**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
  **FORM
        10-KSB**
 
 x
              ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 
 For
        the
        fiscal year ended August 31, 2007
 
  ̈
              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) 355-7001**
 
 Securities
        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.    ̈
 
 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
 ̈
 
 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.   ̈
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act.  Yes  ̈    No
x
 
 The
        issuer’s revenues for the year ended August 31, 2007 were $-0-. The aggregate
        market value of the common stock, par value $.001 per share, held by
        non-affiliates of the issuer as of November 28, 2007, was approximately
        $8,123,059. As of November 28, 2007, there were outstanding 56,603,107 shares
        of
        common stock, par value $.001 per share, of the issuer.
 
 Transitional
        Small Business Disclosure Format.  Yes  ̈ No x
  
  
  **TABLE
        OF CONTENTS**
  **Page****PART
                  I**
              
              **1**Item
                  1.
              
              Description
                  of Business
              
              2Item
                  2.
              
              Description
                  of Property
              
              17Item
                  3.
              
              Legal
                  Proceedings
              
              18Item
                  4.
              
              Submission
                  of Matters to a Vote of Security
                  Holders
              
              18**PART
                  II**
              
              **19**Item
                  5.
              
              Market
                  for Common Stock and Related Stockholder Matters and
                  Small Business Issuer Purchases of Equity Securities
              
              19Item
                  6.
              
              Plan
                  of Operations
              
              21Item
                  7.
              
              Financial
                  Statements
              
              22Item
                  8.
              
              Changes
                  in and Disagreements with Accountants on Accounting
                  and Financial Disclosures
              
              44Item
                  8A.
              
              Controls
                  and Procedures
              
              45Item
                  8B.
              
              Other
                  Information
              
              45**PART
                  III**
              
              **46**Item
                  9.
              
              Directors
                  and Executive Officers, Promoters, Control Persons
                  and Corporate Governance; Compliance with Section 16(a) of the
                  Exchange
                  Act
              
              46Item
                  10.
              
              Executive
                  Compensation
              
              48Item
                  11.
              
              Security
                  Ownership of Certain Beneficial Owners and
                  Management and Related Stockholder Matters
              
              50Item
                  12.
              
              Certain
                  Relationships and Related Transactions and Director
                  Independence
              
              51Item
                  13.
              
              Exhibits
              
              53Item
                  14.
              
              Principal
                  Accountant Fees and Services
              
              55
  *Table
            of Contents*
  **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.  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 have made 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 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.
  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.
  1
 *Table
            of Contents*
  **Item
                  1.**
              **Description
                  of Business**
  **Corporate
        History**
  We
        were
        incorporated in the State of Nevada on 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 in British
        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 the United 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 the United States.
  We
        currently hold oil and gas lease interests in Texas, Kansas and
        Kentucky.  We are actively engaged in the drilling of Frio formation
        wells in Dewitt and Lavaca County, Texas.  We also hold proved
        undeveloped reserves in Wharton County, Texas, and we are engaged in a natural
        gas supply and gas gathering system development project in Southeast
        Kansas.  We hold oil and gas lease interests in Kentucky that are
        exploratory in nature. We hope to establish commercial levels of production
        from
        our Texas Shamrock and Brushy Creek Project wells in Dewitt and Lavaca County,
        Texas during 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 in Wharton County, Texas.
  **Principal
        Properties**
  ***Oakcrest
        Prospect (Wilcox Formation), Wharton County, Texas***
  Our
        Oakcrest Prospect is located in south central Texas, approximately 75 miles
        southwest of Houston, Texas.   We hold oil and gas lease
        interests in approximately 866 acres with a working interest of
        95.75%.  The main target of hydrocarbon production is the Wilcox
        formation, with secondary targets for the Oakcrest Prospect being the Frio
        and
        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 in
        Wharton 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.
  Initial
        production in the Southwest Bonus Field commenced in August 1998 with the
        Obenhaus Gas Unit which to date has yielded total production of approximately
        4,206 MMcf.  We do not hold interests in the Southwest Bonus Field,
        however in connection with the reserve evaluation of the Oakcrest Prospect,
        we
        acquired data for sixty one (61) Wilcox formation producing wells, located
        in
        the Southwest Bonus Field, that we evaluated to ascertain their estimated
        ultimate recoveries.  Production data through June 2007 was obtained
        and evaluated to develop decline curve analysis for each well in order to
        forecast remaining and ultimate reserves for wells that are currently
        producing.  For wells that were no longer producing, the cumulative
        natural gas and oil production were used to develop ultimate
        recoveries.   Median recovery from the Southwest Bonus Field
        offset producing wells is approximately 2,436 MMcf and 73,100 barrels
        of oil per well.
  Production
        forecasts for the Oakcrest Prospect locations was derived based on the
        historical behavior of the Wilcox formation offset wells in the Southwest
        Bonus
        Field.  Based on the production behavior of the offset wells, the
        initial gas production rate for the Oakcrest wells was plotted to be 15,000
        Mcf
        per day with an initial decline rate of 90% per year, and a hyperbolic exponent
        of 0.8.
  We
        engaged MHA Petroleum Consultants, Inc. (“MHA”) to make a technical evaluation
        our Oakcrest Prospect natural gas and oil reserves, and to formulate estimates
        of the proved reserves and income attributable to our interests in the
        prospect.   In MHA’s evaluation of the Oakcrest Prospect, 17
        potential well locations were identified.  Two well locations contain
        reserves categorized as proved reserves.  A summary of the results of
        MHA’s technical evaluation of oil and natural gas reserves categorized as
        proved as of September 1, 2007, together with the net undiscounted cash flows,
        discounted future cash flows at a 10.0% discount rate (“PV10”) on a before and
        after tax basis are as follows:
  2
 *Table
            of Contents*
  **Summary
        of Oil and Natural Gas Reserves**
 **(Dated
        as of September 1, 2007)**
 **(Prepared
        with Constant Prices)**
 
