----

----

| x        Quarterly Report pursuant to Section 13 or 15(d) of the Securities      Exchange Act of 1934 |
|-----------------------------------------------------------------------------------------------------------------|
|                                                                                                            |
| For      the quarterly period ended March 31,      2008                                                         |
|                                                                                                            |
| o        Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act      of 1934        |
|                                                                                                            |
| For      the transition period to ___________ to  ___________                                                   |

| Nevada                                                                       |   | 20-5131044                             |
|------------------------------------------------------------------------------|--------|----------------------------------------|
| (State      or other jurisdiction of incorporation or    organization)  |   | (IRS      Employer Identification No.) |

| 8351      N. High Street, Suite 101Columbus, Ohio 43235 |
|---------------------------------------------------------|
| (Address      of principal executive offices)           |

| (614) 310-1614                                                                               |
|----------------------------------------------------------------------------------------------|
| (Issuer’s      telephone number)                                                       |
|                                                                                         |
|                                                                                         |
|                                                                                         |
| (Former      name, former address and former fiscal year, if changed since last      report) |

----

----

TABLE OFCONTENTS

|                                |                                                            | Page   |
|-------------------------------------|-----------------------------------------------------------------|--------|
|                                |
| PART      I - FINANCIAL INFORMATION |
|                                |                                                            |   |
| Item 1.                             | Financial Statements                                            | 3      |
|                                |                                                            |   |
| Item 2.                             | Plan of Operation                                               | 10     |
|                                |                                                            |   |
| Item 3.                             | Controls and Procedures                                         | 13     |
|                                |
| PART      II - OTHER INFORMATION    |
|                                |                                                            |   |
| Item 1.                             | Legal Proceedings                                               | 14     |
|                                |                                                            |   |
| Item 2.                             | Unregistered Sales of Equity Securities and      Use ofProceeds | 14     |
|                                |                                                            |   |
| Item 3.                             | Defaults Upon Senior    Securities                              | 14     |
|                                |                                                            |   |
| Item 4.                             | Submission of Matters to a Vote of      Security    Holders     | 14     |
|                                |                                                            |   |
| Item 5.                             | Other Information                                               | 14     |
|                                |                                                            |   |
| Item 6.                             | Exhibits                                                        | 14     |

|  Page |                                                                                                                 |
|------------|----------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                 |
| 4          | Consolidated Balance Sheets as of March 31, 2008      (unaudited) and December 31, 2007 (audited)                    |
|       |                                                                                                                 |
| 5          | Consolidated Statements of Operations for the      three months ended March 31, 2008 and 2007                        |
|       |                                                                                                                 |
| 6          | Consolidated Statements of Stockholders’ Equity      from December 31, 2006 through March 31, 2008 (unaudited) |
|       |                                                                                                                 |
| 7          | Consolidated Statements of Cash Flows for the      three months ended March 31, 2008 and 2007                        |
|       |                                                                                                                 |
| 8 - 9 | Notes to Financial    Statements                                                                                     |

