filer o |  |
|--|------------------------------------------|------------------------------------|--|

|  | Non-Accelerated                Filerx                (do not check if a smaller reporting company) | Smaller                reporting company o |  |
|--|----------------------------------------------------------------------------------------------------|--------------------------------------------|--|

 

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

 

There were 44,854,700 shares of Common Stock        outstanding as of June 16, 2008.

 

 

 

----

 

 

**INDEX**

|    | Page    |
|---------|------------------------|
| PART I. | FINANCIAL INFORMATION  |

 

|   | Item 1. | Financial Statements | 1 |
|--------|---------|----------------------|---|

         

|   | Consolidated Balance Sheets

as of April 30, 2008 (unaudited)

and October 31, 2007 | 1 |
|--------|-------------------------------------------------------------------------------------|---|

         

|   | Consolidated Statements of Operations

(unaudited) for the six months ended April 30, 2008 | 2 |
|--------|--------------------------------------------------------------------------------------------|---|

         

|   | Consolidated Statements of Changes in Stockholders’                    Equity

(unaudited) for the six months ended April 30, 2008 | 3 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------|---|

         

|   | Consolidated Statements of Cash Flows

(unaudited) for the six months ended April 30, 2008 | 4 |
|--------|--------------------------------------------------------------------------------------------|---|

         

|   | Notes to Consolidated Financial Statements                    (unaudited) | 5 |
|--------|---------------------------------------------------------------------------|---|

         

|   | Item 2.               | Management’s                Discussion and Analysis of Financial Condition and |   |
|--------|-----------------------|--------------------------------------------------------------------------------------|--------|
|   | Results of Operations | 16                                                                                   |

         

|   | Item 3. | Quantitative and Qualitative Disclosures About Market                    Risk | 21 |
|--------|---------|-------------------------------------------------------------------------------|----|

         

|   | Item 4. | Controls and Procedures | 21 |
|--------|---------|-------------------------|----|

         

| PART II | OTHER INFORMATION |
|---------|-------------------|

 

|   | Item 1. | Legal Proceedings. | 22 |
|--------|---------|--------------------|----|

         

|   | Item 1A. | Risk Factors. | 22 |
|--------|----------|---------------|----|

         

|   | Item 2. | Unregistered Sales of Equity Securities and Use of                    Proceeds | 22 |
|--------|---------|--------------------------------------------------------------------------------|----|

         

|   | Item 3. | Defaults Upon Senior Securities | 22 |
|--------|---------|---------------------------------|----|

         

|   | Item 4. | Submission of Matters to a Vote of Security Holders | 22 |
|--------|---------|-----------------------------------------------------|----|

         

|   | Item 5. | Other Information | 23 |
|--------|---------|-------------------|----|

         

|   | Item 6. | Exhibits | 23 |
|--------|---------|----------|----|

 

| SIGNATURES | 23 |
|------------|----|

 

i

----

**PART I: FINANCIAL INFORMATION**

 

**Item 1. Financial Statements.**

 

The interim financial statements included herein are        unaudited but reflect, in management’s opinion, all adjustments, consisting only of        normal recurring adjustments, that are necessary for a fair presentation of our financial        position and the results of our operations for the interim periods presented. Because of        the nature of our business, the results of operations for the quarterly period ended April        30, 2008 are not necessarily indicative of the results that may be expected for the full        fiscal year.

 

 

**Blacksands Petroleum, Inc.**

**(An Exploration Stage Enterprise)**

**Consolidated Balance Sheets**

 

|                                                                                                                              |   | (Unaudited)        |           | (Audited)            |    |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|----------------|----------------------|--------------|
|                                                                                                                              |   | **As of**          |           | **As of**            |         |
|                                                                                                                              |   | **April 30, 2008** |           | **October 31, 2007** |         |
|                                                                                                                              |   |               |           |                 |         |
| **A S S E T S**                                                                                                                   |   |               |           |                 |         |
|                                                                                                                              |   |               |           |                 |         |
| Current Assets                                                                                                                    |   |               |           |                 |         |
| Cash held at bank                                                                                                                 |   | **$**              | **4,698,546**  |                 | $            | 6,548,707 |   |
| Cash held in attorney’s trust account                                                                                  |   |               | **-**          |                 |         | 44,396 |   |
| Prepaid expenses and deposits                                                                                                     |   |               | **34,806**     |                 |         | 20,634 |   |
| Total Current Assets                                                                                                              |   |               | **4,733,352**  |                 |         | 6,613,737 |   |
|                                                                                                                              |   |               |           |                 |         |   |   |
| Property and Equipment – net (note 2)                                                                                       |   |               | **-**          |                 |         | 25,306 |   |
| Oil and Gas property costs (note 3)                                                                                               |   |               | **6,398,253**  |                 |         | 5,022,859 |   |
| Total Capital Assets                                                                                                              |   |               | **6,398,253**  |                 |         | 5,048,165 |   |
|                                                                                                                              |   |               |           |                 |         |   |   |
| Total Assets                                                                                                                      |   | **$**              | **11,131,605** |                 | $            | 11,661,902 |   |
|                                                                                                                              |   |               |           |                 |         |   |   |
| **L I A B I L I T I E S   A N D   S T O                    C K H O L D E R S’   E Q U I T Y** |   |
|                                                                                                                              |   |               |           |                 |         |   |   |
| Current Liabilities                                                                                                               |   |               |           |                 |         |   |   |
| Accounts payable and accrued liabilities                                                                                          |   | **$**              | **212,594**    |                 | $            | 589,855 |   |
| Accounts payable to related parties (note 6)                                                                                      |   |               | **164,495**    |                 |         | 275,022 |   |
| Total Current Liabilities                                                                                                         |   |               | **377,089**    |                 |         | 864,877 |   |
|                                                                                                                              |   |               |           |                 |         |   |   |
| Minority Interest                                                                                                                 |   |               | **1,266,056**  |                 |         | 639,596 |   |
| Total Liabilities                                                                                                                 |   |               | **1,643,145**  |                 |         | 1,504,473 |   |
|                                                                                                                              |   |               |           |                 |         |   |   |
| Stockholders’ Equity                                                                                                        |   |               |           |                 |         |   |   |
| Preferred Stock (note 4)                                                                                                          |   |               | **-**          |                 |         | - |   |
| Common Stock (note 4)                                                                                                             |   |               | **74,855**     |                 |         | 74,855 |   |
| Additional Paid-in-Capital                                                                                                        |   |               | **11,886,465** |                 |         | 11,878,355 |   |
| Treasury stock, at cost                                                                                                           |   |               | **(50,000**    | **)**                |         | (50,000 | ) |
| Accumulated Comprehensive Loss                                                                                                    |   |               | **114,248**    |                 |         | 319,962 |   |
| Deficit accumulated during the exploration stage                                                                                  |   |               | **(2,537,108** | **)**                |         | (2,065,743 | ) |
| Total Stockholders’ Equity                                                                                                  |   |               | **9,488,460**  |                 |         | 10,157,429 |   |
|                                                                                                                              |   |               |           |                 |         |   |   |
| Total Liabilities and Stockholders’ Equity                                                                                  |   | **$**              | **11,131,605** |                 | $            | 11,661,902 |   |

 

 

See accompanying notes to Consolidated Financial        Statements.

 

1

 

----

 

 

**Blacksands Petroleum, Inc.**

**(An Exploration Stage Enterprise)**

**Consolidated Statements of        Operations**

 

 

|  

                     

                     

                     

                      |   |  

**Unaudited**

**For the Six Months**

**Ended**

**April 30, 2008** |  

                     

                     

                     

                      |  

**Unaudited**

**For the Six Months**

**Ended**

**April 30, 2007** |  

                     

                     

                     

                      | **Unaudited**

**For the Three**

**Months Ended**

**April 30, 2008** |  

                     

                     

                     

                      | **Unaudited**

**For the Three**

**Months Ended**

**April 30, 2007** |  

                     

                     

                     

                      | **Unaudited**

**From Inception**

**(October 12, 2004)**

**through**

**April 30, 2008** |  

                     

                     

                     

