UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549


FORM
10-KSB /A







x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended August 31, 2007o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ______to ______





Commission
file number: 01-33522





GULF
WESTERN PETROLEUM
CORPORATION


(Name of
small business issuer in its charter)





Nevada
            98-0489324(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)4801
      Woodway Drive, Suite 306W, Houston, Texas
            77056(Address
      of principal executive office)
            (Zip
      Code)Issuer’s telephone number(713)
      355-7001Securities
      registered pursuant to Section 12(b) of the Exchange
  Act:Common
      Stock, $.001 par value
            Not
      Applicable(Title
      of Class)
            (Name
      of exchange on which registered)





Securities
registered pursuant to Section 12(g) of the Exchange Act: Common Stock, par
value $.001 per share





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





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes x    No
o





Check
if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.  Yes o    No   x











Transitional Small Business Disclosure
Format.  YesoNox





























TABLE OF
CONTENTS





PagePART I
            1Item 1.
            Description
      of Business
            3Item 2.
            Description
      of Property
            19Item 3.
            Legal
      Proceedings
            20Item 4.
            Submission
      of Matters to a Vote of Security Holders
            20PART II
            21Item 5.
            Market
      for Common Stock and Related Stockholder Matters and Small Business Issuer
      Purchases of Equity Securities
            21Item 6.
            Plan
      of Operations
            23Item 7.
            Financial
      Statements
            24Item 8.
            Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosures
            47Item 8A.
            Controls
      and Procedures
            48Item 8B.
            Other
      Information
            48PART III
            49Item 9.
            Directors
      and Executive Officers, Promoters, Control Persons and Corporate
      Governance; Compliance with Section 16(a) of the Exchange
      Act
            49Item 10.
            Executive
      Compensation
            52Item 11.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            55Item 12.
            Certain
      Relationships and Related Transactions and Director
      Independence
            56Item 13.
            Exhibits
            58Item 14.
            Principal
      Accountant Fees and Services
            60





i





PART I





Forward Looking
Statements




We
caution readers that certain important factors (including without limitation
those set forth below) may affect our actual results and could cause such
results to differ materially from any forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”), made herein. We intend such forward-looking
statements to be covered by the safe-harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995,
and are including this statement for purposes of complying with those
safe-harbor provisions. You should not rely on forward-looking statements in
this Form 10-KSB. Our forward-looking statements are based on current management
expectations that involve risks and uncertainties that may result in such
expectations not being realized. Without limiting the generality of the
foregoing, words such as “may,” “expect,” “believe,” “plan,” “anticipate,”
“intend,” “could,” “estimate” or “continue” are intended to identify
forward-looking statements. These statements are based on our beliefs as well as
assumptions we havemade
using information currently available to it. Some, but not all, of the factors
that may cause these differences include those discussed in “Risk
Factors.”




In particular, this Form 10-KSB contains
forward-looking statements pertaining to the following:




·
            oil and natural gas production
      levels;




·
            capital expenditure
      programs;




·
            the estimated quantity of oil and
      natural gas reserves;




·
            projections of market prices and
      costs;




·
            supply and demand for oil and
      natural gas;




·
            expectations regarding the ability
      to raise capital and to continually add to reserves through acquisitions,
      exploration and development;




·
            treatment under governmental
      regulatory regimes;




·
            drilling plans;
      and




·
            oil and gas reserve
      life.




The actual results could differ
materially from those anticipated in these forward-looking statements as a
result of the risk factors set forth below and elsewhere in this Form
10-KSB:




·
            our ability to continue as a going
      concern;




·
            our limited history of
      operations;




·
            our need for
      additional external funding;




·
            volatility in market prices for
      oil and natural gas;




·
            liabilities inherent in oil and
      natural gas operations;




·
            uncertainties associated with
      estimating oil and natural gas
reserves;




·
            competition for, among other
      things, capital, acquisitions of reserves, undeveloped lands and skilled
      personnel;




·
            incorrect assessments of the value
      of acquisitions;




·
            geological, technical, drilling
      and processing problems;




·
            fluctuations in foreign exchange
      or interest rates and stock market volatility;
  and




·
            the other factors discussed under
      “Risk Factors.”




These factors should not be considered
exhaustive.





1
 Table of Contents





These forward-looking statements are
made as of the date of this Form 10-KSB and we assume no obligation to update
such forward-looking statements or to update the reasons why actual results
could differ materially from those anticipated in such forward-looking
statements.









2
 Table of Contents





Item
      1.
            Description of
      Business




Corporate History




We were incorporated in the State ofNevadaon February 21, 2006 as Georgia
Exploration, Inc., a Vancouver, Canada-based mineral resource exploration
company with interests in 14 non-oil and gas mineral claims inBritish Columbia.  On January 3, 2007, we
consummated a reverse merger with Wharton Resources Corp. (“Wharton” or “Wharton
Corp.”).  The merger resulted in a change in control of us with
Wharton’s former stockholders holding approximately 71.4% of the then issued and
outstanding shares of our common stock.   On March 8, 2007, we
changed our name to Gulf Western Petroleum Corporation.




General
Overview




We are engaged in the acquisition,
exploration and development of oil and natural gas reserves in theUnited States.  Upon completion of our
reverse merger, Wharton’s oil and gas interests and reserves became our primary
assets and our core business became the exploration and development of domestic
oil and natural gas reserves in theUnited States.




We currently hold oil and gas lease
interests inTexas,KansasandKentucky.  We are actively engaged in
the drilling of Frio formation wells inDewittCountyandLavaca County,Texas.  We also hold proved
undeveloped reserves inWharton County,Texas, and we are engaged in a natural gas
supply and gas gathering system development project inSoutheast Kansas.  We hold oil and gas lease
interests inKentuckythat are exploratory in nature.
We hope to establish commercial levels of production from our Texas Shamrock and
Brushy CreekProjectwellsin Dewitt andLavaca Counties,Texasduring 2008.  We are actively
pursuing financing options to initiate the drilling of our proved undeveloped
natural gas and oil reserves in our Oakcrest Prospect located inWharton County,Texas.




Principal
Properties




Oakcrest Prospect (Wilcox Formation),
Wharton County,Texas




Our Oakcrest Prospect is located in
south centralTexas, approximately 75 miles southwest ofHouston,Texas.   We hold oil and gas
lease interests in approximately 866 acres with a working interest of 95.75% and
we serve as operator.  The main target of hydrocarbon production is
the Wilcox formation, with secondary targets for the Oakcrest Prospect being theFrioand Yegua formations that will be
traversed while in route to the Wilcox formation during drilling. The lease
acreage is adjacent to and lies immediately to the north-east of the existing
Southwest Bonus Field.  The prospect is located in the central Gulf
Coast Plain on the east side of the San Marcos Arch inWharton County,Texas.   All Wilcox fields in
the Gulf Coast Plain are fault-bounded and produce from simple, normal
fault-bounded anticlines.  The Wilcox formation is Eocene-age and is
found at a depth of approximately 11,000 to 12,500 feet.  A
combination of aeromagnetic surveys and well control had originally defined the
structure of the Oakcrest Prospect.  Through 2-D seismic data
reprocessing and reinterpretation, two large normal faults that were previously
identified were confirmed together with two smaller possible
faults.













3
 Table of Contents













Summary
of Oil and Natural Gas Reserves


(Prepared
as of the Company’s Fiscal Year-End of August 31, 2007)








Oil
            
            
            Natural GasGross
            
            
            Net
            
            
            Gross
            
            
            Net(MBBL)
            
            
            (MBBL)
            
            
            (MMCF)
            
            
            (MMCF)Total
      Proved Reserves
            
            
            146.2
            
            
            
            106.7
            
            
            
            4,872
            
            
            
            3,308





Cash Flows and PV 10 Proved
Reserves


Before
(“BFIT”) and After (“AFIT”) Income Taxes


(Discounted at 10%)




BFIT
                (in
      thousands)
            
            
            AFIT
                (in
      thousands)Future net
      revenue
            
            $
            28,610
            
            
            $
            28,610Future operating
      costs
            
            
            3,256
            
            
            
            3,256Future income
      taxes
            
            
            -
            
            
            
            2,604Operating cash
      flow
            
            $
            25,354
            
            
            $
            22,750Capital
      investment
            
            
            8,693
            
            
            
            8,693Undiscounted future net cash
      flow
            
            $
            16,661
            
            
            $
            14,057Discounted PV10 cash
      flow
            
            $
            13,066
            
            
            $
            11,168









Estimated capital expenditures to drill
and complete a well is approximately $4.4 million based on current rig rates,
casing prices, sub-surface and surface equipment, and other ancillary services
and materials required to drill and complete a Wilcoxformationwell.





4
 Table of Contents









TexasShamrock and Brushy Creek Projects
(Frio Formation), Dewitt andLavaca Counties,Texas




Our Texas Frio formation wells that
comprise our Shamrock and Brushy CreekProjectsare our first wells to commence
commercial production with the first well, the Pope No. 1 (Brushy Creek V),
going on line in November 2007.    In our Frio initiative,
we are participating in the drilling of a minimum of twelve Frio-age natural gas
wells located in Dewitt andLavaca Counties,Texas.   All twelve wells
have been identified through newly acquired 3-D seismic
data.  Frio-age sediments lie below the Anahuac Shale, a detachment
zone within the Post Isabel Fold Belt.  The Shamrock Project inDewittCountyconsists of five Frio wells
drilled in 2007, and our participation in the Brushy Creek Project consists of
non-operated interests in seven Frio wells located inLavaca County,Texas.  Our Texas Frio formation
projects are operated by third parties.  The Shamrock Project is
operated by Caskids Operating Company, and the Brushy Creek Project is operated
by Suncoast Technical Services, Inc.




Shamrock
Project




The Shamrock Project is a five well
drilling program located in Dewitt County, Texas that is targeting Frio-age
natural gas reserves that have been identified through 3-D seismic. Frio-age
wells have proven to be prolific natural gas producers throughout theTexasGulfCoastregion.  The target
formation is the Jameson Sand at total well depth at approximately 3200
feet.   The five wells drilled and completed in the Shamrock
Project are the Polinard-Lee No. 1, the Miller-Thomas No. 1, the Bushmill No. 1,
the Red Breast No. 1 and the Michael Collins No. 1.   All five
wells had flow rates during test of 310 – 325 Mcf per day.   We
hold an average 65.0% working interest and 45.5% net revenue interest in the
wells.




Our plan of operation for the Shamrock
Project is to finish the interconnection of the wells and to effect commercial
production creating operating cash flows to us.




Brushy Creek
Project




The Brushy Creek Project is a 3-D
seismic controlled project situated in the prolific Oligocene Frio oil and
natural gas trend located in the lowerTexasGulfCoast.  The Brushy Creek Project
was initiated in 2005, and to date has been successful in ten out of ten
wells.  The first ten wells resulted in sixFriodiscoveries, three Miocenen discoveries
and one Yegua completion.  These ten new wells entail drilling that
targets several high quality amplitude anomalies similar to those that have
proven to be productive in the previous drilling.   We currently
hold interests in seven Brushy Creek Project wells, and are evaluating the
participation in three additionalFriowells scheduled for
drilling.  Our average working and net revenue interests in the
existing seven drilled wells is 34.4% and 24.9%,
respectively.




The seven wells drilled and completed
during 2007 that we hold interests in are the Goodrich-Toyah No. 1, Nichol’s No.
1, Pope No. 1, Goodrich-Deleplain No. 1, Goodrich-Poindexter No. 1, O’Neal Smith
No. 1 and the Williams No. 6.   These wells are in various stages
of testing and interconnection.




Our plan of operation is to complete
testing and interconnection of the seven existing Brushy Creek Frio wells, and
to evaluate our further participation in the Brushy Creek
Project.





5
 Table of Contents





Mound Branch Reserve and Infrastructure
Development Project,Elk
County,Kansas




On
January 30, 2007 we purchased Orbit Energy, LLC’s (“Orbit”) working and net
revenue interests in approximately 8,800 gross acres located in Elk County,
Kansas together with its interests in certain drilled wells and associated
equipment (the “Mound Branch Project”).  Orbit is owned by CodeAmerica
Investments, LLC for which Wm. Milton Cox, our Chairman and CEO, is the Managing
Member, and Paragon Capital, LLC for which Bassam Nastat, our President and a
Director, serves as Manager.




The purchase price totaled $6.8 million,
and consideration paid to Orbit was comprised of: a) $760,947 of funds that we
advanced to Orbit for testing and evaluation of the existing well bores,
reservoir formations and associated lease acreage; b) a thirty-six month $2.0
million 10% convertible note with principal due at maturity; and c) 4,039,053
shares of our common stock with a fair value of $1.00 per common share at the
time of issuance, subject to a true up upon receipt of an independent report
assessing the fair value of the assets acquired at no less than the purchase
price of $6.8 million.  Should the valuation be less than the $6.8
million purchase price then the number of shares released to Orbit on January
30, 2008, the one-year anniversary of the purchase from Orbit, will be ratably
reduced for the lower valuation and shares will be returned to
treasury.




The Mound Branch Project is a natural
gas reserve and gathering system development project of existing and after
acquired oil and gas lease acreage, and existing wellbores previously drilled by
Orbit and its working interest partners.  The Mound Branch Project
consists of a three year drilling program to drill fifty wells per year and for
the construction of a 15-mile low pressure gathering system.  The
required gathering system would have design capacity of 8,000 Mcf per day, and
is necessary for the delivery of existing and expected prospective well head
production into the interstate natural gas pipeline grid inKansas.  Orbit serves as the
operator of the Mound Branch Project.




The Mound Branch natural gas reserves
cover Cherokee Group clastic rocks over Mississippian limestones. Depth to the
Mississippian basement in the Cherokee Group ranges from 0 feet at outcrops in
the extreme southeastern corner ofKansasto more than 2,500 feet (762 m)
in Elk andChautauquaCountiesas the Mississippian and Cherokee
Group rocks gradually dip to the west and southwest.  The majority of
wells are expected to produce from the Mulky andSummitcoals at approximately 1,600 feet
depth, with additional potential in the Mississippi
Limestone.




Recent testing of the Mound Branch
Project MT19-1 well, the first Mississippi Limestone well showed absolute open
flow (i.e., the maximum flow rate that a well could theoretically deliver with
zero pressure at the face of the reservoir) at 1,400Mcf per day.    The 72 Hour
Flow Test performed over three days on the MT19-1 well established initital
production rates of approximately 350 to 400 MCF per day.   The
flow rates in the 72 Hour Test were established by flowing the well through a
two phase separator and measuring volumes thru a 2-inch orfice tester vented to
the atmosphere.  Well pressures and volumes were recorded hourly, and
choke setting were varied to establish production rates.   Well
pressure was 610 lbs. at the commencement of the testing, and 590 lbs. at the
end of the test.









Well Name
            Plate Size
              (Inch)
            Test Result Range
              (Mcf/d)DB 19-3
            0.375
            32.1 - 43.7DB 16-3
            0.350
            31.8 - 48.4DD 16-2
            0.375
            25.6 - 48.6MT 29-1
            0.400
            39.2 - 61.2MT 29-1
            0.375
            37.5 - 47.2MT29-2
            0.375
            31.1 - 47.6DD 16-8
            0.350
            32.7 - 47.4DD 16-8
            0.350
            36.7 - 55.5





6
 Table of Contents





Since our acquisition of Orbit’s
interests in theMound
BranchProject we have been
funding 100% of the costs incurred by Orbit for the testing and evaluation of
the of the existing well bores, reservoir formations and associated lease
acreage, including amounts attributable to other working interest owners in the
existing wells.   The amounts paid on the behalf of other working
interest ownerstotal$198,106 through August 31, 2007, and
we expect that the amounts will be charged back to the other working interest
owners in the wells ratable to their working interests.




Orbit has advisedusthat the testing and evaluation
procedures for the Mound Branch Project were substantially completed during
October2007. Orbit has
recently advised that they recommendperforming a test on one well to
further evaluate the Mulberry coal formation that has not beenpreviouslytested, but has been determined to be
productive for other producers in the area.




Our plan of operation for Mound Branch
is to complete the evaluation of the Mulberry coal formation, and to continue
progresson the development
ofthe natural gas supply
and gathering system project.




Other Prospects




Baxter
Bledsoe Prospect,ClayCounty,Kentucky








BellProspect,Bell
County,Kentucky




On October 1, 2006, we acquired from
CodeAmerica oil and gas lease interests located inBell County,Kentucky.  We paid $314,475 to
CodeAmerica for the Bell Prospect which is comprised of approximately 3,400
acres that are categorized as exploratory. Our plan of operation for the Bell
Prospectis to assemble
and evaluate data with respect to the prospectonce the initial exploratory well
on the Baxter Bledsoe prospect is completed and the data acquired during the
drilling process is assembled and evaluated.We hold a 100% working interest in the
prospect and serve as operator.




Market and
Competition




Our long-term success depends on our
ability to identify, acquire and develop oil and natural gas reserves in
quantities and at prices that are physically and commercially
competitive.  TheU.S.natural gas, oil and associated product
markets are highly competitive and experience extreme volatility in commodity
prices, much of which are driven by factors outside our control.  Our
experience is that crude oil, condensate and associated product prices are
driven primarily by global geopolitics, while natural gas prices in theU.S.are primarily determined by the
interaction of consumer and industrial demand and available natural gas
supply.





A large portion of the natural gas,
crude oil and associated products production in theU.S.has historically been in the states ofTexas,Louisiana,Oklahoma, and in the offshore areas associated
with theGulf of
Mexico.  The
natural gas and crude oil production in these areas are interconnected to
consuming markets through a vast network of existing developed infrastructure to
move production through pipelines or via trucks to markets.





