UNITED
      STATES
              SECURITIES
      AND EXCHANGE COMMISSION
              Washington,
      D.C. 20549
              
              FORM
      10-K


Mark
One


x         ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
fiscal year ended December 31, 2008





o           TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


Commission
file number: 146405





Velocity Oil and Gas,
Inc.


(Exact
name of registrant as specified in its charter)




Nevada
            
            20-5465816(State
      or other jurisdiction of incorporation or organization)
            
            (IRS
      Employer Identification No.)




3500
      Washington Ave, Suite 200, Houston, TX
            
            77007(Address
      of principal executive offices)
            
            (Zip
      Code)





Registrant’s
telephone number, including area code:    (604)
574-2248




Securities registered pursuant to
      Section 12(b) of the Act:None





Securities registered pursuant to
      Section 12(g) of the Act:None





Check
whether the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act. o





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





Check
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. Yes x  No o





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





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





Large
accelerated filer o                                          Accelerated
filer o                                          Non-accelerated
filer o                                          Smaller reporting
company x





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





State
registrant’s revenues for its most recent fiscal year:   Revenues
for the twelve months ended December 31, 2008 were $0.





The
aggregate market value of the voting stock held by non-affiliates of the
registrant, based on the closing price of the common stock on the OTC Electronic
Bulletin Board on March 26, 2009 was approximately $116,300.





As of March 30, 2009, the registrant
had 11,620,500 shares of common stock outstanding.


-1-





Velocity
Oil and Gas, Inc.


FORM
10-K





Table
of Contents





PageNo.PART
      IItem
      1.
            Description
      of Business
            4Item
      2.
            Description
      of Property
            9Item
      3.
            Legal
      Proceedings
            9Item
      4.
            Submission
      of Matters to a Vote of Securities Holders
            9PART
      IIItem
      5.
            Market
      for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities
            9Item
      6.
            Management’s
      Discussion and Analysis or Plan of Operation
            12Item
      7.
            Financial
      Statements.
            15Item
      8A.
            Controls
      and Procedures.
            24PART
      IIIItem
      9.
            Directors,
      Executive Officers, Promoters, Control Persons and Corporate Governance;
      Compliance With Section 16(a) of the Exchange Act
            25Item
      10.
            Executive
      Compensation
            27Item
      11.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            28Item
      12.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            30Item
      13.
            Exhibits
            30Item
      14.
            Principal
      Accountant Fees and Services
            31





-2-


FORWARD
LOOKING STATEMENTS





Statements
made in this Form 10-K that are not historical or current facts are
"forward-looking statements" made pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use of terms such as "may," "will," "expect," "believe," "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. We intend that
such forward-looking statements be subject to the safe harbors for such
statements. We wish to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may
occur in the future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond our control that could cause actual
results and events to differ materially from historical results of operations
and events and those presently anticipated or projected. We disclaim any
obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.





Available
Information





The
Company files annual, quarterly, current reports, proxy statements, and other
information with the U.S. Securities and Exchange Commission (the “Commission”).
You may read and copy documents referred to in this Report that have been filed
with the Commission at the Commission’s Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C.  You may obtain information on the operation of
the Public Reference Room by calling the Commission at 1-800-SEC-0330. You can
also obtain copies of our Commission filings by going to the Commission’s
website at http://www.sec.gov.





-3-


PART
I





ITEM
1.  DESCRIPTION OF BUSINESS





Please
note that throughout this Report, and unless otherwise noted, the words “we,”
“our,” “us,” or the “Company” refer to Velocity Oil and Gas, Inc. as well as any
current or new subsidiary companies.We were formed as a
Nevada corporation on May 16, 2006.  We have 110,000,000 shares of
authorized stock, consisting of 100,000,000 shares of common stock, $0.001 par
value and 10,000,000 shares of preferred stock, $0.001 par value.  We
are an exploration stage company with limited operations, which has not
generated any revenues to date, and does not anticipate being able to generate
revenues until we can raise substantial additional capital.




Our Business and
Plans-Summary




We are in
the development stage seeking to grow our Company in the Energy area primarily
focused upon oil and gas exploration which relates to acquiring leases,
exploration, drilling, partnering and other aspects some of which we have
started and others which are planned.




We are
focused to utilize and further develop a plan for funding, exploration,
drilling, marketing and other benefits relating to us and this plan may include
other related pursuits such as acquiring assets and seeking companies to join
with us by joint venture or similar arrangement to pursue business in one of the
World's if not the World's most important business sector,
"Energy."




The
Company is currently focused on the development of oil and gas reserves but is
also investigating geo-thermal energy exploitation.




We are
subject to many risks and there is no assurance of success in our
plans.




Current
Business





We are
currently mainly focused on seeking out and purchasing producing and/or
non-producing non-operated oil and gas properties in the gulf coast region of
Louisiana and Texas.  We hope that through these anticipated
purchases, we will be able to generate oil and gas production and continue to
grow our operations through subsequent purchases, of which there can be no
assurance.





We seek
out low risk, high return investments and development activities in the US gulf
coast region.   We currently have an interest or a right to
participate in three oil and gas leases. We need to raise substantial additional
capital, either though the sale of debt or equity securities or by entering into
joint ventures with more established oil and gas companies and/or institutional
investors in the future or otherwise,  to obtain the necessary funds
we require to drill on these leases and move forward with our business
plan.





-4-


Material
Events





Promissory Note with
Capersia





On June
1, 2007, we issued Capersia Pte. Ltd. (“Capersia”), a shareholder of the
Company, an $8,000 Promissory Note to evidence an $8,000 loan we received from
Capersia (the “Note”).  The Note has an effective date of June 13,
2007, and bears interest at the rate of 6% per annum until paid in
full.  The Note is payable on demand with one year and one day prior
written notice, and any amounts not paid when due accrue interest at the rate of
15% per annum. (We have not been supplied such notice.) Capersia has
the right; at any time prior to the date such Note is repaid, to convert any or
all of the outstanding principal amount of the Note into shares of the Company’s
common stock at a conversion price of $0.10 per share.  If converted
in full, the $8,000 Note (not including any accrued and unpaid interest) would
convert into 80,000 shares of our common stock. Other terms apply.





The Note
was first amended on December 28, 2007. The parties to the Note, our Company as
the Maker, and Capersia as the Payee, agreed that Capersia would provide
Velocity with at least 12 months and one day notice before repayment is due. In
the Second Amendment, dated November 7, 2008, the principal amount of the Note
was increased to $12,764; interest continues to accrue.