                      |
|------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                   |
|                                                                                                                   |
|                                                                                                                   |
|                                                                                                                   |
| **Revenues:**                                                                                                          |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |
| Revenue                                                                                                           |   | $                                                                            | -                                                                                                                      |                                                                         | $                                                                                                                      | -                                                                      |                                                                                                                   | $                                                                      | -                                                                                                                      |                                                                                       | $                                                                                                                      | - |   | $ | - |   |   |
| Total Revenues                                                                                                         |   |                                                                         | -                                                                                                                      |                                                                         |                                                                                                                   | -                                                                      |                                                                                                                   |                                                                   | -                                                                                                                      |                                                                                       |                                                                                                                   | - |   |   | - |   |   |
|                                                                                                                   |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| **Expenses:**                                                                                                          |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| Professional Fees                                                                                                 |   |                                                                         | 261,551                                                                                                                |                                                                         |                                                                                                                   | 209,792                                                                |                                                                                                                   |                                                                   | 119,666                                                                                                                |                                                                                       |                                                                                                                   | 65,263 |   |   | 1,193,621 |   |   |
| Loss on sale of fixed assets                                                                                           |   |                                                                         | 12,588                                                                                                                 |                                                                         |                                                                                                                   | -                                                                      |                                                                                                                   |                                                                   | 12,588                                                                                                                 |                                                                                       |                                                                                                                   | - |   |   | 14,084 |   |   |
| Management fees                                                                                                        |   |                                                                         | 172,897                                                                                                                |                                                                         |                                                                                                                   | 25,993                                                                 |                                                                                                                   |                                                                   | 83,136                                                                                                                 |                                                                                       |                                                                                                                   | 13,098 |   |   | 356,654 |   |   |
| Depreciation                                                                                                      |   |                                                                         | 3,076                                                                                                                  |                                                                         |                                                                                                                   | 4,006                                                                  |                                                                                                                   |                                                                   | 1,538                                                                                                                  |                                                                                       |                                                                                                                   | 2,059 |   |   | 13,643 |   |   |
| Office and Administration                                                                                         |   |                                                                         | 100,654                                                                                                                |                                                                         |                                                                                                                   | 56,906                                                                 |                                                                                                                   |                                                                   | 44,271                                                                                                                 |                                                                                       |                                                                                                                   | 26,982 |   |   | 382,115 |   |   |
| Exploration expenses (note 12)                                                                                         |   |                                                                         | 67,454                                                                                                                 |                                                                         |                                                                                                                   | 1,124,029                                                              |                                                                                                                   |                                                                   | -                                                                                                                      |                                                                                       |                                                                                                                   | 1,124,029 |   |   | 1,295,007 |   |   |
| Total Expenses                                                                                                         |   |                                                                         | 618,220                                                                                                                |                                                                         |                                                                                                                   | 1,420,726                                                              |                                                                                                                   |                                                                   | 261,199                                                                                                                |                                                                                       |                                                                                                                   | 1,231,431 |   |   | 3,255,124 |   |   |
| Net loss from Operations                                                                                               |   |                                                                         | (618,220                                                                                                               | )                                                                            |                                                                                                                   | (1,420,726                                                             | )                                                                                                                      |                                                                   | (261,199                                                                                                               | )                                                                                          |                                                                                                                   | (1,231,431 | ) |   | (3,255,124 | ) |   |
|                                                                                                                   |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| **Other Income and Expenses:**                                                                                         |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| Interest Income                                                                                                   |   |                                                                         | 85,018                                                                                                                 |                                                                         |                                                                                                                   | 238,260                                                                |                                                                                                                   |                                                                   | 32,434                                                                                                                 |                                                                                       |                                                                                                                   | 117,440 |   |   | 626,530 |   |   |
| Gain (loss) from Currency Transaction                                                                             |   |                                                                         | 2,251                                                                                                                  |                                                                         |                                                                                                                   | 1,238                                                                  |                                                                                                                   |                                                                   | (239                                                                                                                   | )                                                                                     |                                                                                                                   | (171 | )  |   | (1,553 | )  |   |
| Net Loss before Taxes                                                                                                  |   |                                                                         | (530,951                                                                                                               | )                                                                            |                                                                                                                   | (1,181,228                                                             | )                                                                                                                      |                                                                   | (229,004                                                                                                               | )                                                                                          |                                                                                                                   | (1,114,162 | ) |   | (2,630,147 | ) |   |
|                                                                                                                   |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| **Provision for Income Taxes:**                                                                                        |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| Income Tax Benefit                                                                                                |   |                                                                         | -                                                                                                                 |                                                                         |                                                                                                                   | -                                                                 |                                                                                                                   |                                                                   | -                                                                                                                 |                                                                                       |                                                                                                                   | -  |   |   | -  |   |   |
| Net Loss before minority interest                                                                                      |   |                                                                         | (530,951                                                                                                               | )                                                                            |                                                                                                                   | (1,181,228                                                             | )                                                                                                                      |                                                                   | (229,004                                                                                                               | )                                                                                          |                                                                                                                   | (1,114,162 | ) |   | (2,630,147 | ) |   |
| Minority Interest                                                                                                      |   |                                                                         | 59,521                                                                                                                 |                                                                         |                                                                                                                   | -                                                                 |                                                                                                                   |                                                                   | 16,820                                                                                                                 |                                                                                       |                                                                                                                   | -  |   |   | 118,039 |   |   |
|                                                                                                                   |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| Net Loss for the period                                                                                                |   | $                                                                            | (471,430                                                                                                               | )                                                                            | $                                                                                                                      | (1,181,228                                                             | )                                                                                                                      | $                                                                      | (212,184                                                                                                               | )                                                                                          | $                                                                                                                      | (1,114,162 | ) | $ | (2,512,108 | ) |   |
|                                                                                                                   |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss)                                                                                      |   | $                                                                            | (205,714                                                                                                               | )                                                                            | $                                                                                                                      | (2,520                                                                 | )                                                                                                                      | $                                                                      | (11,652                                                                                                                | )                                                                                     | $                                                                                                                      | 8,796 |   | $ | 114,248 |   |   |
|                                                                                                                   |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| Total Comprehensive Loss                                                                                               |   | $                                                                            | (677,144                                                                                                               | )                                                                            | $                                                                                                                      | (1,183,748                                                             | )                                                                                                                      | $                                                                      | (223,836                                                                                                               | )                                                                                          | $                                                                                                                      | (1,105,366 | ) | $ | (2,397,860 | ) |   |
|                                                                                                                   |   |                                                                         |                                                                                                                   |                                                                         |                                                                                                                   |                                                                   |                                                                                                                   |                                                                   |                                                                                                                   |                                                                                       |                                                                                                                   |   |   |   |   |   |   |
| Basic and Diluted Loss Per Common Share                                                                                |   | $                                                                            | (0.02                                                                                                                  | )                                                                            | $                                                                                                                      | (0.03                                                                  | )                                                                                                                      | $                                                                      | (0.00                                                                                                                  | )                                                                                          | $                                                                                                                      | (0.02 | ) | $ | (0.05 | ) |   |
| Weighted Average number of Common Shares used in per share                    calculations                             |   |                                                                         | 44,854,700                                                                                                             |                                                                         |                                                                                                                   | 45,849,175                                                             |                                                                                                                   |                                                                   | 44,854,700                                                                                                             |                                                                                       |                                                                                                                   | 44,854,700 |   |   | 51,936,652 |   |   |
|                                                                                                                        |        |                                                                              |                                                                                                                        |                                                                              |                                                                                                                        |                                                                        |                                                                                                                        |                                                                        |                                                                                                                        |                                                                                            |                                                                                                                        |  |  |  |  |  |  |  |

 

 

See accompanying notes to Consolidated Financial        Statements

 

 

2

----

**Blacksands Petroleum, Inc.**

**(An Exploration Stage Enterprise)**

**Consolidated Statement of Changes in        Stockholders’ Equity**

**(Unaudited)**

 

|                                                                                                                                     | Shares | Par Value                $0.001 | Additional                Paid-In                Capital | Treasury                Stock | Other                Comprehensive                Income | Deficit                Accumulated                During                Exploration Stage | Stockholders'                Equity |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|----------------------------------------------------------|-------------------------------|----------------------------------------------------------|-------------------------------------------------------------------------------------------|-------------------------------------|
|                                                                                                                                     |
| Balance –                October 12, 2004 - (inception)                                                                       |   |                            |                                                     | —                       |                                                     | $                                                                                         | —                             |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   |
| Stock issued for cash                -                                                                                              |   |                            |                                                     |                               |                                                     |                                                                                      |                                     |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|               October                12, 2004(1)              |   |                            |                                                     | 30,000,000                    |                                                     |                                                                                      | 30,000                              |   |   | — |   |   | — |   |   | — |   |   | (25,000 | ) |   | 5,000 |   |
| Foreign Currency Translation                Adjustment                                                                              |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | (5 | ) |   | — |   |   | (5 | ) |
| Net Loss                                                                                                                            |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
|                                                                                                                                     |
|               Balance                – October 31, 2004 |   |                            |                                                     | 30,000,000                    |                                                     |                                                                                      | 30,000                              |   |   | — |   |   | — |   |   | (5 | ) |   | (25,000 | ) |   | 4,995 |   |
|                                                                                                                                     |
| Stock issued for cash                -                                                                                              |   |                            |                                                     |                               |                                                     |                                                                                      |                                     |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|               March                4, 2005(1)                 |   |                            |                                                     | 33,000,000                    |                                                     |                                                                                      | 33,000                              |   |   | 22,000 |   |   | — |   |   | — |   |   | — |   |   | 55,000 |   |
| Foreign Currency Translation                Adjustment                                                                              |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | (2,787 | ) |   | — |   |   | (2,787 | ) |
| Net Loss                                                                                                                            |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | — |   |   | (13,780 | ) |   | (13,780 | ) |
|                                                                                                                                     |
|               Balance                – October 31, 2005 |   |                            |                                                     | 63,000,000                    |                                                     |                                                                                      | 63,000                              |   |   | 22,000 |   |   | — |   |   | (2,792 | ) |   | (38,780 | ) |   | 43,428 |   |
|                                                                                                                                     |
| Equity Compensation                -                                                                                                |   |                            |                                                     |                               |                                                     |                                                                                      |                                     |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Granted August 1,                2006                                                                                               |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | 21,620 |   |   | — |   |   | — |   |   | — |   |   | 21,620 |   |
| Deferred equity                compensation                                                                                         |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | (18,918 | ) |   | — |   |   | — |   |   | — |   |   | (18,918 | ) |
| Stock issued for cash                -                                                                                              |   |                            |                                                     |                               |                                                     |                                                                                      |                                     |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|               August                10, 2006                  |   |                            |                                                     | 10,854,700                    |                                                     |                                                                                      | 10,855                              |   |   | 10,843,845 |   |   | — |   |   | — |   |   | — |   |   | 10,854,700 |   |
| Stock issued on conversion                of Debentures                                                                             |   |                            |                                                     |                               |                                                     |                                                                                      |                                     |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|               August                10, 2006                  |   |                            |                                                     | 1,000,000                     |                                                     |                                                                                      | 1,000                               |   |   | 999,000 |   |   | — |   |   | — |   |   | — |   |   | 1,000,000 |   |
| Foreign Currency Translation                Adjustment                                                                              |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | 496 |   |   | — |   |   | 496 |   |
| Net Loss                                                                                                                            |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | — |   |   | (308,798 | ) |   | (308,798 | ) |
|                                                                                                                                     |
|               Balance                – October 31, 2006 |   |                            |                                                     | 74,854,700                    |                                                     |                                                                                      | 74,855                              |   |   | 11,867,547 |   |   | — |   |   | (2,296 | ) |   | (347,578 | ) |   | 11,592,528 |   |
|                                                                                                                                     |
| Stock repurchased for                cash-                                                                                          |   |                            |
| November 6, 2006                                                                                                                    |   |                            |                                                     | (30,000,000                   | )                                                        |                                                                                      | —                             |   |   | — |   |   | (50,000 | ) |   | — |   |   | — |   |   | (50,000 | ) |
| Equity compensation                expensed                                                                                         |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | 10,808 |   |   | — |   |   | — |   |   | — |   |   | 10,808 |   |
| Foreign Currency Translation                Adjustment                                                                              |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | 322,258 |   |   | — |   |   | 322,258 |   |
| Net Loss                                                                                                                            |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | — |   |   | (1,718,165 | ) |   | (1,718,165 | ) |
|                                                                                                                                     |
| Balance – October 31,                2007                                                                                     |   |                            |                                                     | 44,854,700                    |                                                     | $                                                                                         | 74,855                              |   | $ | 11,878,355 |   | $ | (50,000 | ) | $ | 319,962 |   | $ | (2,065,743 | ) | $ | 10,157,429 |   |
|                                                                                                                                     |
| Equity compensation                expensed                                                                                         |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | 8,110 |   |   | — |   |   | — |   |   | — |   |   | 8,110 |   |
| Foreign Currency Translation                Adjustment                                                                              |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | (205,714 | ) |   | — |   |   | (205,714 | ) |
| Net Loss                                                                                                                            |   |                            |                                                     | —                       |                                                     |                                                                                      | —                             |   |   | — |   |   | — |   |   | — |   |   | (471,365 | ) |   | (471,365 | ) |
|                                                                                                                                     |
| Balance – April 30,                2008                                                                                       |   |                            |                                                     | 44,854,700                    |                                                     | $                                                                                         | 74,855                              |   | $ | 11,886,465 |   | $ | (50,000 | ) | $ | 114,248 |   | $ | (2,537,108 | ) | $ | 9,488,460 |   |
|                                                                                                                                     |