 **Oil**
              
              
              **Natural
                  Gas****Gross**
                **(MBBL)**
              
              
              **Net**
                **(MBBL)**
              
              
              **Gross**
                **(MMCF)**
              
              
              **Net**
                **(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
 
  The
        economics and cash flows presented in the above table are based on our 95.75%
        working interest and 73.0% net revenue interest in the Oakcrest
        Prospect.   The constant prices used in calculating the
        information provided in the above table were West Texas Intermediate (“WTI”) of
        $73.19 per barrel (with a wellhead netback of $68.19 to us) and Henry Hub
        natural gas price of $7.00 per million cubic feet (with a wellhead netback
        of
        $6.45 per Mcf to us).
  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
        Wilcox formation well.
  Our
        plan
        of operation for the Oakcrest Prospect is to construct the required drilling
        location, to spud the initial Wilcox formation well in January 2008. A second
        well also targeting reserves identified as proved undeveloped is scheduled
        to
        spud immediately following the completion of the initial well.  Upon
        the drilling of the first and second Wilcox wells, we will make further
        technical evaluations to ascertain whether reserves originally categorized
        as
        probable have shifted to proved reserves with further data assembled through
        the
        drilling of these Wilcox wells.  If successful, we plan to drill a
        third Wilcox formation well during 2008 leveraging off the information acquired
        from the first two wells.
  ***Texas
        Shamrock and Brushy Creek Projects (Frio Formation), Dewitt and Lavaca Counties,
        Texas***
  Our
        Texas
        Frio formation wells that comprise our Shamrock and Brushy Creek Projects
        are
        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
        and
        Lavaca 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 in Dewitt County consists 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 in Lavaca
        County,
        Texas.
  3
 *Table
            of Contents*
  *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 the Texas Gulf Coast region.  Typical Frio wells
        produce at approximately 200 to 250 Mcf per day with estimated total recoverable
        reserves of approximately 500 MMcf.  The target formation is the
        Jameson sand with 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 lower Texas
        Gulf Coast.  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 six Frio discoveries, 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 additional Frio wells 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.
  ***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
        in Kansas.  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 of
        Kansas to more than 2,500 feet (762 m) in Elk and Chautauqua Counties as
        the
        Mississippian and Cherokee Group rocks gradually dip to the west and
        southwest.  The majority of wells are expected to produce from the
        Mulky and Summit coals at approximately 1,600 feet depth, with upside potential
        in the Mississippi Limestone, and Arbuckle sections at approximately 2,200
–
2,600 feet.   Recent testing of the first Mississippi Limestone
        well showed absolute open flow at 1,400 Mcf per day. The 72-hour flow tests
        indicate that the wells will be produced at approximately 350 to 400 Mcf
        per
        day.
  4
 *Table
            of Contents*
  Test
        results for the coal wells tested indicate that the wells, completed in the
        Cherokee coal group, will be produced at a rate of approximately 38-40 Mcf
        per
        day.  There are eight existing wells drilled that are expected to
        achieve commercial levels of production if a gathering system can be
        constructed. Since our acquisition of Orbit’s interests in the Mound Branch
        Project 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 owners total $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
        advised us that the testing and evaluation procedures for the Mound Branch
        Project were substantially completed during October 2007. Orbit has recently
        advised that they recommend performing a test on one well to further evaluate
        the Mulberry coal formation that has not been previously tested, 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 progress on the development of the natural gas
        supply
        and gathering system project.
  **Other
        Prospects**
  *Baxter
        Bledsoe Prospect, Clay County, Kentucky*
  On
        February 1, 2006, we purchased the Baxter Bledsoe Prospect oil and gas lease
        acreage from CodeAmerica for $330,000 cash. The prospect has approximately
        2,200
        acres located in Clay County, Kentucky. The Baxter Bledsoe Prospect is
        characterized as exploratory acreage, and our plan of operation provides
        for the
        drilling of an initial exploratory well targeting the Black River Group
        formation during 2008.
  *Bell
        Prospect, Bell County, Kentucky*
  On
        October 1, 2006, we acquired from CodeAmerica oil and gas lease interests
        located in Bell 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 Prospect is
        to
        assemble and evaluate data with respect to the prospect once the initial
        exploratory well on the Baxter Bledsoe prospect is completed and the data
        acquired during the drilling process is assembled and
        evaluated.
  **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.  The U.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 the U.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 the
        U.S. has historically been in the states of Texas, Louisiana, Oklahoma, and
        in
        the offshore areas associated with the Gulf 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 the U.S., domestic natural gas and crude oil
        production has not materially increased while consumer demand continues to
        grow.  The maturation of U.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.
  5
 *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 the
        U.S.  The volatile nature of the U.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
        the
        United 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, we are unable to predict the future 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. Texas and 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.
  6
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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**
 
 We
        do not
        intend to purchase any significant equipment over the next twelve months.
 