----

|                                                                                                                                                                                                                                    |   | March      31, |      |   | December      31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|-------------------|--------|
|                                                                                                                                                                                                                                    |   | 2008           |      |   | 2007              |   |
|                                                                                                                                                                                                                                    |   | (unaudited)    |      |   |              |   |
|                                                                                                                                                                                                                                    |   | (restated)     |      |   |              |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |
| ASSETS                                                                                                                                                                                                                                  |   |           |      |   |              |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |
| CURRENT      ASSETS                                                                                                                                                                                                                     |   |           |      |   |              |   |
|         Cash                                                                                                                                                                                    |   | $              | 224,578   |   |              | $      | 200,451 |   |
|         Prepaid      expenses                                                                                                                                                                   |   |           | 27,429    |   |              |   | 40,991 |   |
|         Accounts      receivable                                                                                                                                                                |   |           | 988,351   |   |              |   | 414,826 |   |
|         Total Current Assets                                                                                                                                                                                                  |   |           | 1,240,358 |   |              |   | 656,268 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| PROPERTY      AND EQUIPMENT, net                                                                                                                                                                                                        |   |           | 153,598   |   |              |   | 147,261 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| OIL      AND GAS PROPERTIES, net                                                                                                                                                                                                        |   |           | 7,141,395 |   |              |   | 7,214,863 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| OTHER      ASSETS                                                                                                                                                                                                                       |   |           |      |   |              |   |   |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| Deposits                                                                                                                                                                                                                                |   |           | 4,485     |   |              |   | 4,485 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| TOTAL      ASSETS                                                                                                                                                                                                                       |   | $              | 8,539,836 |   |              | $      | 8,022,877 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| LIABILITIES AND STOCKHOLDERS’      EQUITY                                                                                                                                                                                         |   |           |      |   |              |   |   |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| CURRENT      LIABILITIES                                                                                                                                                                                                                |   |           |      |   |              |   |   |   |
|            Accounts payable and accrued expenses                                                                                                                                                               |   | $              | 297,931   |   |              | $      | 360,708 |   |
|            Notes payable-current portion                                                                                                                                                                       |   |           | 25,491    |   |              |   | 100,000 |   |
|           Notes payable-related party                                                                                                                                                                               |   |           | -         |   |              |   | - |   |
|            Participating interest financing arrangement                                                                                                                                                        |   |           | 1,000,000 |   |              |   | - |   |
| Total      Current Liabilities                                                                                                                                                                                                          |   |           | 1,323,422 |   |              |   | 460,708 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| LONG      TERM LIABILITIES                                                                                                                                                                                                              |   |           |      |   |              |   |   |   |
|           Notes payable                                                                                                                                                                                             |   |           | 50,984    |   |              |   | - |   |
|            Deferred income taxes payable                                                                                                                                                                       |   |           | 163,960   |   |              |   | 163,960 |   |
| Total      Long Term Liabilities                                                                                                                                                                                                        |   |           | 214,944   |   |              |   | 163,960 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
|         TOTAL LIABILITIES                                                                                                                                                                                                     |   |           | 1,538,366 |   |              |   | 624,668 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| STOCKHOLDERS'      EQUITY                                                                                                                                                                                                               |   |           |      |   |              |   |   |   |
|             Preferred shares: $0.001 par value, 10,000,000 shares      authorized:              3,142,650 shares issues and outstanding                           |   |           | 3,143     |   |              |   | 3,143 |   |
|             Common shares: $0.001 par value, 90,000,000 sharesauthorized:              26,880,536 and 20,750,740 shares issues and outstanding,      respectively |   |           | 26,881    |   |              |   | 20,751 |   |
|             Additional paid-in capital                                                                                                                                                                    |   |           | 6,485,597 |   |              |   | 6,271,727 |   |
|             Retained earnings                                                                                                                                                                             |   |           | 485,849   |   |              |   | 1,102,588 |   |
| Total      Stockholders' Equity                                                                                                                                                                                                         |   |           | 7,001,470 |   |              |   | 7,398,209 |   |
|                                                                                                                                                                                                                                    |   |           |      |   |              |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                         |   | $              | 8,539,836 |   |              | $      | 8,022,877 |   |