 

| (1) | On May 6, 2006, the Company declared a 30 for 1 forward stock                    split (the “Stock Split”) in the form of a dividend. The record                    date for the stock split was June 21, 2006. The stock split has been recorded                    retroactively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

See accompanying notes to Consolidated Financial        Statements

 

 

3

----

 

 

**Blacksands Petroleum, Inc.**

**(An Exploration Stage Enterprise)**

**Consolidated Statements of Cash        Flows**

 

|                                                |   | **Unaudited)****November 1, 2007****Through****April 30, 2008** |           | **(Unaudited)****November 1, 2006****Through****April 30, 2007** |   | **(Unaudited)****From Inception****(October 12, 2004)****Through****April 30, 2008** |    |
|-----------------------------------------------------|--------|-----------------------------------------------------------------|----------------|------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|---------|
| Cash Flows from Operating Activities:               |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Net Loss                                            |   | **$**                                                           | **(471,365**   | **)**                                                            | $      | (1,181,228                                                                           | )       | **$** | **(2,512,108** | **)** |
| Adjustments to reconcile net loss to                |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| net cash used in operating activities:              |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Minority interest                                   |   |                                                            | **(59,522**    | **)**                                                            |   | **-**                                                                                |    |   | **(118,039** | **)** |
| Foreign Currency Income (loss)                      |   |                                                            | **(205,714**   | **)**                                                            |   | (2,520                                                                               | )       |   | **114,248** |   |
| Equity compensation expense                         |   |                                                            | **8,110**      |                                                             |   | 5,404                                                                                |    |   | **21,620** |   |
| Loss on sale of fixed assets                        |   |                                                            | **12,588**     |                                                             |   | -                                                                                    |    |   | **14,084** |   |
| Office Equipment and Furniture: Depreciation        |   |                                                            | **3,076**      |                                                             |   | 4,006                                                                                |    |   | **13,643** |   |
| Changes in Operating assets and liabilities:        |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Prepaid expenses and deposits                       |   |                                                            | **(14,172**    | **)**                                                            |   | (24,525                                                                              | )       |   | **(34,806** | **)** |
| Exclusivity agreement deposit                       |   |                                                            | **-**          |                                                             |   | (90,080                                                                              | )       |   | **-** |   |
| Rent Deposit                                        |   |                                                            | **-**          |                                                             |   | (116                                                                                 | )       |   | **-** |   |
| Accounts payable and accrued liabilities            |   |                                                            | **(377,261**   | **)**                                                            |   | 1,068,581                                                                            |    |   | **212,594** |   |
| Accounts payable to related party                   |   |                                                            | **(110,527**   | **)**                                                            |   | 26                                                                                   |    |   | **164,495** |   |
| Net Cash Used in Operating Activities     |   |                                                            | **(1,214,787** | **)**                                                            |   | (220,452                                                                             | )       |   | **(2,124,269** | **)** |
|                                                |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Cash Flows from Investing Activities:               |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Oil and gas property costs                          |   |                                                            | **(1,375,394** | **)**                                                            |   | -                                                                                    |    |   | **(6,398,253** | **)** |
| Minority interest in subsidiary                     |   |                                                            | **685,982**    |                                                             |   | -                                                                                    |    |   | **1,384,095** |   |
| Proceeds of sale of fixed assets                    |   |                                                            | **9,642**      |                                                             |   | -                                                                                    |    |   | **9,642** |   |
| Purchase of property and equipment                  |   |                                                            | **-**          |                                                             |   | (2,104                                                                               | )  |   | **(37,369** | **)** |
| Net Cash Used in Investing Activities               |   |                                                            | **(679,770**   | **)**                                                            |   | (2,104                                                                               | )       |   | **(5,041,885** | **)** |
|                                                |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Cash Flows from Financing Activities:               |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Repurchase of stock                                 |   |                                                            | **-**          |                                                             |   | (50,000                                                                              | )       |   | **(50,000** | **)** |
| Issue of convertible debentures                     |   |                                                            | **-**          |                                                             |   | -                                                                                    |    |   | **1,000,000** |   |
| Sales of Common Stock                          |   |                                                            | **-**          |                                                             |   | -                                                                                    |    |   | **10,914,700** |   |
| Net Cash (Used in) Provided by Financing Activities |   |                                                            | **-**          |                                                             |   | (50,000                                                                              | )       |   | **11,864,700** |   |
|                                                |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Net Increase (Decrease) in Cash                     |   |                                                            | **(1,894,557** | **)**                                                       |   | (272,556                                                                             | )       |   | **4,698,546** |   |
| Cash Balance, Beginning of Period                   |   |                                                            | **6,593,103**  |                                                             |   | 11,647,845                                                                           |    |   | **-** |   |
| Cash Balance, End of Period                         |   | **$**                                                           | **4,698,546**  |                                                             | $      | 11,375,289                                                                           |    | **$** | **4,698,546** |   |
|                                                |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Supplemental Disclosures:                           |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Cash Paid for interest                              |   | **$**                                                           | **-**          |                                                             | $      | -                                                                                    |    | $ | - |   |
| Cash Paid for income taxes                          |   | **$**                                                           | **-**          |                                                             | $      | -                                                                                    |    | $ | - |   |
| Non-cash financing activities:                      |   |                                                            |           |                                                             |   |                                                                                 |    |   |   |   |
| Conversion of debentures into stock and warrants    |   | $                                                               | -              |                                                             | $      | -                                                                                    |    | $ | 1,000,000 |   |

 

See accompanying notes to Consolidated Financial        Statements

 

4

 

----

 

 

**Blacksands Petroleum, Inc.**

**(An Exploration Stage Enterprise)**

**Notes to Consolidated Financial        Statements**

 

 

| 1. | DESCRIPTION OF BUSINESS, HISTORY AND                    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----|----------------------------------------------------------------------------------------------------|

 

Description of business and history- Blacksands Petroleum, Inc. (hereinafter referred to        as the “Company”) was incorporated in the State of Nevada on October 12, 2004        as Lam Liang Corp. The Company was formed to design, produce and sell fashionable computer        laptop cases for women through a subsidiary, which was subsequently dissolved on June 5,        2006. The Company’s operations were limited to general administrative operations and        development of its first product line and the Company was considered a development stage        company in accordance with Statement of Financial Accounting Standards No. 7. The Company        exited its plan of operation on May 6, 2006. To indicate its new direction into the        unconventional oil industry, the Company filed a Certificate of Amendment to its Articles        of Incorporation on June 9, 2006 to change its name from “Lam Liang Corp.” to        “Blacksands Petroleum, Inc.” On August 3, 2007, the Company completed its        purchase of 75% of the capital of Access Energy Inc. (“Access”). Prior to the        purchase, the Company was a “shell company” as that term is defined in Rule        12b-2 of the Exchange Act. By consummating the purchase, the Company succeeded at its        business plan, which was to enter the unconventional petroleum industry by acquiring a        suitable target company.

         

Going Concern- The ability of the Company to continue as a going        concern is dependent on additional sources of capital and the success of the        Company’s business plan. As reflected in the accompanying financial statements, the        Company has incurred net losses and negative cash flows from operations, which raises        substantial doubt about the Company’s ability to continue as a going concern. The        financial statements do not include any adjustments that might be necessary if the Company        is unable to continue as a going concern.

 

Year end- The Company’s fiscal year end is October        31.

 

Principles of consolidation- The consolidated financial statements include the        accounts of the Company and its subsidiary Access Energy Inc. from the date of acquisition        of August 3, 2007. All significant inter-company transactions and balances have been        eliminated. The acquisition of 75% of the issued common stock of Access Energy Inc. is        accounted for using the purchase method of accounting. Under the purchase method of        accounting, the assets and liabilities of Access are recorded as of the acquisition date,        at their fair market values, and added to those of Blacksands. The 25% share of the        minority stockholders’ interest in the net assets of Access is recorded as a        liability. Pre-acquisition losses of Access are eliminated on consolidation. The 25% share        of the minority stockholders’ net post acquisition losses of Access are shown as a        separate item on the consolidated statement of operations and are deducted from the        minority stockholders’ interest in net assets.

         

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

         

Cash and cash equivalents- The Company considers all highly liquid investments        with original maturities of three months or less to be cash equivalents.

         

 

5

 

----

 

 

| 1. | DESCRIPTION OF BUSINESS AND SUMMARY OF                    SIGNIFICANT ACCOUNTING POLICIES(continued) |
|----|------------------------------------------------------------------------------------------------------|

         

Concentration of credit risks- The Company’s cash and cash equivalents        accounts are held at financial institutions and are insured by the Federal Deposit        Insurance Corporation (“FDIC”) up to $100,000 and by Canada Deposit Insurance        Corporation (“CDIC”) up to Cdn$100,000. During the quarter ended April 30,        2008, the Company has maintained bank balances exceeding the FDIC and CDIC insurance        limits. To reduce its risk associated with the failure of such financial institutions, the        Company periodically evaluates the credit quality of the financial institutions in which it        holds deposits.

Oil and Gas Properties- The Company follows the successful efforts method        of accounting for its oil and natural gas properties. Unproved oil and gas properties are        periodically assessed and any impairment in value is charged to exploration expense. The        costs of unproved properties, which are determined to be productive, are transferred to        proved oil and gas properties and amortized on an equivalent unit-of-production basis.        Exploratory expenses, including geological and geophysical expenses and delay rentals for        unevaluated oil and gas properties, are charged to expense as incurred. Exploratory        drilling costs are initially capitalized as unproved property but charged to expense if and        when the well is determined not to have found proved oil and gas reserves. In accordance        with Statement of Financial Accounting Standards No. 19, exploratory drilling costs        are evaluated within a one-year period after the completion of drilling.

         

Property and equipment- Property and equipment are stated at cost less        accumulated depreciation. Depreciation is provided principally on the straight-line method        over the estimated useful lives of the assets, which are generally 3 to 27 years. The        amounts of depreciation provided are sufficient to charge the cost of the related assets to        operations over their estimated useful lives. Upon sale or other disposition of a        depreciable property, cost and accumulated depreciation are removed from the accounts and        any gain or loss is reflected in the statement of operations.

 

The Company periodically evaluates whether events and        circumstances have occurred that may warrant revision of the estimated useful life of fixed        assets or whether the remaining balance of fixed assets should be evaluated for possible        impairment. The Company uses an estimate of the related undiscounted cash flows over the        remaining life of the fixed assets in measuring their recoverability.

         

Income taxes- The Company accounts for its income taxes in        accordance with Statement of Financial Accounting Standards No. 109, which requires        recognition of deferred tax assets and liabilities for future tax consequences attributable        to differences between the financial statement carrying amounts of existing assets and        liabilities and their respective tax bases and tax credit carry forwards. Deferred tax        assets and liabilities are measured using enacted tax rates expected to apply to taxable        income in the years in which those temporary differences are expected to be recovered or        settled. The effect on deferred tax assets and liabilities of a change in tax rates is        recognized in operations in the period that includes the enactment date.