 **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.
  7
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  **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.
   8
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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
        have
        raised limited financing and have incurred operating losses since our inception,
        with total losses of approximately $3,817,250 through August 31,
        2007.  Although our management team has experience in the U.S. oil and
        gas industry, we have no track record of successful oil and gas exploration
        and
        development activities that would allow an investor to assess the likelihood
        of
        us, or guarantee that we will be successful, as an oil and natural gas
        exploration and production company.  We may fail to achieve or
        maintain successful operations, even in favorable market
        conditions.  There is a substantial risk that we will not be
        successful in our exploration activities, or if initially successful, in
        thereafter generating any operating revenues or otherwise achieving sustained
        and recurring operating cash flows.
  ***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*.**
  Over
        the
        next twelve months, we plan to spend approximately $12.8 million for oil
        and
        natural gas exploration, drilling and development expenditures, and
        approximately $1.6 million for general and administrative, operating and
        public
        company expenses, and working capital requirements.  See “Plan of
        Operations” for more information.  Based on our plan of operation, our
        current available cash and projected operating cash flows arenot sufficient
        to
        fund our capital and operating requirements over the next twelve month
        period.  In particular, our current and projected operating cash flows
        from our Frio formation oil and gas production in Dewitt and Lavaca Counties,
        Texas are not sufficient to repay the total $3.7 million principal balance
        due
        on September 10, 2008 under the notes issued to certain of our
        investors.  The first six months of interest on these notes totaling
        $277,500 is due on March 10, 2008.  We are dependent on external
        financing sources to raise funds sufficient to repay the principal balance
        due
        on these notes at maturity.
  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.
  9
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  ***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.
  ***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 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.  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.
  Potential
        conflicts of interest can exist if a related party director or officer has
        to
        make a decision that has different implications for us and the related party.
        No
        assurance can be given as to how    potentially conflicted
        board members or officers will evaluate their fiduciary duties or how such
        individuals will act under such circumstances. Furthermore, the appearance
        of
        conflicts, even if such conflicts do not materialize, might adversely affect
        the
        public's perception of us, as well as our relationship with other companies
        and
        our ability to enter into new relationships in the future, which could have
        a
        material adverse effect on our ability to do business.
  ***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.***
  Oil
        and
        natural gas exploration may involve unprofitable efforts, not only from dry
        wells, but from wells that are productive but do not produce sufficient net
        revenues to return a profit after drilling, operating and other costs.
        Completion of a well does not assure a profit on the investment or recovery
        of
        drilling, completion and operating costs. In addition, drilling hazards or
        environmental damage could greatly increase the cost of operations, and various
        field operating conditions may adversely affect the production from successful
        wells. These conditions include delays in obtaining governmental approvals
        or
        consents, shut-ins of connected wells resulting from extreme weather conditions,
        insufficient storage or transportation capacity or other geological and
        mechanical conditions. While diligent well supervision and effective maintenance
        operations can contribute to maximizing production rates over time, production
        delays and declines from normal field operating conditions cannot be eliminated
        and can be expected to adversely affect revenue and cash flow levels to varying
        degrees.
  Our
        commercial success depends on our ability to find, acquire, develop and
        commercially produce oil and natural gas reserves.  Without the
        continual addition of new reserves, any existing reserves and the production
        therefrom will decline over time as such existing reserves are depleted.
        A
        future increase in our reserves will depend not only on our ability to explore
        and develop any properties we may have from time to time, but also on our
        ability to select and acquire suitable producing properties or
        prospects.  No assurance can be given that we will be able to continue
        to locate satisfactory properties for acquisition or
        participation.  Moreover, if such acquisitions or participations are
        identified, we may determine that current markets, terms of acquisition and
        participation or pricing conditions make such acquisitions or participations
        economically disadvantageous.  There is no assurance that commercial
        quantities of oil and natural gas will be discovered or acquired by
        us.
  10
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  ***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.
  To
        date,
        we have not generated revenues from production of our oil and natural gas
        lease
        interests.  Our oil and natural gas exploration and development
        activities will be focused on the exploration and development of our oil
        and
        natural gas rights which are high-risk ventures with uncertain prospects
        for
        success.  In addition, we will not have earnings to support our
        activities should the wells drilled or properties acquired prove not to be
        commercially viable.  No assurance can be given that commercial
        quantities of oil and natural gas will be successfully produced as a result
        of
        our exploration and development efforts.  Further there is no
        guarantee that we will generate sufficient revenues from production of our
        reserves.
  Our
        exploration and development activities will depend in part on the evaluation
        of
        data obtained through geophysical testing and geological analysis, as well
        as
        test drilling activity.  The results of such studies and tests are
        subjective, and no assurances can be given that exploration and development
        activities based on positive analysis will produce oil or natural gas in
        commercial quantities or costs.  As developmental and exploratory
        activities are performed, further data required for evaluation of our oil
        and
        natural gas interests will become available.  The exploration and
        development activities that will be undertaken by us are subject to greater
        risks than those associated with the acquisition and ownership of producing
        properties.  The drilling of development wells, although generally
        consisting of drilling to reservoirs believed to be productive, may result
        in
        dry holes or a failure to produce oil and natural gas in commercial
        quantities.  Moreover, any drilling of exploratory wells is subject to
        significant risk of dry holes.
  ***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.***
  The
        marketability of any oil or natural gas that may be discovered by us will
        be
        affected by numerous factors beyond our control, including market fluctuations,
        the supply and demand for natural gas, the proximity and capacity of natural
        gas
        pipelines, oil transportation, and processing equipment, as well as by
        government regulations, including regulations relating to the prices, taxes,
        royalties, land tenure, allowable production, the import and export of natural
        gas and environmental protection.  These factors cannot be
        predicted.  Given the development stage of our operations, we are in
        the initial stage of negotiating contracts for the delivery and sale of oil
        or
        natural gas production from our properties.  There is no guarantee
        that any such contracts will be obtained or, if obtained, will be on terms
        which
        are economically viable 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.***
  Oil
        and
        natural gas exploration is intensely competitive in all its phases and involves
        a high degree of risk.  We compete with numerous other participants in
        the search for and the acquisition of oil and natural gas properties and
        in the
        marketing of oil and natural gas.  Our competitors include oil and
        natural gas companies that have substantially greater financial resources,
        staff
        and facilities than us.  Our ability to increase reserves in the
        future will depend not only on our ability to explore and develop our existing
        properties, but also on our ability to select and acquire suitable producing
        properties or prospects for exploratory drilling.  Competitive factors
        in the distribution and marketing of oil and natural gas include price and
        methods and reliability of delivery.  Competition may also be
        presented by alternate fuel sources.
  11
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  ***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 the United States affect 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.
  Environmental
        legislation provides for, among other things, restrictions and prohibitions
        on
        spills, releases or emissions of various substances produced in association
        with
        oil and natural gas operations. The legislation also requires that wells
        and
        facility sites be operated, maintained, abandoned and reclaimed to the
        satisfaction of the applicable regulatory authorities. Compliance with such
        legislation can require significant expenditures and a breach may result
        in the
        imposition of fines and penalties, some of which may be material. Environmental
        legislation is evolving in a manner expected to result in stricter standards
        and
        enforcement, larger fines and liability and potentially increased capital
        expenditures and operating costs. The discharge of oil, natural gas or other
        pollutants into the air, soil or water may give rise to liabilities to
        governments and third parties and may require us to incur costs to remedy
        such
        discharge. No assurance can be given that environmental laws will not result
        in
        a curtailment of production or a material increase in the costs of production,
        development or exploration activities or otherwise adversely affect our
        financial condition, results of operations or prospects.  We could
        incur significant liability for damages, clean-up costs and/or penalties
        in the
        event of discharges into the environment, environmental damage caused by
        us or
        previous owners of our property or non-compliance with environmental laws
        or regulations. In addition to actions brought by governmental agencies,
        we
        could face actions brought by private parties or citizens groups.  Any
        of the foregoing could have a material adverse effect on our financial
        results.
  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 the United States
        and
        Canada, the actions of the Organization of Petroleum Exporting Countries,
        governmental regulation, political stability in the Middle East and 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.
  12
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  ***We
        cannot guarantee that title to our properties does not contain a defect that
        may
        materially affect our interest in those properties.***
  It
        is our
        practice in acquiring significant oil and natural gas leases or interest
        in oil
        and natural gas leases to retain lawyers to fully examine the title to the
        interest under the lease.  In the case of minor acquisitions, we rely
        upon the judgment of oil and natural gas lease brokers or landmen who do
        the
        field work in examining records in the appropriate governmental office before
        attempting to place under lease a specific interest. We believe that this
        practice is widely followed in the oil and natural gas industry. Nevertheless,
        there may be title defects which affect lands comprising a portion of our
        properties which may adversely affect us.
  ***Our
        business may be harmed if we are unable to retain our interests in
        leases***.
  All
        of
        our properties are held under interests in oil and gas mineral leases, some
        of
        which expire within the next twelve months. If we fail to meet the specific
        requirements of each lease, especially future drilling and production
        requirements, the lease may be terminated or otherwise expire. We cannot
        assure
        you that we will be able to meet our obligations under each lease. The
        termination or expiration of our working interest relating to any lease would
        harm our business, financial condition and results of operations.
  ***Our
        reserve estimates are subject to numerous uncertainties and may be
        inaccurate.***
  There
        are
        numerous uncertainties inherent in estimating quantities of oil or natural
        gas
        reserves and cash flows to be derived therefrom, including many factors beyond
        our control. The reserve and associated cash flow information set forth herein
        represents estimates only. In general, estimates of economically recoverable
        oil
        and natural gas reserves and the future net cash flows therefrom are based
        upon
        a number of variable factors and assumptions, such as historical production
        from
        the properties, production rates, ultimate reserve recovery, timing and amount
        of capital expenditures, marketability of oil and natural gas, royalty rates,
        the assumed effects of regulation by governmental agencies and future operating
        costs, all of which may vary from actual results. All such estimates are
        to some
        degree speculative, and classifications of reserves are only attempts to
        define
        the degree of speculation involved. For those reasons, estimates of the
        economically recoverable oil and natural gas reserves attributable to any
        particular group of properties, classification of such reserves based on
        risk of
        recovery and estimates of future net revenues expected therefrom prepared
        by
        different engineers, or by the same engineers at different times, may vary.
        Our
        actual production, revenues, taxes and development and operating expenditures
        with respect to our reserves will vary from estimates thereof and such
        variations could be material.
  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
        constant price forecasts and cost estimates as of September 1,
        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.
  ***Although
        we are covered as an additional insured under certain insurance policies
        of our
        lease  operators, we presently do not carry our own insurance, and
        because of the limitations of any future insurance coverage, we may be exposed
        to significant liability should any claims arise for which we are not
        insured.***
  Our
        involvement in the exploration for and development of oil and natural gas
        properties may result in our becoming subject to liability for pollution,
        blowouts, property damage, personal injury or other hazards. We are covered
        as
        an additional insured under the insurance policies of our
        lease  operators, but do not presently maintain our own insurance
        covering liabilities arising from our operations. Although prior to drilling
        we
        will obtain insurance in accordance with industry standards to address certain
        of these risks, such insurance has limitations on liability that may not
        be
        sufficient to cover the full extent of such liabilities. In addition, such
        risks
        may not in all circumstances be insurable or, in certain circumstances, we may
        elect not to obtain insurance to deal with specific risks due to the high
        premiums associated with such insurance or other reasons. The payment of
        such
        uninsured liabilities would reduce the funds available to us. The occurrence
        of
        a significant event that we are not fully insured against, or the insolvency
        of
        the insurer of such event, could have a material adverse effect on our financial
        position, results of operations or prospects.
  13
 *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.***
  Our
        properties are held in the form of licenses and leases and working interests
        in
        licenses and leases. If we or the holder of the license or lease fail to
        meet
        the specific requirement of a license or lease, the license or lease may
        terminate or expire. There can be no assurance that any of the obligations
        required to maintain each license or lease will be met, although we exercise
        our
        commercially reasonable efforts to do so. The termination or expiration of
        our
        licenses or leases or the working interests relating to a license or lease
        may
        have a material adverse effect on our results of operations and
        business.
  ***The
        loss or unavailability of our key personnel for an extended period of time
        could
        adversely affect our business operations and
        prospects.***
  Our
        success depends in large measure on certain key personnel, including our
        President, Chief Executive Officer and Chief Financial Officer. The loss
        of the
        services of such key personnel could have a material adverse effect on
        us.  Although we are looking into acquiring key person insurance, we
        do not currently have such insurance in effect for these key individuals.
        In
        addition, the competition for qualified personnel in the oil and natural
        gas
        industry is intense and there can be no assurance that we will be able to
        continue to attract and retain all personnel necessary for the development
        and
        operation of our business.
  ***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
        may
        rely on third parties to operate some of the assets in which we possess an
        interest. Assuming the presence of commercial quantities of oil and natural
        gas
        on our properties, the success of the oil and natural gas operations, whether
        considered on the basis of drilling operations or production operations,
        will
        depend largely on whether the operator of the property properly fulfils our
        obligations.  As a result, our ability to exercise influence over the
        operation of these assets or their associated costs may be limited, adversely
        affecting our financial performance.  Our performance will therefore
        depend upon a number of factors that may be outside of our full control,
        including the timing and amount of capital expenditures, the operator’s
        expertise and financial resources, the approval of other participants, the
        selection of technology, and risk management practices.  The failure
        of third party operators and their contractors to perform their services
        in a
        proper manner could adversely affect our operations.
  ***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.
  14
 *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***.
  Although
        a trading market for our common stock exists, the trading volume has
        historically been insignificant, and an active trading market for our common
        stock may never develop. There currently is limited analyst coverage of our
        business. We do not have very many shares of common stock outstanding and
        the
        amount of shares in our public “float” will continue to be limited due to the
        fact that significant portions of our outstanding shares are held by our
        officers and directors and their affiliates. As a result of the thin trading
        market for our common stock, and the lack of analyst coverage, the market
        price
        for our shares may continue to fluctuate significantly, and will likely be
        more
        volatile than the stock market as a whole. There may be a limited demand
        for
        shares of our common stock due to the reluctance or inability of certain
        investors to buy stocks quoted for trading on the Over-The-Counter Bulletin
        Board (“OTCBB”), limited analyst coverage of our common stock, and a negative
        perception by investors of stocks traded on the OTCBB.  As a result,
        even if prices appear favorable, there may not be sufficient demand in order
        to
        complete a shareholder’s sell order. Without an active public trading market or
        broader public ownership, shares of our common stock are likely to be less
        liquid than the stock of most public companies, and any of our shareholders
        who
        attempt to sell their shares in any significant volumes may not be able to
        do so
        at all, or without depressing the publicly quoted bid prices for their
        shares.
  In
        addition, while we may at some point be able to meet the requirements necessary
        for our common stock to be listed on a national securities exchange, we cannot
        assure you that we will ever achieve a listing of our common stock on a national
        securities exchange. Initial listing on a national securities exchange is
        subject to a variety of requirements, including minimum trading price and
        minimum public “float” requirements, and could also be affected by the general
        skepticism of such markets concerning companies that are the result of mergers
        with inactive publicly-held companies. There are also continuing eligibility
        requirements for companies listed on public trading markets. If we are unable
        to
        satisfy the initial or continuing eligibility requirements of any such market,
        then our stock may not be listed or could be delisted. This could result
        in a
        lower trading price for our common stock and may limit your ability to sell
        your
        shares, any of which could result in you losing some or all of your
        investments.
  ***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.
  15
 *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, although
                  there are currently no analysts covering our
                  stock;
  •
              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.
  16
 *Table
            of Contents*
  **Item
                  2.**
              **Description
                  of Property**
  **Reserves**
  Our
        proved natural gas and oil reserves have been estimated as of August 31,
        2007 and presented in following table.  The reserves presented in the
        table are based on reserve evaluations performed by MHA Petroleum Consultants,
        Inc., an independent reserve engineer, and reported in their report entitled
        “Securities and Exchange Commission Evaluation, Oil & Natural Gas Reserves,
        Oakcrest Prospect, Wharton County, Texas, Effective September 1, 2007”.  The
        reserve quantities were prepared based on constant price forecasts and cost
        estimates.  There are numerous uncertainties inherent in estimating
        quantities of proved reserves and estimates of reserve quantities and values
        must be viewed as being subject to significant change as more data about
        the
        properties becomes available.
  All
        reserves classified as proved as of August 31, 2007 are associated with our
        Oakcrest Prospect located in Wharton County, Texas.
  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
              