Notwithstanding increased drilling
activity in theU.S., domestic natural gas and crude oil
production has not materially increased while consumer demand continues to
grow.  The maturation ofU.S.supply basins has resulted in declining
well recoveries and higher production decline rates.  Although
generally more costly than conventional supply sources, supply from
non-conventional sources of natural gas, such as liquefied natural gas and
coalbed methane, is becoming more prevalent and is attracting significant
capital investment to explore and develop these potential non-conventional
supply opportunities.  The development of non-conventional supply
sources will in many instances also require capital investment to develop the
infrastructure necessary to effect delivery of production into
markets.





7
 Table of Contents





We compete with independent oil and
natural gas companies for commercial prospect acquisitions/participation;
equipment, drilling rigs and labor required to evaluate and develop prospects;
capital resources to fund capital investments; and in the sale of production
into the oil and natural gas markets in theU.S.The volatile nature of theU.S.energy markets makes it difficult to
estimate future prices of oil and natural gas, and competition for drilling rigs
makes it very difficult to forecast the development costs of our prospects and
the timeframe under which they can be developed.  Many of our
competitors have substantially greater financial resources than we have, which
may allow them to define, evaluate, acquire and develop a greater number of
prospects than we can.





Regulation





In theUnited States, domestic development, production and
sale of oil and natural gas are extensively regulated at both the federal and
state levels.  These regulations include requiring permits for
drilling wells; maintaining prevention plans; submitting notification and
receiving permits in relation to the presence, use and release of certain
materials incidental to oil and natural gas operations; and regulating the
location of wells, the method of drilling and casing wells, the use,
transportation, storage and disposal of fluids and materials used in connection
with drilling and production activities, surface plugging and abandoning of
wells and the transporting of production.  Legislation affecting the
oil and natural gas industry is under constant review for amendment or
expansion, frequently increasing the regulatory burden.  Also,
numerous departments and agencies, both federal and state, have issued rules and
regulations binding on the oil and natural gas industry and its individual
members, compliance with which is often difficult and costly and some of which
carry substantial penalties for failure to comply.  Inasmuch as new
legislation affecting the oil and natural gas industry is commonplace, and
existing laws and regulations are frequently amended or reinterpreted,
weare unable to predict
thefuture cost or impact
of complying with these laws and regulations.




State statutes and regulations require
permits for drilling operations, drilling bonds and reports concerning wells.Texasand other states in which we intend to
conduct operations also have statutes and regulations governing conservation
matters, including the unitization or pooling of oil and natural gas properties
and establishment of maximum rates of production from oil and natural gas
wells.




Our operations are also subject to
extensive and developing federal, state and local laws and regulations relating
to environmental, health and safety matters; petroleum; chemical products and
materials; and waste management.  Permits, registrations or other
authorizations are required for the operation of certain of our facilities and
for our oil and natural gas exploration and future production activities. These
permits, registrations or authorizations are subject to revocation, modification
and renewal.  Governmental authorities have the power to enforce
compliance with these regulatory requirements, the provisions of required
permits, registrations or other authorizations, and lease conditions, and
violators are subject to civil and criminal penalties, including fines,
injunctions or both.  Failure to obtain or maintain a required permit
may also result in the imposition of civil and criminal penalties. Third parties
may have the right to sue to enforce compliance.




Our operations are also subject to
various conservation matters, including the number of wells which may be drilled
in a unit and the unitization or pooling of oil and natural gas properties. In
this regard, some states allow the forced pooling or integration of tracts to
facilitate exploration while other states rely on voluntary pooling of lands and
leases, which may make it more difficult to develop oil and natural gas
properties. In addition, state conservation laws establish maximum rates of
production oil and natural gas wells, generally limit the venting or flaring of
natural gas, and impose certain requirements regarding the ratable purchase of
production. The effect of these regulations is to limit the amounts of oil and
natural gas that we can produce from our wells and to limit the number of wells
or the locations at which we can drill.




Our operations, as is the case in the
petroleum industry generally, are significantly affected by federal tax laws.
Federal, as well as state, tax laws have many provisions applicable to
corporations which could affect our future tax liability.





8
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Environmental
Matters




Our exploration, development, and future
production of oil and natural gas are subject to various federal, state and
local environmental laws and regulations discussed below. Such laws and
regulations can increase the costs of planning, designing, installing and
operating oil and natural gas wells.  We consider the cost of
environmental protection a necessary and manageable part of our business. We
have been able to plan for and comply with new environmental initiatives without
materially altering our operating strategies.




Our activities are subject to a variety
of environmental laws and regulations, including but not limited to, the Oil
Pollution Act of 1990 (“OPA”), the Clean Water Act (“CWA”), the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), the Resource
Conservation and Recovery Act (“RCRA”), the Clean Air Act, and the Safe Drinking
Water Act, as well as state regulations promulgated under comparable state
statutes. We are also subject to regulations governing the handling,
transportation, storage, and disposal of naturally occurring radioactive
materials that are found in our oil and natural gas operations. Civil and
criminal fines and penalties may be imposed for non-compliance with these
environmental laws and regulations. Additionally, these laws and regulations
require the acquisition of permits or other governmental authorizations before
undertaking certain activities, limit or prohibit other activities because of
protected areas or species, and impose substantial liabilities for cleanup of
pollution.




Under the OPA, a release of oil into
water or other areas designated by the statute could result in us being held
responsible for the costs of remediating such a release, certain OPA specified
damages, and natural resource damages. The extent of that liability could be
extensive, as set out in the statute, depending on the nature of the release. A
release of oil in harmful quantities or other materials into water or other
specified areas could also result in us being held responsible under the CWA for
the costs of remediation, and civil and criminal fines and
penalties.




CERCLA and comparable state statutes,
also known as “Superfund” laws, can impose joint and several and retroactive
liability, without regard to fault or the legality of the original conduct, on
certain classes of persons for the release of a “hazardous substance” into the
environment. In practice, cleanup costs are usually allocated among various
responsible parties. Potentially liable parties include site owners or
operators, past owners or operators under certain conditions, and entities that
arrange for the disposal or treatment of, or transport hazardous substances
found at the site. Although CERCLA, as amended, currently exempts petroleum,
including but not limited to, crude oil, natural gas and natural gas liquids
from the definition of hazardous substance, our operations may involve the use
or handling of other materials that may be classified as hazardous substances
under CERCLA. Furthermore, there can be no assurance that the exemption will be
preserved in future amendments of the act, if any.




RCRA and comparable state and local
requirements impose standards for the management, including treatment, storage,
and disposal of both hazardous and non-hazardous solid wastes. We generate
hazardous and non-hazardous solid waste in connection with our routine
operations. From time to time, proposals have been made that would reclassify
certain oil and natural gas wastes, including wastes generated during drilling,
production and pipeline operations, as “hazardous wastes” under RCRA which would
make such solid wastes subject to much more stringent handling, transportation,
storage, disposal, and clean-up requirements. This development could have a
significant impact on our operating costs. While state laws vary on this issue,
state initiatives to further regulate oil and natural gas wastes could have a
similar impact.





Research and
Development





Our business plan is focused on the
exploration and development of our oil and natural gas interests. We do not
anticipate that we will expend any significant funds on research and development
over the twelve months ending August 31, 2008.





Purchase of Significant
Equipment










9
 Table of Contents





Employees





We currently have five full-time and
part-time employees. We generally utilize short term contractors, consultants
and professional service providers, as necessary. Our directors and officers
provide services on a month to month basis pursuant to oral arrangements, but
have not signed employment or consulting agreements with us. We do not expect
any material changes in the number of employees over the next twelve month
period. We may enter formal written service agreements with our directors and
officers in the future. We expect to utilize contractors and consultants as
needed to meet our staffing needs, and will continue to periodically evaluate
costs and benefits of staffing our resource requirements externally or
internally. We expect that the level of success of our exploration and
development initiatives will drive the timing and level of employees that we may
retain in the future.





Going Concern




Our financial statements have been
prepared assuming we will continue as a going concern. We are in our development
stage and, accordingly, have several capital initiatives but no revenues. We
have raised limited financing and have incurred operating losses since our
inception. These factors raise substantial doubt about our ability to continue
as a going concern, and our ability to achieve and maintain profitability and
positive cash flows are dependent on our ability to secure sufficient financing
to fund the acquisition, drilling and development of profitable oil and natural
gas properties. We are actively pursuing financing options which we believe
would allow us to establish and sustain commercial production. There are no
assurances that we will be able to obtain additional financing from investors or
private lenders and, if available, such financing may not be on commercial terms
acceptable to us or our stockholders. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty. We
intend to raise financing sufficient to fund our capital expenditure and working
capital requirements for the next twelve months principally through private
placements and possibly public offerings.





10
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Risks
Factors




Risks
Related to our Business




Without additional financing, there
is substantial doubt about our ability to continue as a going
concern.




Our
audited consolidated financial statements as of August 31, 2007 and 2006 and for
each of the two years ended August 31, 2007 and 2006, and from inception
(January 20, 2005) to August 31, 2007 were prepared assuming that we will
continue as a going concern.  We are in our development stage and have
had limited operations and no revenues from our inception through August 31,
2007.  Our independent accountants in their audit report have
expressed substantial doubt about our ability to continue as a going
concern.  Our continued operations are dependent on our ability to
achieve profitability and to generate and maintain positive operating cash
flows.  This is driven by our ability to complete equity and debt
financings sufficient to fund the acquisition, drilling and development of
profitable oil and gas properties.  Such financings may not be
available to us or may not be on reasonable terms.  Our financial
statements do not include any adjustments that may result from the outcome of
this uncertainty.




We have a very
limited history of operations in oil and natural gas exploration and production
and accordingly may not be successful in carrying out our business
objectives.




We were
incorporated in the State of Nevada on February 21, 2006 as Georgia Exploration,
Inc., a Vancouver based mineral resource exploration company with interests in
14 non-oil and gas mineral claims in British Columbia.  On January 3,
2007, we consummated a merger with Wharton Resources Corp.  Upon
completion of the merger, our core business and strategic focus became the
exploration and development of oil and natural gas reserves in the United
States.








We may require additional funding,
and our failure to raise additional capital necessary to support and expand our
operations could reduce our ability to compete and could harm our
business.








To
execute our plans, we will require substantial financing and are actively
working on options to raise equity and/or debt financing through private
placements and public offerings. However, in the event that we are unable to
raise the financing to meet our needs, or if we are able to obtain sufficient
financing from investors or private lenders but it is on commercial terms
unacceptable to us or our stockholders, we will be required to scale back
or slow our capital investment program. Should we raise funds through equity and
debt placements, existing equity and ownership in us could be negatively
affected due to the dilution of existing equity ownership of our
shares.




The notes issued
to certain of our investors mature in twelve months and are secured by
substantially all of our assets, so the failure to repay the notes could cause
us to cease operations.




As noted
above, the notes issued to certain of our investors in connection with the
financing that we completed in September 2007, are due on September 10, 2008 and
are secured by a lien on substantially all of our assets, including our oil and
gas lease interests and our equity interests in our subsidiaries.  We
are dependent on external financing sources to raise funds sufficient to repay
the principal due under these notes at maturity. Alternate external financing
may be comprised of equity and debt, which may or may not be available to us on
reasonable terms.  If we are not successful in or unable to repay the
$3.7 million principal balance on the maturity of the notes, since substantially
all our assets are pledged as security to the lenders,we may be
unable to continue our business and as a result may be required to scale back or
cease operations for our business, the result of which would be that our
stockholders would lose some or all of their investment.





11
 Table of Contents





Our related party
transactions may cause conflicts of interests that may adversely affect our
ability to operate our business.





We have
entered into and may, in the future, enter into various transactions and
agreements with entities wholly or partially owned by our officer and directors,
including Orbit Energy, LLC, which is ownedby CodeAmerica Investments,
LLC, for which Wm. Milton Cox, our Chairman and CEO, is the Managing Member, and
Paragon Capital, LLC for which Bassam Nastat, our President and a Director,
serves as Manager.  We believe that the transactions and agreements
that we have entered into with related parties are on terms that are at least as
favorable to us as could reasonably have been obtained at such time from third
parties.  However, these relationships could create, or appear to
create, potential conflicts of interest when members of our senior management
are faced with decisions that could have different implications for us and those
entities or their affiliates.










Our exploration and development
operations are subject to many risks which may affect our ability to profitably
extract oil and natural gas reserves or achieve targeted returns.  In
addition, continued growth requires that we acquire and successfully develop
additional oil and natural gas reserves.














Our oil and natural gas operations are
subject to operating hazards that may increase our operating costs to prevent
such hazards, or may materially affect our operating results if any of such
hazards were to occur.




Oil and natural gas exploration,
development and production operations are subject to all the risks and hazards
typically associated with such operations, including hazards such as fire,
explosion, blowouts, cratering, sour gas releases and spills, each of which
could result in substantial damage to oil and natural gas wells, production
facilities, other property and the environment or in personal injury. Oil and
natural gas production operations are also subject to all the risks typically
associated with such operations, including encountering unexpected formations or
pressures, premature decline of reservoirs and the invasion of water into
producing formations. Losses resulting from the occurrence of any of these risks
could have a material adverse effect on our results of operations, liquidity and
financial condition.





12
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Sales of any production of oil or
natural gas from our present or future reserves are subject to numerous factors
beyond our control which could make it difficult to market and sell any oil and
natural gas at price and cost levels that are acceptable or profitable to
us.










If we are unable to successfully compete
with the large number of oil and natural gas producers in our industry, we may
not be able to achieve profitable operations.










We are subject to various regulatory
requirements, including environmental regulations, and may incur substantial
costs to comply and remain in compliance with those requirements.





Our operations in the United States are
subject to regulation at the federal, state and local levels, including
regulation relating to matters such as the exploration for and the development,
production, marketing, pricing, transmission and storage of oil and natural gas,
as well as environmental and safety matters.  Failure to comply with
applicable regulations could result in fines or penalties being owed to third
parties or governmental entities, the payment of which could have a material
adverse effect on our financial condition or results of operations.  Our
operations are subject to significant laws and regulations, which may adversely
affect our ability to conduct business or increase our costs.  Extensive
federal, state and local laws and regulations relating to health and
environmental quality in theUnited Statesaffect nearly all of our operations.
 These laws and regulations set various standards regulating various
aspects of health and environmental quality, provide for penalties and other
liabilities for the violation of these standards, and in some circumstances,
establish obligations to remediate current and former facilities and off-site
locations.





13
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Moreover, we cannot predict what
legislation or regulations will be enacted in the future or how existing or
future laws or regulations will be administered, enforced or made more
stringent. Compliance with more stringent laws or regulations, or more vigorous
enforcement policies of the regulatory agencies, could require us to make
material expenditures for the installation and operation of systems and
equipment for remedial measures, all of which could have a material adverse
effect on our financial condition or results of operations.





Our ability to successfully market and
sell oil and natural gas is subject to a number of factors that are beyond our
control, and that may adversely impact our ability to produce and sell oil and
natural gas, or to achieve profitability.




The marketability and price of oil and
natural gas that may be acquired or discovered by us will be affected by
numerous factors beyond our control.  Our ability to market our natural gas
may depend upon our ability to acquire space on pipelines that deliver natural
gas to commercial markets. We may also be affected by deliverability
uncertainties related to the proximity of our reserves to pipelines and
processing facilities, by operational problems with such pipelines and
facilities, and by government regulation relating to price, taxes, royalties,
land tenure, allowable production, the export of oil and natural gas and by many
other aspects of the oil and natural gas business.





Our revenues, profitability and future
growth and the carrying value of our oil and natural gas properties are
substantially dependent on prevailing prices of oil and natural gas. Our ability
to borrow and to obtain additional capital on attractive terms is also
substantially dependent upon oil and natural gas prices. Prices for oil and
natural gas are subject to large fluctuations in response to relatively minor
changes in the supply of and demand for oil and natural gas, market uncertainty
and a variety of additional factors beyond our control. These factors include
economic conditions, in theUnited StatesandCanada, the actions of the Organization of
Petroleum Exporting Countries, governmental regulation, political stability in
theMiddle Eastand elsewhere, the foreign supply of
oil and natural gas, the price of foreign imports and the availability of
alternative fuel sources. Any substantial and extended decline in the price of
oil and natural gas would have an adverse effect on the carrying value of our
proved reserves, borrowing capacity, revenues, profitability and cash flows from
operations.





Volatile oil and natural gas prices make
it difficult to estimate the value of producing properties for acquisition and
often cause disruption in the market for oil and natural gas producing
properties, as buyers and sellers have difficulty agreeing on such value. Price
volatility also makes it difficult to budget for and project the return on
acquisitions and development and exploitation projects.





14
 Table of Contents





We cannot guarantee that title to our
properties does not contain a defect that may materially affect our interest in
those properties.










Our
business may be harmed if we are unable to retain our interests in
leases.










Our reserve estimates are subject to
numerous uncertainties and may be inaccurate.










Estimates of proved reserves that may be
developed and produced in the future are often based upon volumetric
calculations and upon analogy to similar types of reserves rather than actual
production history. Estimates based on these methods are generally less reliable
than those based on actual production history. Subsequent evaluation of the same
reserves based upon production history and production practices will result in
variations in the estimated reserves and such variations could be
material.





The reserve quantities included herein
were prepared by an independent reserve engineer, MHA Petroleum Consultants,
Inc. (“MHA”), and were prepared based on fiscal year-end prices and cost
estimates assuming continuation of existing economic conditions as of August 31,
2007.Actual
future net revenue will be affected by other factors such as actual production
levels, supply and demand for oil and natural gas, curtailments or increases in
consumption by oil and natural gas purchasers, changes in governmental
regulation or taxation and the impact of inflation on costs.  The MHA
reserve quantities and other calculations are based in part on the assumed
success of activities we intend to undertake in future periods, including
obtaining the financing required to fund the capital expenditures necessary to
effect the drilling and completion of the reserves identified in the MHA reserve
evaluation.  The reserves and estimated cash flows to be derived from
the production of the reserves will be reduced if we are not successful in
undertaking the activities required in future periods.