 

Management feels the Company will have a net        operating loss carryover to be used for future years. Such losses may not be fully        deductible due to the significant amounts of non-cash service costs. The Company has        established a valuation allowance for the full tax benefit of the operating loss carryovers        due to the uncertainty regarding realization.

 

Net loss per common share- The Company computes net loss per share in        accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff Accounting        Bulletin No. 98 (SAB 98). Under the provisions of SFAS 128 and SAB 98, basic net loss per        share is computed by dividing the net loss available to common stockholders for the period        by the weighted average number of shares of common stock outstanding during the period. The        calculation of diluted net loss per share gives effect to common stock equivalents;        however, potential common shares are excluded if their effect is anti-dilutive. For the        quarter ended April 30, 2008, 14,054,700 options and warrants were excluded from the        computation of diluted earnings per share because their effect would be anti-dilutive. For        the quarter ended April 30, 2007 there were 13,054,700 options and warrants excluded from        the computation of diluted earnings per share because their effect would be        anti-dilutive.

         

6

 

----

 

 

| 1. | DESCRIPTION OF BUSINESS AND SUMMARY OF                    SIGNIFICANT ACCOUNTING POLICIES(continued) |
|----|------------------------------------------------------------------------------------------------------|

         

Comprehensive income (loss)– The Company’s funds at April 30, 2008        and at October 31, 2007 were held in Canadian and U.S. Dollar bank accounts. Foreign        currency translation losses for the quarter ended April 30, 2008 amounted to $11,652.        Foreign currency translation losses for the quarter ended April 30, 2007 were $2,502. Total        foreign currency translation gains from October 12, 2004 to April 30, 2008 were $114,248.        See note 7 regarding comprehensive income.

         

Foreign Currency        Translation – The Company uses        the United States Dollar as its reporting currency for consistency with registrants of the        Securities and Exchange Commission (“SEC”) and in accordance with the SFAS No.        52 - “Foreign Currency Translation”. Assets and liabilities denominated in a        foreign currency are translated at the exchange rate in effect at the period end and        capital accounts are translated at historical rates. Income statement accounts are        translated at the average rates of exchange prevailing during the period. Translation        adjustments from the use of different exchange rates from period to period are included in        the comprehensive income account in stockholder’s equity, if applicable.

         

The Company’s operations have moved to Canada        and although the Company maintains substantial funds in United States Dollars, the        functional currency of the Company is the Canadian Dollar. The Company continues to use the        United States Dollar as its reporting currency for consistency with registrants of the        SEC.

         

Transactions undertaken in currencies other than the        functional currency of the entity are translated using the exchange rate in effect as of        the transaction date. Any exchange gains and losses are included in other items on the        statement of operations.

         

Fair Value of Financial Instruments- The carrying amounts of financial instruments,        including cash and cash equivalents, prepaid expenses and deposits, accounts payable and        accrued expenses approximate fair value at April 30, 2008 and at October 31, 2007 because        of the relatively short maturity of the instruments.

 

Revenue recognition- The Company has no revenues to date from its        operations.

 

Stock based compensation - In December 2004,        the FASB issued SFAS No. 123 (revised 2004), *Share-Based Payment*, which is a        revision of SFAS No. 123, *Accounting for Stock-Based Compensation*. SFAS No. 123(R)        supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS        No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to        the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based        payments to employees, including grants of employee stock options, to be recognized in the        income statement based on their fair values. Pro forma disclosure is no longer an        alternative. The new standard became effective for the Company in the first interim or        annual reporting period beginning after December 15, 2005. The Company has adopted this        standard effective for the year ended October 31, 2006.

 

New accounting pronouncements - In September        2006, the FASB issued FASB Statement No. 157. This Statement defines fair value,        establishes a framework for measuring fair value in generally accepted accounting        principles (GAAP), and expands disclosures about fair value measurements. This Statement        applies under other accounting pronouncements that require or permit fair value        measurements, the Board having previously concluded in those accounting pronouncements that        fair value is a relevant measurement attribute. Accordingly, this Statement does not        require any new fair value measurements. However, for some entities, the application of        this Statement will change current practices. This Statement is effective for financial        statements for fiscal years beginning after November 15, 2007. Earlier application is        permitted provided that the reporting entity has not yet issued financial statements for        that fiscal year. Management is currently evaluating the impact this statement will have on        the consolidated financial statements of the Company once adopted.

 

7

 

----

 

 

| 1. | DESCRIPTION OF BUSINESS AND SUMMARY OF                    SIGNIFICANT ACCOUNTING POLICIES(continued) |
|----|------------------------------------------------------------------------------------------------------|

         

In February 2007, the FASB issued Statement of        Financial Accounting Standards No. 159,*The        Fair Value Option for Financial Assets and Financial Liabilities – Including an        amendment of FASB Statement No. 115*. This        Statement permits entities to choose to measure many financial instruments and certain        other items at fair value. The objective is to improve financial reporting by providing        entities with the opportunity to mitigate volatility in reported earnings caused by        measuring related assets and liabilities differently without having to apply complex hedge        accounting provisions. This Statement applies to all entities, including not-for-profit        organizations. Most of the provisions of this Statement apply only to entities that elect        the fair value option. However, the amendment to FASB Statement No. 115,*Accounting for Certain Investments in Debt and        Equity Securities*, applies to all entities        with available-for-sale and trading securities. The fair value option permits all entities        to choose to measure eligible items at fair value at specified election dates.

         

A business entity shall report unrealized gains and        losses on items for which the fair value option has been elected in earnings (or another        performance indicator if the business entity does not report earnings) at each subsequent        reporting date. The fair value option may be applied instrument by instrument (with a few        exceptions); is irrevocable (unless a new election date occurs); and is applied only to        entire instruments and not to portions of instruments. This Statement is effective as of        the beginning of an entity’s first fiscal year that begins after or before November        15, 2007, provided the entity also elects to apply the provisions of FASB Statement No.        157,*Fair Value        Measurement*. The Company does not expect        the adoption of SFAS 159 to materially effect the Company’s financial po sition or        results of operations.

In December 2007, the FASB issued FASB Statement No.        141 (revised 2007), *Business Combinations*. This Statement replaces FASB Statement        No. 141, *Business Combinations*. This Statement retains the fundamental requirements        in Statement 141 that the acquisition method of accounting (which Statement 141 called        the purchase method) be used for all business combinations and for an acquirer to be        identified for each business combination. This Statement defines the acquirer as the entity        that obtains control of one or more businesses in the business combination and establishes        the acquisition date as the date that the acquirer achieves control. This Statement’s        scope is broader than that of Statement 141, which applied only to business combinations in        which control was obtained by transferring consideration. By applying the same method of        accounting—the acquisition method—to all transactions and other events in which        one entity obtains control over one or more other businesses, this Statement improves the        comparability of the information about business combinations provided in financial        reports.

This Statement requires an acquirer to recognize the        assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree        at the acquisition date, measured at their fair values as of that date, with limited        exceptions specified in the Statement. That replaces Statement 141’s cost-allocation        process, which required the cost of an acquisition to be allocated to the individual assets        acquired and liabilities assumed based on their estimated fair values.

This Statement applies to all transactions or other        events in which an entity (the acquirer) obtains control of one or more businesses (the        acquirer), including those sometimes referred to as “true mergers” or        “mergers of equals” and combinations achieved without the transfer of        consideration, for example, by contract alone or through the lapse of minority veto rights.        This Statement applies to all business entities, including mutual entities that previously        used the pooling-of-interests method of accounting for some business combinations. It does        not apply to: (a) The formation of a joint venture, (b) The acquisition of an asset or a        group of assets that does not constitute a business, (c) A combination between entities or        businesses under common control, (d) A combination between not-for-profit organizations or        the acquisition of a for-profit business by a not-for-profit organization.

This Statement applies prospectively to business        combinations for which the acquisition date is on or after the beginning of the first        annual reporting period beginning on or after December 15, 2008. An entity may not apply it        before that date. Management believes this Statement will have no impact on the financial        statements of the Company once adopted.

 

8

 

----

 

 

| 1. | DESCRIPTION OF BUSINESS AND SUMMARY OF                    SIGNIFICANT ACCOUNTING POLICIES(continued) |
|----|------------------------------------------------------------------------------------------------------|

         

In December 2007, the FASB issued FASB Statement No.        160 –*Non-controlling Interests in        Consolidated Financial Statements*–        an amendment of ARB No. 51. This Statement applies to all entities that prepare        consolidated financial statements, except not-for-profit organizations, but will affect        only those entities that have an outstanding non-controlling interest in one or more        subsidiaries or that deconsolidate a subsidiary.

This Statement amends ARB 51 to establish accounting        and reporting standards for the non-controlling interest in a subsidiary and for the        deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a        subsidiary is an ownership interest in the consolidated entity that should be reported as        equity in the consolidated financial statements. Before this Statement was issued, limited        guidance existed for reporting non-controlling interests. As a result, considerable        diversity in practice existed. So-called minority interests were reported in the        consolidated statement of financial position as liabilities or in the mezzanine section        between liabilities and equity. This Statement improves comparability by eliminating that        diversity.

A non-controlling interest, sometimes called a        minority interest, is the portion of equity in a subsidiary not attributable, directly or        indirectly, to a parent. The objective of this Statement is to improve the relevance,        comparability, and transparency of the financial information that a reporting entity        provides in its consolidated financial statements by establishing accounting and reporting        standards that require: (a) The ownership interests in subsidiaries held by parties other        than the parent be clearly identified, labeled, and presented in the consolidated statement        of financial position within equity, but separate from the parent’s equity, (b) The        amount of consolidated net income attributable to the parent and to the non-controlling        interest be clearly identified and presented on the face of the consolidated statement of        income, (c) Changes in a parent’s ownership interest while the parent retains its        controlling financial interest in its subsidiary be accounted for consistently. A        parent’s ownership interest in a subsidiary changes if the parent purchases        additional ownership interests in its subsidiary or if the parent sells some of its        ownership interests in its subsidiary. It also changes if the subsidiary reacquires some of        its ownership interests or the subsidiary issues additional ownership interests. All of        those transactions are economically similar, and this Statement requires that they be        accounted for similarly, as equity transactions, (d) When a subsidiary is deconsolidated,        any retained non-controlling equity investment in the former subsidiary be initially        measured at fair value. The gain or loss on the deconsolidation of the subsidiary is        measured using the fair value of any non-controlling equity investment rather than the        carrying amount of that retained investment, (e) Entities provide sufficient disclosures        that clearly identify and distinguish between the interests of the parent and the interests        of the non-controlling owners.

This Statement is effective for fiscal years, and        interim periods within those fiscal years, beginning on or after December 15, 2008 (that        is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited.        This Statement shall be applied prospectively as of the beginning of the fiscal year in        which this Statement is initially applied, except for the presentation and disclosure        requirements. The presentation and disclosure requirements shall be applied retrospectively        for all periods presented. Management believes this Statement will have no impact on the        financial statements of the Company once adopted.