              
              
              3.5Development
              
              
              -
              
              
              
              -Total
              
              
              10.0
              
              
              
              3.5Total
                  WellsProductive
              
              
              -
              
              
              
              -Non-productive
              
              
              -
              
              
              
              -Under
                  testing and evaluation
              
              
              10.0
              
              
              
              3.5Total
              
              
              10.0
              
              
              
              3.5
 
 All
        wells
        drilled during the year ended August 31, 2007 were drilled in Texas in
        connection with the Shamrock and Brushy Creek Frio formation 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.
  17
 *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 in Houston, Texas with 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.
 
 **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.
  18
 *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.
  **Sales
                  Price****High**
              
              
              **Low**Quarter
                  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**
  We
        have
        not paid dividends on our common stock and do not anticipate paying cash
        dividends in the immediate future as we contemplate that our cash flows will
        be
        used for continued growth of our operations.  The payment of future
        dividends, if any, will be determined by the Board in light of conditions
        then
        existing, including our earnings, financial condition, capital requirements,
        and
        restrictions in financing agreements, business conditions and other
        factors. The Nevada Revised Statutes, however, do prohibit us from
        declaring dividends where, after giving effect to the distribution of the
        dividend we would not be able to pay our debts as they become due in the
        usual
        course of business; or our total assets would be less than the sum of our
        total
        liabilities, plus the amount that would be needed to satisfy the rights of
        shareholders who have preferential rights superior to those receiving the
        distribution.
  19
 *Table
            of Contents*
  **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 Information****Plan
                  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.*
 
  20
 *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
  Based
        on
        our plan of operation, our current available cash is not sufficient to fund
        our
        capital and operating requirements over this twelve month period. 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 program.
        Should we raise funds through equity and debt placements, existing equity
        ownership in us could be negatively affected due to the dilution of existing
        equity ownership of our shares.  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.
  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,
                  2008****Exploration,
                  drilling, development and operating expenditures**Oakcrest
                  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
              
              
              1,200,000**Operating,
                  general and administrative**
              
              
              900,000**Public
                  company expenses**
              
              
              240,000**Working
                  capital**
              
              
              500,000**$**
              14,440,000
  We
        do not have any off balance sheet
        financial arrangements.
  21
 *Table
            of Contents*
  **Item
                  7.**
              **Financial
                  Statements**
  