15
 Table of Contents





Some of our oil and natural gas
properties are held in the form of licenses and leases.  If we default on
those licenses or leases, we may lose our interest in those
properties.










The loss or unavailability of our key
personnel for an extended period of time could adversely affect our business
operations and prospects.










We depend on the services of third
parties for material aspects of our operations, including drilling operators,
and accordingly if we cannot obtain certain third party services, we may not be
able to operate.










We will be subject to the requirements
of Section 404 of the Sarbanes-Oxley Act.  If we are unable to timely
comply with Section 404 or if the costs related to compliance are significant,
our profitability, stock price and results of operations and financial condition
could be materially adversely affected.





Pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, beginning with our annual report on Form 10-KSB for
the fiscal year ending August 31, 2008, we will be required to furnish a report
by management on our internal control over financial reporting.  This
report will contain, among other matters, an assessment of the effectiveness of
our internal control over financial reporting, including a statement as to
whether or not our internal control over financial reporting is effective.
 This assessment must include disclosure of any material weaknesses in our
internal control over financial reporting identified by our
management.  Beginning for the fiscal year ending August 31, 2009,
this report must also contain a statement that our auditors have issued an
attestation report on management’s assessment of internal control.





We cannot be certain that we will be
able to complete our assessment, testing and any required remediation in a
timely fashion.  These reporting and assessment obligations will place
significant demands on our management, administrative, operational, internal
audit and accounting resources. We anticipate that we will need to upgrade our
reporting systems and procedures, implement additional financial and management
controls, and hire additional accounting and finance staff. If we are unable to
accomplish these objectives in a timely and effective fashion, our ability to
comply with our financial reporting requirements and other rules that apply to
reporting companies could be impaired.  In addition, during the evaluation
and testing process, if we identify one or more material weaknesses in our
internal control over financial reporting, we will be unable to assert that our
system of internal control is effective. If we are unable to assert that our
internal control over financial reporting is effective (or if our auditors are
unable to attest that management’s report is fairly stated or they are unable to
express an opinion on the effectiveness of our internal controls), we could lose
investor confidence in the accuracy and completeness of our financial reports,
which could have a material adverse effect on our stock
price.





16
 Table of Contents





Any
failure to maintain effective internal controls could have a material adverse
effect on our business, operating results and stock price. In addition, expenses
related to services rendered by our accountants, legal counsel and consultants
will increase in order to ensure compliance with these laws and regulations.
Failure to comply with Section 404 may make it more difficult for us to obtain
certain types of insurance, including director and officer liability insurance.
 We may be forced to accept reduced policy limits and coverage and/or to
incur substantially higher costs to obtain the same or similar coverage.
 The impact of these events could also make it more difficult for us to
attract and retain qualified persons to serve on our board of directors, on
committees of our board of directors, or as executive officers.




Risks Related to our Common
Stock




Shares
of our common stock may continue to be subject to price volatility and
illiquidity because our shares may continue to be thinly traded and may never
become eligible for trading on a national securities exchange.













Our
common stock is subject to the “penny stock” rules of the Securities and
Exchange Commission and the trading market in our securities is limited, which
makes transactions in our stock cumbersome and may reduce the value of an
investment in our stock.




The Securities and Exchange Commission
(the “SEC”) has adopted Rule 3a51-1 which establishes the definition of a “penny
stock,” for the purposes relevant to us, as any equity security that (i) has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share, or (ii) is not registered on a national securities exchange or
listed on an automated quotation system sponsored by a national securities
exchange. For any transaction involving a penny stock, unless exempt, Rule 15g-9
of the Securities and Exchange Act of 1934, as amended,
requires:




•
            that a broker or dealer approve a
      person’s account for transactions in penny stocks;
    and




•
            the broker or dealer receives from
      the investor a written agreement to the transaction, setting forth the
      identity and quantity of the penny stock to be
      purchased.


17
 Table of Contents




In order to approve a person’s account
for transactions in penny stocks, the broker or dealer must:




•
            obtain financial information and
      investment experience objectives of the person;
  and




•
            make a reasonable determination
      that the transactions in penny stocks are suitable for that person and the
      person has sufficient knowledge and experience in financial matters to be
      capable of evaluating the risks of transactions in penny
      stocks.




The broker or dealer must also deliver,
prior to any transaction in a penny stock, a disclosure schedule prescribed by
the SEC relating to the penny stock market, which, in highlight
form:




•
            sets forth the basis on which the
      broker or dealer made the suitability determination;
      and




•
            attests that the broker or dealer
      received a signed, written agreement from the investor prior to the
      transaction.




Disclosure also has to be made about the
risks of investing in penny stocks in both public offerings and in secondary
trading, and about the commissions payable to both the broker-dealer and the
registered representative.  Current quotations for the securities and
the rights and remedies and to be available to an investor in cases of fraud in
penny stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks.  Generally, brokers may be less
willing to execute transactions in securities subject to the “penny stock”
rules.  This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our
stock.




The market valuation of our business may
fluctuate due to factors beyond our control and the value of your investment may
fluctuate correspondingly.




The market valuation of energy
companies, such as us, frequently fluctuate due to factors unrelated to the past
or present operating performance of such companies.  Our market
valuation may fluctuate significantly in response to a number of factors, many
of which are beyond our control, including:




•
            changes in securities analysts’
      estimates of our financial
performance;




•
            fluctuations in stock market
      prices and volumes, particularly among securities of energy
      companies;




•
            changes in market valuations of
      similar companies;




•
            announcements by us or our
      competitors of significant contracts, new technologies, acquisitions,
      commercial relationships, joint ventures or capital
      commitments;




•
            variations in our quarterly
      operating results;




•
            fluctuations in oil and natural
      gas prices; and




•
            additions or departures of key
      personnel.




As a result, the value of your
investment in us may fluctuate.




Investors should not look to dividends
as a source of income.




In the
interest of reinvesting initial profits back into our business, we do not intend
to pay cash dividends in the foreseeable future.  Consequently, any
economic return will initially be derived, if at all, from appreciation in the
fair market value of our stock, and not as a result of dividend
payments.





18
 Table of Contents





Item
      2.
            Description of
      Property




Reserves




The reserve quantities
were prepared based on








Proved
      ReservesDeveloped
              
              
              Undeveloped
              
              
              TotalNatural
      gas (Mcf)
              
              
              -
              
              
              
              3,307,601
              
              
              
              3,307,601Oil
      (Bbls)
              
              
              -
              
              
              
              106,697
              
              
              
              106,697Total
      proved reserves (Mcfe)
              
              
              -
              
              
              
              3,947,783
              
              
              
              3,947,783





From our
inception through August 31, 2007, we have not had natural gas or oil production
arising from or attributable to our oil and gas interests.




Drilling Activity and Productive
Wells




Information
with regard to our drilling activities during the year ended August 31, 2007,
and well status at August 31, 2007 are presented in the following
table:




At August 31, 2007Gross
            
            
            NetDrilled:Exploratory
            
            
            10.0
            
            
            
            3.6Development
            
            
            -
            
            
            
            -Total
            
            
            10.0
            
            
            
            3.6Total WellsProductive
            
            
            -
            
            
            
            -Non-productive
            
            
            -
            
            
            
            -Under testing and
      evaluation
            
            
            10.0
            
            
            
            3.6Total
            
            
            10.0
            
            
            
            3.6





All wells drilled during the year ended
August 31, 2007 were drilled inTexasin connection with the Shamrock and
Brushy Creek projects. At August 31, 2007, these wells were undergoing
completion operations and testing in order to make a determination of the
productive status of each well.




We did
not drill any wells during the period from our inception through the year ended
August 31, 2006.




Acreage




The
following table summarizes by state our developed and undeveloped acreage as of
August 31, 2007. The term of the undeveloped leasehold acreage ranges from one
to three years.   Our Oakcrest Prospect lease acreage located in
Wharton County, Texas expires on September 1, 2008 unless we have commenced and
maintain a continuous drilling schedule, initiate production or negotiate a
renewal with the holder of the mineral rights.





19
 Table of Contents




Developed
              
              
              UndevelopedState
              
              Gross
              
              
              Net
              
              
              Gross
              
              
              NetKansas
              
              
              -
              
              
              
              -
              
              
              
              8,800
              
              
              
              6,864Kentucky
              
              
              -
              
              
              
              -
              
              
              
              5,600
              
              
              
              4,032Texas
              
              
              -
              
              
              
              -
              
              
              
              1,687
              
              
              
              1,099


Delivery
Commitments





We have
no significant delivery commitments.





Office
Lease





We share office space inHouston,Texaswith Orbit under a month-to-month
arrangement.The office space is
leased by Orbit.  During the years ended August 31, 2007 and 2006, we
paid renttotaling $42,994
and $38,210, respectively.





Item
      3.
            Legal
      Proceedings




We know of no material, active or
pending legal proceedings against us, nor are we involved as a plaintiff in any
material proceeding or pending litigation. There are no proceedings in which any
of our directors, officers or affiliates, or any registered or beneficial
shareholder, is an adverse party or has a material interest adverse to our
interest.




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




None.





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 Table of Contents





PART II





Item
      5.
            Market for Common Stock and
      Related Stockholder Matters and Small Business Issuer Purchases of Equity
      Securities




Market Price for Common
Stock





Our common stock has been quoted on the
Over The Counter Bulletin Board (“OTCBB”) since July 10, 2006.  On
March 8, 2007, we changed our symbol on the OTCBB from “GXPL.OB” to “GWPC.OB”
and our common stock is currently trading on the OTCBB under that
symbol.




The following table sets forth the
range of the high and low closing prices, as reported by the OTCBB, for our
common stock for the periods indicated.The quotations represent inter-dealer
prices, without retail mark up or commission and may not represent actual
transactions.




Sales PriceHigh
            
            
            LowQuarter ended November 30,
      2006
            
            $
            1.30
            
            
            $
            0.93Quarter ended February 28,
      2007
            
            $
            1.10
            
            
            $
            0.84Quarter ended May 31,
      2007
            
            $
            0.93
            
            
            $
            0.55Quarter ended August 31,
      2007
            
            $
            0.60
            
            
            $
            0.22





Our authorized capital stock consists of
1,200,000,000 shares of common stock.  As of November 28, 2007,
56,603,107 shares of common stock were issued and outstanding.  As of
such date, there were approximately 36 holders of record of our common
stock.




Dividend Policy









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Securities Authorized For Issuance Under
Equity Compensation Plans




The
following table sets forth information regarding our existing equity
compensation plans as of August 31, 2007.




Equity
      Compensation Plan InformationPlan
      Category
            
            Number
      of securities to be
              issued
      upon exercise of
              outstanding
      options, warrants
              and
      rights
              (a)
            
            
            Weighted
      average
              exercise
              price
      of outstanding options,
              warrants
      and rights
              (b)
            
            
            Number
      of securities remaining
              available
      for future issuance under
              equity
      compensation plans
              (excluding
      securities reflected in
              column
      (a))
              (c)Equity
      compensation plans approved by security holders
            
            
            -
            
            
            
            -
            
            
            
            -Equity
      compensation plans not approved by security holders (1)
            
            
            3,625,000
            
            
            
            0.74
            
            
            
            5,375,000Total
      as of August 31, 2007
            
            
            3,625,000
            
            
            
            0.74
            
            
            
            5,375,000





(1)
            Consists
      of the 2007 Non-Qualified Stock Option Plan (the “Plan”).  The
      Plan will be adopted by the Company’s stockholders prior to March 9,
      2008.





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 Table of Contents





Item
      6.
            Plan of
      Operations




The
following plan of operations should be read in conjunction with “Business” and
our consolidated financial statements and related notes included elsewhere in
this Form 10-KSB.  In January 2007, we modified our business plan to
concentrate on the acquisition, exploration, development and production of oil
and natural gas projects.  We are a development stage company and we
have not earned any operating revenue as of the date of this filing from our
current operations in the oil and natural gas industry.  Our plan of
operation is to (i) continue to secure capital funding sufficient to drill a
minimum of two Oakcrest Prospect wells in Texas; (ii) to continue progress on
the development of the gas supply and gathering system for the Mound Branch
Project; and (iii) to complete the drilling and testing of our Frio formation
wells in the Shamrock and Brushy Creek Projects, interconnect the wells and
establish commercial production.  We also expect to drill a test
exploration well in Kentucky on the Baxter Bledsoe Prospect.




During
the twelve month period ending August 31, 2008, we project total cash
requirements of approximately $14.4 million. Our total estimated cash
requirements are comprised of approximately $12.8 million for oil and natural
gas exploration, drilling, development and operating expenditures, and $1.6
million for general and administrative, operating and public company expenses,
and working capital requirements.




In
September of 2007, we issued convertible notes in an aggregate principal amount
of $3.7 million to Metage Funds Limited and NCIM Limited which are due in full
on September 10, 2008 unless converted into shares of our common stock prior to
maturity.  These notes are secured by a lien on substantially all of
our assets, including our oil and gas lease interests and our equity interests
in our subsidiaries.  The stated interest in the notes is 15.0% per
annum with interest for the first six months due on March 10, 2008 and monthly
thereafter until maturity.








Over the
next twelve months, we intend to use substantially all of our available funds to
continue the exploration and development of our oil and natural gas prospect
opportunities, as summarized below:




Estimated Funding
      During the Twelve Months Ending August 31, 2008Exploration,
      drilling, development and operating expendituresOakcrest
      Prospect – Drilling and completion of two Wilcox formation
      wells
            
            $
            8,900,000Shamrock
      and Brushy Creek Projects – Drilling and completion of
    wells
            
            
            1,100,000Mound
      Branch Project – Development of gathering system and reserve development
      program
            
            
            1,300,000Baxter
      Bledsoe Prospect –Drill initial exploratory well
            
            
            300,000Other
      prospects
            
            
            1,200,000Operating,
      general and administrative
            
            
            900,000Public
      company expenses
            
            
            240,000Working
      capital
            
            
            500,000$
            14,440,000




We do not
have any off balance sheet financial arrangements.





23
 Table of Contents





Item
      7.
              Financial
      Statements





INDEX
TO FINANCIAL STATEMENTS




Report of Independent
      Registered Public Accounting Firm
            25Consolidated Balance Sheets as
      of August 31, 2007 and 2006
            26Consolidated Statements of
      Operations for the years ended August 31, 2007 and 2006 and the period
      from Inception (January 20, 2005) to August 31, 2007 (Restated)
            27Consolidated Statement of
      Stockholders’ Equity (Deficit) for the period from Inception (January 20,
      2005) to August 31, 2007
            28Consolidated Statements of
      Cash Flows for years ended August 31, 2007 and 2006 and the period from
      Inception (January 20, 2005) to August 31, 2007
            30Notes to the Consolidated
      Financial Statements – August 31, 2007
            32





24
 Table of Contents





REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM








To the Board of
Directors


Gulf Western Petroleum
Corporation


Houston,Texas





We have audited the accompanying
consolidated balance sheets of Gulf Western Petroleum Corporation (a development
stage company) as of August 31, 2007 and 2006, and the related consolidated
statements of operations, stockholders’ equity, and cash flows for each of the
two years in the period ended August 31, 2007, and the period from inception
(January 20, 2005) to August 31, 2007.   These consolidated
financial statements are the responsibility of Gulf Western’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.




We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.




In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects,
the financial position of Gulf Western Petroleum Corporation as of August 31,
2007 and 2006, and the results of operations and cash flows for the years then
ended, and the period from inception (January 20, 2005) to August 31, 2007, in
conformity with accounting principles generally accepted in the United States of
America.




The accompanying consolidated financial
statements have been prepared assuming that Gulf Western Petroleum Corporation
will continue as a going concern. As discussed in Note 3 to the consolidated
financial statements, Gulf Western Petroleum Corporation was formed on January
20, 2005 and has not generated any revenues since inception, which raises
substantial doubt about its ability to continue as a going concern. Management’s
plans in regard to these matters are described in Note 3.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.