Purchase and Sale Agreement
with Entek





In
November 2007, we entered into a Purchase and Sale Agreement with Entek USA Inc.
(the “Purchase Agreement” and “Entek”) and an Assignment of Membership Interests
(the “Assignment”), pursuant to which we purchased all of the outstanding
membership interests in South Marsh LLC, a Delaware limited liability company
(“South Marsh”).   Through the Purchase Agreement, we obtained all of
the interests in oil and gas leases acquired by South Marsh pursuant to an
Amended and Restated Participation Agreement, dated December 8, 2006, by and
between, South Marsh, Ridgelake Energy, Inc., a Louisiana corporation
(“Ridgelake”), and GulfX, LLC, a Delaware limited liability company, which was
later amended by an Amended and Restated Participation Agreement entered into in
September 2007 (the “Participation Agreement”).  Pursuant to the terms
of this participation agreement, South Marsh acquired the right to earn (a) a
10% working interest in Block 79, Viosca Knoll Area covering approximately 5,760
acres of submerged lands within the Outer Continental Shelf (“VK 79”); (b) a 10%
working interest in Block A 307, High Island Area, covering approximately 5,760
acres of submerged lands within the Outer Continental Shelf (“HI A 307”); (c) a
10% working interest in the Block 317, Vermillion Area, covering approximately
5,000 acres of submerged lands within the Outer Continental Shelf (“VM 317”);
(d) a 11.25% working interest in Block 138, South Marsh Island Area, covering
approximately 5,000 acres of submerged lands within the Outer Continental Shelf
(“SMI 138”); and (e) a 15% working interest in Block 152, South Marsh Island
Area, covering approximately 2,500 acres of submerged lands within the Outer
Continental Shelf (“SMI 152”).  All of the leases are located in the
Gulf of Mexico, off the coast of Texas and Louisiana.  The effective
date of the Purchase Agreement is November 8, 2007.





In
connection with the Purchase Agreement, all of the officers and Directors of
South Marsh resigned, and Frank Jacobs, our then sole officer and
Director,  was appointed as the sole officer and Director of South
Marsh.





In
consideration for the sale and assignment of the membership interests, we
granted Entek a production payment (the “Production Payment”) in and to all oil,
gas or mineral production attributable to the interests purchased equal to 50%
of the Net Proceeds (as defined below) of such production attributable to South
Marsh’s interest in the subject leases (or which South Marsh shall acquire
within five years from the date of the Purchase Agreement), until such time as
Entek has received a total of $1,072,258.22.  “Net Proceeds” are
defined in the Assignment of Production Payment, which evidences the grant of
the Production Payment, as any and all production of oil, gas or minerals, free
of all exploration, development and operating costs, but subject to (i)
applicable taxes measured by production or value, including gross production,
severance and other taxes, and (ii) all presently valid and subsisting royalties
and other burdens on production which are of record and burden on the interests
purchased as of the date of the Assignment of Production Payment.


-5-





The
Production Payment is a non-recourse obligation of the Company, payable solely
out of proceeds from production of the leases which South Marsh has the right to
participate in, as described above.  However, if prior to receiving an
assignment of a lease from Ridgelake, South Marsh assigns its rights under the
Participation Agreement to a third party, South Marsh will pay Entek its sunk
costs in the leases, which total an aggregate of $878,987.56.





In order
for South Marsh to acquire the working interests pursuant to the Participation
Agreement, South Marsh was required to make certain payments to Ridgelake
representing its respective “Cost Share” (as defined below) of the various
leases, which totaled approximately $1,072,258 as of the date of the
Purchase Agreement, which funds were previously paid by South Marsh in
connection with the Participation Agreement.  South Marsh is also
responsible for paying Ridgelake for its respective costs and expenses expended
by Ridgelake in maintenance and development of the leases, and its respective
cost of conducting the interest earning operations on each lease, based on the
Cost Share (collectively the “Lease Expenses”).  South Marsh’s “Cost
Share” on each of the leases is as follows:





Lease
            Cost
      ShareVK
      79
            13.34%HI
      A 307
            13.34%VM
      317
            13.34%SMI
      138
            15.00%SMI
      152
            20.00%





South
Marsh’s failure to pay the required Lease Expenses when due will result in the
immediate termination of the Participation Agreement, and if that were to occur,
South Marsh would not earn any interest in the leases described
above.  Additionally, South Marsh has no obligation to participate in
any certain leases, although in the event it does not participate, it will
forfeit its right to earn any interest in such leases.  Additionally,
each working interest is subject to a proportional share of royalties and
overriding royalties applicable to such leases.





In the
event any wells are drilled on the leases, South Marsh and Ridgelake have agreed
to enter into a Joint Venture agreement in connection with such wells, and that
Ridgelake shall serve as the operator of any such wells and
leases.  South Marsh has not earned any working interests in any of
the leases to date.





The
change in market conditions in 2008 made it difficult, in our
estimation,  to raise equity funding for drilling. When a cash call
was made by Ridgelake in June 2008, in relation to lease rental and other
expenses for SMI 152, VK 79 and VM 317, the Company made the decision to drop
participation in these leases.





Purchase of Ownership
Interest in SMI 138





On or
about September 29, 2008, South Marsh entered into an Assignment agreement with
Ridgelake to acquire a 40% working interest in SMI 138.  Pursuant to
the Assignment agreement between Ridgelake, South Marsh and Offset Leo LLC, a
Delaware limited liability company (“Offset”), which agreement has an effective
date of June 1, 2008, Ridgelake agreed to assign a 40% interest to the Company
and a 40% interest to Offset.  Jacobs Oil & Gas, Ltd., which is
controlled by our former officer and Director, Frank Jacobs, is a shareholder of
Offset. South Marsh previously held the right to an 11.25% working interest in
SMI 138, which rights have lapsed and are superseded by the
Assignment.  Prior to its entry into the Assignment agreement, Offset
provided a payment of $25,000 to Ridgelake as consideration for the assignment,
of which we are responsible for repaying $12,500 of such payment to
Offset.  We have not made this payment to Offset to date.


-6-





The
Assignment is subject to all royalty and overriding royalties that burden the
lease, including the following royalties and overriding royalties: (a) a
16.66667% royalty payable to the United States of America under the terms of the
SMI 138 lease, (b) a 3.33333% of 8/8ths overriding royalty interest that was
previously granted to Beacon Exploration and Production Company, L.L.C. by
Ridgelake in December 2005, and (c) overriding royalty interests in the amount
of 1/3rd of 1.0% of 8/8ths each (a total of 1.0% of 8/8ths) previously granted
by Ridgelake in December 2006 to (1) Petrosand Energy, L.L.C., (2) Digwell
Energy, L.L.C. and (3) Delta Oil and Gas, L.L.C.  Further, pursuant to
the Assignment agreement, Ridgelake reserved to itself an additional 4.0% of
8/8ths overriding royalty interest (the “Additional Interest”) which shall
attach to all oil, gas, and other minerals which are allocated under the
Assignment agreement.  The Additional Interest shall be free of
drilling and operating expenses, but shall bear its proportionate part of
severance and production taxes.





Moving
forward to present day, it is currently anticipated that the SMI 138 joint
venture will propose to drill one well in fiscal 2009 estimated to cost
approximately $4.0 million in total (of which South Marsh’s required payment
would be $1,600,000). These estimates are subject to change however, based
on the actual drilling costs of such wells, and as such, the estimates above may
be higher or lower than the actual amounts South Marsh is actually required to
pay.  The drilling costs associated with wells on the other remaining
lease in which the Company has an interest (HI A307) have not been determined
yet; however, the Company anticipates such costs being in the order of $500,000
to $1,000,000 net to the Company.




Additionally,
South Marsh will be responsible for its share of ongoing lease expenses even
assuming the successful completion of one or both of the currently proposed
wells above.  The estimated lease expenses for each well, assuming
such well produce, which will be required to be paid by the Company will be
approximately $80,000 per month; however, in the even any of the wells produce,
it is anticipated that the revenue such wells will generate will be in excess of
any lease operating expenses, and as a result, such expenses will be able to be
paid by the Company with funds it receives in revenue from the
well.