 **INDEX
        TO FINANCIAL STATEMENTS**
 
 Report
                  of Independent Registered Public Accounting Firm
              
              23Consolidated
                  Balance Sheets as of August 31, 2007 and 2006
              
              24Consolidated
                  Statements of Operations for the years ended August 31, 2007 and
                  2006 and
                  the period from Inception (January 20, 2005) to August 31,
                  2007
              
              25Consolidated
                  Statement of Stockholders’ Equity (Deficit) for the period from Inception
                  (January 20, 2005) to August 31, 2007
              
              26Consolidated
                  Statements of Cash Flows for years ended August 31, 2007 and 2006
                  and the
                  period from Inception (January 20, 2005) to August 31,
                  2007
              
              27Notes
                  to the Consolidated Financial Statements
              
              28
  22
 *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,
        PC
 www.gbhcpas.com
 Houston,
        Texas
 
 November
        28, 2007
  23
 *Table
            of Contents*
  **GULF
        WESTERN PETROLEUM CORPORATION**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        BALANCE SHEETS**
 **As
        of August 31, 2007 and 2006**
 
 ASSETS
              
              **2007**
              
              
              **2006**Current
                  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
              
              
              6,824,775
              
              
              
              136,987Total
                  assets
              
              $
              8,196,590
              
              
              $
              1,228,606LIABILITIES
                  AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
                  liabilitiesAccounts
                  payable
              
              $
              1,065,092
              
              
              $
              712,312Accounts
                  payable – related parties
              
              
              380,148
              
              
              
              3,296Stock
                  payable
              
              
              100,000
              
              
              
              -Advances
                  from stockholder
              
              
              417,254
              
              
              
              242,745Due
                  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
              
              
              7,093,980
              
              
              
              (24,000
              )Deficit
                  accumulated during the development stage
              
              
              (3,817,250
              )
              
              
              (585,126
              )Total
                  stockholders’ equity (deficit)
              
              
              3,330,220
              
              
              
              (584,126
              )Total
                  liabilities and stockholders’ equity (deficit)
              
              $
              8,196,590
              
              
              $
              1,228,606
 
 *The
        accompanying notes are an integral part of these consolidated financial
        statements.*
  24
 *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**
              
              
              **Year
                  Ended**
                **August
                  31, 2006**
              
              
              **Inception**
                **through**
                **August
                  31, 2007**Revenue
              
              **$**
              **-**
              
              
              **$**
              **-**
              
              
              **$**
              **-**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
              )Deemed
                  dividend
              
              
              (3,817,432
              )
              
              
              -
              
              
              
              (3,817,432
              )Net
                  loss available to common shareholders
              
              $
              (7,049,556
              )
              
              $
              (356,382
              )
              
              $
              (7,634,682
              )Net
                  loss per share:Basic
                  and diluted
              
              $
              (0.18
              )
              
              $
              (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.*
  25
 *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**
              
              
              **Total**Issuance
                  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
              
              
              
              -
              
              
              
              460,496-  
                  January 30, 2007 ($1.00 per share)
              
              
              4,039,053
              
              
              
              4,039
              
              
              
              4,035,014
              
              
              
              -
              
              
              
              4,039,053Common
                  shares issued 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
              
              
              
              -
              
              
              
              -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 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
              
              
              
              -
              
              
              
              13,138Deemed
                  dividends on purchase of oil and gas properties from related
                  parties
              
              
              -
              
              
              
              -
              
              
              
              (3,817,432
              )
              
              
              -
              
              
              
              (3,817,432
              )Issuance
                  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
              
              
              $
              7,093,980
              
              
              $
              (3,817,250
              )
              
              $
              3,330,220
  *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 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, 2007**CASH
                  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
              
              
              352,780
              
              
              
              508,576
              
              
              
              1,059,136Accounts
                  payable - related parties
              
              
              376,852
              
              
              
              3,296
              
              
              
              380,148Accrued
                  interest
              
              
              10,276
              
              
              
              4,765
              
              
              
              15,041Accrued
                  interest – related parties
              
              
              116,712
              
              
              
              -
              
              
              
              116,712CASH
                  FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
              
              
              (942,678
              )
              
              
              172,397
              
              
              
              (801,245
              )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
              
              
              174,509
              
              
              
              92,094
              
              
              
              417,254Proceeds
                  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
              
              
              5,377,267
              
              
              
              476,641
              
              
              
              6,004,559NET
                  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
              
              
              
              -
              
              
              
              75,390Deemed
                  dividends on purchase of oil and gas properties from related
                  parties
              