----

|                                                                       |   | For      the Three Months Ended |       |
|----------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                       |   | March      31,                  |       |
|                                                                       |   | 2008                            |       |   | 2007 |   |
|                                                                       |   | (restated)                      |       |   |   |   |
|                                                                       |   |                            |       |   |   |   |
| REVENUES                                                                   |   |                            |       |   |   |   |
|                                                                       |   |                            |       |   |   |   |
| Oil      and gas revenue                                                   |   | $                               | 520,932    |   |   | $ | 646,715 |   |
| Management      revenue                                                    |   |                            | 25,133     |   |   |   | 53,433 |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| Total      Revenues                                                        |   |                            | 546,065    |   |   |   | 700,148 |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| OPERATING      EXPENSES                                                    |   |                            |       |   |   |   |   |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| Lease      operating costs                                                 |   |                            | 204,879    |   |   |   | 200,470 |   |
| Depreciation      and depletion                                            |   |                            | 186,991    |   |   |   | 190,320 |   |
| General      and administrative                                            |   |                            | 630,093    |   |   |   | 216,418 |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| Total      Operating Expenses                                              |   |                            | 1,021,963  |   |   |   | 607,208 |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| INCOME      (LOSS) FROM OPERATIONS                                         |   |                            | (475,898   | ) |   |   | 92,940 |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| OTHER      INCOME (EXPENSE)                                                |   |                            |       |   |   |   |   |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| Gain      on sale of assets                                                |   |                            | -          |   |   |   | - |   |
| Interest      expense                                                      |   |                            | (2,097     | ) |   |   | (102,776 | ) |
|                                                                       |   |                            |       |   |   |   |   |   |
| Total      Other Income (Expense)                                          |   |                            | (2,097     | ) |   |   | (102,776 | ) |
|                                                                       |   |                            |       |   |   |   |   |   |
| NET      INCOME (LOSS) BEFORE INCOME TAXES                                 |   |                            | (477,995   | ) |   |   | (9,836 | ) |
|                                                                       |   |                            |       |   |   |   |   |   |
| INCOME      TAX EXPENSE                                                    |   |                            | -          |   |   |   | - |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| NET      INCOME (LOSS)                                                     |   | $                               | (477,995   | ) |   | $ | (9,836 | ) |
|                                                                       |   |                            |       |   |   |   |   |   |
| BASIC      EARNINGS (LOSS) PER SHARE                                       |   | $                               | (0.02      | ) |   | $ | (0.00 | ) |
|                                                                       |   |                            |       |   |   |   |   |   |
| FULLY      DILUTED INCOME (LOSS) PER SHARE                                 |   | $                               | (0.02      | ) |   | $ | (0.00 | ) |
|                                                                       |   |                            |       |   |   |   |   |   |
| BASIC      WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING              |   |                            | 22,488,138 |   |   |   | 18,095,740 |   |
|                                                                       |   |                            |       |   |   |   |   |   |
| FULLY      DILUTED WEIGHTED AVERAGE NUMBER OF SHARES      OUTSTANDING |   |                            | 28,423,589 |   |   |   | 18,095,740 |   |

----

|                                                                     |                 |   |              |   |    |       |     |   |          |   | Additional |        |   |   | Total     |
|--------------------------------------------------------------------------|----------------------|--------|-------------------|--------|---------|------------|----------|--------|---------------|--------|------------|-------------|--------|--------|-----------|
|                                                                     | Preferred      Stock |   | Common      Stock |   | Paid-In |       | Retained |   | Stockholders' |
|                                                                     | Shares               |   | Amount            |   | Shares  |       | Amount   |   | Capital       |   | Earnings   |        | Equity |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Balance,      December 31, 2006                                          | 3,142,650            |   | $                 | 3,143  |    | 18,095,740 |     | $      | 18,096        |   | $          | 7,382,111   |   | $      | 914,987   |   | $ | 8,318,337 |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Common      stock issued for cashat $10.00 per share                     | -                    |   |              | -      |    | 2,155,000  |     |   | 2,155         |   |       | 2,152,845   |   |   | -         |   |   | 2,155,000 |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Common      stock issued upon exerciseof warrants at $0.25               | -                    |   |              | -      |    | 250,000    |     |   | 250           |   |       | 6,000       |   |   | -         |   |   | 6,250 |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Common      stock issued upon exerciseof warrants at $1.00               | -                    |   |              | -      |    | 250,000    |     |   | 250           |   |       | 24,750      |   |   | -         |   |   | 25,000 |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Costs      incurred by the Energy Fundsnot included in re-capitalization | -                    |   |              | -      |    |       |     |   | -             |   |       | (3,293,979) |   |   | -         |   |   | (3,293,979) |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Net      income for the year endedDecember      31, 2007            | -                    |   |              | -      |    | -          |     |   | -             |   |       | -           |   |   | 187,601   |   |   | 187,601 |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Balance,      December 31, 2007                                          | 3,142,650            |   |              | 3,143  |    | 20,750,740 |     |   | 20,751        |   |       | 6,271,727   |   |   | 1,102,588 |   |   | 7,398,209 |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Recapitalization                                                         | -                    |   |              | -      |    | 6,060,000  |     |   | 6,060         |   |       | (6,060)     |   |   | -         |   |   | - |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Common      stock issued for debtat      $3.36 per share                 | -                    |   |              | -      |    | 29,796     |     |   | 30            |   |       | 99,970      |   |   | -         |   |   | 100,000 |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Common      stock issued for servicesat $3.00 per share                  | -                    |   |              | -      |    | 40,000     |     |   | 40            |   |       | 119,960     |   |   | -         |   |   | 120,000 |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Dividends      paid on preferred stock                                   | -                    |   |              | -      |    | -          |     |   | -             |   |       | -           |   |   | (138,744) |   |   | (138,744) |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Net      income for the three months endedMarch 31, 2008 (restated) | -                    |   |              | -      |    | -          |     |   | -             |   |       | -           |   |   | (477,995) |   |   | (477,995) |
|                                                                     |                 |   |              |   |    |       |     |   |          |   |       |        |   |   |      |   |   |   |
| Balance,      March 31, 2008 (restated)                                  | 3,142,650            |   | $                 | 3,143  |    | 26,880,536 |     | $      | 26,881        |   | $          | 6,485,597   |   | $      | 485,849   |   | $ | 7,001,470 |