South
Marsh does not currently anticipate being required to make any payments to
Ridgelake in connection with the wells until September or October 2009, funding
permitting, nor does it believe that it will cease its business operations if it
is unable to raise capital by such time.  The Company does not
currently have any anticipated funding available for the drilling. In the
event South Marsh is unable to make the required payments to Ridgelake in
connection with the proposed wells described above, South Marsh will not be able
to participate in the wells, and the Company will not earn any revenue from such
wells, even if they are successful.  The Company does not believe
however that the Company will cease its business operations if such interests
are not earned.





We also
issued Sterling Grant Capital, Inc. 500,000 shares of our common stock as a
finder’s fee in connection with the South Marsh transaction.





We have
not paid any consideration to date, including cash and/or securities, to Entek
in connection with Purchase Agreement, other than 500,000 shares of our common
stock issued to Sterling Grant Capital, Inc.





As a
result of the Purchase Agreement and the Assignment, South Marsh became a wholly
owned subsidiary of the Company.


-7-





Series A Preferred
Stock





On March
2, 2009, the Company's Board of Directors unanimously agreed by a written
consent to action without a meeting, to adopt a Certificate of Designations for
the creation of a Series A preferred stock (the "Series A Preferred
Stock").





The
Series A Preferred Stock has a par value of $0.001 per share. The Series A
Preferred Stock consists of one thousand (1,000) shares, each having no dividend
rights, no liquidation preference, and no conversion or redemption rights.
However, the one thousand (1,000) shares of Series A Preferred Stock have the
right, voting in aggregate, to vote on all shareholder matters equal to
fifty-one percent (51%) of the total vote. For example, if there are 10,000,000
shares of the Company's common stock issued and outstanding at the time of a
shareholder vote, the holders of Series A Preferred Stock, voting separately as
a class, will have the right to vote an aggregate of 10,408,163 shares, out of a
total number of 20,408,163 shares.





Additionally,
the Company shall not adopt any amendments to the Company's Bylaws, Articles of
Incorporation, as amended, make any changes to the Certificate of Designations,
or effect any reclassification of the Series A Preferred Stock, without the
affirmative vote of at least 66-2/3% of the outstanding shares of Series A
Preferred Stock. However, the Company may, by any means authorized by law and
without any vote of the holders of shares of Series A Preferred Stock, make
technical, corrective, administrative or similar changes to the Certificate of
Designations that do not, individually or in the aggregate, adversely affect the
rights or preferences of the holders of shares of Series A Preferred
Stock.





EMPLOYEES





We
currently have one employee, Mr. Moses.  We currently have no plans to
increase our number of employees, and do not plan on increasing our number of
employees until we are able to obtain positive cash flows, funding permitting,
of which there can be no assurance.





COMPETITION





We face
competition from numerous other oil and gas exploration and development
companies, which have greater resources than we do, already have producing
properties, and may be better able to find and extract commercial quantities of
oil and gas, and therefore may be able to offer their oil and gas products at
prices lower than we will be able to, assuming we find any oil and gas and/or
purchase any producing properties in the future, of which there can be no
assurance due to the fact that we will need to raise substantial additional
capital prior to the acquisition of any producing or non-producing oil and gas
interests.





-8-


COSTS
AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS





Various
federal, state and local laws regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, will
directly impact our planned future oil and gas exploration, development and
production operations, and consequently may impact our operations and costs
moving forward, assuming we are able to raise sufficient capital to purchase oil
and gas interests and sustain our operations, of which there can be no
assurance. These regulations include, among others, (i) regulations by the
Environmental Protection Agency and various state agencies regarding approved
methods of disposal for certain hazardous and non-hazardous wastes; (ii) the
Comprehensive Environmental Response, Compensation, and Liability Act, Federal
Resource Conservation and Recovery Act and analogous state laws which regulate
the removal or remediation of previously disposed wastes (including wastes
disposed of or released by prior owners or operators), property contamination
(including groundwater contamination), and remedial plugging operations to
prevent future contamination; (iii) the Clean Air Act and comparable state and
local requirements which may result in the gradual imposition of certain
pollution control requirements with respect to air emissions from our
operations; (iv) the Oil Pollution Act of 1990 which contains numerous
requirements relating to the prevention of and response to oil spills into
waters of the United States; (v) the Resource Conservation and Recovery Act
which is the principal federal statute governing the treatment, storage and
disposal of hazardous wastes; and (vi) state regulations and statutes governing
the handling, treatment, storage and disposal of naturally occurring radioactive
material.  While we do not currently have any oil and gas operations, we
have not had any costs associated with the above regulations to date; however,
assuming that we have any oil and gas operations in the future, of which there
can be no assurance because of the substantial amount of additional financing we
will require, we anticipate the costs required to comply with the regulations
above will be substantial.  Furthermore, if we have any oil and gas
operations in the future, and we are deemed not to be in compliance with
applicable environmental laws, we could be forced to expend substantial amounts
to be in compliance, which would have a materially adverse effect on our
available cash and liquidity, and/or could force us to curtail or abandon our
current business operations.




ITEM
2. DESCRIPTION OF PROPERTY.




We
maintain an office at 3500 Washington Ave, Suite 200, Houston
TX  77007.




We have a
variety of real property related rights as part of our oil and gas business
pursuits, as noted in detail above.




ITEM 3. LEGAL PROCEEDINGS




Management
of the Company is not aware of any legal proceedings contemplated by any
governmental authority or other party involving the Company or its subsidiaries
or its properties. No director, officer or affiliate of the Company is (i) a
party adverse to the Company in any legal proceedings; or (ii) has an adverse
interest to the Company in any legal proceedings. Management is not aware of any
other legal proceedings pending or that have been threatened against the
Company, its subsidiaries or its properties.





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




None during the period of this report.


-9-





PART
II





ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
PURCHASES OF EQUITY SECURITIES.





MARKET
FOR COMMON EQUITY





Shares of
our common stock are traded on the OTC Bulletin Board (OTC BB) under the
symbol         VOIG.   The
following table sets forth the high and low sales prices relating to our common
stock on a quarterly basis since the Company wasquoted by the OTC BB on July 7,
2008. These quotations reflect inter-dealer prices without retail mark-up,
mark-down, or commissions, and may not reflect actual transactions.





Quarter
      Ended
            
            High
      Bid
            
            
            Low
      BidDecember
      31, 2008
            
            $
            0.10
            
            
            $
            0.10September
      30, 2008
            
            $
            0.15
            
            
            $
            0.15





As of
December 31, 2008, we had approximately 60 shareholders of record, which does
not include shareholders whose shares are held in street or nominee names. We
believe that there are approximately 200 or more such beneficial owners of our
common stock.





Our
shares may be subjected to additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouses). The
broker/dealer may need to make a special suitability determination for the
purchase and have received the purchaser's written agreement to the transaction
prior to the sale. Other compliance rules may apply.





DIVIDEND
POLICY




No
dividends have ever been declared by the Board of Directors and we do not
anticipate dividends in the near future.