GBH CPAs, PCwww.gbhcpas.comHouston,TexasNovember 28, 2007 (April
      17, 2008 as to the effects of the restatement described in Note
      13)





25
 Table of Contents





GULF WESTERN PETROLEUM
CORPORATION


(A DEVELOPMENT STAGE
COMPANY)


CONSOLIDATED BALANCE
SHEETS


As of August 31, 2007 and
2006





ASSETS
            
            2007
              (Restated)
            
            
            2006Current assetsCash
            
            $
            1,925
            
            
            $
            312,581Accounts receivable – joint
      interest partners
            
            
            198,106
            
            
            
            -Accounts receivable – related
      party
            
            
            11,488
            
            
            
            -Total current assets
            
            
            211,519
            
            
            
            312,581Deferred financing costs, net
      of amortization
            
            
            56,123
            
            
            
            -Office equipment, net of
      depreciation of $6,507 and $1,350, respectively
            
            
            13,185
            
            
            
            6,022Oil and gas properties, full
      cost method:Properties subject to
      amortization
            
            
            1,090,988
            
            
            
            773,016Properties not subject to
      amortization
            
            
            10,642,207
            
            
            
            136,987Total assets
            
            $
            12,014,022
            
            
            $
            1,228,606LIABILITIES AND STOCKHOLDERS’
      EQUITY (DEFICIT)Current liabilitiesAccounts payable
            
            $
            1,065,092
            
            
            $
            630,306Accounts payable – related
      parties
            
            
            677,402
            
            
            
            328,047Stock payable
            
            
            100,000
            
            
            
            -Advances from stockholder
            
            
            120,000
            
            
            
            -Due to parent
            
            
            -
            
            
            
            460,231Accrued interest
            
            
            15,041
            
            
            
            4,765Accrued interest – related
      party
            
            
            116,712
            
            
            
            -Notes payable
            
            
            
            
            
            
            312,500Convertible note payable, net
      of unamortized debt discount of $11,290 and $-0-, respectively
            
            
            238,710
            
            
            
            -Total current liabilities
            
            
            2,332,957
            
            
            
            1,735,849Convertible note – related
      party
            
            
            2,000,000
            
            
            
            -Convertible notes payable, net
      of unamortized debt discount of $17,536 and $-0-, respectively
            
            
            482,464
            
            
            
            76,883Asset retirement
      obligation
            
            
            50,949
            
            
            
            -Total liabilities
            
            
            4,866,370
            
            
            
            1,812,732STOCKHOLDERS’ EQUITY
      (DEFICIT)Common shares, $0.001 par
      value, 1.2 billion shares authorized, 53,489,662 and 25,000,000 shares
      issued and outstanding, respectively
            
            
            53,490
            
            
            
            25,000Additional paid-in capital
            
            
            10,911,412
            
            
            
            (24,000
            )Deficit accumulated during the
      development stage
            
            
            (3,817,250
            )
            
            
            (585,126
            )Total stockholders’ equity
      (deficit)
            
            
            7,147,652
            
            
            
            (584,126
            )Total liabilities and
      stockholders’ equity (deficit)
            
            $
            12,014,022
            
            
            $
            1,228,606





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





26
 Table of Contents





GULF WESTERN PETROLEUM
CORPORATION


(A DEVELOPMENT STAGE
COMPANY)


CONSOLIDATED STATEMENTS OF
OPERATIONS


For the Years Ended August 31, 2007 and
2006


and the Period from Inception (January
20, 2005) through August 31, 2007





Year Ended
                  August 31, 2007
                  (Restated)
                
                
                Year Ended
                  August 31, 2006
                
                
                Inception
                  through
                  August 31, 2007Revenue
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating expensesGeneral and administrative
                
                
                2,680,342
                
                
                
                60,958
                
                
                
                2,741,449Depreciation
                
                
                5,157
                
                
                
                1,350
                
                
                
                6,507Total operating expenses
                
                
                2,685,499
                
                
                
                62,308
                
                
                
                2,747,956Operating loss
                
                
                (2,685,499
                )
                
                
                (62,308
                )
                
                
                (2,747,956
                )Other (income) expenseFinancing costs
                
                
                (118,017
                )
                
                
                278,517
                
                
                
                389,095Interest expense
                
                
                663,306
                
                
                
                4,765
                
                
                
                668,071Currency exchange loss
                
                
                1,336
                
                
                
                10,792
                
                
                
                12,128Total other expense
                
                
                546,625
                
                
                
                294,074
                
                
                
                1,069,294Net loss
                
                $
                (3,232,124
                )
                
                $
                (356,382
                )
                
                $
                (3,817,250
                )Net loss per share:Basic and diluted
                
                $
                (0.08
                )
                
                $
                (0.01
                )Weighted average shares
      outstanding:Basic and diluted
                
                
                42,052,238
                
                
                
                25,000,000







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





27
 Table of Contents





GULF
WESTERN PETROLEUM CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)


For
the Period from Inception (January 20, 2005) through August 31,
2007




Common
                  Shares
                
                
                Par
                  Amount
                
                
                Additional
                  Paid-In-Capital
                
                
                Accumulated
                  Deficit
                
                
                TotalIssuance of common shares at
      inception
                
                
                25,000,000
                
                
                $
                25,000
                
                
                $
                (24,000
                )
                
                $
                -
                
                
                $
                1,000Net loss, inception through
      August 31, 2005
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (228,744
                )
                
                
                (228,744
                )Balance, August 31, 2005
                
                
                25,000,000
                
                
                $
                25,000
                
                
                
                (24,000
                )
                
                $
                (228,744
                )
                
                $
                (227,744
                )Net loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (356,382
                )
                
                
                (356,382
                )Balance, August 31, 2006
                
                
                25,000,000
                
                
                $
                25,000
                
                
                $
                (24,000
                )
                
                $
                (585,126
                )
                
                $
                (584,126
                )Issuance of common shares to
      related party for oil and gas properties-October 16, 2006 ($0.09 per
      share)
                
                
                5,000,000
                
                
                
                5,000
                
                
                
                455,496
                
                
                
                -
                
                
                
                460,496Balance, January 3, 2007
      (prior to reverse merger)
                
                
                30,000,000
                
                
                $
                30,000
                
                
                $
                431,496
                
                
                $
                (585,126
                )
                
                $
                (123,630
                )Common shares recapitalized
      for reverse merger-January 3, 2007 ($0.001 per
      share)
                
                
                27,645,000
                
                
                
                27,645
                
                
                
                (27,645
                )
                
                
                -
                
                
                
                -Cancellation of shares on
      reverse merger-January 3, 2007 ($0.001 per
      share)
                
                
                (15,645,000
                )
                
                
                (15,645
                )
                
                
                15,645
                
                
                
                -
                
                
                
                -Balance, January 3, 2007
      (after  reverse merger)
                
                
                42,000,000
                
                
                $
                42,000
                
                
                $
                419,496
                
                
                $
                (585,126
                )
                
                $
                (123,630
                )Issuance of common shares for
      debenture-January 3, 2007 ($0.73 per
      share)
                
                
                108,109
                
                
                
                108
                
                
                
                78,369
                
                
                
                -
                
                
                
                78,477Beneficial conversion feature
      of debentures
                
                
                -
                
                
                
                -
                
                
                
                75,390
                
                
                
                -
                
                
                
                75,390Issuance of common shares to
      related party for oil and gas properties-January 30, 2007 ($1.00 per
      share)
                
                
                4,039,053
                
                
                
                4,039
                
                
                
                4,035,014
                
                
                
                -
                
                
                
                4,039,053Issuance of units for cash in
      private placement-January 22, 2007 ($1.00 per
      unit)
                
                
                3,205,000
                
                
                
                3,205
                
                
                
                3,201,795
                
                
                
                -
                
                
                
                3,205,000-May 10, 2007 ($1.00 per
      unit)
                
                
                525,000
                
                
                
                525
                
                
                
                524,475
                
                
                
                -
                
                
                
                525,000-August 16, 2007 ($0.40 per
      unit)
                
                
                1,712,500
                
                
                
                1,713
                
                
                
                683,287
                
                
                
                -
                
                
                
                685,000-August 31, 2007 ($0.40 per
      unit)
                
                
                1,000,000
                
                
                
                1,000
                
                
                
                399,000
                
                
                
                -
                
                
                
                400,000Issuance of warrants for
      services in private placement
                
                
                -
                
                
                
                -
                
                
                
                13,138
                
                
                
                -
                
                
                
                13,138Issuance of common shares for
      services-May 10, 2007 ($0.72 per
      share)
                
                
                500,000
                
                
                
                500
                
                
                
                359,500
                
                
                
                -
                
                
                
                360,000-August 1, 2007 ($0.31 per
      share)
                
                
                100,000
                
                
                
                100
                
                
                
                30,400
                
                
                
                -
                
                
                
                30,500Issuance of common shares
      under terms of and extension of notes payable-May 10, 2007 ($1.00 per
      share)
                
                
                200,000
                
                
                
                200
                
                
                
                199,800
                
                
                
                -
                
                
                
                200,000-August 31, 2007 ($1.00 per
      share)
                
                
                100,000
                
                
                
                100
                
                
                
                99,900
                
                
                
                -
                
                
                
                100,000Amortization of stock
      options
                
                
                -
                
                
                
                -
                
                
                
                738,599
                
                
                
                -
                
                
                
                738,599Fair value of warrants issued
      in conjunction with loans
                
                
                -
                
                
                
                -
                
                
                
                53,249
                
                
                
                -
                
                
                
                53,249Net loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (3,232,124
                )
                
                
                (3,232,124
                )Balance, August 31, 2007
                
                
                53,489,662
                
                
                $
                53,490
                
                
                $
                10,911,412
                
                
                $
                (3,817,250
                )
                
                $
                7,147,652


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





28
 Table of Contents





GULF WESTERN PETROLEUM
CORPORATION


(A DEVELOPMENT STAGE
COMPANY)


CONSOLIDATED STATEMENTS OF CASH
FLOWS


For the Years Ended August 31, 2007 and
2006


and the Period from Inception (January
20, 2005) through August 31, 2007





Year Ended
              August 31, 2007
            
            
            Year Ended
              August 31, 2006
            
            
            Inception through
              August 31, 2007CASH FLOWS FROM OPERATING
      ACTIVITIESNet loss
            
            $
            (3,232,124
            )
            
            $
            (356,382
            )
            
            $
            (3,817,250
            )Adjustments to reconcile net
      loss to cash provided (used) by operating activities:Depreciation
            
            
            5,157
            
            
            
            1,350
            
            
            
            6,507Foreign currency exchange
      loss
            
            
            1,336
            
            
            
            10,792
            
            
            
            12,128Amortization of debt
      discount
            
            
            99,813
            
            
            
            -
            
            
            
            99,813Amortization of deferred
      financing costs
            
            
            7,015
            
            
            
            -
            
            
            
            7,015Bonus shares on notes
      payable
            
            
            400,000
            
            
            
            -
            
            
            
            400,000Issuance of shares for
      services
            
            
            390,500
            
            
            
            -
            
            
            
            390,500Amortization of stock option
      expense
            
            
            738,599
            
            
            
            -
            
            
            
            738,599Net change in:Accounts receivable – joint
      interest partners
            
            
            (198,106
            )
            
            
            -
            
            
            
            (198,106
            )Accounts receivable – related
      parties
            
            
            (11,488
            )
            
            
            -
            
            
            
            (11,488
            )Accounts payable
            
            
            434,786
            
            
            
            426,570
            
            
            
            1,059,136Accounts payable - related
      parties
            
            
            349,355
            
            
            
            177,396
            
            
            
            677,402Accrued interest
            
            
            10,276
            
            
            
            4,765
            
            
            
            15,041Accrued interest – related
      parties
            
            
            116,712
            
            
            
            -
            
            
            
            116,712CASH FLOWS PROVIDED (USED) BY
      OPERATING ACTIVITIES
            
            
            (888,169
            )
            
            
            264,491
            
            
            
            (503,991
            )CASH FLOWS FROM INVESTING
      ACTIVITIESPurchase of property and
      equipment
            
            
            (12,320
            )
            
            
            (7,372
            )
            
            
            (19,692
            )Investment in oil and gas
      properties
            
            
            (4,732,925
            )
            
            
            (329,085
            )
            
            
            (5,181,697
            )CASH FLOWS USED IN INVESTING
      ACTIVITIES
            
            
            (4,745,245
            )
            
            
            (336,457
            )
            
            
            (5,201,389
            )CASH FLOWS FROM FINANCING
      ACTIVITIESAdvances from stockholder
            
            
            120,000
            
            
            
            -
            
            
            
            120,000Proceeds from private
      placement unit sales
            
            
            4,815,000
            
            
            
            -
            
            
            
            4,815,000Proceeds from convertible
      notes payable
            
            
            700,000
            
            
            
            72,047
            
            
            
            772,047Proceeds from notes
      payable
            
            
            540,776
            
            
            
            312,500
            
            
            
            853,276Repayment of notes payable
            
            
            (853,018
            )
            
            
            -
            
            
            
            (853,018
            )CASH FLOWS PROVIDED BY
      FINANCING ACTIVITIES
            
            
            5,322,758
            
            
            
            384,547
            
            
            
            5,707,305NET INCREASE(DECREASE) IN
      CASH
            
            
            (310,656
            )
            
            
            312,581
            
            
            
            1,925Cash, beginning of period
            
            
            312,581
            
            
            
            -
            
            
            
            -Cash, end of period
            
            $
            1,925
            
            
            $
            312,581
            
            
            $
            1,925Cash paid for:Interest
            
            $
            22,929
            
            
            $
            -
            
            
            $
            22,929Income taxes
            
            $
            -
            
            
            $
            -
            
            
            $
            -Supplemental Schedule of
      Non-cash Investing and Financing Activities:Issuance of founders
      shares
            
            $
            -
            
            
            $
            -
            
            
            $
            1,000Assignment and rescission of
      oil and gas properties  from parent
            
            
            (460,231
            )
            
            
            460,231
            
            
            
            -Convertible note to related
      party for acquisition of oil and gas interests
            
            
            2,000,000
            
            
            
            -
            
            
            
            2,000,000Common shares issued to
      acquire oil and gas properties
            
            
            4,499,549
            
            
            
            -
            
            
            
            4,499,549Issuance of common shares for
      convertible debentures
            
            
            78,477
            
            
            
            -
            
            
            
            78,477Asset retirement obligation
      incurred
            
            
            50,949
            
            
            
            -
            
            
            
            50,949Fair value of warrants issued
      with debt
            
            
            66,387
            
            
            
            -
            
            
            
            66,387Discount on debt for
      beneficial conversion feature of debentures
            
            $
            75,390
            
            
            $
            -
            
            
            $
            75,390





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





29
 Table of Contents





GULF WESTERN PETROLEUM
CORPORATION


(A DEVELOPMENT STAGE
COMPANY)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS







NOTE 1 – ORGANIZATION AND BUSINESS
OPERATIONS




Gulf Western Petroleum Corporation
(“Gulf Western”) was incorporated on February 21, 2006 in the State ofNevada.   Gulf Western
(formerly Georgia Exploration, Inc.) is engaged in the acquisition, exploration
and development of oil and natural gas reserves in theUnited States.  Gulf Western holds oil and
gas lease interests inTexas,KansasandKentucky.  Gulf Western is actively
engaged in the drilling of Frio formation wells in Dewitt andLavaca County,Texas; it holds proved undeveloped reserves
inWharton
County,Texas; and it is engaged in a supply and
infrastructure development program inSoutheast Kansas. Gulf Western’s oil and gas lease
interests inKentuckyare exploration in
nature.




On January 3, 2007, Gulf Western and
Wharton Resources Corp. (“Wharton” or “Wharton Corp.”) consummated a merger that
was effected through a reverse merger with the oil and gas lease interests and
reserves held by Wharton becoming the primary core assets of Gulf
Western.   Concurrent with the merger, Wharton’s executive
management and directors assumed control and responsibility for Gulf Western’s
activities and its strategic direction.   The merger effected a
change in control of Gulf Western and immediately following the merger,
Wharton’s former stockholders held approximately 71.4% of Gulf Western’s issued
and outstanding common shares.   On March 8, 2007, Georgia
Exploration, Inc.’s name was changed to Gulf Western Petroleum Corporation, and
the stock symbol was changed to OTCBB: GWPC.




For Securities and Exchange Commission
(“SEC”)reporting
purposes, the merger between Gulf Western and Wharton was treated as a reverse
merger with Wharton being the “accounting acquirer” and, accordingly, it assumed
Gulf Western’s reporting obligations with the SEC.  In accordance with
SEC requirements, the historical financial statements and related disclosures
presented herein for the period prior to the date of merger (i.e., January 3,
2007) are those of Wharton since its inception on January 20,
2005.   In conjunction with the merger, each outstanding share of
Wharton was converted into 25,000 common shares in Gulf Western with a total of
30,000,000 common shares issued to the former Wharton stockholders.Of the 27,645,000 shares of Gulf
Western outstanding at the time of the merger,15,645,000 shares of Gulf Western’s
outstanding common stock were cancelled concurrent with the closing of the
merger.   Immediately following the merger, a total of 42,000,000
shares of common stock were issued and outstanding.  Wharton assumed
the net liabilities of Gulf Western totaling $66,631 which were recorded as an
expense on the date of merger.




Since its inception, Gulf Western has
funded its oil and gas activities through a combination of equity and debt
securities, and the contribution of funds and services by its principal
shareholders and Gulf Western’s management.   Gulf Western has
raised initial financing from external sources through a series of private
equity placements with units consisting of common shares and warrants; the
issuance of convertible securities in the form of secured notes; and through
various bridge and short term notes.




NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES




Basis of
presentation




Gulf Western’s consolidated balance
sheets and related consolidated statements of operations, stockholders’ equity
(deficit) and cash flows for the periods from inception through August 31, 2007
are presented in U.S. dollars and have been prepared in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”) and the rules of the Securities and Exchange
Commission.




The accompanying consolidated financial
statements are prepared in accordance with Statement of Financial Accounting
Standards (“SFAS”) No. 7, Accounting and Reporting by Development Stage
Enterprises.




30
 Table of Contents


Use of
estimates




The preparation of financial statements
in conformity with generally accepted accounting principles in theUnited Statesrequires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting periods.  Actual results could materially differ from those
estimates.




Management believes that it is
reasonably possible the following material estimates affecting the financial
statements could significantly change in the coming year:  (1)
estimates of proved oil and gas reserves, and (2) forecast forward price curves
for natural gas and crude oil.   The oil and gas industry in theUnited Stateshas historically experienced
substantial commodity price volatility, and such volatility is expected to
continue in the future.   Commodity prices affect the level of
reserves that are considered commercially recoverable; significantly influence
Gulf Western’s current and future expected cash flows; and impact the PV10
derivation of proved reserves presented in Gulf Western’s supplemental oil and
gas reserve disclosures made herein.




Reclassification




Certain amounts in prior periods have
been reclassified to conform to current period presentation.




Principles of
consolidation




The consolidated balance sheets include
the accounts of Gulf Western Petroleum Corporation and its 100% owned subsidiary
Wharton Resources Corp., a Delaware corporation; its 100% member interest in
Wharton Resources LLC, a Delaware limited liability company; and its direct and
indirect interests in Gulf Western Petroleum, LP, a Texas limited partnership
(“Gulf Western LP”).   Gulf Western LP is Gulf Western’s primary
operating entity and Wharton Resources LLC holds a 1.0% general partner interest
in Gulf Western LP while the remaining 99.0% is held by Gulf Western through
limited partner interests.




Cash and cash
equivalents




Cash and cash equivalents include cash
in banks and certificates of deposit which mature within three months of the
date of purchase.  Gulf Western may, in the normal course of
operations, maintain cash balances in excess of federally insured
limits.