              $
              3,817,432
              
              
              $
              -
              
              
              $
              3,817,432
  *The
        accompanying notes are an integral part of these consolidated financial
        statements*
  27
 *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 of Nevada.   Gulf Western (formerly Georgia
        Exploration, Inc.) is engaged in the acquisition, exploration and development
        of
        oil and natural gas reserves in the United States.  Gulf Western holds
        oil and gas lease interests in Texas, Kansas and Kentucky.  Gulf
        Western is actively engaged in the drilling of Frio formation wells in Dewitt
        and Lavaca County, Texas; it holds proved undeveloped reserves in Wharton
        County, Texas; and it is engaged in a supply and infrastructure development
        program in Southeast Kansas. Gulf Western’s oil and gas lease interests in
        Kentucky are 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
        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.  Further, 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.
  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.
  **Use
        of estimates**
  The
        preparation of financial statements in conformity with generally accepted
        accounting principles in the United States requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and
        disclosure of contingent assets and liabilities at the date of the financial
        statements, and the reported amounts of revenues and expenses during the
        reporting periods.  Actual results could materially differ from those
        estimates.
  28
 *Table
            of Contents*
  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 the United States has 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**
  Gulf
        Western follows the full cost method of accounting for its oil and natural
        gas
        properties, whereby all costs incurred in connection with the acquisition,
        exploration for and development of petroleum and natural gas reserves are
        capitalized.  Such costs include lease acquisition, geological and
        geophysical activities, rentals on non-producing leases, drilling, completing
        and equipping of oil and gas wells and administrative costs directly
        attributable to those activities and asset retirement costs.  Gulf
        Western did not capitalize any administrative costs or interest
        costs.   Disposition of oil and gas properties are accounted for
        as a reduction of capitalized costs, with no gain or loss recognized unless
        such
        adjustment would significantly alter the relationship between capital costs
        and
        proved reserves of oil and gas, in which case the gain or loss is recognized
        to
        income.
  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.
  **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.
  29
 *Table
            of Contents*
  **Oil
        and gas properties, not subject to amortization**
  Gulf
        Western holds oil and gas interests in Texas, Kansas and Kentucky pursuant
        to
        lease agreements.  Gulf Western is currently drilling Frio formation
        wells in Dewitt and Lavaca County, Texas.  Upon completion of drilling
        and initial well production from the Frio formation 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**
  In
        accordance with SFAS No. 143, “Accounting for Asset Retirement Obligations” Gulf
        Western records the fair value of a liability for asset retirement obligations
        (“ARO”) in the period in which an obligation is incurred and a corresponding
        increase in the carrying amount of the related long-lived asset. The present
        value of the estimated asset retirement cost is capitalized as part of the
        carrying amount of the long-lived asset and is depreciated over the useful
        life
        of the asset.  The settlement date fair value is discounted at Gulf
        Western’s credit adjusted risk-free rate in determining the abandonment
        liability.  The abandonment liability is accreted with the passage of
        time to its expected settlement fair value. At August 31, 2007 Gulf Western
        has
        recorded an estimated asset retirement obligation of $50,949.  No
        liabilities were settled during the period and no accretion expense has been
        recognized.
  **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.
  30
 *Table
            of Contents*
  **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**
  Gulf
        Western uses the sales method of accounting for natural gas and oil revenues.
        Under this method, revenues are recognized based on the actual volumes of
        gas
        and oil sold to purchasers. The volume sold may differ from the volumes to
        which
        Gulf Western is entitled based on our interest in the properties. In this
        case a
        production imbalance receivable or liability will be recorded.  Costs
        associated with production are expensed in the period incurred.
  **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.
  **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.
  31
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            of Contents*
  **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 in Wharton 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 the number 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.
  In
        accordance with SEC requirements and for financial reporting purposes, the
        acquisition of the Mound Branch Project from Orbit was treated as a transaction
        between entities under common control and recorded on Gulf Western’s records at
        Orbit’s historical cost in acquired assets of
        $3,227,568.    The difference between the $6.8 million
        purchase price and Orbit’s historical cost in the assets was recorded by Gulf
        Western as a deemed dividend which totaled $3,572,432.
  32
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            of Contents*
  Orbit
        is
        100% owned by CodeAmerica, and Paragon Capital, LLC (“Paragon”), a company in
        which Bassam Nastat, Gulf Western’s President and a Director, is a
        Manager.  Immediately prior to the acquisition of Mound Branch from
        Orbit, Wm. Milton Cox and Bassam Nastat held a combined 22.5 million common
        shares, or 49.6% of the then issued and outstanding common shares of Gulf
        Western.   The 4,039,053 common shares issued to Orbit increased
        their direct and indirect holdings in Gulf Western to 52.5% of the then issued
        and outstanding common shares.  Should the independent fair market
        appraisal of the assets acquired be less than the purchase price, the shares
        of
        common stock released to Orbit will be ratably reduced for the lower valuation,
        and Wm. Milton Cox and Bassam Nastat’s direct and indirect combined holdings in
        Gulf Western will be reduced.
  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.
  In
        addition to the $760,747 paid by Gulf Western and applied as consideration
        against the purchase price from Orbit, Orbit has billed $636,684 to Gulf
        Western
        associated with the testing and evaluation of the Mound Branch Project since
        Gulf Western’s acquisition.  A balance of $248,171 is recorded as
        payable to related party as at August 31, 2007.  In the aggregate
        through August 31, 2007 Gulf Western has incurred costs totaling $1,397,631
        on
        the testing and evaluation of the Mound Branch Project of which $1,149,460
        has
        been paid to Orbit.   The testing and evaluation procedures for
        the Mound Branch Project were completed in early October 2007.  Gulf
        Western is continuing with its Mound Branch Project reserve and infrastructure
        development program, and is actively pursuing financing that would provide
        for
        the initiation of the next phase of the project.
  **Baxter
        Bledsoe Prospect, Clay County, Kentucky**
  On
        February 1, 2006, Gulf Western 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 treated as a transaction between entities
        under
        common control and recorded at the seller’s historical cost basis of
        approximately $170,000.  The difference between the $330,000 purchase
        price and CodeAmerica’s historical cost in the assets was recorded by Gulf
        Western as a deemed dividend which totaled $160,000.
  **Bell
        Prospect, Bell County, Kentucky**
  On
        October 1, 2006, Gulf Western purchased CodeAmerica's oil and gas lease
        interests located in Bell 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 treated as a
        transaction between entities under common control and recorded at the seller’s
        historical cost basis of approximately $229,475.  The difference
        between the $314,475 purchase price and CodeAmerica’s historical cost in the
        assets was recorded by Gulf Western as a deemed dividend which totaled
        $85,000.
  **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.
  33
 *Table
            of Contents*
  **Office
        Rent**
  Gulf
        Western shares office space in Houston, Texas with 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 the United
        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
                  Year Incurred
              
              Acquisition
                Costs
              
              
              Exploration
                  Costs
              
              
              Total2006
              
              $
              12,000
              
              
              
              -
              
              
              $
              12,0002007
              
              
              1,981,288
              
              
              
              4,831,487
              
              
              
              6,812,775Total
              
              
              1,993,288
              
              
              
              4,831,487
              
              
              
              6,824,775
 
 Gulf
        Western holds oil and gas lease interests in Texas, Kentucky and
        Kansas.  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
                  at U.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
              
              $
              -
              
              
              $
              -
 
 
 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.
  34
 *Table
            of Contents*
  The
        income tax provision differs from the amount of income determined by applying
        the U.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.
  **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.
  35
 *Table
            of Contents*
  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**
  Wharton
        entered into three short term loan agreements dated August 21, 2006 that
        provided for total borrowings of $500,000 for general working capital
        purposes.  The loans had a 90-day maturity; bore interest at 10.0% per
        annum with principal and interest due upon maturity; and were secured by
        all
        existing and after acquired assets of Wharton.  The loan agreements
        provided for the issuance of 150,000 shares of common stock (“Bonus Shares”) to
        the lenders in the event that Wharton completed a public
        transaction.   The loans also provided that Wharton could extend
        the loans for 90-days under the same terms and conditions for an additional
        150,000 Bonus Shares.  Wharton elected to extend the loan
        maturities.  At August 31, 2006, $312,500 had been funded to Wharton
        under the loan agreements with the remaining funds received during the month
        of
        September 2006.   During the year ending August 31, 2007 the
        loans were fully repaid to the lenders.  During the fiscal quarter
        ending February 28, 2007, the triggering event occurred and the notes were
        extended to effect the issuance of the Bonus Shares, and Gulf Western recorded
        a
        non-cash interest charge totalling $300,000 for the fair value of the Bonus
        Share commitment to the lenders.  As of August 31, 2007, 200,000 Bonus
        Shares have been issued to the lenders, and 100,000 Bonus Shares remain unissued
        and are recorded as stock payable.
  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.
  36
 *Table
            of Contents*
  **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.
  Wharton
        Limited was the original sole stockholder of Wharton Corp. and as of August
        30,
        2006, Wharton Corp. assumed the obligations for the convertible debentures
        of
        Wharton Limited.     Pursuant to the merger agreement
        between Wharton Corp. and Gulf Western on January 3, 2007, the date the merger
        was consummated, Gulf Western assumed the obligation to issue common shares
        to
        the three debenture holders and issued a total of 108,109 shares of common
        stock
        to them for the then outstanding principal and interest amounts under the
        debentures.    The debentures also provided that warrants to
        purchase common shares would be issued to the debenture holders, and in
        conjuction with the merger Gulf Western issued to the three debenture holders
        warrants to purchase 85,000 shares of common stock of Gulf Western at an
        exercise price of $1.25 per share, with a twelve month expiry.
  The
        fair
        value of the warrants attached to the convertible debentures totalling $75,390
        was derived through use of the Black-Scholes option pricing
        model.   The parameters used in the model were : a risk-free
        interest rate of 4.98%; the current stock price at date of issuance of $1.00
        per
        share; the exercise price of the warrants of $1.25; the expected term of
        one
        year; expected volatility of 183%; and dividend yield of 0%.  The
        estimated fair value of the warrants was recorded as a debt discount with
        a
        corresponding increase to additional paid-in capital of
        $75,390.   Upon the conversion of the debentures into common
        shares on January 3, 2007, the debt discount of $75,390 was charged to interest
        expense.
  **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.
  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:
  37
 *Table
            of Contents*
 