SECURITIES
AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS




We are
considering a Stock Option Plan for Management and advisors, and this will be to
advance our interests and our shareholders by affording our key personnel an
opportunity for investment and the incentive advantages inherent in stock
ownership in us. Pursuant to the anticipated provisions of the Stock Option
Plan, stock options, stock awards, cash awards or other incentives (the “Stock
Options and Incentives”) will be granted only to our key personnel, generally
defined as a person designated by the Board of Directors upon whose judgment,
initiative and efforts we may rely including any of our directors, officers,
employees, consultants or advisors. We have not yet set the shares of common
stock to be reserved under the Stock Option Plan. Options may be granted for a
term not exceeding ten years from


-10-




STOCK
OPTION PLAN (Projected)




The
future Stock Option Plan will, as projected, be administered by our Board of
Directors, which shall determine (i) the persons to be granted Stock Options and
Incentives; (ii) the Fair Market Value of our shares; (iii) the exercise price
per share of options to be granted; (iv) the number of shares to be represented
by each option or incentive award; (v) the time or times at which options and
incentive awards shall be granted; (vi) the interpretation of the Stock Option
Plan; (vii) whether to prescribe, amend and rescind rules and regulations
relating to the Stock Option Plan; (viii) the term and provisions or each option
and incentive award granted (which need not be identical) and, with the consent
of the grantee thereof, modify or amend such option or incentive award; (ix)
whether to accelerate or defer (with the consent of the grantee) of the exercise
date of any option or incentive award; (x) the person to execute on our behalf
any instrument required to effectuate the grant of an option or incentive award
previously granted by the Board; (xi) whether to accept or reject the election
made by a grantee pursuant to the Stock Option Plan; and (xii) all other
determinations deemed necessary or advisable for the administration of the Stock
Option Plan.  The Stock Option Plan will provide authorization to the Board
of Directors to grant Stock Options and Incentives.




In the
event an optionee who is one of our directors, officers, employees (employee
also encompasses consultants and advisors where such is appropriate or where
such is intended by the Board or by a particular grant under the Stock Option
Plan) (each an "Employee") has his employment terminated by us, except if such
termination is voluntary or occurs due to retirement with the consent of the
Board or due to death or disability, then the Stock Option, to the extent not
exercised, shall terminate on the date on which the Employee's employment with
us is terminated.  If an Employee's termination is voluntary or occurs due
to retirement with the consent of the Board, then the Employee may after the
date such Employee ceases to be one of our employees, exercises his Stock Option
at any time within three (3) months after the date he ceases to be one of our
Employees, but only to the extent that he was entitled to exercise it on the
date of such termination.  To the extent that the Employee was not entitled
to exercise the Stock Option at the date of such termination, or if he does not
exercise such Stock Option (which he was entitled to exercise) within the time
specified herein, the option shall terminate.  In no event may the period
of exercise in the case of Incentive Options extend more than three (3) months
beyond termination of employment.




In the
event an Employee is unable to continue his employment with us as a result of
his permanent and total disability, he may exercise his Stock Option at any time
within six (6) months from the date of termination, but only to the extent he
was entitled to exercise it at the date of such termination.  To the extent
that he was not entitled to exercise the Stock Option at the date of
termination, or if he does not exercise such option (which he was entitled to
exercise) within the time specified herein, the Stock Option shall
terminate.  In no event may the period of exercise in the case of an
Incentive Option extend more than six (6) months beyond the date the Employee is
unable to continue employment due to such disability.




In the
event an optionee dies during the term of the Stock Option and is at the time of
his death an Employee who shall have been in continuous status as an Employee
since the date of grant of the option, the Stock Option may be exercised at any
time within six (6) months following the date of death by the optionee's estate
or by a person who acquired the right to exercise the Stock Option by bequest or
inheritance, but only to the extent that an optionee was entitled to exercise
the Stock Option on the date of death, or if the optionee's estate, or person
who acquired the right to exercise the Stock Option by bequest or inheritance,
does not exercise such Stock Option (which he was entitled to exercise) within
the time specified herein, the Stock Option shall terminate.  In no event
may the period of exercise in the case of an Incentive Option extend more than
six (6) months beyond the date of the Employee's death.




Except to
the extent otherwise expressly provided in an award, the right to acquire shares
or other assets under the Stock Option Plan may not be assigned, encumbered or
otherwise transferred by an optionee and any attempt by an optionee to do so
will be null and void.  However Stock Options and Incentives granted under
this Stock Option Plan may be transferred by an optionee by will or the laws of
descent and distribution or pursuant to a qualified domestic relations
order.  Unless assigned in accordance with the terms of an award, options
and other awards granted under this Stock Option Plan may not be exercised
during an optionee's lifetime except by the optionee or, in the event of the
optionee's legal incapacity, by his guardian or legal representative acting in a
fiduciary capacity on behalf of the optionee under state law and court
supervision.


-11-




Recent
Sales of Unregistered Securities





As of the
date of this Annual Report and during fiscal year just, we may have sold or
issued stock in private placement offerings, issued stock in exchange for our
debts or pursuant to contractual agreements. These transactions, if
any,  were conducted under one or more possible exemptions from
registration such as Section 4(2) of the Securities Act of 1933, as amended, or
Regulation D of the Commission. Securities were marked as restricted securities.
The following data, if any, sets forth a summary of such transactions for the
years ended December 31, 2007 and 2008:





During
2007 we sold 250,000 shares to investors in a private offering for $25,000 in
cash. In connection with the private offering, we also granted the investors
250,000 Class A Warrants with an exercise price of $0.25 per share and a term of
3 years and 250,000 Class B Warrants with an exercise price of $0.50 per share
and a term of 3 years.





In July
2007, we issued two consultants 5,000 shares of our restricted common stock
each, in consideration for web design and internet consulting services
rendered.





In
September 2007, we issued 4,000,000 shares of our restricted common stock to
Polaris Holdings, Inc, in connection with and pursuant to the terms of a
Participation Agreement, described above. In October 2007, we cancelled the
Participation Agreement and the shares previously issued to
Polaris.





In
October 2007, we cancelled 100,000 shares of common stock previously issued to a
consultant in consideration for accounting and secretarial services rendered in
May 2006, which shareholder agreed to and consented to such
cancellation.





In
November 2007, we issued 500,000 shares of our restricted common stock to
Sterling Grant Capital, Inc., in connection with and consideration as a finder’s
fee in connection with the Purchase and Sale Agreement with Entek, described
above.





In
January 2008, 200,000 shares were issued to Island Stock Transfer for their
services as Transfer Agent to the Company.





In May
2008, 100,000 shares were issued to David Loev for legal services provided.





Market
Considerations





Our
Company is suffering from stock price and volume volatility issues. In simple
terms, these may be attributed to a variety of factors, in our opinion, and this
may include natural, as in the case of downward trends in the stock market, or
manmade, as in the case of potential profiting on our stock through abusive
short selling tactics. These factors are broad, like the market concerns
involving the economy, and more specific like the lack of any responsible
promotion and public relationships such as market awareness campaigns, mostly
non-existent, and also possibly due to stock conversion or similar debt
retirement relationships that may be driving down the stock price or potentially
not allowing upward movement. We have reviewed possible options and actions
considering the advice of lawyers and others taking into consideration the
regulatory environment, recent, seeking to stop short selling, and what may be
favorable potential judicial support in light of the many abuses small companies
face from market "players," and public and government pressure to end short
selling and seeking to stop market manipulation. We will be considering our
trading history and the actions of shareholders, creditors and others on our
stock trading. While we have not completed a review, nor can we say any
conclusions at this time, we intend or at least hope to
vigorously analyze prior and current credit and stock related
obligations.


-12-





ITEM
6.    MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.