Accounts receivable




Gulf Western routinely assesses the
recoverability of all material trade, joint interest and other receivables. Gulf
Western accrues a reserve on a receivable when, based on the judgment of
management, it is probable that a receivable will not be collected and the
amount of any reserve may be reasonably estimated.  Actual write-offs
may exceed the recorded allowance.  No allowance for doubtful accounts
was considered necessary at August 31, 2007 and 2006.




Oil and gas
properties








Depletion and depreciation of proved oil
and gas properties is calculated on the units-of-production method based upon
estimates of proved reserves.  Such calculations include the estimated
future costs to developed proved reserves.  Oil and gas reserves are
converted to a common unit of measure based on the energy content of 6,000 cubic
feet of gas to one barrel of oil. Costs of undeveloped properties are not
included in the costs subject to depletion. These costs are assessed
periodically for impairment.




31
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Ceiling
test


In applying the full cost method, Gulf
Western performs an impairment test (ceiling test) at each reporting date,
whereby the carrying value of property and equipment is compared to the
“estimated present value,” of its proved reserves discounted at a 10-percent
interest rate of future net revenues, based on current economic and operating
conditions, plus the cost of properties not being amortized, plus the lower of
cost or fair market value of unproved properties included in costs being
amortized, less the income tax effects related to book and tax basis differences
of the properties.  As of August 31, 2007 and 2006, no impairment of
oil and gas properties was recorded.




Oil and gas properties, not subject to
amortization




Gulf Western holds oil and gas interests
inTexas,KansasandKentuckypursuant to lease
agreements.  Gulf Western is currently drilling Frio formation wells
in Dewitt andLavaca
County,Texas.  Upon completion of drilling
and initial well production from theFrioformation wells, Gulf Western will
commence amortization (on a unit-of-production basis) of the acquisition,
geological and geophysical, drilling and development costs incurred and included
in oil and gas properties.




The amortization of the oil and gas
properties not classified as proved begins when the oil and gas properties
become proved, or their values become impaired.   Gulf Western
assesses the realizability of its properties not characterized as proved on at
least an annual basis or when there is or has been an indication that an
impairment in value may have occurred.  The impairment of properties
not classified as proved is assessed based on management’s intention with regard
to future exploration and development of individually significant properties,
and Gulf Western’s ability to secure capital funding to finance such exploration
and development.   If the result of an assessment indicates that
a property is impaired, the amount of the impairment is added to the capitalized
costs in its full cost pool and they are amortized over production from proved
reserves.




Furniture and office
equipment




Furniture and office equipment is stated
at cost. Depreciation is computed on a straight-line basis over the estimated
useful lives of three to five years.




Debt




Gulf Western accounts for debt at fair
value and recognizes interest expense for accrued interest payable under the
terms of the debt. Principal and interest payments due within one year are
classified as current, whereas principal and interest payments for periods
beyond one year are classified as long term. Beneficial conversion features of
debt are valued and the related amounts recorded as discounts on the
debt.  Discounts are amortized to interest expense using the effective
interest method over the term of the debt.  Any unamortized discount
upon settlement or conversion of debt is recognized immediately as interest
expense.




Asset retirement
obligations








Foreign exchange




Balance sheet items are translated into
U.S. dollars at exchange rates prevailing at the balance sheet date for monetary
items and at exchange rates in effect at the transaction date for non-monetary
items. Operating statement items are translated at average rates prevailing
during the period. Gains and losses on translation of current monetary assets
and liabilities are included in income.





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Future income taxes




Income taxes are accounted for using the
asset/liability method of income tax allocation. Future income taxes are
recognized for the future income tax consequences attributable to differences
between the carrying values of assets and liabilities and their respective
income tax bases. Future income tax assets and liabilities are measured using
income tax rates expected to apply to taxable income in the years in which
temporary differences are expected to be recovered or settled. The effect on
future income tax assets and liabilities of a change in income tax rates is
included in earnings in the period that such change in income tax rates is
enacted. Future income tax assets are recorded in the financial statements if
realization is considered more likely than not.




Revenue and cost
recognition








Stock-based
compensation




The Financial Accounting Standards Board
issued SFAS No. 123(R), “Share-Based Payment” which establishes standards for
the accounting for transactions in which an entity exchanges its equity
instruments for goods or services.    Gulf Western utilizes
SFAS No. 123R and related Interpretations for fair value determination and
recognition for share based compensation granted to directors, officers, and
employees.   Under SFAS 123R, compensation cost for all share
based payments granted are based on the grant date fair value estimated in
accordance with the provisions of SFAS no. 123R.




Compensation cost is recognized on a
straight line basis over the requisite service period for the entire award in
accordance with the provisions of SFAS 123R.  If at any date the
portion of the grant-date fair value of the award that is vested is greater than
that amount recognized on a straight line basis, the amount of the vested grant
date fair value is recognized.  Gulf Western also accounts for
transactions in which we issue equity instruments to acquire goods or services
from non-employees in accordance with the provisions of SFAS No. 123R (as
amended).  These transactions are accounted for based on the fair
value of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable.




Earnings per share




Basic net earnings (loss) per common
share are computed by dividing net earnings (loss) available to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted net earnings (loss) per common share is determined using the
weighted-average number of common shares outstanding during the period, adjusted
for the dilutive effect of common stock equivalents. In periods when losses are
reported, the weighted-average number of common shares outstanding excludes
common stock equivalents, because their inclusion would be
anti-dilutive.




The dilutive effect of outstanding stock
options and warrants is reflected in diluted earnings per share by application
of the treasury stock method. The dilutive effect of outstanding convertible
securities is reflected in diluted earnings per share by application of the
if-converted method.  For the years ended August 31, 2007 and 2006,
fully diluted earnings per share excludes common stock equivalents, because
their inclusion would be anti-dilutive.




Fair value of financial
instruments




The carrying value of cash and cash
equivalents, accounts payable and accrued expenses and other liabilities
approximates fair value due to the short term maturity of these instruments. The
carrying value of the notes payable, convertible notes and convertible
debentures approximate their fair value as August 31, 2007 and August 31,
2006.





33
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New Accounting
Pronouncements




In September 2006, the FASB issued SFAS
No. 157, “Fair Value Measurements” (“SFAS 157”), which clarifies the definition
of fair value, establishes guidelines for measuring fair value, and expands
disclosures regarding fair value measurements.  SFAS 157 does not
require any new fair value measurements and eliminates inconsistencies in
guidance found in various prior accounting pronouncements.  SFAS 157
will be effective for Gulf Western on September 1, 2008. Gulf Western is
currently evaluating the impact of adopting SFAS 157 on its financial position,
cash flows, and results of operations.




NOTE 3 – GOING
CONCERN




Gulf Western is in its development stage
and, accordingly, has limited operations and no revenues.  Gulf
Western has raised limited financing and has incurred operating losses since its
inception in January 2005.  These factors raise substantial doubt
about Gulf Western’s ability to continue as a going
concern.   Gulf Western’s ability to achieve and maintain
profitability and positive cash flow is dependent on its ability to secure
sufficient financing to fund the acquisition, drilling and development of
profitable oil and gas properties.  Management is seeking financing
that it believes would allow Gulf Western to establish and sustain commercial
production.   There are no assurances that Gulf Western will be
able to obtain additional financing from investors or private lenders and, if
available, such financing may not be on commercial terms acceptable to Gulf
Western or its stockholders. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.




NOTE 4 - RELATED PARTY
TRANSACTIONS




During Gulf Western’s formation and
development to date, it has had transactions with the current directors,
executive officers and shareholders holding interests in excess of 10.0%. These
transactions are as follows:




Oakcrest Prospect,Wharton County,Texas




In connection with the reverse merger of
Gulf Western and Wharton Corp., Gulf Western acquired oil and gas lease
interests located inWharton County,Texas.  The Oakcrest oil and gas
lease interests were originally acquired by CodeAmerica Investments LLC
(“CodeAmerica”), a company controlled by Wm. Milton Cox, the current Chairman
and CEO of Gulf Western.   When Wharton Corp. acquired the
Oakcrest oil and gas lease interests from CodeAmerica on October 16, 2006, Wm.
Milton Cox was the Chairman and CEO of Wharton Corp.  CodeAmerica
received 5,000,000 shares of common stock in Gulf Western for its Oakcrest oil
and gas lease interests.




Consistent with SEC requirements for
entities under common control, the acquisition of the Oakcrest oil and gas lease
interests from CodeAmerica has been recorded on Gulf Western’s records at its
historical cost basis in the interests which totaled approximately
$460,500.  When the Oakcrest lease interests were acquired by Wharton
Corp., Wharton Corp. shares of common stock were not publicly
traded.  The fair value of the shares issued to CodeAmerica for the
lease interests was equal to its historical cost basis in the lease
interests.




Mound Branch Project,Elk County,Kansas




On January 30, 2007, Gulf Western
purchased Orbit Energy, LLC’s (“Orbit”) working and net revenue interests in
approximately 8,800 gross acres located in Elk County, Kansas together with its
interests in drilled wells and associated equipment (the “Mound Branch
Project”).   Gulf Western’s purchase price totaled $6.8 million,
and consideration paid to Orbit was comprised of: a) $760,947 of funds advanced
by Gulf Western to Orbit for testing and evaluation of the existing well bores,
reservoir formations and associated lease acreage; b) a thirty-six month $2.0
million 10% convertible note with principal due at maturity; and c) 4,039,053
common shares of Gulf Western with a fair value of $1.00 per common share at the
time of issuance.




The Gulf Western shares issued to Orbit
for the purchase were placed in escrow (“Orbit Escrow Shares”) to be released
upon Orbit's delivery to the escrow agent of an independent report assessing the
fair value of the purchased assets at no less than the purchase price of $6.8
million.  Should the valuation be less than the $6.8 million purchase
price, then thenumber of
shares to be released from escrow will be ratably reduced for the lower
valuation.  Gulf Western shares remaining in escrow at the end of the
twelve month period ending January 30, 2008 are to be cancelled and returned to
Gulf Western’s treasury.   To date no shares have been released
from escrow.





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Orbit serves as operator of the Mound
Branch Project.   In conjunction with the terms of the Mound
Branch Project purchase and sale agreement, Gulf Western has been funding 100%
of the costs incurred by Orbit for the testing and evaluation of the existing
well bores, reservoir formations and associated lease acreage.  The
share of costs not attributable to Gulf Western’s working interest ownership in
the property is recorded as a receivable from joint interest partners in the
amount of $198,006.  Gulf Western expects to collect this amount from
its partners in the Mound Branch Project.








Baxter Bledsoe Prospect,ClayCounty,Kentucky








BellProspect,Bell County,Kentucky




On October 1, 2006, Gulf Western
purchased CodeAmerica's oil and gas lease interests located inBell County,Kentucky. The Bell Prospect is comprised of
approximately 3,400 acres. The cash purchase price was $314,475, which included
$59,475 for land, legal and title services expended by CodeAmerica on the
prospect.  This acquisition from CodeAmerica was accounted for at fair
value as provided for in EITF 02-5 with the cash purchase price recorded as
lease acquisition costs. The seller’s historical cost basis of the lease
interests acquired totaled approximately $229,475.





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Advances from
Stockholder




During the months of April and May 2007,
CodeAmerica made cash advances to Gulf Western totaling $120,000 for general
working capital requirements.    The advances were due on
demand, did not bear interest and were outstanding at August 31,
2007.   The advances were fully repaid in November
2007.




Office Rent




Gulf Western shares office space inHouston,Texaswith Orbit under a month-to-month
lease.  The office space was leased by Orbit and during the years
ended August 31, 2007 and 2006 Gulf Western paid rent totaling $42,994 and
$38,210, respectively.




NOTE 5 – OIL AND GAS
PROPERTIES




All of the Gulf Western’s oil and gas
properties are located in theUnited States.  No amortization of expense
was recorded in 2007 or 2006 as no production or sales
occurred.




Costs excluded from amortization at
August 31, 2007 are as follows:




Fiscal
      YearIncurred
            
            Acquisition
              Costs
            
            
            ExplorationCosts
            
            
            Total2006
            
            $
            12,000
            
            
            $
            -
            
            
            $
            12,0002007
            
            
            5,798,720
            
            
            
            4,831,487
            
            
            
            10,630,207Total
            
            $
            5,810,720
            
            
            $
            4,831,487
            
            
            $
            10,642,207





Gulf Western holds oil and gas lease
interests inTexas,KentuckyandKansas.  The leases are classified
as “Properties not subject to amortization” in Gulf Western’s financial
statements.  Gulf Western expects that these costs will be included in
oil and gas properties subject to amortization upon evaluation of proved
reserves in fiscal 2008.




NOTE 6 – INCOME
TAXES




Deferred income taxes are recorded at
the expected tax rate of 35%.  SFAS No. 109 “Accounting for Income
Taxes” requires that deferred tax assets be reduced by a valuation allowance if
it is more or likely than not that some portion or all of the deferred tax asset
will not be realized.




Reconciliation between actual tax
expense (benefit) and income taxes computed by apply the combined U.S. federal
income tax rate and state income tax rate to income from continuing operations
before income taxes and deemed dividends is as follows:




August 31,
    2007
            
            
            August 31,
    2006Computed atU.S.and State statutory
      rates
            
            $
            (1,131,200
            )
            
            $
            (121,000
            )Permanent
      differences
            
            
            885,200
            
            
            
            -Changes in valuation
      allowance
            
            
            246,000
            
            
            
            121,000Total
            
            $
            -
            
            
            $
            -August 31,
    2007
            
            
            August 31,
    2006Deferred tax asset attributable
      to:Net operating
      loss
            
            $
            445,000
            
            
            $
            199,000Less: valuation
      allowance
            
            
            (445,000
            )
            
            
            (199,000
            )Total
            
            $
            -
            
            
            $
            -





36
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The components giving rise to the
deferred tax assets described above have been included in the accompanying
consolidated balance sheet as noncurrent assets.  As of August 31,
2007 and 2006, the deferred tax assets are net of a full valuation allowance of
$445,000 and $199,000, respectively based on the amount that management believes
will ultimately be realized.  Realization of deferred tax assets is
dependent upon sufficient future taxable income during the period that
deductible temporary differences and carryforwards are expected to be available
to reduce taxable income. At August 31, 2007, Gulf Western had loss
carryforwards of approximately $1.3 million for tax purposes which will begin to
expire in 2025. The valuation allowance increased by approximately $246,000 and
$121,000 for the years ended August, 31, 2007 and 2006, respectively. Section
382 of the Internal Revenue Code will limit the amounts historical net operating
losses available for tax purposes prior to the reverse
merger.




The income tax provision differs from
the amount of income determined by applying theU.S.federal income tax rate to pretax
income for the years ended August 31, 2007 and 2006 primarily due to the
valuation allowance.  The above estimates are based upon management’s
decisions concerning certain elections which could change the relationship
between net income and taxable income.   Management decisions are
made annually and could cause the estimates to vary
significantly.




NOTE 7 – NOTES PAYABLE AND CONVERTIBLE
UNSECURED DEBENTURES




Convertible Secured
Note




On July 3, 2007, Gulf Western borrowed
$500,000 under an eighteen-month convertible secured note from a private
investor with a maturity date of January 3,
2009.    Principal repayments were due beginning October
2007 at $33,333 per month.   The loan bore interest at a rate of
12.0% per annum, payable quarterly, and could be repaid in portion or in full at
any time at 105% of the then outstanding principal and accrued
interest.  The note provided the lender the right to convert any or
all of the outstanding balance to Gulf Western shares of common stock at a
conversion rate of $0.45 per common share during the loan
term.   Attached to the note were three-year warrants for 125,000
common shares of Gulf Western at $0.30 per common share.




Gulf Western evaluated the terms of the
convertible note and attached warrants in accordance with EITF 98-5 and EITF
00-27 and concluded that there was no beneficial conversion
feature.  The relative fair value of the warrants under the
Black-Scholes option pricing model was $21,196, which was recorded as debt
discount on the convertible note and amortized using the effective interest
method over the eighteen-month term of the note.  The parameters used
in the Black-Scholes valuation model were: a risk-free interest rate of 4.90%;
the current stock price on the date of issuance of $0.27 per common share; the
exercise price of the warrants of $0.30 per share of common stock; an expected
term of three years; volatility of 107.61%; and a dividend yield of
0.0%.   For the year ending August 31, 2007, $3,660 was charged
to interest expense associated with the amortization of the debt discount, and
$17,536 debt discount was unamortized at August 31, 2007.




This note was refinanced subsequent to
year end in connection with the $3.7 million Senior Secured Convertible
Notes.   As a result, the current portion of the Convertible
Secured Note was excluded from current liabilities as of August 31,
2007.




In connection with the July 3, 2007
convertible secured note, Gulf Western issued warrants to purchase 100,000
shares of common stock to a placement agent, and paid the placement agent a fee
totaling $50,000.   The warrants have an exercise price of $0.40
per share and a term of two years.  The placement agent warrants were
valued using the Black-Scholes option pricing model.   The
assumptions used in the Black-Scholes valuation model were: a risk-free interest
rate of 4.89%; the current stock price at date of issuance of $0.27 per common
share; the exercise price of the warrants of $0.40 per share of common stock; an
expected term of two years; volatility of 107.6%; and dividend yield of
0.0%.   The estimated fair value of the warrants was
$13,138.  The fair value of the warrants and the $50,000 fee was
recorded as deferred financing cost and is being amortized using the effective
interest method over the life of the debt.





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 Table of Contents





Short-Term Convertible
Note




On June 28, 2007, Gulf Western borrowed
$250,000 under a short term convertible note payable with a private
investor.   The note bore interest at 12.0% per annum; was
convertible at $0.45 per share of common stock; and provided for a payment on
maturity or upon the occurrence of certain events; but no later than September
28, 2007.   This note and accrued interest was repaid on
September 14, 2007.   In connection with this loan Gulf Western
issued to the lender warrants to purchase 200,000 common shares of Gulf Western
at an exercise price of $0.32 per share with a three year
term.