----

|                                                                                  |   | For      the Three Months Ended |      |
|---------------------------------------------------------------------------------------|--------|---------------------------------|-----------|
|                                                                                  |   | March      31,                  |      |
|                                                                                  |   | 2008                            |      |   | 2007 |   |
|                                                                                  |   |                            |      |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                             |   |                            |      |   |   |   |
|                                                                                  |   |                            |      |   |   |   |
| Net      loss                                                                         |   | $                               | (477,995  | ) |   | $ | (9,836 | ) |
| Adjustments      to reconcile net loss to net cash used by operating      activities: |   |                            |      |   |   |   |   |   |
| Depreciation      and depletion                                                       |   |                            | 186,991   |   |   |   | 190,320 |   |
| Common      stock issued for services                                                 |   |                            | 120,000   |   |   |   | - |   |
| Gain      on sale of assets                                                           |   |                            | -         |   |   |   | - |   |
| Amortization      of discount on debt                                                 |   |                            | -         |   |   |   | 91,667 |   |
| Changes      in operating assets and liabilities                                      |   |                            |      |   |   |   |   |   |
| Changes      in accounts receivable                                                   |   |                            | (573,525  | ) |   |   | (17,974 | ) |
| Changes      in prepaid expenses and deposits                                         |   |                            | 13,562    |   |   |   | - |   |
| Changes      in deferred taxes payable                                                |   |                            | -         |   |   |   | - |   |
| Changes      in accounts payable and accrued expenses                                 |   |                            | (62,777   | ) |   |   | 51,934 |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| Net      Cash Provided by Operating Activities                                        |   |                            | (793,744  | ) |   |   | 306,111 |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                             |   |                            |      |   |   |   |   |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| Purchase      of property and equipment                                               |   |                            | (6,424    | ) |   |   | - |   |
| Purchase      of oil and gas properties                                               |   |                            | (113,436  | ) |   |   | (1,345,871 | ) |
|                                                                                  |   |                            |      |   |   |   |   |   |
| Net      Cash Used by Investing Activities                                            |   |                            | (119,860  | ) |   |   | (1,345,871 | ) |
|                                                                                  |   |                            |      |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                             |   |                            |      |   |   |   |   |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| Repayment      of notes payable                                                       |   |                            | (11,312   | ) |   |   | - |   |
| Proceeds      from notes payable                                                      |   |                            | 1,087,787 |   |   |   | - |   |
| Costs      incurred by the Energy Funds not included in    re-capitalization          |   |                            | -         |   |   |   | (85,886 | ) |
| Dividends      paid                                                                   |   |                            | (138,744  | ) |   |   | - |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| Net      Cash Provided by Financing Activities                                        |   |                            | 937,731   |   |   |   | (85,886 | ) |
|                                                                                  |   |                            |      |   |   |   |   |   |
| NET      DECREASE IN CASH                                                             |   |                            | 24,127    |   |   |   | (1,125,646 | ) |
|                                                                                  |   |                            |      |   |   |   |   |   |
| CASH      AT BEGINNING OF PERIOD                                                      |   |                            | 200,451   |   |   |   | 1,169,749 |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| CASH      AT END OF PERIOD                                                            |   | $                               | 224,578   |   |   | $ | 44,103 |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION                                |   |                            |      |   |   |   |   |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| CASH      PAID FOR:                                                                   |   |                            |      |   |   |   |   |   |
| Interest                                                                              |   | $                               | 2,097     |   |   | $ | 11,109 |   |
| Income      Taxes                                                                     |   | $                               | -         |   |   | $ | - |   |
|                                                                                  |   |                            |      |   |   |   |   |   |
| NON      CASH FINANCING ACTIVITIES:                                                   |   |                            |      |   |   |   |   |   |
|               Common stock issued for debt    |   | $                               | 100,000   |   |   | $ | - |   |