         

Management does not believe that any other recently        issued, but not yet effective accounting pronouncements if currently adopted would have a        material effect on the accompanying consolidated financial statements.

 

9

 

----

 

 

| 2. | PROPERTY AND EQUIPMENT(continued) |
|----|-----------------------------------|

         

The Company owns the following office equipment and        furniture:

 

|                   | **April 30, 2008**                                                                                   | October 31, 2007                                                                                         |
|------------------------|------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
|                   |  

**Cost**                                                                                     | **Accumulated                    depreciation**                                                          | **Net book**

**Value** | Net book

Value |
| Furniture and fixtures | $                                – | $                                –     | $                                – | $   14,416 |
| Office equipment       | –                                                                                              | –                                                                                                  | – | 10,890 |
|                   | $                                – | **$                                –** | **$                                –** | $  25,306 |

 

Depreciation expense amounted to $1,538 and $2,059        for the quarters ended April 30, 2008 and 2007, respectively. During the quarter ended        April 30, 2008, the Company sold the furniture and equipment in its Calgary office        following the relocation of its Head Office to Toronto.

 

| 3. | OIL AND GAS PROPERTY                    COSTS |
|----|-----------------------------------------------|

 

In the quarter ended April 30, 2008 and in the year        ended October 31, 2007, the Company incurred property acquisition costs as        follows:

         

|                                                                                                   | **Six months Ended** | Year Ended                                                                                                 |
|--------------------------------------------------------------------------------------------------------|----------------------|------------------------------------------------------------------------------------------------------------|
|                                                                                                   | **April 30, 2008**   | October 31, 2007                                                                                           |
|                                                                                                   |                 |                                                                                                       |
| Balance, beginning of period                                                                           | **$ 5,022,859**      | $                                 – |
|                                                                                                   |                 |                                                                                                       |
| Fair Value of property acquired August 3,                    2007 on acquisition of Access Energy Inc. | **-**                | 4,568,558                                                                                                  |
| Costs incurred during the                    period                                                    | **1,375,394**        | **-**                                                                                                      |
| Costs incurred from August 3, 2007 to                    October 31, 2007                              | **-**                | 454,301                                                                                                    |
| Total incurred during the                    period                                                    | **1,375,394**        | 5,022,859                                                                                                  |
|                                                                                                   |                 |                                                                                                       |
| Balance, end of year                                                                                   | **$ 6,398,253**      | $ 5,022,859                                                                                                |

         

During the year ended October 31, 2007, the Company        spent funds to evaluate and to acquire properties with oil and gas potential in northern        Saskatchewan and northern Alberta. During the six months ended April 30, 2008, the Company        incurred additional costs evaluating these properties and made payments contemplated in the        acquisition agreements.

         

On November 3, 2006, the Company entered into a joint        venture agreement (“JV Agreement”), which was amended on May 9, 2007, and March        17, 2008, and on May 24, 2007, the Company entered into an Impact Benefit Agreement with        the Buffalo River Dene Nation (“BRDN”) which was amended on March 17, 2008, to        explore and develop its traditional lands in northern Saskatchewan and Alberta.

         

Pursuant to the terms of the JV Agreement, the        Company is responsible for 100% of the costs to explore and develop any project within the        traditional lands. After all costs relating to a specific project have been recouped, the        BRDN is entitled to a net profit interest. Furthermore, the BRDN is entitled to earn an        additional interest in any project(s) by contributing its pro rata share of the costs to        explore and develop any project(s).

         

Pursuant to the terms of the Impact Benefit Agreement        with BRDN, the Company is committed to make certain contributions to the BRDN. As at April        30, 2008, the Company had paid a total of approximately Cdn$1,728,000 (approximately        US$1,716,000) to the BRDN and is committed to further annual payments over the term of the        agreement.

         

 

10

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| 3. | OIL AND GAS PROPERTY COSTS– (continued) |
|----|-----------------------------------------------|

         

The funding provided to the BRDN under the Impact        Benefit Agreement is recoverable to the Company under the JV Agreement before the payment        of the BRDN net profit interest. These costs are capitalized as acquisition-related costs        associated with oil and gas property interests, and will be credited when        recovered.

         

| 4. | STOCKHOLDER’S                    EQUITY |
|----|-----------------------------------------------|

 

Preferred Stock and Common Stock

Authorized:

On June 9, 2006, the Company filed a Certificate of        Amendment to its Articles of Incorporation with the Secretary of State of Nevada to        increase the authorized share capital (the “Share Increase”) from 75,000,000        shares of Common Stock, par value $0.001, to 310,000,000 shares, comprised of 300,000,000        shares of Common Stock and 10,000,000 shares of Preferred Stock, par value $0.001. In        addition, on May 6, 2006, our Board of Directors declared a 30:1 forward stock split (the        “Stock Split”) in the form of a dividend. The record and payment date for the        stock dividend was June 21, 2006. Appropriate revisions have been made to the financial        statements for the year ended October 31, 2006 to reflect the Share Increase and the Stock        Split.

         

Common Stock Issued:

|                                                                     | **Number of Shares** | **Par Value**                                             | **Additional Paid in                    Capital** | **Treasury Stock**                                                                                   |
|--------------------------------------------------------------------------|----------------------|-----------------------------------------------------------|---------------------------------------------------|------------------------------------------------------------------------------------------------------|
|                                                                     |                 |                                                      |                                              |                                                                                                 |
| October 12, 2004 - Issued for                    cash                    | 1,000,000            | $                         1,000  | $     4,000              | $                                – |
| March 2005 - Issued for cash                                             | 1,100,000            | 1,100                                                     | 53,900                                            | –                                                                                              |
| **Balance October 31,                    2005**                          | 2,100,000            | 2,100                                                     | 57,900                                            | –                                                                                              |
| June 21, 2006 – Stock Split                    30:1                | 60,900,000           | 60,900                                                    | (57,900)                                          | –                                                                                              |
| August 9, 2006 – Issued for                    cash                | 10,854,700           | 10,855                                                    | 10,843,845                                        | –                                                                                              |
| August 9, 2006 – On conversion                    of               |                 |                                                      |                                              |                                                                                                 |
| Convertible Debentures                                                   | 1,000,000            | 1,000                                                     | 999,000                                           | –                                                                                              |
| **Balance, October 31,                    2006**                         | 74,854,700           | $                         74,855 | $   11,842,845                          | $                                – |
| Repurchase of stock for cash –                    November 6, 2006 | (30,000,000)         | –                                                   | –                                           | (50,000)                                                                                             |
| **Balance, October 31, 2007 and April                    30, 2008**      | 44,854,700           | $                         74,855 | $   11,842,845                          | $   (50,000)                                                                               |

         

The issued and outstanding shares were issued as        follows:

         

On June 9, 2006, the Company filed a Certificate of        Amendment to its Articles of Incorporation to increase its authorized capital stock to        310,000,000 authorized shares, consisting of 300,000,000 shares of common stock, par value        $0.001 each, and 10,000,000 shares of preferred stock, par value $0.001 each. The        Company’s Board of Directors may issue the preferred stock in one or more series,        with such voting powers, designations, preferences and rights or qualifications,        limitations or restrictions thereof as shall be stated in the resolution or resolutions        adopted by them.

         

Effective August 9, 2006, the Company closed a        private placement of Units of its securities. 10,854,700 Units were issued at a price of        $1.00 per Unit, resulting in gross proceeds of $10,854,700. The offering was conducted        pursuant to the exemption from the registration requirements of the federal securities laws        provided by Regulation S and Section 4(2) of the Securities Act of 1993, as amended (the        “Securities Act”) and Rule 506 of Regulation D under the Securities Act. Each        Unit consisted of one share, on a post-split basis, of the Company’s common stock and        one warrant to purchase a share of common stock (the “Warrants”).

         

Each Warrant is exercisable for two years commencing        October 1, 2006 and entitles its holder to purchase one share of Common Stock at $3.00 per        share. Following the closing of the offering, the funds remained in escrow until the        acquisition of Access Energy Inc. on August 3, 2007.

 

 

11

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| 4. | STOCKHOLDER’S EQUITY(continued) |
|----|---------------------------------------|

         

On May 6, 2006, the Company issued $1,000,000 of        convertible debentures (see note 6 below) to two accredited investors. The Debentures        converted into Units on August 9, 2006 at a conversion price of $1.00 per Unit for a total        of 1,000,000 Units. Each Unit consisted of one share, on a post-split basis, of the        Company’s common stock and one warrant to purchase a share of common stock. Each of        these Warrants is exercisable for two years commencing October 1, 2006 and entitles its        holder to purchase one share of Common Stock at $3.00 per share.

         

On November 6, 2006, the Company purchased 30,000,000        shares of common stock from Darren Stevenson for $50,000 cash in accordance with the terms        of the stock repurchase agreement.

         

As at April 30, 2008, there are 11,854,700 Warrants        outstanding. Each Warrant is exercisable for two years commencing October 1, 2006 and        entitles its holder to purchase one share of Common Stock at $3.00 per share.

         

In addition there are 1,500,000 Warrants outstanding,        which were issued as part of the consideration for the purchase of the subsidiary. Each of        these 1,500,000 Warrants is exercisable for five years commencing August 3, 2007 and        entitles the holder to purchase one share of Common Stock at $2.00 per share.

         

On August 1, 2006 the Company entered into a        consulting agreement and a stock warrant agreement with Gregg Layton. Under the Stock        Warrant Agreement, Mr. Layton received warrants to purchase 200,000 shares of our        common stock. These warrants were cancelled with the termination of Mr. Layton’s        agreement.

 

| 5. | RELATED PARTY                    TRANSACTIONS |
|----|-----------------------------------------------|

 

As of April 30, 2008, there are no significant        related party transactions between the Company and any of its officers or directors other        than a consulting agreement between Access and a company controlled by the President and        CEO and Director of the Company.

         

On November 1, 2005,Access entered into an agreement        with Coniston Investment Corp. (“Coniston”), to provide management, consulting        and advisory services to Access (the “Services”). These services include        assisting Access in negotiating joint venture agreements, assisting in the formation of a        team of technical experts, and other consulting and advisory services as required by Access        from time to time. The agreement automatically renews for consecutive one-year terms unless        terminated by either party in writing.

         

Coniston’s sole shareholder, President and CEO        is the President and CEO of Access and, effective November 1, 2007, also of the Company.        Pursuant to the agreement: (i)        Accessshall        pay Coniston a fee of: (i) Cdn$260,000 per annum, payable monthly (paid); (ii)        Cdn$1,000,000 (the “Dene Fee”) in the event Access enters into an agreement        with the BRDN and/or its associates or affiliates to develop hydrocarbon opportunities in a        defined area within Treaty 10 lands which includes the traditional and historically        occupied and used lands of the BRDN (paid in the year ended October 31, 2007); and (iii)        Coniston will also be entitled to receive a 1.25% non-convertible overriding royalty based        on 100% production (“GORR”) from any and all projects that Coniston brings to        Access (the “Royalty Fee”).