 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 in Wharton 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.
  Concurrent
        with the consummation of the reverse merger, a total of 15,645,000 outstanding
        shares of Gulf Western common stock were purchased and cancelled
  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.
  38
 *Table
            of Contents*
  **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.
  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.
  39
 *Table
            of Contents*
 For
          the
          year ended August 31, 2007, Gulf Western recorded stock option expense
          reflecting the non-cash fair value amortization of $738,599.  A
          summary of Gulf Western’s stock option activity for the year ended August 31,
          2007 is as follows:
 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
 
 The
        relative fair value of the Class C and Class B Warrants issued in connection
        with the units sold were estimated using the Black-Scholes valuation
        model.   The parameters used in the Black-Scholes valuation model
        were: a risk-free interest rate of 4.19%; the current stock price on the
        date of
        issuance of $0.33 per common share; the exercise price of the warrants of
        $0.65
        and $2.00 per share, respectively; expected terms of three years; volatility
        of
        108%; and a dividend yield of 0.0%.
  **Senior
        Secured Convertible Notes Payable**
  On
        September 10, 2007, Gulf Western entered into a Security Purchase Agreement
        (“SPA”) with two lenders under which Gulf Western borrowed $3.444 million (net
        of $256,000 placement fees) under Senior Secured Convertible
        Notes.   Pursuant to the SPA, Gulf Western issued 1,500,000
        common shares to the lenders and issued 3,461,538 warrants to purchase shares
        of
        common stock in Gulf Western at an exercise price of $0.26 per share for
        a
        period of five years.
  The
        Senior Secured Convertible Notes each bear interest at 15% per annum, and
        each
        matures on September 10, 2008.  Interest is payable monthly beginning
        March 10, 2008, and all principal is due at maturity.  The Senior
        Secured Convertible Notes may be prepaid at any time after the six month
        anniversary of the notes with a 2.5% prepayment penalty.  The Senior
        Secured Convertible Notes are convertible into common shares of Gulf Western
        at
        a price of $0.39 per share.    At closing, Senior Secured
        Convertible Notes proceeds of $2.6 million were funded and the remaining
        $1.1
        million note proceeds were funded in October 2007.
  40
 *Table
            of Contents*
  In
        connection with the September 10, 2007 SPA, Gulf Western issued 300,000 shares
        of common stock to a placement agent.   The fair value of the
        common stock and the $256,000 fee will be recorded as deferred financing
        costs
        and amortized using the effective interest method over the life of the
        debt.
  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 Purchase
        Agreement.  In addition, Gulf Western Petroleum, LP, Wharton Resources
        Corp. and Wharton Resources LLC, each a wholly-owned subsidiary of the Gulf
        Western, entered into a Guaranty with the Buyers, whereby each of the
        subsidiaries guaranteed the payment and performance of all obligations of
        the
        Gulf Western under the Notes and terms of the Purchase
        Agreement.  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 in Texas and Kansas
        to
        secure the obligations of the Gulf Western under the Purchase Agreement and
        the
        Notes.
  In
        conjunction with the SPA, Gulf Western entered into a registration rights
        agreement (the “Registration Rights Agreement”) with the lenders of the Senior
        Secured Convertible Notes, pursuant to which Gulf Western will (i) file a
        registration statement with the Securities and Exchange Commission with respect
        to the Common Stock issued under the SPA and the Common Stock issuable upon
        exercise of the Warrants and conversion of the Senior Secured Convertible
        Notes
        within 60 days after September 12, 2007 and to cause such registration statement
        to be declared effective under the Securities Act of 1933, as amended, and
        the
        rules promulgated thereunder, not later than 150 days after September 12,
        2007.
        If such registration statement is not filed by the 60th day after September
        12,
        2007, or the registration statement is not declared effective on or prior
        to the
        150th day after September 12, 2007, liquidated damages in the maximum amount
        of
        $150,000 will become payable by Gulf Western to the lenders.  Gulf
        Western did not file a registration statement within 60 days of September
        12,
        2007 and, accordingly, is subject to registration delay penalties.
  Gulf
        Western evaluated the terms of the Senior Secured Convertible Notes, sale
        and
        issuance of common stock and attached warrants in accordance with EITF 98-5
        and
        EITF 00-27 and concluded that the intrinsic value of the conversion feature
        represented a beneficial conversion feature in the amount of $367,308. The
        relative fair value of the warrants under the Black-Scholes option pricing
        model
        was $1,031,411.  The total discount of $1,398,719 will be amortized as
        interest expense using the effective interest method over the term of the
        Senior
        Secured Convertible Notes.
  41
 *Table
            of Contents*
  **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 constant prices of oil and gas to the estimated future
        production of proved oil and gas reserves, less estimated future expenditures
        (based on period-end costs) to be incurred in developing and producing the
        proved reserves, less estimated future income tax expenses (based on period-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
              
              $
              2,118,275
              
              
              $
              136,987Uncompleted
                  wells, equipment and facilities
              
              
              4,831,487
              
              
              
              -Total
                  unproved properties
              
              
              6,949,762
              
              
              
              136,987Less:
                  accumulated depreciation, depletion and amortizationNet
                  capitalized costs
              
              $
              7,915,763
              
              
              $
              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
              
              
              1,981,288
              
              
              
              136,987Development
                  costs
              
              
              -
              
              
              
              -Exploration
                  costs
              
              
              4,831,487
              
              
              
              -Total
                  costs incurred
              
              $
              7,005,760
              
              
              $
              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:
  42
 *Table
            of Contents*
  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
  43
 *Table
            of Contents*
  **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”) of Houston, Texas as 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.
  44
 *Table
            of Contents*
  **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**
  There
        have been no changes in the Company’s internal control over financial reporting
        during the year ended June 30, 2007 that have materially affected, or that
        are
        reasonably likely to materially affect, the Company’s internal control over
        financial reporting.
  **Item
                  8B.**
              **Other
                  Information**
  Not
        applicable.
  45
 *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**
              **Position**Wm.
                  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.
                  Tim Altum
              52
              Director
 