Plan
of Operation




Our goal
is to expand or build our business through a variety of efforts. We are
considering ongoing offerings of securities under Private Placements, joint
ventures with other companies public and private and other activities to either
build sales or generate much needed capital to grow and undertake our business
plan (for example, obtain, if possible, loans).




Existing
working capital, further loan advances and possible debt instruments, warrant
exercises, further private placements, monetization of existing assets and
anticipated cash flow are being considered.  We have no lines of
credit or other bank financing arrangements. However, we are working out a
possible formal line of credit with Frank Jacobs, formerly a member of
Management, who has advanced monies to us from time to time. (Mr. Jacobs may
still remain considered as an affiliate.) Generally, we have financed operations
to date through the proceeds of the private placement of equity and debt
securities and loans from our shareholders.




In
connection with our business plan, Management will try and delay additional
increases in operating expenses and capital expenditures. We will need to raise
additional capital and revenues to meet both short term and long-term operating
requirements.






We have
undertaken certain actions and continue to implement changes designed to improve
our financial results and operating cash flows. The actions involve certain
cost-saving initiatives and growing strategies. For example, we do not have a
seasoned staff of public company officers beyond the extent of experience and
abilities of our CEO; so, for example, we have not engaged, thus avoided the
expenses, of formal officers like a Chief Financial Officer or
CFO.  Our financial contain information expressing substantial doubt
about our ability to continue as a going concern. The consolidated financial
statements have been prepared "assuming that we will continue as a going
concern," which contemplates that we will realize our assets and satisfy our
liabilities and commitments in the ordinary course of business.




LOANS
FROM SHAREHOLDERS




As of
December 31, 2009 we are obligated to repay loans totaling $55,286 to Mr. Frank
Jacobs and Jacobs Oil & Gas, Ltd, an affiliate company to him, or as he may
nominate. We are finalizing the terms of these obligations to the extent not
stated in our financial statements.  These shareholder loans are
currently unsecured.




PURCHASE
OF SIGNIFICANT EQUIPMENT




We do not
intend to purchase any significant equipment during the next
quarter.




CRITICAL
ACCOUNTING POLICIES




Our
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States.  The preparation of
these consolidated financial statements require us to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the periods presented. Refer to the Consolidated Financial
Statements.  The following paragraphs include a discussion of the critical
areas that required a higher degree of judgment or are considered
complex.


-13-




Stock-based
Compensation





We
account for our stock-based compensation according to the provisions of SFAS No.
123(R),


Share-Based
Payment. This statement requires the recognition of the fair value of
stock-based compensation awards in financial statements. Under the provisions of
SFAS No. 123(R), stock-based compensation expense is measured at the date of
grant, based on the calculated fair value of the stock-based award, and is
recognized as expense over the employee’s requisite service period (generally
the vesting period of the award). We have not granted any stock options to date.
Shares issued as compensation to employees and outside consultants for services
are recorded at the fair value of the stock as measured on the date or dates the
services were rendered.





Recent
Accounting Pronouncements




The
Company does not expect the adoption of any recently issued accounting
pronouncements to have a significant impact on the Company’s results of
operations, financial position or cash flows.


-14-




ITEM
7. FINANCIAL STATEMENTS




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


Velocity
Oil & Gas, Inc.


(an
exploration stage company)





We have
audited the accompanying consolidated balance sheets of Velocity Oil & Gas,
Inc. (the “Company”) (an exploration stage company), as of December 31, 2008 and
2007 and the related consolidated statements of expenses, changes in
stockholders’ equity (deficit) and cash flows for the years then ended and the
period from May 16, 2006, inception, to December 31, 2008. These consolidated
financial statements are the responsibility of the Company’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 audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. 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 the Company as of December
31, 2008 and 2007, and the results of its operations and its cash flows for the
periods described above in conformity with accounting principles generally
accepted in the United States of America.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered a loss from
operations, which raises substantial doubt about its ability to continue as a
going concern. Management’s plans regarding those matters also are described in
Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.








/s/
Malone & Bailey, PC


www.malone-bailey.com


Houston,
Texas





March 30,
2009





-15-





VELOCITY
OIL & GAS, INC.


(An Exploration
Stage Company)


CONSOLIDATED
BALANCE SHEETS





December
      31,
            
            
            December
      31,2008
            
            
            2007ASSETSCURRENT
      ASSETSCash
            
            $
            5,716
            
            
            $
            1,286Prepaid
      expense other current assets
            
            
            -
            
            
            
            3,000Total
      current assets
            
            
            5,716
            
            
            
            4,286Property,
      plant and equipment, net of accumulateddepreciation
      of $2,583 and $1,230, respectively
            
            
            4,870
            
            
            
            1,480Unproved
      oil and gas properties
            
            
            12,500
            
            
            
            50,000TOTAL
      ASSETS
            
            $
            23,086
            
            
            $
            55,766LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
            
            $
            16,938
            
            
            $
            6,908Accounts
      payable – related party
            
            
            1,207
            
            
            
            -Accrued
      liabilities
            
            
            52,406
            
            
            
            100Total
      current liabilities
            
            
            70,551
            
            
            
            7,008Long-term
      advances - related party
            
            
            55,286
            
            
            
            17,536Note
      payable to shareholders
            
            
            12,764
            
            
            
            8,264Total
      liabilities
            
            
            138,601
            
            
            
            32,808STOCKHOLDERS’
      EQUITY (DEFICIT)Preferred
      stock, $0.001 par value; 10,000,000 sharesauthorized;
      none issued and outstanding
            
            
            -
            
            
            
            -Common
      stock, $0.001 par value; 100,000,000 sharesauthorized;
      11,620,500 and 11,320,500 shares issued andoutstanding,
      respectively
            
            
            11,621
            
            
            
            11,321Additional
      paid-in capital
            
            
            159,848
            
            
            
            130,148Deficit
      accumulated during the exploration stage
            
            
            (286,984
            )
            
            
            (118,511
            )Total
      stockholders' equity (deficit)
            
            
            (115,515
            )
            
            
            22,958TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
            
            $
            23,086
            
            
            $
            55,766See
      notes to consolidated financial statements.





-16-


VELOCITY
OIL & GAS, INC.


(An Exploration
Stage Company)


CONSOLIDATED
STATEMENTS OF EXPENSES





InceptionYear
      Ended
            
            
            ThroughDecember
      31,
            
            
            December
      31,2008
            
            
            2007
            
            
            2008Operating
      expenses:General
      and administrative
            
            $
            145,890
            
            
            $
            73,599
            
            
            $
            262,907Impairment
      of oil and gas properties
            
            
            20,020
            
            
            
            -
            
            
            
            20,020Depreciation
            
            
            1,353
            
            
            
            903
            
            
            
            2,583Total
      operating expenses
            
            
            167,263
            
            
            
            74,502
            
            
            
            285,510Operating
      loss
            
            
            (167,263
            )
            
            
            (74,502
            )
            
            
            (285,510
            )Interest
      expense
            
            
            (1,210
            )
            
            
            (264
            )
            
            
            (1,474
            )Net
      loss
            
            $
            (168,473
            )
            
            $
            (74,766
            )
            
            $
            (286,984
            )Basic
      and diluted net lossper
      common share
            
            $
            (0.01
            )
            
            $
            (0.01
            )Weighted
      average commonshares
      outstanding
            
            
            11,567,768
            
            
            
            10,815,777See
      notes to consolidated financial statements.





-17-


VELOCITY
OIL & GAS, INC.