         

During the quarter ended April 30, 2008, Coniston        charged Access management fees of Cdn$68,250 including Goods and Services Tax        (“GST”) which amount is included in the consolidated statement of operations.        Amounts payable to Coniston of Cdn$165,672 (US$164,495) are shown as amounts payable to        related parties as at April 30, 2008.

         

 

12

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| 6. | STOCK OPTIONS AND WARRANTS(continued) |
|----|---------------------------------------|

         

On April 18, 2006, the Company entered into an        employment agreement and a stock option agreement with Darren Stevenson. Under the Stock        Option Agreement, Mr. Stevenson was, on April 18, 2006, granted options to purchase        1,000,000 shares of common stock of the Company on a post-split basis. All of the        options, once vested, are exercisable at $2.00 per share, and all had a two-year term.        Options to purchase 100,000 shares vested on June 9, 2006 when the Company filed with the        Secretary of State of Nevada an amendment to its Articles of Incorporation, which among        other things, increased its authorized common stock to 300,000,000 shares and changed its        name to “Blacksands Petroleum, Inc.” Options to purchase 200,000 shares vested        on August 9, 2006 when the Company completed a common stock placement of US$10,854,700.        Options to purchase 200,000 shares vested on January 1, 2007, and options to purchase        500,000 shares would have vested if the Company conducted a placement of at least        US$50,000,000. On October 31, 2007, the Company cancelled these 500,000 options granted to        Mr. Darren Stevenson as part of the termination of his employment agreement as        President and CEO. In April 2008, the 500,000 options held by Mr. Stevenson        expired.

         

The Company valued the options issued to        Mr. Stevenson at a $0 value based on a closing price of $0.03, an exercise price of        $2.00, and a term of 2 years. The Company used the average historical volatility of 3        companies deemed to be in the same industry as the Company as 50.86%.

         

On August 1, 2006, the Company entered into a        consulting agreement and a stock warrant agreement with Gregg Layton, which has been        subsequently terminated effective February 29, 2008. Under the Stock Warrant Agreement,        Mr. Layton received warrants to purchase 200,000 shares of common stock with        50,000 warrants vesting on August 1, 2006. Warrants to purchase 25,000 shares of common        stock vested on January 1, 2007, warrants to purchase 25,000 shares of common stock vested        August 9, 2006, and warrants to purchase the final 100,000 shares of common stock would        have vested if the Company conducted a placement of at least US$50,000,000 during        Mr. Layton’s agreement with the Company. All of the warrants, once vested, were        exercisable at $2.00 per share until July 31, 2008.

         

The Company valued the warrants issued to        Mr. Layton at a $21,620 value based on a closing price of $1.00, an exercise price of        $2.00, and a term of 2 years. The Company used the average historical volatility of 3        companies deemed to be in the same industry as the Company as 50.86%.

 

As of June 26, 2006, the Company’s Board of        Directors approved, and a majority of the Company’s stockholders ratified, the        adoption of the Company’s 2006 Stock Option Plan (the “Plan”), pursuant        to which the Board of Directors has the ability to provide incentives through the issuance        of options, stock, restricted stock, and other stock-based awards, representing up to        6,000,000 shares of the Company’s common stock, to certain employees, outside        directors, officers, consultants and advisors.

The Board of Directors approved a revised stock        option plan for the Company on February 15, 2008. The revised stock option plan is subject        to regulatory and shareholder approvals.

Also on February 15, 2008, the Board of Directors        approved the grant of 2,200,000 stock options to officers, directors and consultants of the        Company. These options are exerciseable at $1.90 per share for a term of five years,        subject to all necessary approvals, and have the following vesting provisions:

|   | **•** | 991,666 options vested                    immediately |
|--------|------------|-------------------------------------------------------|

|   | **•** | 604,166 options vest when the stock price                    trades at or above $2.50 for ten consecutive trading days; and |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------|

|   | **•** | 604,168 options vest when the stock price                    trades at or above $3.00 for ten consecutive trading days |
|--------|------------|------------------------------------------------------------------------------------------------------------------------|

As at April 30, 2008, other than those granted,        subject to necessary approvals, on February 15, 2008, the Company has issued no other        options or entered into stock option agreements with any other persons.

 

 

13

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| 6. | STOCK OPTIONS                    (continued) |
|----|----------------------------------------------|

As there is no certainty that the shareholders will        approve the revised stock option plan, there has been no expense recorded as stock-based        compensation relating to these options to date.

A summary of the Company’s stock option        activity and related information is as follows:

 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Number of Shares          | Weighted Average                    Exercise Price |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|----------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                      |                                               |
| Outstanding at October 31,                    2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | -                         | -                                                  |
| Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 1,000,000                 | $2.00                                              |
| Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | -                         | -                                                  |
| Cancelled                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | -                         | -                                                  |
| Outstanding at October 31,                    2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 1,000,000                 | $2.00                                              |
| Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | -                         | -                                                  |
| Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | -                         | -                                                  |
| Cancelled                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (500,000)1                | $2.00                                              |
| Outstanding at October 31,                    2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 500,000    | $2.00                                              |
| Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (500,000)1                | $2.00                                              |
| Outstanding at April 30,                    20082                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | -                         | -                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                      |                                               |
| 1 On October 31, 2007, the                    Company cancelled 500,000 options granted to Mr. Darren Stevenson as part                    of the termination of his employment agreement as President and CEO. In April                    2008, 500,000 options granted to Mr. Stevenson and vested have                    expired.

2 Excludes the options                    granted, subject to necessary approvals, to directors, officers and consultants                    on February 15, 2008. |

 

A summary of options granted, vested and cancelled is        as follows:

 

|                   | Options Granted/(Cancelled) | Options Vested                                                                |
|------------------------|-----------------------------|-------------------------------------------------------------------------------|
|                   | Number of Options           | Weighted Average                    Remaining Life                    (years) | Weighted Average Exercise                    Price | Number of Options | Weighted Average Remaining Life                    (years) | Weighted Average Exercise                    Price |
|                   |
|                   |
| **April 30, 2007**     |                        |                                                                          |   |   |   |   |
| Vested January 1, 2007 | -                           | -                                                                             | - | 200,000 | 0.25 | $2.00 |
|                   |                        |                                                                          |   |   |   |   |
| **April 30, 2008**     |                        |                                                                          |   |   |   |   |
| Granted or vested      | -                           | -                                                                             | - | - | - | - |

 

A summary of the Company’s stock warrant        activity and related information is as follows:

 

|                                               |   | Warrants   | Weighted Average                    Exercise Price |
|----------------------------------------------------|--------|------------|----------------------------------------------------|
|                                               |   |
| Outstanding at October 31,                    2006 |   | 12,054,700 | $2.98                                              |
| Exercised                                          |   | -          | -                                                  |
| Cancelled                                          |   | -          | -                                                  |
| Granted – August 3, 2007                     |   | 1,500,000  | $2.00                                              |
| Outstanding at April 30, 2008                      |   | 13,554,700 | $2.87                                              |

 

 

14

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| 7. | COMPREHENSIVE INCOME |
|----|----------------------|

         

The functional currency of the Company is the        Canadian Dollar. At April 30, 2008, the Company maintained account balances of        Cdn$4,692,259 (approximately US$4,666,671) and US$31,875.

         

Foreign currency translation adjustments for the        three months ended April 30, 2008 and for the three months ended April 30, 2007 are net of        tax of $NIL. Foreign currency translation adjustments for the six months ended April 30,        2008 and for the six months ended April 30, 2007 are net of tax of $NIL. Foreign currency        translation adjustments for the period from inception to April 30, 2008 are net of tax of        $NIL.

 

| 8. | LITIGATION   |
|----|-------------------|

 

As of April 30, 2008, the Company is not aware of any        current or pending litigation, which may affect the Company’s operations.

 

| 9 | LEASE COMMITMENTS |
|---|-------------------|

 

The Company renegotiated the lease for its Calgary        office space commencing April 1, 2007 for a period of one year at a monthly rent of        Cdn$6,684 (approximately US$6,658). The Company did not renew its Calgary office space when        the current lease expired at the end of March 2008.

         

| 10. | ACQUISITION OF ACCESS ENERGY INC.                    (“ACCESS”) |
|-----|-----------------------------------------------------------------------------|

         

On August 3, 2007, pursuant to a Common Stock        Purchase Agreement (“Purchase Agreement”), the Company purchased 600 newly        issued shares of common stock of Access, representing 75.0% of its common stock for an        aggregate sum of Cdn$3,427,935.23 (US$3,234,545), and common stock purchase warrants        to acquire 1,500,000 of the Company’s shares of common stock (“Access        Warrants”). Prior to the Purchase, the Company was a “shell company” as        that term is defined in Rule 12b-2 of the Exchange Act. By consummating the Purchase, the        Company succeeded at its business plan, which was to enter the unconventional petroleum        industry by acquiring a suitable target company. The Company paid the purchase price in        four segments: (i) Cdn$3,077,935.23 in cash; (ii) Cdn$250,000 by offset against        the amount held in escrow created on May 17, 2007; (iii) Cdn$100,000 that was paid to        Access pursuant to the Exclusivity Agreement; and (iv) the Access Warrants. The Company        obtained the cash portion of the purchase price from funds released from the restricted        cash held in an escrow account. On August 28, 2007, the balance of restricted cash held in        escrow was released and transferred to the Company’s bank account. Blacksands intends        to operate Access to continue in the business that Access engaged in prior to the        acquisition. Prior to the acquisition, no material relationship existed between the Company        and Access. The acquisition has been accounted for using the purchase method of accounting.        Under the purchase method of accounting, the assets and liabilities of Access are recorded        as of the acquisition date, at their fair market values, and added to those of the Company.        The 25% share of the minority stockholder’s interest has been recorded as a        liability. Pre-acquisition losses of Access are eliminated on consolidation.

         

On August 31, 2007, the Company advanced        Cdn$1,100,000 (US$1,046,622) to Access for its working capital requirements. On February        20, 2008, the Company advanced a further Cdn$2,258,055 (US$2,229,152) to Access. These        advances are treated as contributed capital.

         

 

15

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**Item 2.   Management’s Discussion        and Analysis of Financial Condition and Results of Operations.**

 

Certain statements in this report, other than purely        historical information, including estimates, projections, statements relating to our        business plans, objectives, and expected operating results, and the assumptions upon which        those statements are based, are “forward-looking statements” within the meaning        of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act        of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking        statements generally are identified by the words “believe,”        “project,” “expect,” “anticipate,”        “estimate,” “intend,” “strategy,” “plan,”        “may,” “should,” “will,” “would,”        “will be,” “will continue,” “will likely result,” and        similar expressions. Forward-looking statements are based on current expectations and        assumptions that are subject to risks and uncertainties, which may cause actual results to        differ materially from the forward-looking statements. A detailed discussion of risks and        uncertainties that could cause actual results and events to differ materially from such        forward-looking statements is included in our most recent annual report on Form 10-KSB        under the heading “Risk Factors and Uncertainties” (see Part 1, Item 1 in such        report), as amended in this report under the heading “Risk Factors” (see Part        II, Item 1A). We undertake no obligation to update or revise publicly any forward-looking        statements, whether as a result of new information, future events, or otherwise.