 *Wm.
        Milton Cox*.  Mr. Cox has served as our Chairman and CEO since
        December of 2006 and as a director since January of 2007.  Since 1982,
        Mr. Cox has been the President and CEO of CodeAmerica Investments LLC
        (“CodeAmerica”), which has various interests in mining and oil & natural gas
        production. Mr. Cox has 25 years of experience in resource investment management
        as well as international business experience in oil, natural gas and
        mining.  From October of 2003 to February of 2006, Mr. Cox served as
        Chairman of Altus Explorations, Inc., an oil and natural gas company quoted
        on
        the OTCBB (“Altus”), and was its President and Chief Executive Officer from
        October of 2003 through June of 2005.  Mr. Cox has a Bachelor of
        Business Administration in Marketing from Memphis State University and Masters
        in Business Administration in Finance from the University of
        Mississippi.
  *Bassam
        “Sam” Nastat*.  Mr. Nastat has served as our President since
        December of 2006 and as a director since January of 2007.  Since May
        1994, Mr. Nastat has been the Vice President of Project Development and Finance
        for CodeAmerica, developing financing strategies to take advantage of
        exploration opportunities in Texas, Wyoming and Alaska.  From November
        of 2003 to February of 2006 Mr. Nastat was a director of Altus and served
        as
        President of Altus from June of 2005 to February of 2006.   Mr.
        Nastat attended McMaster University, Hamilton Ontario, and the University
        of
        Tulsa earning a certificate in Basic Petroleum Geology.
  *Donald
        L. Sytsma.*Mr. Sytsma has served as our Chief Financial Officer,
        Corporate Secretary and Treasurer since December of 2006 and as a director
        since
        January of 2007.  Since April of 2003, Mr. Sytsma has been an officer
        and a director of DLS Energy Associates, LLC, an independent consulting company
        and has worked in various capacities with them since 1995. From November
        of 2003
        to June of 2005 Mr. Sytsma was Chief Financial Officer of Altus.  From
        November 2003 through February 2006 Mr. Sytsma was a director of
        Altus.  Mr. Sytsma is a former Executive Committee member of the North
        American Energy Standards Board, and has chaired multiple industry subcommittees
        developing standards for the U.S. energy markets. Mr. Sytsma holds a Bachelor
        of
        Science in Accounting from Indiana University.
  *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 from Clemson University.
  *J.
        Tim 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 from Hardin Simmons University and Master of Science in Geology
        from Baylor University.
  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.
  46
 *Table
            of Contents*
  **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 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.
  47
 *Table
            of Contents*
  **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**
              
              
              **Total**Wm.
                  Milton Cox, Chairman and Chief Executive Officer
              
              2007
                2006
              
              
              $
                $
              -
                -
              
              
              $
                $
              -
                -
              
              
              $
                $
              238,721
                -
              
              
              $
                $
              140,000
                -
              (2)
              
              $
                $
              378,821
                -Bassam
                  “Sam” Nastat, President
              
              2007
                2006
              
              
              $
                $
              -
                -
              
              
              $
                $
              -
                -
              
              
              $
                $
              477,441
                -
              
              
              $
                $
              140,000
                -
              (3)
              
              $
                $
              617,441
                -Donald
                  L. Sytsma, Chief Financial Officer, Corporate Secretary and
                  Treasurer
              
              2007
                2006
              
              
              $
                $
              -
                -
              
              
              $
                $
              -
                -
              
              
              $
                $
              238,721
                -
              
              
              $
                $
              120,000
                -
              (4)
              
              $
                $
              358,721
                -
 (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.
  (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.
  48
 *Table
            of Contents*
  **OUTSTANDING
                  EQUITY AWARDS AT FISCAL YEAR-END**
                
                **August
                  31, 2007****Option
                  Awards**
              
              **Stock
                  Awards****Name**
              
              **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.
  
 **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.
                  Tim 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 common shares, 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.
  (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 common shares, 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.
  49
 *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.
                  Tim 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.
  50
 *Table
            of Contents*
  **Item
                  12.**
              **Certain
                  Relationships and Related Transactions and Director
                  Independence**
  **Certain
        Relationship and Related Transactions**
  During
        our development stage oil and natural gas exploration and development
        activities, we have had the following transactions with our executive officers
        and directors, or with their affiliates in which they have direct or indirect
        material interests:
  *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.
  The
        shares of common stock issued to Orbit as part of the purchase price were
        placed
        in escrow 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 the number of shares to be released
        from escrow will be ratably reduced for the lower valuation.  The
        shares remaining in escrow at the end of the twelve month period ending January
        30, 2008 are to be cancelled and returned to treasury.   To date,
        no shares have been released from escrow.
  The
        acquisition from Orbit was treated as a transaction between entities under
        common control and recorded in our records at Orbit’s historical cost in
        acquired assets of $3,227,568.  The difference between the $6.8
        million purchase price and Orbit’s historical cost in the assets was recorded by
        us as a deemed dividend which totaled $3,572,432.
  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, each of whom
        is one
        of our officers and directors.  Immediately prior to the acquisition,
        Messrs. Cox and Nastat held a combined 22.5 million shares of common stock,
        or
        49.6% of our then issued and outstanding common stock.   The
        4,039,053 shares issued to Orbit increased their direct and indirect holdings
        in
        us to 52.5% of the then issued and outstanding common stock.  Should
        the independent fair market appraisal of the assets acquired be less than
        the
        purchase price, the shares of common stock released to Orbit will be ratably
        reduced for the lower valuation, and the direct and indirect combined holdings
        of Messrs. Nastat and Cox in us will be reduced.
  51
 *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.
  In
        addition to the $760,747 paid by us and applied as consideration against
        the
        purchase price from Orbit, Orbit has billed us $636,684 associated with the
        testing and evaluation of the Mound Branch Project since the
        acquisition.  A balance of $248,171 is recorded as payable to a
        related party as of August 31, 2007.  In the aggregate, through August
        31, 2007, we have incurred costs totaling $1,397,631 on the testing and
        evaluation of the Mound Branch Project, of which $1,149,460 has been paid
        to
        Orbit.   The testing and evaluation procedures for the Mound
        Branch Project were completed in early October 2007.
  *Baxter
        Bledsoe Prospect, Clay County, 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 treated as a transaction between entities under common
        control and recorded at CodeAmerica’s historical cost basis of approximately
        $170,000.  The difference between the $330,000 purchase price and
        CodeAmerica’s historical cost in the assets was recorded by us as a deemed
        dividend which totaled $160,000,
  *Bell
        Prospect, Bell County, Kentucky*
  On
        October 1, 2006, we purchased CodeAmerica’s oil and gas lease interests located
        in Bell 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 treated as a
        transaction between entities under common control and recorded at CodeAmerica’s
        historical cost basis of approximately $229,475.  The difference
        between the $314,475 purchase price and CodeAmerica’s historical cost in the
        assets was recorded by us as a deemed dividend which totaled
        $85,000.
  *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 in Houston, Texas with 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**
  Our
        Board
        has five members.  The Board does not have an executive committee or
        any committees performing a similar function.  We are not currently
        listed on a national securities exchange or in an inter-dealer quotation
        system
        that has requirements that a majority of the Board be independent.
  52
 *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 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).3.2
              
              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
                  in
                  Wharton County, Texas dated 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 and Gas Mineral Leases Elk County, Kansas dated 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).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).
  53
 *Table
            of Contents*
 
 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.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
  54
 *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
                  Ending
              
              August,
                  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.
  55
 *Table
            of Contents*


**SIGNATURES**
 
 
 Pursuant
        to the requirements of Section 13 or 15(d) of the Securities Exchange Act
        of
        1934, as amended, the registrant has duly caused this annual report on Form
        10-KSB to be signed on its behalf by the undersigned, thereunto duly
        authorized.
 
 GULF
                  WESTERN PETROLEUM CORPORATIONDate:  November
                  29, 2007
              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
              
              November
                  29, 2007W.
                  Milton Cox
              
              Director
                  (Principal Executive Officer)/s/
                  Donald L. Sytsma
              
              Chief
                  Financial Officer, Corporate
              
              November
                  29, 2007Donald
                  L. Sytsma
              
              Secretary
                  and  Treasurer and Director (Principal Financial and Principal
                  Accounting Officer)/s/
                  Bassam Nastat
              
              President
                  and Director
              
              November
                  29, 2007Bassam
                  Nastat/s/
                  Jay Timothy Altum
              
              Director
              
              November
                  29, 2007Jay
                  Timothy Altum/s/
                  T. Arden McCracken
              
              Director
              
              November
                  29, 2007T.
                  Arden McCracken


56