(An Exploration
Stage Company)


CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)


May
16, 2006 (Inception) Through December 31, 2008





DeficitAccumulated
            
            
            TotalAdditional
            
            
            During
      the
            
            
            Stockholders'Common
      Stock
            
            
            Paid-in
            
            
            Exploration
            
            
            EquityShares
            
            
            Amount
            
            
            Capital
            
            
            Stage
            
            
            (Deficit)Common
      shares issued for cash
            
            
            10,360,500
            
            
            $
            10,361
            
            
            $
            35,689
            
            
            $
            -
            
            
            $
            46,050Common
      shares issued for services
            
            
            300,000
            
            
            
            300
            
            
            
            -
            
            
            
            -
            
            
            
            300Warrants
      granted
            
            
            -
            
            
            
            -
            
            
            
            19,119
            
            
            
            -
            
            
            
            19,119Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (43,745
            )
            
            
            (43,745
            )Balances
      at December 31, 2006
            
            
            10,660,500
            
            
            
            10,661
            
            
            
            54,808
            
            
            
            (43,745
            )
            
            
            21,724Common
      shares issued for cash
            
            
            250,000
            
            
            
            250
            
            
            
            24,750
            
            
            
            -
            
            
            
            25,000Common
      shares issued for services
            
            
            10,000
            
            
            
            10
            
            
            
            990
            
            
            
            -
            
            
            
            1,000Common
      shares issued as finder's fees
            
            
            500,000
            
            
            
            500
            
            
            
            49,500
            
            
            
            -
            
            
            
            50,000Cancellation
      of common shares
            
            
            (100,000
            )
            
            
            (100
            )
            
            
            100
            
            
            
            -
            
            
            
            -Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (74,766
            )
            
            
            (74,766
            )Balances
      at December 31, 2007
            
            
            11,320,500
            
            
            
            11,321
            
            
            
            130,148
            
            
            
            (118,511
            )
            
            
            22,958Common
      shares issued for services
            
            
            300,000
            
            
            
            300
            
            
            
            29,700
            
            
            
            -
            
            
            
            30,000Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (168,473
            )
            
            
            (168,473
            )Balances
      at December 31, 2008
            
            
            11,620,500
            
            
            $
            11,621
            
            
            $
            159,848
            
            
            $
            (286,984
            )
            
            $
            (115,515
            )See
      notes to consolidated financial statements.





-18-


VELOCITY
OIL & GAS, INC.


(An Exploration
Stage Company)


CONSOLIDATED
STATEMENTS OF CASH FLOWS





InceptionYear
      Ended
            
            
            ThroughDecember
      31,
            
            
            December
      31,2008
            
            
            2007
            
            
            2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
            
            $
            (168,473
            )
            
            $
            (74,766
            )
            
            $
            (286,984
            )Adjustments
      to reconcile net loss to cash usedin
      operating activities:Depreciation
            
            
            1,353
            
            
            
            902
            
            
            
            2,583Debt
      issued for interest
            
            
            -
            
            
            
            264
            
            
            
            264Impairment
      of oil and gas properties
            
            
            20,020
            
            
            
            
            
            
            
            20,020Stock
      issued for services
            
            
            30,000
            
            
            
            1,000
            
            
            
            31,300Warrant
      expense
            
            
            -
            
            
            
            -
            
            
            
            19,119Changes
      in assets and liabilities:Prepaid
      expenses and other receivables
            
            
            3,000
            
            
            
            4,500
            
            
            
            -Accounts
      payable
            
            
            (2,470
            )
            
            
            6,908
            
            
            
            4,438Accounts
      payable – related party
            
            
            1,207
            
            
            
            -
            
            
            
            1,207Accrued
      liabilities
            
            
            52,306
            
            
            
            100
            
            
            
            52,406NET
      CASH USED IN OPERATING ACTIVITIES
            
            
            (63,057
            )
            
            
            (61,092
            )
            
            
            (155,647
            )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of fixed assets
            
            
            (4,743
            )
            
            
            -
            
            
            
            (7,453
            )Proceeds
      from sale of oil and gas properties
            
            
            29,980
            
            
            
            -
            
            
            
            29,980NET
      CASH PROVIDED BY INVESTING ACTIVITIES
            
            
            25,237
            
            
            
            -
            
            
            
            22,527CASH
      FLOWS FROM FINANCING ACTIVITIESAdvances
      from related party
            
            
            64,500
            
            
            
            17,536
            
            
            
            85,002Proceeds
      from note payable to shareholder
            
            
            4,500
            
            
            
            8,000
            
            
            
            12,500Repayments
      of advances from related party
            
            
            (26,750
            )
            
            
            (2,966
            )
            
            
            (29,716
            )Proceeds
      from issuance of common stock
            
            
            -
            
            
            
            27,800
            
            
            
            71,050NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            42,250
            
            
            
            50,370
            
            
            
            138,836NET
      CHANGE IN CASH
            
            
            4,430
            
            
            
            (10,722
            )
            
            
            5,716Cash,
      beginning of period
            
            
            1,286
            
            
            
            12,008
            
            
            
            -Cash,
      end of period
            
            $
            5,716
            
            
            $
            1,286
            
            
            $
            5,716Cash
      paid for:Interest
            
            $
            -
            
            
            $
            -Income
      taxes
            
            
            -
            
            
            
            -Non-cash
      investing and financing activities:Acquisition
      of unproved property for payable
            
            $
            12,500
            
            
            $
            -Cancellation
      of common shares
            
            
            -
            
            
            
            100Common
      shares issued as finder’s fee for unproved properties
            
            
            -
            
            
            
            50,000See
      notes to consolidated financial statements.


-19-


VELOCITY
OIL & GAS, INC.


(An
Exploration Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Nature of
Business. Velocity Oil and Gas, Ltd. (“Velocity”) was incorporated in the State
of Nevada on May 16, 2006. Since inception, the Company is a start-up entity
with the intention of being involved in oil and gas exploration and development
with a geographic focus in Texas and Louisiana.





Basis of
Presentation. The consolidated financial statements of Velocity and its wholly
owned subsidiary have been prepared by Velocity and have been audited, pursuant
to the rules and regulations of the Securities and Exchange Commission and in
accordance with accounting principles.





Use of
Estimates. In preparing financial statements, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities in the
balance sheet and expenses in the statement of expenses. Actual results could
differ from those estimates.





Property
and Equipment is valued at cost. Additions are capitalized and maintenance and
repairs are charged to expense as incurred. Gains and losses on dispositions of
equipment are reflected in operations. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets, which are
three and five years.





Impairment
of Long-Lived Assets. Velocity reviews the carrying value of its long-lived
assets annually or whenever events or changes in circumstances indicate that the
historical cost-carrying value of an asset may no longer be appropriate.
Velocity assesses recoverability of the carrying value of the asset by
estimating the future net cash flows expected to result from the asset,
including eventual disposition. If the future net cash flows are less than the
carrying value of the asset, an impairment loss is recorded equal to the
difference between the asset’s carrying value and fair value.





Income
Taxes. Velocity recognizes deferred tax assets and liabilities based on
differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. Velocity provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets to be more likely than not.





Basic and
Diluted Net Loss Per Share. The basic net loss per common share is computed by
dividing the net loss by the weighted average number of common shares
outstanding. Diluted net loss per common share is computed by dividing the net
loss adjusted for potential dilutive securities on an "as if converted" basis,
by the weighted average number of common shares outstanding. For the period from
May 16, 2006 (inception) to December 31, 2008, potential dilutive securities had
an anti-dilutive effect and were not included in the calculation of diluted net
loss per common share.