Gulf Western evaluated the terms of the
convertible note and attached warrants in accordance with EITF 98-5 and EITF
00-27 and concluded that there was no beneficial conversion
feature.   The relative fair value of the warrants attached to
the loan that was derived through use of the Black-Scholes option pricing model
was $32,053, which was recorded as a discount on the note and amortized over the
life of the note.   The parameters used in the Black-Scholes
valuation model were: a risk-free interest rate of 4.98%; the current stock
price on the date of issuance of $0.28 per common share; the exercise price of
the warrants of $0.32 per share; an expected term of three years; volatility of
108.79%; and a dividend yield of 0.0%.    At August 31,
2007, $20,763 of the loan discount was charged to interest
expense.  Upon repayment of the loan on September 14, 2007 the
remaining unamortized loan discount totaling $11,290 was charged to interest
expense.




Orbit Energy, LLC Mound Branch
Convertible Note




As consideration to Orbit Energy, LLC
for Gulf Western’s purchase of its interests in the Mound Branch Project, Gulf
Western issued a thirty-six month $2.0 million unsecured convertible note dated
January 30, 2007 with principal due at maturity, bearing interest at 10.0% per
annum due quarterly in arrears.   Pursuant to the terms of the
convertible note, after the initial twelve months: a) Orbit has the ability to
convert the outstanding principal and interest balance into common shares at a
conversion price of $1.00 per common share, and b) Gulf Western may prepay all
or a portion of the convertible loan without penalty.  Under the terms
of the convertible note, the maturity of the note is accelerated upon a change
in control of Gulf Western.  On July 3, 2007 the note was amended to
provide that interest payable for the first two quarters to be due on October
30, 2007.  As of October 30, 2007, no interest has been paid and no
new arrangements have been made for an extension.  There are no
penalty provisions in the note for non-payment.  At August 31, 2007
the outstanding principal under the note is $2.0 million and accrued interest
totals $116,712.




Gulf Western evaluated the terms of the
convertible note in accordance with EITF 98-5 and EITF 00-27 and concluded that
the note contained no beneficial conversion features.




Wharton Notes
Payable









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On October 17, 2006, Wharton entered
into a short term loan agreement for $350,000 with a private
lender.  The loan had a 90-day maturity; bore interest at 18.0% per
annum with principal and interest due upon maturity; and was secured by all
existing and after acquired assets of Gulf Western.   The loan
provided for 100,000 shares of common stock (“Bonus Shares”) to be issued to the
lender in the event that Wharton completed a public transaction. The loan
agreement provided for Gulf Western to use its best efforts to register the
Bonus Shares issuable under the loan agreement within a 12-month period from the
date of their issuance.  During the second fiscal quarter ending
February 28, 2007, the triggering event occurred to issue the Bonus Shares, and
Gulf Western recorded a non-cash charge of $100,000 to interest expense for the
fair value of the 100,000 Bonus Shares committed to the
lender.    The loan was fully repaid to the lender during
the year ending August 31, 2007, and the 100,000 Bonus Shares were issued to the
lender on May 21, 2007.




Convertible Unsecured
Debentures




On March 13, 2006 Wharton Resources
Limited (“Wharton Limited”), a corporation organized in New Brunswick, Canada,
issued three unsecured convertible debentures denominated in Canadian dollars
with total principal balance of CAD$85,000 (US$76,883 at August 31,
2006).  In the event that Wharton Limited common shares began trading
on a public market, the debentures provided that they would be automatically
converted into common shares at a conversion rate of 85% of the initial publicly
traded share price.   If not converted by the maturity date, the
outstanding principal balance together with interest accrued since the debenture
issuances would be due and payable to the debenture holders.












NOTE 8 – INTEREST
EXPENSE




The following table is a detail of the
components of interest expense for the years ended August 31, 2007 and
2006:




2007
            
            
            2006Interest expense on convertible
      debentures
            
            $
            24,726
            
            
            $
            4,765Interest expense on note
      payable
            
            
            5,342
            
            
            
            -Interest expense on convertible
      note – related party
            
            
            116,712
            
            
            
            -Interest expense on convertible
      note
            
            
            9,698
            
            
            
            -Bonus shares on notes
      payable
            
            
            400,000
            
            
            
            -Amortization of debt
      discount
            
            
            99,813
            
            
            
            -Amortization of deferred financing
      cost
            
            
            7,015
            
            
            
            -Total interest
      expense
            
            $
            663,306
            
            
            $
            4,765





There was no interest expense for the
period from inception (January 20, 2005) to August 31, 2005.





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Gulf Western incurred $389,095 of costs
associated with financing activities for the period from inception through
August 31, 2007 for transactions that were not consummated and, accordingly,
have been charged to expense in the consolidated statements of
operations.




NOTE 9 – STOCKHOLDERS’
EQUITY




Gulf Western has authorized 1.2 billion
shares of $0.001 par value share of common voting stock.   At
August 31, 2007 and 2006, Gulf Western had issued and outstanding shares of
common stock of 53,489,662 and 25,000,000, respectively.




Issuance of Common Shares and Warrants
In Private Placement Offerings




During the year ended August 31, 2007,
Gulf Western sold units in private placement offerings.  Each unit
consisted of one share of common stock, one Class A Warrant and one Class B
Warrant.  Each Class A Warrant is exercisable at a price of $2.00 per
common share for a period of three years.  Each Class B Warrant is
exercisable at a price of $3.00 per common share for a period of three
years.  The Class A and Class B Warrants’ relative fair values on the
date cash was received from the investor was estimated through use of the
Black-Scholes option pricing model.  The parameters used in the
calculation of the Black-Scholes fair values for the Warrants are provided in
the following table:




Issue Date
            
            Volatility
            
            
            Risk-Free Interest
      Rate
            
            
            Common Share
      Price
            
            
            Term
(years)January 22,
      2007
            
            
            120
            %
            
            
            4.85
            %
            
            $
            1.00
            
            
            
            3May 10,
2007
            
            
            115
            %
            
            
            4.66% - 4.79
            %
            
            $
            0.68 -
$0.88
            
            
            
            3August 16,
    2007
            
            
            108
            %
            
            
            4.57% - 4.92
            %
            
            $
            0.45 -
$0.68
            
            
            
            3August 31,
    2007
            
            
            108
            %
            
            
            4.66% - 4.79
            %
            
            $
            0.22 -
$0.80
            
            
            
            3








Summarized in the following table are
Gulf Western’s sales of units during the year ended August 31, 2007 and the
associated estimated relative fair values of the shares of common stock and the
Class A and Class B warrants that comprised the units sold:




Date
            
            Number of
    Units
            
            
            Price per
    Unit
            
            
            Total
    Proceeds
            
            
            Common
Stock
            
            
            Class A
    Warrant
            
            
            Class B
    WarrantJanuary 22,
      2007
            
            
            3,205,000
            
            
            $
            1.00
            
            
            $
            3,205,000
            
            
            $
            1,487,834
            
            
            $
            910,336
            
            
            $
            806,831May 10,
2007
            
            
            525,000
            
            
            
            1.00
            
            
            
            525,000
            
            
            
            257,224
            
            
            
            143,323
            
            
            
            124,253August 16,
    2007
            
            
            1,712,500
            
            
            
            0.40
            
            
            
            685,000
            
            
            
            369,960
            
            
            
            171,819
            
            
            
            143,221August 31,
    2007
            
            
            1,000,000
            
            
            
            0.40
            
            
            $
            400,000
            
            
            $
            240,877
            
            
            $
            87,902
            
            
            $
            71,221








Common Shares Issued to Acquire Oil and
Gas Properties




On January 30, 2007, Gulf Western
purchased Orbit’s interest in the Mound Branch Project for $6.8 million, which
included consideration of 4,039,053 shares of common stock with a fair value of
$1.00 per share or $4,039,053 in total.




On October 16, 2006, 5,000,000 shares of
common stock of Gulf Western were issued to CodeAmerica in exchange for its
Oakcrest Prospect oil and gas interests located inWharton County,Texas.




Consummation of Reverse
Merger




On January 3, 2007 the reverse merger
between Georgia Exploration Inc. and Wharton Corp. was
consummated.   As a result of the reverse merger, each share of
common stock held by the Wharton Corp. shareholders was exchanged into 25,000
common shares in Gulf Western with a total aggregate share issuance of
30,000,000 shares of common stock to the former Wharton Corp.
shareholders.





40
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Immediately following the closing of the
merger transaction, Gulf Western had 42,000,000 shares of common stock issued
and outstanding with former Wharton Corp. shareholders holding 71.43% of the
total issued and outstanding shares of common stock.




Unsecured Debenture
Conversion




On January 3, 2007, the provisions of
the Wharton Corp. debentures resulted in the automatic conversion of the
debentures into common stock of Gulf Western.   The then
outstanding principal and interest due to the three debenture holders was
converted into 108,109 common shares. Additionally, Gulf Western issued 85,000
warrants for shares of common stock to the debenture holders with an exercise
price of $1.25 and a 12-month term.




Shares Issued for
Services




During the year ended August 31, 2007,
Gulf Western issued 600,000 common shares to consultants for their services to
Gulf Western.  The shares issued for services were valued at $390,500,
which was determined based on the share price on the date that Gulf Western
became obligated to issue the shares to the consultants.




Bonus Shares on Notes
Payable




During the year ended August 31, 2007,
Gulf Western issued 300,000 shares of common stock at $1.00 per share for
additional consideration to various lenders under the terms of notes payable
(“Bonus Shares”).  At August 31, 2007, 100,000 shares of unissued
common stock is recorded as stock payable.




NOTE 10 – WARRANTS




As of August 31, 2006, there were no
warrants outstanding.




Warrants outstanding and exercisable as
of August 31, 2007, are summarized below:




Exercise
            
            
            Weighted Average
      Remaining
            
            
            Number of
      WarrantsDescription
            
            Price
            
            
            Life
(years)
            
            
            Outstanding
            
            
            ExercisableSeries A – Convertible unsecured
      debentures
            
            $
            1.25
            
            
            
            0.35
            
            
            
            85,000
            
            
            
            85,000Class A Warrants issued in private
      placements
            
            $
            2.00
            
            
            
            2.61
            
            
            
            5,442,500
            
            
            
            5,442,500Class B Warrants issued in private
      placements
            
            $
            3.00
            
            
            
            2.61
            
            
            
            5,442,500
            
            
            
            5,442,500Convertible Secured
      Note
            
            $
            0.30
            
            
            
            2.84
            
            
            
            125,000
            
            
            
            125,000Short Term
    Note
            
            $
            0.32
            
            
            
            2.83
            
            
            
            200,000
            
            
            
            200,000Placement agent
      warrants
            
            $
            0.40
            
            
            
            1.80
            
            
            
            100,000
            
            
            
            100,000Total
            
            
            
            
            
            
            
            
            
            
            11,395,000
            
            
            
            11,395,000





No warrants were exercised, cancelled or
expired during the year ended August 31, 2007.  The intrinsic value of
warrants outstanding as of August 31, 2007 was zero.




NOTE 11 – STOCK OPTION
PLAN




On March 9, 2007 Gulf Western adopted
the 2007 Non Qualified Stock Option Plan (“2007 Option Plan”) for its directors,
officers, employees and consultants, which reserved 9,000,000 shares of common
stock for issuance under the plan.  On May 10, 2007, Gulf Western
granted stock options under the plan to officers, directors and an advisor for
common shares totaling 3,000,000 at an exercise price of $0.79 per
share.  The 3,000,000 options vest quarterly over twelve-months with
the first quarter vesting on the date of grant.   The fair value
for options granted was estimated at the date of grant using the Black-Scholes
option-pricing model assuming an expected life of 2.0 years, a risk-free rate of
4.70%, a share price volatility of 115.33%, share price of $0.79, and dividend
yield of 0.0%.  The Black-Scholes option-pricing model resulted in a
fair value on the date the options were granted of
$1,432,321.





41
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On June 14, 2007 Gulf Western granted
options under the 2007 Option Plan to non-management directors and consultants
of Gulf Western for common shares totaling 625,000 at an exercise price of $0.50
per share.  The 625,000 options vest in four equal installments over
twenty months with the first vesting on August 15, 2007 and the final vesting on
February 15, 2009..  The fair value of the options granted was
estimated to be $149,593 under the Black-Scholes option-pricing model, assuming
an expected life of 2.0 years, a risk-free rate of 5.1%, a share price
volatility of 115.33%, share price of $0.42, and dividend yield of
0.0%.  The Black-Scholes option-pricing model resulted in a total fair
value on the date the options were granted of $0.24 per share
option.








Number of
      Options
            
            
            Weighted Average Exercise
      PriceBalance, August 31,
      2006
            
            
            -
            
            
            $
            -Options
    granted
            
            
            3,625,000
            
            
            
            0.74Cancelled/forfeited
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Balance, August 31,
      2007
            
            
            3,625,000
            
            
            $
            0.74Vested at August 31,
      2007
            
            
            1,656,250
            
            
            $
            0.76Unvested at August 31,
      2007
            
            
            1,968,750
            
            
            $
            0.72





The weighted average remaining life of
outstanding stock options at August 31, 2007 was 9.75 years.




At August 31, 2007, there is $843,315 of
total unrecognized compensation cost related to fair value of the unvested
share-based compensation granted under the 2007 Stock Option Plan that will be
amortized over the remaining vesting period.    The
intrinsic value of the options outstanding as of August 31, 2007 is
zero.




NOTE 12 - SUBSEQUENT
EVENTS




Issuance of Common Shares and Warrants
in Private Placements




On September 20, 2007, Gulf Western
completed a private placement transaction for 1,250,000 units at a price of
$0.40 for aggregate proceeds of $500,000.  Each unit consisted of one
common share, one Class C Warrant and one Class D Warrant.  Each Class
C Warrant may be exercised at a price of $0.65 for a period of 3 years to
acquire one additional share of common stock of Gulf
Western.   Each Class D Warrant may be exercised at a price of
$2.00 for a period of three years to acquire one additional share of common
stock.




The relative fair value of the common
shares and the Class C and Class D Warrants for the private placement
transactions closed on September 20, 2007, was as follows:




September 20, 2007
      PlacementCommon Shares (1,250,000
      shares)
            
            $
            265,918Class C Warrants (1,250,000
      shares)
            
            
            145,384Class D Warrants (1,250,000
      shares)
            
            
            88,698Total
    placement
            
            $
            500,000





42
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Senior Secured Convertible Notes
Payable





















43
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The Convertible Notes are secured by a
lien on substantially all of the assets of the Gulf Western, including all of
the equity interests of the Gulf Western’s subsidiaries and the Gulf Western’s
rights in certain real property, pursuant to the terms of a Security Agreement
and Pledge Agreement entered into in connection with the closing of transactions
under the SPA.  In addition, Gulf Western Petroleum, LP, Wharton
Resources Corp. and Wharton Resources LLC, each a wholly-owned subsidiary of
Gulf  Western, entered into a Guaranty with the Buyers, whereby each
of the subsidiaries guaranteed the payment and performance of all obligations of
Gulf Western under the Convertible Notes and terms of the SPA. Gulf Western
Petroleum, LP also entered into a Mortgage, Deed of Trust, Assignment of
Production, Security Agreement, Fixture Filing and Financing Statement with
respect to certain properties inTexasandKansasto secure the obligations of Gulf
Western under the SPA and the Convertible Notes.








Mound
Branch Project,Elk
County,Kansas
























As a result of the restatement, “Net
loss per share –basic and diluted” decreased from
($0.18) per share to ($0.08) per share, a decrease in the net loss of $0.10 per
share.





44
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SUPPLEMENTAL INFORMATION ON OIL AND GAS
PRODUCING ACTIVITIES (UNAUDITED)





The following supplemental
unaudited information regarding Gulf Western’s oil and gas activities is
presented pursuant to the disclosure requirements of SFAS No. 69.  The
standardized measure of discounted future net cash flows is computed by applying
fiscal year-end prices of oil and gas to the estimated future production of
proved oil and gas reserves, less estimated future expenditures (based on fiscalyear-end cost estimates assuming continuation of existing economic
conditions) to be incurred in
developing and producing the proved reserves, less estimated future income tax
expenses (based on fiscal year-end statutory tax rates) to be incurred on
pre-tax net cash flows less tax basis of the properties and available credits,
and assuming continuation of existing economic conditions.  The
estimated future net cash flows are then discounted using a rate of 10 percent
per year to reflect the estimated timing of the future cash
flows.




Capitalized Costs Relating to Oil and
Gas Producing Activities as of August 31, 2007 and 2006:




2007
            
            
            2006Proved propertiesMineral interests
            
            $
            966,001
            
            
            $
            773,016Wells, equipment and
      facilities
            
            
            -
            
            
            
            -Total proved properties
            
            
            966,001
            
            
            
            773,016Unproved propertiesMineral interests
            
            $
            5,935,707
            
            
            $
            136,987Uncompleted wells, equipment
      and facilities
            
            
            4,831,487
            
            
            
            -Total unproved properties
            
            
            10,767,194
            
            
            
            136,987Less: accumulated
      depreciation, depletion and amortizationNet capitalized costs
            
            $
            11,733,195
            
            
            $
            910,003





Costs Incurred in Oil and Gas Producing
Activities for the Years Ended August 31, 2007 and 2006:




2007
            
            
            2006Acquisition of proved
      properties
            
            $
            192,985
            
            
            $
            773,016Acquisition of unproved
      properties
            
            
            5,798,720
            
            
            
            136,987Development costs
            
            
            -
            
            
            
            -Exploration costs
            
            
            4,831,487
            
            
            
            -Total costs incurred
            
            $
            10,823,192
            
            
            $
            910,003





Results of Operations for Oil and Gas
Producing Activities for the Years Ended August 31, 2007 and
2006:




Gulf Western generated no revenues and
incurred no expenses related to oil and gas producing activities for the years
ended August 31, 2007 and 2006.