----

|                                                                                                                                                                                                     |   | (Revised) |      |   | (Original) |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-----------|--------|------------|--------|
|                                                                                                                                                                                                     |   |      |      |   |       |   |
| CURRENT      ASSETS                                                                                                                                                                                      |   | $         | 1,240,358 |   |       | $      | 1,370,357 |   |
| PROPERTY      AND EQUIPMENT, net                                                                                                                                                                         |   |      | 153,598   |   |       |   | 153,598 |   |
| OIL      AND GAS PROPERTIES, net                                                                                                                                                                         |   |      | 7,141,395 |   |       |   | 6,666,395 |   |
| OTHER      ASSETS                                                                                                                                                                                        |   |      | 4,485     |   |       |   | 4,485 |   |
|             TOTAL ASSETS                                                                                                                                                   |   | $         | 8,539,836 |   |       | $      | 8,194,835 |   |
|                                                                                                                                                                                                     |   |      |      |   |       |   |   |   |
| CURRENT      LIABILITIES                                                                                                                                                                                 |   |      |      |   |       |   |   |   |
| Accounts      payable and accrued expenses                                                                                                                                                               |   | $         | 297,931   |   |       | $      | 297,931 |   |
| Notes      payable-current portion                                                                                                                                                                       |   |      | 25,491    |   |       |   | 25,491 |   |
| Participating      interest financing arrangement                                                                                                                                                        |   |      | 1,000,000 |   |       |   | - |   |
| Total      Current Liabilities                                                                                                                                                                           |   |      | 1,323,422 |   |       |   | 323,422 |   |
|                                                                                                                                                                                                     |   |      |      |   |       |   |   |   |
| LONG      TERM LIABILITIES                                                                                                                                                                               |   |      | 214,944   |   |       |   | 285,926 |   |
|                                                                                                                                                                                                     |   |      |      |   |       |   |   |   |
| TOTAL      LIABILITIES                                                                                                                                                                                   |   |      | 1,538,366 |   |       |   | 609,348 |   |
|                                                                                                                                                                                                     |   |      |      |   |       |   |   |   |
| STOCKHOLDERS'      EQUITY                                                                                                                                                                                |   |      |      |   |       |   |   |   |
|         Preferred shares: $0.001 par value, 10,000,000 shares      authorized:           3,142,650 shares issues and outstanding                                      |   |      | 3,143     |   |       |   | 3,143 |   |
|         Common shares: $0.001 par value, 90,000,000 sharesauthorized:           26,880,536 and 20,750,740  shares issues and outstanding,      respectively |   |      | 26,881    |   |       |   | 26,881 |   |
|         Additional paid-in capital                                                                                                                                                             |   |      | 6,485,597 |   |       |   | 6,485,597 |   |
|         Retained earnings                                                                                                                                                                      |   |      | 544,866   |   |       |   | 1,069,866 |   |
|                                 Total Stockholders' Equity             |   |      | 7,001,470 |   |       |   | 7,585,487 |   |
|                                                                                                                                                                                                     |   |      |      |   |       |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                          |   | $         | 8,539,836 |   |       | $      | 8,194,835 |   |