Share-Based
Compensation. Shares issued as compensation to employees and outside consultants
for services are recorded at the fair value of the stock as measured on the date
or dates the services were rendered.


-20-





Recently
Issued Accounting Pronouncements. Velocity does not expect the adoption of
recently issued accounting pronouncements to have a significant impact on
Velocity’s results of operations, financial position or cash flow.





NOTE 2 –
GOING CONCERN





As shown
in the accompanying financial statements, Velocity incurred a net loss of
$168,473 for the year ended December 31, 2008, has an accumulated deficit of
$286,984, and a working capital deficit of $64,835.  These conditions
raise substantial doubt as to Velocity’s ability to continue as a going
concern.  Management is trying to raise additional capital through
sales of common and preferred stock.  The financial statements do not
include any adjustments that might be necessary if Velocity is unable to
continue as a going concern.





NOTE 3 –
UNPROVED PROPERTIES





On
November 8, 2007, Velocity signed a purchase and sale agreement for the
acquisition of 100% of the membership interest in South Marsh LLC, a Delaware
limited liability company, which owns unproved oil and gas properties in five
oil and gas leases in the Outer Continental Shelf Area of the Gulf of Mexico.
Velocity recorded $50,000 unproved property as a result of the
transaction.





In July
2008, Velocity received a nonrefundable deposit of $29,980 representing the full
purchase price, for the sale of 100% of the five oil and gas leases owned by
South Marsh, LLC.  The remaining $20,020 book value of the unproved
property was written-off through impairment of oil and gas properties during the
nine months ended September 30, 2008. The sale never closed and Velocity
retained its ownership in the oil and gas leases ad retained the nonrefundable
deposit.





In
December 2008, Velocity, through its ownership in South Marsh LLC, acquired a
40% working interest in South Marsh Island Block 138 which is located off the
Louisiana coast in the Gulf of Mexico. The purchase price of $12,500 is included
in accounts payable.





NOTE 4 –
PROPERTY AND EQUIPMENT





Property
and equipment consisted of the following at December 31, 2008 and December 31,
2007:





AmountDecember
      31,Description
            Life
            
            2008
            
            
            2007Computer
      equipment
            3
      years
            
            $
            2,710
            
            
            $
            2,710Furniture
      and fixtures
            5
      years
            
            
            4,743
            
            
            
            -Less:
      accumulated depreciation
            
            
            
            (2,583
            )
            
            
            (1,230
            )$
            4,870
            
            
            $
            1,480





-21-


NOTE 5 –
ADVANCES FROM RELATED PARTY





Velocity
borrows advances from a shareholder periodically.  The advances are
non-interest bearing and due on demand with twelve months and one day’s
notice.  At December 31, 2008 and 2007, there was an outstanding
balance of $55,286 and $17,536, respectively, due the shareholder.





NOTE 6 –
NOTES PAYABLE





Velocity
borrowed $8,000 from a shareholder in June 2007.  The note is due on
demand with twelve months and one day’s notice and bears interest at 6% per
annum.  The principal is convertible into common shares at $0.10 per
share. During 2007, the accrued interest of $264 was converted to debt. At
December 31, 2008, the outstanding balance on the note was
$12,764.  Velocity evaluated the convertible portion under FAS 133 and
EITF 00-19 for consideration of classification as a liability and derivative and
determined both were not applicable. Velocity then evaluated the convertible
portion under EITF’s 98-5 and 00-27 for consideration of beneficial conversion
feature and determined none existed.





NOTE 7 –
STOCKHOLDERS’ EQUITY





During
the year ended December 31, 2008, Velocity issued 300,000 shares valued at
$30,000 for professional fees.





During
the year ended December 31, 2007, Velocity sold 250,000 shares to investors in a
private offering for $25,000 in cash.  In connection with the private
offering, Velocity also granted the investors 250,000 Class A Warrants with an
exercise price of $0.25 per share and a term of 3 years and 250,000 Class B
Warrants with an exercise price of $0.50 per share and a term of 3
years.





During
the year ended December 31, 2007, Velocity also issued 500,000 shares valued at
$50,000 as a finder’s fee for the acquisition of unproved
properties.





During
the year ended December 31, 2007, 100,000 previously issued shares were
cancelled.  The shares were originally issued for services at
inception and valued at $100.  The cancellation resulted in a decrease
to common stock and an increase to additional paid-in capital of
$100.  The net effect on Velocity’s total equity was
zero.





A summary
of changes in outstanding warrants is as follows:





Weighted
      AverageWarrants
            
            
            Exercise
      PriceOutstanding
      as of December 31, 2006
            
            
            921,000
            
            
            $
            0.32Granted
            
            
            500,000
            
            
            
            0.38Canceled
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Outstanding
      as of December 31, 2007
            
            
            1,421,000
            
            
            
            0.34Granted
            
            
            -
            
            
            
            -Canceled
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Outstanding
      as of December 31, 2008
            
            
            1,421,000
            
            
            $
            0.34





-22-


1,421,000
warrants were exercisable at December 31, 2007 and 2008 with a weighted average
exercise price of $0.34. The weighted average remaining life of the warrants
outstanding at December 31, 2007 and 2008 was 1.82 and 1.23 years,
respectively.





NOTE 8 –
INCOME TAXES





Velocity
uses the liability method, where deferred tax assets and liabilities are
determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes. During fiscal 2008, Velocity incurred net
losses and, therefore, has no tax liability. The net deferred tax asset
generated by the loss carry-forward has been fully reserved. The cumulative net
operating loss carry-forward is approximately $211,473 at December 31, 2008, and
will expire in the years ending December 31, 2026 through December 31,
2028.





December
      31,2008
            
            
            2007Deferred
      tax asset
            
            
            71,901
            
            
            
            24,820Valuation
      allowance
            
            
            (71,901
            )
            
            
            (24,820
            )Net
      deferred tax asset
            
            
            -
            
            
            
            -





NOTE 9 –
SUBSEQUENT EVENTS





In March
2009, Velocity issued 1,000 Series A Preferred shares for consulting
services.


-23-





ITEM
8A. CONTROLS AND PROCEDURES





FINANCIAL
DISCLOSURE CONTROLS AND PROCEDURES





An
evaluation was conducted under the supervision and with the participation of our
Management, including our Chief Executive Officer, also acting as our Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of year end. Based on that evaluation, our
Chief Executive Officer/Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of such date to ensure that
information required to be disclosed in the reports that we file or submit under
the Exchange Act of 1934, as amended ("Exchange Act"), is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms. Such officers also confirmed that there was no change in our internal
control over financial reporting during the year ended that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.





We
maintain "disclosure controls and procedures," as such term is defined in Rule
13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that
are designed to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission rules and forms, and
that such information is accumulated and communicated to our management,
including our Chief Executive Officer/Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure. We conducted an
evaluation (the "evaluation"), under the supervision and with the participation
of our Chief Executive Officer/Chief Financial Officer of the effectiveness of
the design and operation of our disclosure controls and procedures ("Disclosure
Controls") as of the end of the period covered by this report pursuant to Rule
13a-15 of the Exchange Act. The evaluation of our disclosure controls and
procedures included a review of the disclosure controls’ and procedures’
objectives, design, implementation and the effect of the controls and procedures
on the information generated for use in this report. In the course of our
evaluation, we sought to identify data errors, control problems or acts of fraud
and to confirm the appropriate corrective actions, if any, including process
improvements, were being undertaken. Our Chief Executive Officer/Chief Financial
Officer concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures were effective and were operating at the
reasonable assurance level.