Proved Reserves:




Gulf Western’s proved oil and natural
gas reserves have been estimated by independent petroleum engineers. Proved
reserves are the estimated quantities that geologic and engineering data
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions. Proved
developed reserves are the quantities expected to be recovered through existing
wells with existing equipment and operating methods. Due to the inherent
uncertainties and the limited nature of reservoir data, such estimates are
subject to change as additional information becomes available. The reserves
actually recovered and the timing of production of these reserves may be
substantially different from the original estimate. Revisions result primarily
from new information obtained from development drilling and production history;
acquisitions of oil and natural gas properties; and changes in economic factors.
Proved reserves as of August 31, 2007 and 2006 are summarized in the table
below:





45
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Proved Developed and Undeveloped Natural
Gas and Oil Reserves at August 31, 2007 and 2006 (Mcfe):




2007
            
            
            2006Proved undeveloped reserves -
      beginning of period
            
            
            4,220,394
            
            
            
            -Petroleum and natural gas lease
      acreage acquired
            
            
            -
            
            
            
            4,220,394Extensions, discoveries and
      improved recovery
            
            
            -
            
            
            
            -Production
            
            
            -
            
            
            
            -Revisions of previous
      estimates
            
            
            (272,611
            )
            
            
            -Proved undeveloped reserves - end
      of period
            
            
            3,947,783
            
            
            
            4,220,394Proved developed reserves - end of
      period
            
            
            -
            
            
            
            -





Standardized Measure of Discounted
Future Net Cash Flows at August 31, 2007 and 2006:





2007
            
            
            2006Future cash
      inflows
            
            $
            28,609,680
            
            
            $
            29,959,342Future production
      costs
            
            
            (3,255,451
            )
            
            
            (4,104,540
            )Future development
      costs
            
            
            (8,692,702
            )
            
            
            (6,730,459
            )Future income
      taxes
            
            
            (2,604,004
            )
            
            
            (3,926,340
            )Future net cash
      flows
            
            
            14,057,523
            
            
            
            15,198,00310% annual discount for estimated
      timing of cash flows
            
            
            (2,889,053
            )
            
            
            (3,778,299
            )Standardized measure of discounted
      future net cash flows:
            
            $
            11,168,470
            
            
            $
            11,419,704





Changes in Standardized Measure of
Discounted Future Net Cash Flows for the Years Ended August 31, 2007 and
2006:




2007
            
            
            2006Beginning of
      period
            
            $
            11,419,704
            
            
            $
            -Petroleum and natural gas lease
      acreage acquired
            
            
            -
            
            
            
            11,419,704Revisions of quantity
      estimates
            
            
            (570,380
            )
            
            
            -Changes in prices and production
      costs
            
            
            705,169
            
            
            
            -Changes in estimated future
      development costs
            
            
            (1,762,243
            )
            
            
            -Net change in income
      taxes
            
            
            881,394
            
            
            
            -Timing and
      other
            
            
            494,826
            
            
            
            -End of
    period
            
            $
            11,168,470
            
            
            $
            11,419,704




46
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Item
      8.
            Changes in and Disagreements with
      Accountants on Accounting and Financial
  Disclosures




On January 18, 2007, our independent
auditor, Dale Matheson Carr-Hilton Labonte LLP (“DMCL”) was dismissed. DMCL
conducted the audit of our March 31, 2006 balance sheet, and the statements of
operations, stockholders’ equity and cash flows for the period from February 21,
2006 (date of inception) through March 31, 2006. In DMCL’s report dated April
25, 2006, there were no adverse opinions or disclaimers of the opinion, or
qualification or modification as to uncertainty, audit scope, or accounting
principles, with the exception of a statement regarding the uncertainty of our
ability to continue as a going concern.




During the period from our inception
through March 31, 2006 and the subsequent interim period through the dismissal
date, there were no disagreements with DMCL on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which if not resolved to DMCL’s satisfaction would have caused DMCL
to make reference to the subject matter of the disagreements in connection with
DMCL’s report.




On January 18, 2007, our Board approved
the engagement of Malone & Bailey, PC (“M&B”) ofHouston,Texasas our principal accountant. Neither we
nor anyone on our behalf consulted with M&B regarding either the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on our financial
statements, nor has M&B provided us with a written report or oral advice
that was an important factor considered by us in reaching a decision as to any
accounting, auditing, or factual reporting issue, or any matter that was the
subject of a disagreement or reportable events with M&B.




On October 5, 2007, the Board dismissed
M&B as the Company’s independent registered public accounting
firm.  M&B’s reports on our financial statements for the two
fiscal years ended August 31, 2006 and 2005, did not contain an adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles, except for concerns about our ability to
continue as a going concern.  During our two most recent fiscal years
ended August 31, 2006 and 2005, and through October 5, 2007, there were no
disagreements between us and M&B on any manner of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of M&B, would have caused
it to make reference to the subject matter of the disagreements in connection
with its report on our financial statements for such years.  There
were no reportable events that occurred within the two most recent fiscal years
ended August 31, 2006 and 2005, or within the interim period through October 5,
2007.




On October 5, 2007, the Board approved
the engagement of GBH CPAs, PC (“GBH”) as our new independent registered public
accounting firm.  Neither we nor anyone on our behalf consulted with
GBH regarding either the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on our financial statements, nor has GBH provided us with a
written report or oral advice that was an important factor considered by us in
reaching a decision as to any accounting, auditing, or factual reporting issue,
or any matter that was the subject of a disagreement or reportable events with
GBH.





47
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Item 8A.
            Controls
      and Procedures




This
annual report does not include a report of management’s assessment regarding
internal control over financial reporting due to a transition period established
by rules of the Securities and Exchange Commission.




Evaluation
of Disclosure Controls and Procedures




As of the
end of the period covered by this report, the Company’s management, including
its Chief Executive Officer, President and Chief Financial Officer, carried out
an evaluation of the effectiveness of the Company’s disclosure controls and
procedures pursuant to Rule 13a-15 of the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”). Based on that evaluation, the Chief Executive
Officer, President and Chief Financial Officer concluded the following:






(i)
            that
      the Company’s disclosure controls and proceduresare
      designed to ensure (a) that information required to be disclosed by the
      Company in the reports it files or submits under the Exchange Act is
      recorded, processed, summarized and reported, within the time periods
      specified in the SEC’s rules and forms, and (b) that such information is
      accumulated and communicated to the Company’s management, including the
      Chief Executive Officer, President and Chief Financial Officer, as
      appropriate, to allow
      timely decisions regarding required disclosure; and






(ii)
            that
      the Company’s disclosure controls and procedures are
      effective.




Changes
in Internal Control Over Financial Reporting








Item
      8B.
            Other
      Information




Not applicable.





48
 Table of Contents





PART
III





Item
      9.
            Directors and Executive Officers,
      Promoters, Control Persons and Corporate Governance; Compliance with
      Section 16(a) of the Exchange
Act




The
following table sets forth information concerning our directors, executive
officers and key employeesas of
November 28, 2007:




Name
            Age
            PositionWm. Milton Cox
            60
            Chairman of the Board and
      Chief Executive OfficerBassam “Sam”Nastat
            39
            President and DirectorDonald L. Sytsma
            50
            Chief Financial Officer, Corporate Secretary,
      Treasurer  and DirectorT. Arden McCracken
            63
            DirectorJ. Timothy Altum
            52
            Director





Wm. Milton
Cox





Bassam “Sam”
Nastat




Donald L.
Sytsma.




T. Arden
McCracken.  Mr.
McCracken has served as a director since March 12, 2007.  From 1996 to
the present, he has work as a senior engineering advisor to Pennzoil Exploration
and Devon Energy.  He is responsible for evaluations and
recommendations on all international ventures and for assisting in the
preparation of the year end reserve report.  Mr. McCracken holds a
Ph.D., M.S. and B.S. in Chemical Engineering fromClemsonUniversity.




J. Timothy
Altum.  Mr.
Altum has served as a director since March 22, 2007.  From 1998 to the
present, he has worked as a geological adviser to PennzEnergy, Devon Energy Corp
/ BP with respect to their Eugene Island 330 Field, which is PennzEnergy’s
largest single asset. His responsibilities include integration of geology,
petrophysics, geophysics and engineering data into 3-D reservoir
models.  Mr. Altum has a Bachelor of Science in Geology/Physics fromHardinSimmonsUniversityand Master of Science in Geology
fromBaylorUniversity.





49
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There are no family relationships among
our directors and executive officers.  No director, executive officer
or promoter has been a director or executive officer of any business which has
filed a bankruptcy petition or had a bankruptcy petition filed against it during
the past five years. No director, executive officer or promoter has been
convicted of a criminal offense or is the subject of a pending criminal
proceeding during the past five years. No director, executive officer or
promoter has been the subject of any order, judgment or decree of any court
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities during
the past five years. No director, executive officer or promoter has been found
by a court to have violated a federal or state securities or commodities law
during the past five years.




None of our directors or executive
officers or their respective immediate family members or affiliates is indebted
to us.





50
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Section 16(a) Beneficial Ownership
Reporting Compliance




Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and executive officers, and persons who own more than 10% of our equity
securities, to file initial reports of ownership and reports of changes in
ownership of our common stock with the SEC and to furnish us a copy of each
filed report.




Each of
Sokhie Puar, a former director and officer, and Bijay Singh a former director,
failed to timely file their initial insider Form 3 reports which were due upon
their becoming insiders in connection with our merger with
Wharton.




Code
of Ethics




Our Board
of Directors (the “Board”) has adopted a Code of Business Conduct and Ethics
Compliance Program and an Insider Trading Policy providing guidelines with
respect to transactions in Company securities and is applicable to all
directors, officers, employees and consultants who receive or have accesses to
material non-public Company information.   All participants in
the Plan are required to acknowledge receipt of the Code of Business Conduct and
Ethics Compliance Program and the Insider Trading Policy to participate in the
Plan, and they are required upon request by us to periodically confirm their
adherence and compliance to these policies as a condition of their continued
participation in the Plan.




Corporate
Governance




The Board
does not have an executive committee or any committee performing a similar
function.  The Board is in the process of forming an audit committee,
of which a majority of the members will be comprised of independent
directors.  There have been no material changes to the procedures by
which our stockholders may recommend nominees to the board of
directors.





51
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Item
      10.
            Executive
      Compensation




Summary Compensation
Table.  The
following table provides information concerning compensation paid or accrued
during the fiscal years ended August 31, 2007 and March 31, 2006 to our
principal executive officer and each of our other two most highly paid executive
officers whose salary and bonus exceeded $100,000, collectively referred to as
the Named Executive Officers, determined at the end of the last fiscal
year:




Name and Principal
      Position
              
              Fiscal
                Year
              
              Salary
              
              
              Bonus
              
              
              Option Awards
      (1)
              
              
              All Other
      Compensation
              
              
              TotalWm. Milton
    Cox,
              
              2007
              
              $
              -
              
              
              $
              -
              
              
              $
              238,721
              
              
              $
              140,000
              (2)
              
              $
              378,821Chairman and
      ChiefExecutive
      Officer
              
              2006
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Bassam “Sam”
      Nastat,
              
              2007
              
              $
              -
              
              
              $
              -
              
              
              $
              477,441
              
              
              $
              140,000
              (3)
              
              $
              617,441President
              
              2006
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Donald L. Sytsma,
              
              2007
              
              $
              -
              
              
              $
              -
              
              
              $
              238,721
              
              
              $
              120,000
              (4)
              
              $
              358,721Chief
      Financial Officer,Corporate
      Secretary
              
              2006
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -and
      Treasurer




(1)Estimated fair value of options on the
date of grant computed with the Black-Scholes option-pricing model. Amount
identified is the non-cash fair value amortization of options granted that
became vested by the recipient during the period then ending.  No
options have been exercised by the recipients.  See “Outstanding
Equity Awards at Fiscal Year End” for the material terms of each
grant.




(2)Fees for services remitted to
CodeAmerica Investments, LLC, for which Mr. Cox serves as the Managing
Member.




(3)Fees for services remitted to Paragon
Capital, LLC, for which Mr. Nastat serves as the Manager.




(4)Fees for services remitted to DLS
Energy Associates, LLC and H&H Energy Consultants, an affiliate of DLS
Energy Associates, LLC, for which Mr. Sytsma is the Managing
Member.




Employment
Agreements




We have not entered into employment
agreements with any of our executive officers.




Potential Payments Upon Termination or
Change of Control




There are no payments due to any of our
executive officers in connection with a termination or on a change of
control.





52
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OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-END
              August
      31, 2007Option
      Awards
            
            Stock
      AwardsName
            
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            
            
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            
            
            Equity
              Incentive
              Plan
              Awards
              Number
              of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            
            
            Option
              Exercise
              Price
              ($)
            
            Option
              Expiration
              Date
            
            Number
              of
      Shares
              or
      Units
              of
      Stock
              That
      Have
              Not
              Vested
              (#)
            
            
            Market
              Value
      of
              Shares
      or
              Units
      of
              Stock
              That
      Have
              Not
              Vested
              ($)
            
            
            Equity
              Incentive
              Plan
      Awards:
              Number
              of
              Unearned
              Shares,
              Units
      or
              Other
      Rights
              That
      Have
              Not
      Vested
              (#)
            
            
            Equity
              Incentive
              Plan
      Awards
              Market
      or
              Payout
              Value
              of
              Unearned
              Shares,
              Units
      or
              Other
              Rights
              That
      Have
              Not
              Vested
              ($)(a)
            
            (b)
            
            
            (c)
            
            
            (d)
            
            
            (e)
            
            (f)
            
            (g)
            
            
            (h)
            
            
            (i)
            
            
            (j)Wm.
      Milton Cox
            
            (1)
            250,000
            
            
            
            250,000
            
            
            
            -
            
            
            $
            0.79
            
            5/10/2017
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Bassam
      “Sam” Nastat
            
            (2)
            500,000
            
            
            
            500,000
            
            
            
            -
            
            
            $
            0.79
            
            5/10/2017
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Donald
      L. Sytsma
            
            (1)
            250,000
            
            
            
            250,000
            
            
            
            -
            
            
            $
            0.79
            
            5/10/2017
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -


____________________




(1)
            Mr. Cox and Mr. Sytsma received
      options to purchase 500,000 shares of common stock on May 10, 2007 with an
      exercise price of $0.79 per share.  The options vest quarterly
      over the twelve months following the date of issuance and expire on May
      10, 2017.




(2)
            Mr. Nastat received options to
      purchase 1,000,000 shares of common stock on May 10, 2007 with an exercise
      price of $0.79 per share, which vests over twelve months and expires on
      May 10, 2017.




Director
Compensation




Our directors are not compensated in
cash for their services but are reimbursed for out-of-pocket expenses incurred
in furtherance of our business.  The following table sets forth
information with respect to compensation paid to directors during the fiscal
year ended August 31, 2007, which also represents all compensation paid
to such directors since they began their service as our directors.




Name
            
            Fees Earned or Paid in
      Cash
            
            
            Stock Awards
            
            
            Option Awards
            
            
            Non-Equity Incentive
      Compensation
            
            
            Nonqualified Deferred
      Compensation Earnings
            
            
            All Other Compensation
            
            
            Total(a)
            
            (b)
            
            
            (c)
            
            
            (d)
            
            
            (e)
            
            
            (f)
            
            
            (g)
            
            
            (h)T. Arden McCracken
            
            $
            -
            
            
            $
            -
            
            
            $
            143,296
            (1)
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            143,296J. Timothy Altum
            
            $
            -
            
            
            $
            -
            
            
            $
            143,296
            (2)
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            143,296


____________________




(1)
            Mr. McCracken
      received options to purchase 250,000 shares of common stock on May 10,
      2007 with an exercise price of $0.79 per share.  The options
      vest quarterly over the twelve months following the date of issuance and
      expire on May 10, 2017.  He also received options to purchase
      100,000 shares of common stock on June 14, 2007 with an exercise price of
      $0.50 per share, which vest over 20 months and expires on June 14, 2017.
      The estimated fair value of the options granted was computed with the
      Black-Sholes option-pricing model.  The amount identified in the
      table is the non-cash fair value amortization of options granted that
      became vested by the recipient during the fiscal year ended August 31,
      2007.





53
 Table of Contents




(2)
            Mr. Altum
      received options to purchase 250,000 shares of common stock on May 10,
      2007 with an exercise price of $0.79 per share. The options vest quarterly
      over the twelve months following the date of issuance and expire on May
      10, 2017.  He also received options to purchase 100,000 shares
      of common stock on June 14, 2007 with an exercise price of $0.50 per
      share, which vest over 20 months and expires on June 14, 2017. The
      estimated fair value of the options granted was computed with the
      Black-Sholes option-pricing model.  The amount identified in the
      table is the non-cash fair value amortization of options granted that
      became vested by the recipient during the fiscal year ended August 31,
      2007.




Other Information




From February 21, 2006 to January 3,
2007, we paid a total of $20,527 in consulting fees.  Of the total,
Bijay Singh, our former director, received $10,000.  Sokhie Puar, one
of our former directors and our former President, Corporate Secretary and
Treasurer, received $10,527.





54
 Table of Contents





Item
      11.
            Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters




The
following table sets forth information with respect to the beneficial ownership
of our common stock as of November 28, 2007, by:




•
            each
      person who is known by us to beneficially own 5% or more of the
      outstanding class of our capital
stock;




•
            each
      member of the Board;




•
            each
      of our executive officers; and




•
            all
      of our directors and executive officers as a
  group.