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|                                                             |   | For      the Three Months Ended |       |
|------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                             |   | March      31,                  |       |
|                                                             |   | 2008                            |       |   | 2008 |   |
|                                                             |   | (Restated)                      |       |   | (Original) |   |
|                                                             |   |                            |       |   |   |   |
| REVENUES                                                         |   |                            |       |   |   |   |
| Oil      and gas revenue                                         |   | $                               | 520,932    |   |   | $ | 520,932 |   |
| Management      revenue                                          |   |                            | 25,133     |   |   |   | 40,133 |   |
| Total      Revenues                                              |   |                            | 546,065    |   |   |   | 561,065 |   |
|                                                             |   |                            |       |   |   |   |   |   |
| OPERATING      EXPENSES                                          |   |                            |       |   |   |   |   |   |
| Lease      operating costs                                       |   |                            | 204,879    |   |   |   | 204,879 |   |
| Depreciation      and depletion                                  |   |                            | 186,991    |   |   |   | 186,991 |   |
| General      and administrative                                  |   |                            | 630,093    |   |   |   | 510,094 |   |
| Total      Operating Expenses                                    |   |                            | 1,021,963  |   |   |   | 901,964 |   |
|                                                             |   |                            |       |   |   |   |   |   |
| INCOME      (LOSS) FROM OPERATIONS                               |   |                            | (475,898   | ) |   |   | (340,899 | ) |
|                                                             |   |                            |       |   |   |   |   |   |
| OTHER      INCOME (EXPENSE)                                      |   |                            |       |   |   |   |   |   |
| Gain      on sale of assets                                      |   |                            | -          |   |   |   | 525,000 |   |
| Interest      expense                                            |   |                            | (2,097     | ) |   |   | (2,097 | ) |
| Total      Other Income (Expense)                                |   |                            | (2,097     | ) |   |   | 522,903 |   |
|                                                             |   |                            |       |   |   |   |   |   |
| NET      INCOME (LOSS) BEFORE INCOME TAXES                       |   |                            | (477,995   | ) |   |   | 182,004 |   |
|                                                             |   |                            |       |   |   |   |   |   |
| INCOME      TAX EXPENSE                                          |   |                            | -          |   |   |   | (70,982 | ) |
|                                                             |   |                            |       |   |   |   |   |   |
| NET      INCOME (LOSS)                                           |   | $                               | (477,995   | ) |   | $ | 111,022 |   |
|                                                             |   |                            |       |   |   |   |   |   |
| BASIC      EARNINGS (LOSS) PER SHARE                             |   | $                               | (0.02      | ) |   | $ | 0.00 |   |
| FULLY      DILUTED INCOME (LOSS) PER SHARE                       |   | $                               | (0.02      | ) |   | $ | 0.00 |   |
|                                                             |   |                            |       |   |   |   |   |   |
| BASIC      WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING         |   |                            | 22,488,138 |   |   |   | 22,488,138 |   |
| FULLY      DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |   |                            | 22,488,138 |   |   |   | 29,083,588 |   |

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MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OFOPERATION

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Item 3.     Controls andProcedures

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| Exhibit      Number |   | Description      of Exhibit                                                                                                                                                             |
|---------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                    |
| 3.1                 |   | Articles      of Incorporation (1)                                                                                                                                                      |
|                |   |                                                                                                                                                                                    |
| 3.2                 |   | By-Laws      (1)                                                                                                                                                                        |
|                |   |                                                                                                                                                                                    |
| 31.1                |   | Certification of Chief Executive Officer pursuant      to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of      2002                             |
|                |   |                                                                                                                                                                                    |
| 31.2                |   | Certification of Chief Financial Officer pursuant      to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of      2002                             |
|                |   |                                                                                                                                                                                    |
| 32.1                |   | Certification of Chief Executive Officer and Chief      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002 |

| (1)   | Previously      included as an exhibit to the 8-KA filed on March 14,  2008. |
|-----------------|------------------------------------------------------------------------------|

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|                              | Capital      City Energy Group, Inc.                                                                                 |
|-----------------------------------|----------------------------------------------------------------------------------------------------------------------|
| Date:      September      8, 2008 |                                                                                                                 |
|                              |                                                                                                                 |
|                              | By:      /s/ David  Beule                                                                                            |
|                              |                   David Beule                            |
|                              | Title:    Chief      Financial Officer, Principal Accounting Officer (Since March 11,      2008) |

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