 

The following discussion should be read in        conjunction with our consolidated financial statements and notes thereto included in this        report.

 

On August 3, 2007, we completed the purchase of 75%        of Access Energy Inc. (“Access”) for cash of $3,234,544 and 1,500,000 warrants        to purchase shares of our common stock issued to the former sole stockholder of Access.        Prior to our acquisition of Access (the “Purchase”), we were an exploration        stage company with no revenues. As a result of the Purchase, our plan of operation, results        of operations and financial condition differ materially from those that existed prior to        the Purchase.

 

The initial exploration project for Access is named        “A10 Project” and lies on a portion of the traditional land of the Buffalo        River Dene Nation (the “BRDN”) subject to Treaty 10 (“Treaty 10”)        in western Saskatchewan on the border with Alberta (the “Project Land”). The        BRDN is a party to Treaty 10 with Her Majesty the Queen in the Right of Canada (the        “Crown”) which recognizes lands and water belonging to the BRDN whose territory        is situated partly in the Province of Saskatchewan and partly in the Province of Alberta.        Upon entering into Treaty 10, the BRDN did not cede, release, surrender or yield to the        Crown any or all rights, titles and privileges whatsoever to the BRDN’s traditional        territories. Lands and waters described in Treaty 10 form a part of the traditional        territories of the BRDN. Access signed the Joint Venture Agreement with the BRDN in May        2007, amended on March 17, 2008, granting Access exclusive access to the land. A copy of        this agreement was filed as Exhibit 10.8 to our Form 8-K filed on August 8,        2007.

 

Subsequent to the Purchase, we have continued work to        obtain the permits, licenses and sub-surface rights necessary to commence our exploration        activities.

 

At a Board of Directors’ meeting on February        15, 2008, the Board of Directors approved operating budgets for the Company and for Access        for the year ended October 31, 2008. The Access budget included cost expectations to obtain        the required permits, approvals, licences and sub-surface rights which would enable the        Company to carry out work on the A10 Project.

 

The Company is committed, under the Unanimous        Shareholders’ Agreement among Access, the Company and the minority        shareholder, to contribute sufficient capital to Access to meet Access’s planned        financial commitments until such time as Access has sufficient internal capital resources        to fund its commitments without such contributions. These contributions are treated as a        contribution of capital, with no increase in our current 75% equity participation in        Access. Therefore, all contributions that we make to Access are dilutive to our        shareholders as to 25% of such contributions. The minority shareholder is not obligated to        provide any funding to Access in order to maintain his 25% interest in Access.

 

Unless the context otherwise requires, all references        in this report to “Blacksands”, “the Company”, “we”,        “us” or “our” refer to both Blacksands and Access. In our        consolidated financial statements, this management’s discussion and analysis and        elsewhere in this report, unless otherwise noted, we include 100% of the accounts of        Access from

 

 

16

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the date of acquisition of August 3, 2007. For a        discussion of our principles of consolidation, see Note 1 to the interim consolidated        financial statements included in this report.

 

Consolidated Results of Operations

 

For the six months ended April 30, 2008, and since        the date of inception, we have not yet generated any revenues.

 

We incurred total operating expenses of $618,220 for        the six months ended April 30, 2008, as compared to total operating expenses of $1,420,726        for the six months ended April 30, 2007. During the six months ended April 30, 2007, we        purchased certain two dimensional seismic data, which relates to approximately 750        kilometers of land in northern Saskatchewan and Alberta where the Company intends to        explore deposits of oil sands for $1,124,029. These costs were expensed as exploration        expenses. Our exploration expenses during the six months ended April 30, 2008 were $67,454.        The increase in our other expenses was principally due to our ceasing to be a “shell        company” and our commencement of operations. These expenses consisted of general        operating expenses incurred in connection with the day-to-day operation of our business and        the preparation and filing of our periodic reports as well as the management fees paid to        Coniston Investment Corp. (“Coniston”) of $135,735 and Directors’ fees of        $36,667. The operating expenses include professional fees of $261,551 for the six months        ended April 30, 2008 incurred in connection with filing of periodic reports, SEC compliance        filings, audit and accounting fees and general corporate mattersas compared with professional fees of $209,792 for        the six months ended April 30, 2007. The office and administration expenses of $100,654 for        the six months ended April 30, 2008 include rent, travel, telephone and other office        expenses as compared to office and administration expenses of $56,906 for the six months        ended April 30, 2007.

 

We earned total interest income of $85,018 for the        six months ended April 30, 2008, as compared to total interest income of $238,260 for the        six months ended April 30, 2007. The interest was earned on the balance of proceeds of the        private placement on August 9, 2006 of $10,854,700, and has declined as we have used the        cash in our operations and the unused balance of such proceeds has declined as well as        reduced interest rates offered by our bank.

 

Our total comprehensive loss for the six months ended        April 30, 2008 was $677,144, as compared to total comprehensive loss of $1,183,748 for the        six months ended April 30, 2007, and a total comprehensive loss of $2,397,860 from        inception on October 12, 2004 to April 30, 2008.

 

Net cash used in investing activities for the six        months ended April 30, 2008 was $679,770, as compared to $2,104 for the six months ended        April 30, 2007 and $5,041,885 for the period from inception on October 12, 2004 to April        30, 2008. There was no cash used by or provided from financing activities during the six        months ended April 30, 2008. Cash used by financing activities for the six months ended        April 30, 2007 was $50,000, resulting from our repurchase of 30,000,000 shares of common        stock from Mr. Stevenson on November 6, 2006.

 

We are still in the exploration stage and have        generated no revenues to date.

 

Selected Consolidated Financial        Information

 

|                       |   | **April 30, 2008** | October 31, 2007 |
|----------------------------|--------|--------------------|------------------|
| Current Assets             |   | **$ 4,733,352**    | $ 6,613,737      |
| Total Assets               |   | **11,131,605**     | 11,661,902       |
| Current Liabilities        |   | **377,089**        | 864,877          |
| Stockholders’ Equity |   | **9,488,460**      | 10,157,429       |

 

Liquidity and Capital Resources

 

At April 30, 2008, we had cash in the bank of        $4,698,546.

 

17

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Our management intends to consider possible strategic        transactions in the unconventional oil industry. We expect to be able to satisfy our cash        requirements for at least the next 12 months without having to raise additional funds or        seek bank loans if we do not undertake any such strategic transactions. After that 12-month        period, we may have to raise additional monies through sales of our equity securities or        through loans from banks or third parties to continue our business plans; however, no such        plans have yet been implemented.

 

Our stockholders’ equity at April 30, 2008 was        $9,488,460.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Table of Contractual Obligations

|                                | **Payment due by period** |
|-------------------------------------|---------------------------|
|  

**Contractual Obligations** |  

**Total**         | **Less than**

**1 year** |  

**1-3 years** |  

**3-5 years** | **More than**

**5 years** |
| Operating lease obligations         | -                         | - | - | - | - |
| Purchase obligations                | $129,0771                 | $129,077 | - | - | - |
| Total                               | $129,077                  | $129,077 | - | - | - |

 

|   | 1 | On November 1, 2005, Access entered into                    an agreement with Coniston to provide management, consulting and advisory                    services to Access (the “Services”). These services include                    assisting Access in negotiating joint venture agreements, assisting in the                    formation of a team of technical experts, and other consulting and advisory                    services as required by Access from time to time. The agreement automatically                    renews for consecutive one-year terms unless terminated by either party in                    writing. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

Critical Accounting Policies

 

Our financial statements are based on the selection        and application of generally accepted accounting principles, which require us to make        estimates and assumptions about future events that affect the amounts reported in our        financial statements and the accompanying notes. Future events and their effects cannot be        determined with certainty. Therefore, the determination of estimates requires the exercise        of judgment. Actual results could differ from those estimates, and any such differences may        be material to our financial statements. We believe that our policies may involve a higher        degree of judgment and complexity in their application than our other accounting policies        and represent the critical accounting policies used in the preparation of our financial        statements. If different assumptions or conditions were to prevail, the results could be        materially different from our reported results. Our significant accounting policies are        presented in the notes to our financial statements.

 

When we prepare our consolidated financial        statements, we use estimates and assumptions that may affect reported amounts and        disclosures. We base these estimates on historical results and various other assumptions        believed to be reasonable, the results of which form the basis for making estimates        concerning the carrying value of assets and liabilities that are not readily available from        other sources. Actual results could differ from the amounts previously estimated, which        were based on the information available at the time the estimates were made. Changes in        estimates are recorded if and when better information becomes available.

 

We consider an accounting estimate to be critical if:        (1) the accounting estimate requires us to make an assumption about a matter that was        highly uncertain at the time the estimate was made, and (2) changes in the estimate that        are reasonably likely to occur from period to period, or use of a different estimate that        we reasonably could have used in the current period, could have a material impact on our        consolidated results of operations or financial condition.

 

We have established an Audit Committee consisting of        two non-executive Directors. The members of the Audit Committee are Bruno Mosimann and Mark        Holcombe.

 

 

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New Accounting Pronouncements

 

In September 2006, the FASB issued FASB Statement No.        157. This Statement defines fair value, establishes a framework for measuring fair value in        generally accepted accounting principles, and expands disclosures about fair value        measurements. This Statement applies under other accounting pronouncements that require or        permit fair value measurements, the Board having previously concluded in those accounting        pronouncements that fair value is a relevant measurement attribute. Accordingly, this        Statement does not require any new fair value measurements. However, for some entities, the        application of this Statement will change current practices. This Statement is effective        for financial statements for fiscal years beginning after November 15, 2007. Earlier        application is permitted provided that the reporting entity has not yet issued financial        statements for that fiscal year. Management is currently evaluating the impact this        statement will have on the consolidated financial statements of the Company once        adopted.

 

In February 2007, the FASB issued Statement of        Financial Accounting Standards No. 159, *The Fair Value Option for Financial Assets and        Financial Liabilities – Including an amendment of FASB Statement No. 115*. This        Statement permits entities to choose to measure many financial instruments and certain        other items at fair value. The objective is to improve financial reporting by providing        entities with the opportunity to mitigate volatility in reported earnings caused by        measuring related assets and liabilities differently without having to apply complex hedge        accounting provisions. This Statement applies to all entities, including not-for-profit        organizations. Most of the provisions of this Statement apply only to entities that elect        the fair value option. However, the amendment to FASB Statement No. 115, *Accounting for        Certain Investments in Debt and Equity Securities*, applies to all entities with        available-for-sale and trading securities. The fair value option permits all entities to        choose to measure eligible items at fair value at specified election dates.