Beneficial
ownership is determined in accordance with the rules of the SEC.  To
our knowledge, each of the holders of capital stock listed below has sole voting
and investment power as to the capital stock owned unless otherwise
noted.




Name and Address of
      Beneficial Owner
            
            Numbers of Shares of Common
              Stock Beneficially Owned
            
            
            % of Common Stock
              Outstanding(1)Wm. Milton Cox
            
            
            17,269,527
            (2)
            
            
            30.5
            %Metage Funds Limited
            
            
            13,166,667
            (3)
            
            
            23.3
            %Bassam “Sam” Nastat
            
            
            10,019,526
            (4)
            
            
            17.7
            %Donald L. Sytsma
            
            
            7,751,000
            (5)
            
            
            13.7
            %T. Arden McCracken
            
            
            140,000
            (6)
            
            
            *J. Timothy Altum
            
            
            140,000
            (7)
            
            
            *Executive Officers and
      Directors as a group (5 persons)
            
            
            35,320,053
            
            
            
            60.6
            %


__________________________





* Less than one
percent




(1)
            Based
      on 56,603,107 shares outstanding as of November 28,
  2007.




(2)
            Includes
      250,000 shares of common stock issuable upon the exercise of options which
      are currently exercisable or exercisable within 60 days
      hereof.  Wm. Milton Cox is the managing member of CodeAmerica
      Investments, LLC, the holder of record of 17,019,527 of these shares, and
      he is the beneficial owner of these shares.  Wm. Milton Cox is
      our Chairman and Chief Executive Officer.  CodeAmerica
      Investments LLC’s address is 6300 Germantown Rd., Suite 100, Olive Branch,
      MS 38654.




(3)
            Includes
      11,666,667 shares are issuable upon conversion of outstanding convertible
      notes and exercise of outstanding warrants. Metage Capital Limited, Mr.
      Tom Sharp, Investment Manager exercises voting and investment authority
      over these shares.  Metage’s address is 8 Pollen Street, London,
      England W1S 1NG.




(4)
            Includes
      500,000 shares of common stock issuable upon the exercise of options which
      are currently exercisable or exercisable within 60 days
      hereof.




(5)
            Includes
      250,000 shares of common stock issuable upon the exercise of options which
      are currently exercisable or exercisable within 60 days
      hereof.  Donald L. Sytsma is the managing member of Harbour
      EnCap, LLC, the holder of record of  7,500,000of these shares,
      and he is the beneficial owner of these shares.  Donald L.
      Sytsma is a director and our Corporate Secretary, Treasurer, and Chief
      Financial Officer.  Harbour Encap LLC’s address is 514 W.
      Jefferson Street, Culver, IN 4651.




(6)
            Includes
      140,000 shares of common stock issuable upon the exercise of options which
      are currently exercisable or exercisable within 60 days
      hereof.




(7)
            Includes
      140,000 shares of common stock issuable upon the exercise of options which
      are currently exercisable or exercisable within 60 days
      hereof.





55
 Table of Contents





Item
      12.
            Certain Relationships and Related
      Transactions and DirectorIndependence








Oakcrest
Prospect, Wharton County, Texas




In
connection with the merger of us and Wharton Corp., we acquired oil and gas
lease interests located in Wharton County, Texas.  The Oakcrest oil
and gas lease interests were originally acquired by CodeAmerica.  When
Wharton Corp. acquired the Oakcrest oil and gas lease interests from CodeAmerica
on October 16, 2006, Wm. Milton Cox was also the Chairman and CEO of Wharton
Corp.  CodeAmerica received 5,000,000 shares of our common stock for
its Oakcrest oil and gas lease interests in the merger.




The
acquisition of the Oakcrest oil and gas lease interests from CodeAmerica has
been recorded on our records at its historical cost basis in the interests which
totaled approximately $460,500.  When the Oakcrest lease interests
were acquired by Wharton Corp., our shares of common stock were not publicly
traded.  The fair value of the shares issued to CodeAmerica for the
lease interests was equal to its historical cost basis in the lease
interests.




Mound
Branch Project, Elk County, Kansas




On
January 30, 2007, we purchased Orbit’s working and net revenue interests in
approximately 8,800 gross acres located in Elk County, Kansas together with its
interests in drilled wells and associated equipment.  The purchase
price totaled $6.8 million, and consideration paid to Orbit was comprised of (a)
$760,947, representing funds advanced by us to Orbit for testing and evaluation
of the existing well bores, reservoir formations and associated lease acreage,
(b) a thirty-six month $2.0 million 10% convertible note with principal due at
maturity, and (c) 4,039,053 shares of our common stock with a fair value of
$1.00 per share at the time of issuance.




The note issued to Orbit bears interest
at 10.0% per annum due quarterly in arrears.   Pursuant to the
terms of the note, after the initial twelve months, (a) Orbit has the ability to
convert the outstanding principal and interest balance into shares of common
stock at a conversion price of $1.00 per share and (b) we may prepay all or a
portion of the note without penalty.  On July 3, 2007 the note was
amended to provide that interest payable for the first two quarters was deferred
by Orbit until October 30, 2007.   At August 31, 2007, the
outstanding principal under the note was $2.0 million and accrued interest
totaled $116,712.








Orbit is
100% owned by CodeAmerica and Paragon, which as noted elsewhere in this Form
10-KSB, are controlled by Wm. Milton Cox and Bassam Nastat, who are senior
officers and directors of Gulf Western.Immediately
prior to the acquisition of Mound Branch from Orbit on January 30, 2007, Messrs.
Cox and Nastat held a combined 22,500,000 shares of common stock, or 49.7% of
the then issued and outstanding common shares of Gulf Western.  The
common shares issued to Orbit in the transaction increased Messrs. Cox’s and
Nastat’s combined direct and indirect holdings in Gulf Western to 53.8% of our
then issued and outstanding shares of common stock.









56
 Table of Contents





Orbit
serves as operator of the Mound Branch Project.   In conjunction
with the terms of the Mound Branch Project purchase and sale agreement, we have
been funding 100% of the costs incurred by Orbit for the testing and evaluation
of the existing well bores, reservoir formations and associated lease
acreage.  The share of costs not attributable to our working interest
ownership in the property is recorded as a receivable from joint interest
partners in the amount of $198,006.  We expect to collect this amount
from our partners in the Mound Branch Project.








Baxter Bledsoe Prospect,ClayCounty,Kentucky




On February 1, 2006, we purchased the
Baxter Bledsoe Prospect oil and gas lease acreage from CodeAmerica for a cash
purchase price of $330,000. The prospect has approximately 2,200 acres located
in Clay County, Kentucky.This acquisition from CodeAmerica was
accounted for at fair value with the cash purchase price recorded as lease
acquisition costs as provided for in EITF 02-5.  The seller’s
historical cost basis of the lease interests acquired totaled approximately
$170,000.




BellProspect,Bell County,Kentucky




On October 1, 2006, we purchased
CodeAmerica’s oil and gas lease interests located inBell County,Kentucky. The cash purchase price was $314,475,
which included $59,475 for land, legal and title services expended by
CodeAmerica on the prospect.This acquisition from CodeAmerica was
accounted for at fair value with the cash purchase price recorded as lease
acquisition costs as provided for in EITF 02-5.  The seller’s
historical cost basis of the lease interests acquired totaledapproximately$229,475.




Advances from
Stockholder




During the months of April and May 2007,
CodeAmerica made cash advances to us totaling $120,000 for general working
capital requirements.  The advances were due on demand, did not bear
interest and were outstanding as of August 31, 2007.  The advances
were fully repaid during November 2007.




Office Rent




We share office space inHouston,Texaswith Orbit under a month-to-month
arrangement.   The office space is leased by
Orbit.  During the years ended August 31, 2007 and 2006, we paid rent
totaling $42,994 and $38,210, respectively.




Director
Independence









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 Table of Contents





Item 13.
            Exhibits




2.1
            Agreement and Plan of Merger
      among Georgia Exploration, Inc., Wharton Resources Corp., Gex Acquisition
      Corp. and CodeAmerica Investments LLC, Bassam Nastat, Harbour Encap LLC
      dated as of November 21, 2006 (incorporated by reference to Exhibit 2.1 to
      the Company’s Current Report on Form 8-K filed on November 29, 2006).3.1
            Articles of Incorporation of
      the Company (incorporated by reference to Exhibit 3.1 to the Company’s
      Registration Statement (Registration No. 333-133759) on Form SB-2 filed on
      May 3, 2006).3.2
            Certificate of Change to
      Article of Incorporation of the Company (incorporated
      by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s
      Registration Statement (Registration No. 333-147842) on Form SB-2/A filed
      on January31, 2008).3.3
            Certificate of Amendment to
      Article of Incorporation of the Company (incorporated by reference to
      Exhibit 3.2 to the Company’s Registration Statement (Registration No.
      333-141234) on Form S-8 filed on March 12, 2007).3.4
            Bylaws of the Company
      (incorporated by reference to Exhibit 3.2 to the Company’s Registration
      Statement on Form 8-A filed on November 9, 2006).4.1
            Specimen Stock Certificate
      (incorporated by reference to Exhibit 4.1 to the Company’s Registration
      Statement on Form 8-A filed on November 9, 2006).4.2+
            2007 Non-Qualified Stock
      Option  Plan (incorporated by reference to Exhibit 4.1 to the
      Company’s Registration Statement (Registration No. 333-141234) on Form S-8
      filed on  March 12, 2007).10.1
            Property Acquisition Agreement
      between the Company and Shaheen Jivraj-Sangara dated as March 2, 2006
      (incorporated by reference to Exhibit 10.1 to the Company’s Registration
      Statement on Form SB-2 (Registration No. 333-133759 ) filed on May 3,
      2006)10.2
            Trust Agreement between the
      Company and Shaheen Jivraj-Sangara dated as March 2, 2006 (incorporated by
      reference to Exhibit 10.2 to the Company’s Registration Statement on Form
      SB-2 (Registration No. 333-133759) filed on May 3, 2006)10.3
            Purchase and Sale Agreement
      between CodeAmerica Investments, LLC and Wharton Resources LP dated
      effective October 1, 2006(incorporated by reference to
      Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB filed on
      January 22, 2007).10.4
            Purchase and Sale Agreement
      between CodeAmerica Investments, LLC and Wharton Resources LP dated
      effective February 1, 2006 (incorporated by reference to Exhibit 10.2 to
      the Company’s Quarterly Report on Form 10-QSB filed on January 22,
      2007).10.5
            Purchase and Sale Agreement
      between Orbit Energy, LLC and Wharton Resources LP dated effective
      September 1, 2006 (incorporated by reference to Exhibit 10.3 to the
      Company’s Quarterly Report on Form 10-QSB filed on January 22, 2007).10.6
            Assignment of Oil and Gas Mineral
      Leases by and between CodeAmerica Investments, LLC and Wharton Resources
      LP for its oil and gas lease interests located inWharton County,Texasdated effective April 28,
      2006 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly
      Report on Form 10-QSB filed on January 22, 2007).10.7
            Purchase and Sale Agreement
      between Orbit Energy, LLC and Wharton Resources LP dated effective January
      30, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s
      Current Report on Form 8-K filed on February 5, 2007).10.8
            Convertible Unsecured
      Promissory Note issued by the Company to Orbit Energy, LLC dated January
      30, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s
      Current Report on Form 8-K filed on February 5, 2007).10.9
            Assignment of Working Interest
      in Oil and Gas Wells Mound Branch Prospect dated January 30, 2007
      (incorporated by reference to Exhibit 10.3 to the Company’s Current Report
      on Form 8-K filed on February 5, 2007).10.10
            Assignment of Oil andGas Mineral Leases
      Elk County,Kansasdated January 30, 2007
      (incorporated by reference to Exhibit 10.4 to the Company’s Current Report
      on Form 8-K filed on February 5, 2007).10.11
            Convertible Secured Note and
      Associated Warrant by and between NCIM Limited and Gulf Western Petroleum
      Corporation, effective July 3, 2007 (incorporated by reference to Exhibit
      10.9 to the Company’s Quarterly Report on Form 10-QSB filed on July 17,
      2007).




58




10.12
            Securities Purchase
      Agreement dated as of September 10, 2007 between Gulf Western Petroleum
      Corporation and Metage Funds Limited and NCIM Limited(incorporated by reference to
      Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
      September 13, 2007).10.13
            Senior Secured Note dated
      September 10, 2007 issued by Gulf Western Petroleum Corporation to Metage
      Funds Limited (incorporated by reference to Exhibit 10.2 to the Company’s
      Current Report on Form 8-K filed on September 13, 2007).10.14
            Senior Secured Note dated
      September 10, 2007 issued by Gulf Western Petroleum Corporation to NCIM
      Limited (incorporated by reference to Exhibit 10.3 to the Company’s
      Current Report on Form 8-K filed on September 13, 2007).10.15
            Warrant to Purchase Common
      Stock dated September 10, 2007 issued by Gulf Western Petroleum
      Corporation to Metage Funds Limited and NCIM Limited (incorporated by
      reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K
      filed on September 13, 2007).10.16
            Security Agreement dated
      September 10, 2007 between Gulf Western Petroleum Corporation, Gulf
      Western Petroleum, LP, Wharton Resources Corp., Wharton Resources LLC and
      Metage Funds Limited, in its capacity as collateral agent (incorporated by
      reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K
      filed on September 13, 2007).10.17
            Pledge Agreement dated
      September 10, 2007 between Gulf Western Petroleum Corporation, Gulf
      Western Petroleum, LP, Wharton Resources Corp., Wharton Resources LLC and
      Metage Funds Limited, in its capacity as collateral agent (incorporated by
      reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K
      filed on September 13, 2007).10.18
            Guaranty dated September 10,
      2007 between Gulf Western Petroleum, LP and Wharton Resources Corp.,
      Wharton Resources LLC, for the benefit of Metage Funds Limited and NCIM
      Limited (incorporated by reference to Exhibit 10.7 to the Company’s
      Current Report on Form 8-K filed on September 13, 2007).10.19
            Form of Texas Mortgage, Deed
      Of Trust, Assignment Of Production, Security Agreement, Fixture Filing and
      Financing Statement dated September 10, 2007 by Gulf Western Petroleum, LP
      to Thomas J. Perich, as Trustee for the benefit of Metage Funds Limited,
      in its capacity as collateral agent (incorporated by reference to Exhibit
      10.8 to the Company’s Current Report on Form 8-K filed on September 13,
      2007).10.20
            Form of Kansas Mortgage, Deed
      Of Trust, Assignment Of Production, Security Agreement, Fixture Filing and
      Financing Statement dated September 10, 2007 by Gulf Western Petroleum, LP
      to Metage Funds Limited, in its capacity as collateral agent (incorporated
      by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K
      filed on September 13, 2007).10.21
            Registration Rights Agreement
      dated September 10, 2007 between Gulf Western Petroleum Corporation and
      Metage Funds Limited and NCIM Limited (incorporated by reference to
      Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on
      September 13, 2007).16.1
            Letter from Dale Matheson
      Carr-Hilton Labonte LLP regarding change in certifying accountants
      (incorporated by reference to Exhibit 16.1 to the Company’s Current Report
      on Form 8-K/A filed on January 24, 2007).16.2
            Letter from Malone &
      Bailey, PC regarding change in certifying accountants (incorporated by
      reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K
      filed on October 5, 2007).21.1
            Subsidiaries of the
      Company(incorporated by
      reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K
      filed on November 29, 2007).23.1*
            Consent of GBH CPAs, PC,
      Independent Registered Public Accounting Firm.23.2*
            Consent of MHA Petroleum
      Consultants, Inc.31.1*
            Section 302 Certification
      under Sarbanes-Oxley Act of 2002 of Wm. Milton Cox (principal executive
      officer).31.2*
            Section 302 Certification
      under Sarbanes-Oxley Act of 2002 of Donald L. Sytsma (principal financial
      and accounting officer).32.1*
            Section 906 Certification
      under Sarbanes-Oxley Act of 2002 0f Wm. Milton Cox (principal executive
      officer).32.2*
            Section 906 Certification
      under Sarbanes-Oxley Act of 2002 0f Donald L. Sytsma (principal financial
      and accounting officer).





*
            Filed
    herewith.


+
            Management contract or
      compensatory plan or
arrangement





59
 Table of Contents





Item
      14.
            Principal Accountant Fees and
      Services




Independent Registered Public Accountant
Fees.




The aggregate fees billed by Malone
& Bailey, PC and GBH CPAs, PC for professional services rendered for the
audits of our consolidated financial statements for the years ending August 31,
2007 and August 31, 2006 are as follows:




Years EndingAugust, 31 2007
            
            
            August, 31 2006Audit Fees
            
            $
            90,995
            
            
            $
            80,200





Policy on Audit Committee Pre-Approval
of Audit and Non-Audit Services of Independent Auditor.




The Board
is in the process of forming an audit committee, of which a majority of the
members will be comprised of independent directors.  For the year
ended August 31, 2007, all audit and non-audit services to be provided to us
were approved by the entire Board.





60
 Table of Contents





SIGNATURES








GULF WESTERN PETROLEUM
      CORPORATIONDate:  April 21,
      2008
            By:
            /s/ W. Milton CoxW. Milton
      Cox, Chairmanand Chief
      Executive Officer







Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
annual report on Form 10-KSB has been signed by the following persons in the
capacities and on the dates indicated.




Signature
            
            Capacity In Which Signed
            
            Date/s/ W. Milton Cox
            
            Chairman and Chief Executive
      Officer and
            
            April 21, 2008W. Milton Cox
            
            Director (Principal Executive
      Officer)/s/ Donald L. Sytsma
            
            Chief Financial Officer,
      Corporate
            
            April 21, 2008Donald L. Sytsma
            
            Secretary
      and  Treasurer and Director (Principal Financial and Principal
      Accounting Officer)/s/ Bassam Nastat
            
            President and Director
            
            April 21, 2008Bassam Nastat






61