         

A business entity shall report unrealized gains and        losses on items for which the fair value option has been elected in earnings (or another        performance indicator if the business entity does not report earnings) at each subsequent        reporting date. The fair value option may be applied instrument by instrument (with a few        exceptions); is irrevocable (unless a new election date occurs); and is applied only to        entire instruments and not to portions of instruments. This Statement is effective as of        the beginning of an entity’s first fiscal year that begins after or before November        15, 2007, provided the entity also elects to apply the provisions of FASB Statement No.        157, *Fair Value Measurement*. The Company does not expect the adoption of SFAS 159 to        materially effect the Company’s financial position or results of        operations.

         

In December 2007, the FASB issued FASB Statement No.        141 (revised 2007), *Business Combinations*. This Statement replaces FASB Statement        No. 141, *Business Combinations* . This Statement retains the fundamental requirements        in Statement 141 that the acquisition method of accounting (which Statement 141 called        the purchase method) be used for all business combinations and for an acquirer to be        identified for each business combination. This Statement defines the acquirer as the entity        that obtains control of one or more businesses in the business combination and establishes        the acquisition date as the date that the acquirer achieves control. This Statement’s        scope is broader than that of Statement 141, which applied only to business combinations in        which control was obtained by transferring consideration. By applying the same method of        accounting—the acquisition method—to all transactions and other events in which        one entity obtains control over one or more other businesses, this Statement improves the        comparability of the information about business combinations provided in financial        reports.

         

This Statement requires an acquirer to recognize the        assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree        at the acquisition date, measured at their fair values as of that date, with limited        exceptions specified in the Statement. That replaces Statement 141’s cost-allocation        process, which required the cost of an acquisition to be allocated to the individual assets        acquired and liabilities assumed based on their estimated fair values.

         

This Statement applies to all transactions or other        events in which an entity (the acquirer) obtains control of one or more businesses (the        acquirer), including those sometimes referred to as “true mergers” or        “mergers of equals” and combinations achieved without the transfer of        consideration, for example, by contract alone or through the lapse of minority veto rights.        This Statement applies to all business entities, including mutual entities that previously        used the pooling-of-interests method of accounting for some business combinations. It does        not apply to: (a) The

 

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formation of a joint venture, (b) The acquisition of        an asset or a group of assets that does not constitute a business, (c) A combination        between entities or businesses under common control, (d) A combination between        not-for-profit organizations or the acquisition of a for-profit business by a        not-for-profit organization.

         

This Statement applies prospectively to business        combinations for which the acquisition date is on or after the beginning of the first        annual reporting period beginning on or after December 15, 2008. An entity may not apply it        before that date. Management believes this Statement will have no impact on the financial        statements of the Company once adopted.

         

In December 2007, the FASB issued FASB Statement No.        160 –*Non-controlling Interests in        Consolidated Financial Statements*–        an amendment of ARB No. 51. This Statement applies to all entities that prepare        consolidated financial statements, except not-for-profit organizations, but will affect        only those entities that have an outstanding non-controlling interest in one or more        subsidiaries or that deconsolidate a subsidiary.

         

This Statement amends ARB 51 to establish accounting        and reporting standards for the non-controlling interest in a subsidiary and for the        deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a        subsidiary is an ownership interest in the consolidated entity that should be reported as        equity in the consolidated financial statements. Before this Statement was issued, limited        guidance existed for reporting non-controlling interests. As a result, considerable        diversity in practice existed. So-called minority interests were reported in the        consolidated statement of financial position as liabilities or in the mezzanine section        between liabilities and equity. This Statement improves comparability by eliminating that        diversity.

         

A non-controlling interest, sometimes called a        minority interest, is the portion of equity in a subsidiary not attributable, directly or        indirectly, to a parent. The objective of this Statement is to improve the relevance,        comparability, and transparency of the financial information that a reporting entity        provides in its consolidated financial statements by establishing accounting and reporting        standards that require: (a) The ownership interests in subsidiaries held by parties other        than the parent be clearly identified, labeled, and presented in the consolidated statement        of financial position within equity, but separate from the parent’s equity, (b) The        amount of consolidated net income attributable to the parent and to the non-controlling        interest be clearly identified and presented on the face of the consolidated statement of        income, (c) Changes in a parent’s ownership interest while the parent retains its        controlling financial interest in its subsidiary be accounted for consistently. A        parent’s ownership interest in a subsidiary changes if the parent purchases        additional ownership interests in its subsidiary or if the parent sells some of its        ownership interests in its subsidiary. It also changes if the subsidiary reacquires some of        its ownership interests or the subsidiary issues additional ownership interests. All of        those transactions are economically similar, and this Statement requires that they be        accounted for similarly, as equity transactions, (d) When a subsidiary is deconsolidated,        any retained non-controlling equity investment in the former subsidiary will initially be        measured at fair value. The gain or loss on the deconsolidation of the subsidiary is        measured using the fair value of any non-controlling equity investment rather than the        carrying amount of that retained investment, (e) Entities provide sufficient disclosures        that clearly identify and distinguish between the interests of the parent and the interests        of the non-controlling owners.

         

This Statement is effective for fiscal years, and        interim periods within those fiscal years, beginning on or after December 15, 2008 (that        is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited.        This Statement shall be applied prospectively as of the beginning of the fiscal year in        which this Statement is initially applied, except for the presentation and disclosure        requirements. The presentation and disclosure requirements shall be applied retrospectively        for all periods presented. Management believes this Statement will have no impact on the        financial statements of the Company once adopted.

 

 

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**Item 3. Quantitative and Qualitative Disclosures        About Market Risk.**

 

While the Company’s reporting currency is U.S.        dollars, the Company’s principal executive offices and its principal exploration        property, the A10 Project, are located in Canada, and most of its contractual obligations        are payable in Canadian dollars. For this reason, the Company is subject to Canada-U.S.        exchange rate risk. The Company considers the amount of risk to be manageable and does not        currently, nor is it likely in the foreseeable future to, conduct hedging to reduce its        exchange rate risk. A hypothetical 10% increase in the value of one Canadian dollar        expressed in U.S. dollars during the six months ended April 30, 2008 would have caused an        approximate $38,500 increase in the Company’s expenses for the six months, and an        equivalent decrease in the value of one Canadian dollar would have caused a $38,500        decrease in the Company’s expenses for the six months. A hypothetical 10% increase in        the value of one Canadian dollar expressed in U.S. dollars during the six months ended        April 30, 2008 would have caused an approximate $703,000 increase in the Company’s        other comprehensive loss and a corresponding decrease in stockholders’ equity for the        six months, and an equivalent decrease in the value of one Canadian dollar would have        caused a $703,000 decrease in the Company’s other comprehensive loss and a        corresponding increase in stockholders’ equity for the six months.

 

**Item 4. Controls and Procedures.**

 

Under the supervision and with the participation of        our management, including the Chief Executive Officer and Chief Financial Officer, we have        evaluated the effectiveness of our disclosure controls and procedures as required by        Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on        that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded        that these disclosure controls and procedures are effective. There were no changes in our        internal control over financial reporting during the six months ended April 30, 2008 that        have materially affected, or are reasonably likely to materially affect, our internal        control over financial reporting.

 

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**PART II: OTHER INFORMATION**

 

**Item 1. Legal Proceedings.**

 

None.

 

**Item 1A. Risk Factors.**

 

The Company’s risk factors have not changed        materially from those set forth under the heading “Risk Factors and        Uncertainties” in the Company’s most recent annual report on Form 10-KSB,        except as follows:

 

**The Company and its shareholders may be adversely        affected by recent rule amendments making Rule 144 unavailable for Company        securities.**

 

Rule 144 under the Securities Act of 1933 provides a        safe harbor under which holders of restricted securities and affiliates of an issuer may        resell their securities into the public market. Effective February 15, 2008, Rule 144 was        amended to make it unavailable for securities of former shell companies until, among other        things, twelve months have elapsed since the former “shell company” has filed        “Form 10 information” with the Securities and Exchange Commission. The Company        was a “shell company” until August 3, 2007, when it acquired 75% of Access. On        August 8, 2007, the Company filed a Form 8-K report that was intended to satisfy the        “Form 10 information” requirement. Accordingly, Rule 144 is no longer available        to permit our shareholders to resell their Company securities. No assurance can be provided        as to the date that the Company’s securities will again become eligible for resale        under Rule 144.

 

The unavailability of the Rule 144 resale exemption        for our securities may adversely affect our ability to raise additional financing on a        private placement basis, and may adversely affect the ability of our private placees and        affiliates to resell their securities into the public market, all of which could have a        material adverse effect on us and our shareholders.

 

**Our funding of Access is dilutive to our        shareholders.**

 

The Company is committed, under the Unanimous        Shareholders’ Agreement among Access, the Company and the minority        shareholder, to contribute sufficient capital to Access to meet Access’s planned        financial commitments until such time as Access has sufficient internal capital resources        to fund its commitments without such contributions. These contributions are treated as a        contribution of capital, with no increase in our current 75% equity participation in        Access. Therefore, all contributions that we make to Access are dilutive to our        shareholders as to 25% of such contributions. The minority shareholder is not obligated to        provide any funding to Access in order to maintain his 25% interest in Access.

 

In addition, we may have insufficient capital        resources to satisfy this obligation. If we are unable to satisfy our contractual        obligation to fund Access, we may be liable for breach of contract.

 

**Item 2. Unregistered Sales of Equity Securities        and Use of Proceeds**

 

None.

 

**Item 3. Defaults Upon Senior        Securities**

 

None.

 

**Item 4. Submission of Matters to a Vote of        Security Holders**

 

None.

 

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**Item 5. Other Information.**

| (a) | **Form 8-K Information** |
|-----|--------------------------|

None.

| (b) | **Director Nomination                    Procedures** |
|-----|-------------------------------------------------------|

The Company does not have any established procedures        by which security holders may recommend nominees to the Company’s Board of        Directors.

 

**Item 6. Exhibits.**

 

| Exhibit No. |   | Description                                                              |
|-------------|--------|--------------------------------------------------------------------------|
| 31.1        |   | Sec. 302 Certification of Principal                    Executive Officer |
| 31.2        |   | Sec. 302 Certification of Principal                    Financial Officer |
| 32.1        |   | Sec. 906 Certification of Principal                    Executive Officer |
| 32.2        |   | Sec. 906 Certification of Principal                    Financial Officer |

 

 

**SIGNATURES**

 

Pursuant to the requirements of the Securities        Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf        by the undersigned thereunto duly authorized.

 

| June 16,                2008 | **BLACKSANDS                PETROLEUM, INC.**                By:  /s/ Paul A. Parisotto                       _________________________________                       Name:    Paul A.                Parisotto                       Title:      Chief                Executive Officer                                      (Principal                Executive Officer) |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | By:  /s/ Rick                Wilson                       _________________________________                       Name:    Rick Wilson                       Title:      Chief                Financial Officer                                      (Principal                Financial Officer) |
|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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