Please
note we are considering engaging a financial officer other than our CEO and the
current person is an interim officer in such position as financial
officer.





Our management is responsible for establishing and maintaining
adequate control over financial reporting (as defined in Rules 13a-15(f)
promulgated under the Exchange Act.  The term internal control over
financial reporting is defined as a process designed by, or under the
supervision of, the issuer's principal executive and principal financial
officers, or persons performing similar functions, and effected by the issuer's
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures
that:




1.
            Pertain to the maintenance of records that in reasonable detail
      accurately and fairly reflect the transactions and dispositions of the
      assets of the issuer;




2.
            Provide reasonable assurance that transactions are recorded as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles, and that receipts and
      expenditures of the issuer are being made only in accordance with
      authorizations of management and directors of the issuer;
      and




-24-


3.
            Provide reasonable assurance regarding prevention or timely
      detection of unauthorized acquisition, use or disposition of the issuer's
      assets that could have a material effect on the financial
      statements.




Our
management, including our chief executive officer/chief financial officer,
do/does not expect that our disclosure controls and procedures or our internal
controls will prevent all error and all fraud.  A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their
costs. Due to the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been
detected.




In making
this assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated
Framework. Our management has concluded that, as of year-end, our
internal control over financial reporting is effective.




This
Report does not include an attestation report of the Company's registered public
accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management's report
in this report.





ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL
PERSONS   AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a)
OF THE EXCHANGE ACT.





All of
our Directors hold office until the next annual general meeting of the
shareholders or until their successors are elected and qualified. Our officers
are appointed by our Board of Directors and hold office until their earlier
death, retirement, resignation or removal.





As of the
date of this Annual Report our directors and executive officers, their ages,
positions held are as follows:





Name
            Age
            Position
      with the CompanyJames
      Moses
            40
            President,
      Chief Executive Officer, Interim Chief Financial Officer and a
      DirectorDavid
      Purdy
            26
            Secretary
      (Resigned February 28, 2009)





Information
concerning resignations or substitutions of officers and Directors prior to our
recent fiscal year end may be obtained from our prior filings with the
Commission. Note the following summary information regarding our previous
officer and Director.





-25-


Background
of our Officers and Directors




James
Moses




Mr. Moses
has been President and Director of the Company since September
2008.  Since January 2008, he has also been a Partner at Fortbridge
Consulting, an investor relations firm in Sydney, Australia, which specializes
in capital raising strategies, corporate development and communications for
emerging small-cap publicly-listed companies.  Prior to this, he
worked at Professional Public Relations as the New South Wales Investor
Relations Manager from August 2007 to January 2008.  From December
2005 to July 2007 he was the Publication Editor and a journalist for Aspermont
Publishing at their Resource Stocks Magazine.  He worked at ING
Australia as a Funds Management Business Development Manager from February 2002
to February 2005.  From January 1999 to February 2002, he was a
Private Client Advisor for Smith Coffey Financial Management, and from January
1991 to December 1998 he worked at AXA Australia as Superannuation Investment
Advisor and a Business Development Manager.





Mr. Moses
has experience in advising a wide range of successful junior mining and energy
companies.  Further, he has a strong background in funds management,
with 14 years experience in senior business development roles for leading global
fund managers.  Mr. Moses holds a Bachelor of Commerce degree and a
post graduate diploma in Journalism and Communication from Edith Cowan
University, which degrees he received in 1990 and 2005,
respectively.





Frank
A. Jacobs





Mr.
Jacobs previously served as our Chief Executive Officer, President, Treasurer
and Director. Additionally, since November 2007, Mr. Jacobs has served as the
sole officer and Director of South Marsh LLC, our wholly owned Delaware
subsidiary.  Mr. Jacobs resigned as an officer and Director of the
Company effectively September 15, 2008 but remains the sole officer and Director
of South Marsh LLC and an advisor to the Company.





David
Purdy





Mr. David
Purdy served as the Company’s Secretary from August 20, 2008 to February 28,
2009 when the Company received his resignation.





Terje
Reiersen





Additionally,
Terje Reiersen previously served as a Director and as Secretary of the Company
from August 2006 to July 2007. However, Mr. Reiersen no longer holds any
position with the Company.





-26-


COMMITTEES
OF THE BOARD OF DIRECTORS





Audit
Committee





As of the
date of this Annual Report, we do not have any members on our audit
committee.  We have not appointed additional members to the audit
committee and, therefore, the respective role of an audit committee has been
conducted by our Board of Directors. When new members are to be appointed to the
audit committee, the audit committee's primary function will be to provide
advice with respect to our financial matters and to assist our board of
directors in fulfilling its oversight responsibilities regarding finance,
accounting, and legal compliance. The audit committee's primary duties and
responsibilities will be to: (i) serve as an independent and objective party to
monitor our financial reporting process and internal control system; (ii) review
and appraise the audit efforts of our independent accountants; (iii) evaluate
our quarterly financial performance as well as our compliance with laws and
regulations; (iv) oversee management's establishment and enforcement of
financial policies and business practices; and (v) provide an open avenue of
communication among the independent accountants, management and the
Board.





Our Board
of Directors has considered whether the provision of such non-audit services
would be compatible with maintaining the principal independent accountant's
independence. Our Board of Directors considered whether our principal
independent accountant was independent, and concluded that the auditor for the
fiscal year ended was independent.




Code
of Ethics




We have
adopted a corporate code of ethics. We believe our code of ethics is reasonably
designed to deter wrongdoing and promote honest and ethical conduct; provide
full, fair, accurate, timely and understandable disclosure in public reports;
comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code.




ITEM
10. EXECUTIVE COMPENSATION


Name
      & PrincipalPosition
            Year
            
            
            Salary
              ($)
            
            
            
            RestrictedStockAwards($)
            
            Other(1)AnnualCompensation($)
            
            
            Total *
              Compensation($)James
      Moses
            2008
            
            $
            17,500
            
            
            
            --
            
            --
            
            $
            17,500President,
      CFO,
              TreasurerAnd
      DirectorFrank
      A. Jacobs
            2008
            
            $
            30,000
            
            
            
            --
            
            --
            
            $
            30,000Former
      CEO, CFO,
            2007
            
            $
            0
            
            
            
            --
            
            --
            
            $
            0Treasurer
            2006
            
            $
            5,000
            (2)
            
            
            --
            
            --
            
            $
            5,000And
      Director (3)Terje
      Reiersen
            2006
            
            $
            5,000
            (2)
            
            
            --
            
            --
            
            $
            5,000Former
      Secretaryand
      Director (4)




-27-


* Does not include perquisites and
other personal benefits in amounts less than 10% of the total annual salary and
other compensation. Other than the individuals listed above, we had no executive
employees or Directors during the years listed above. Our officers and directors may be
reimbursed for any out-of-pocket expenses incurred by them on our
behalf.  As of the date of this Report, none of our officers or
directors are a party to employment agreements with us except as identified
herein or in our filings with the Commission.  We presently have no
pension, health, annuity, insurance, profit sharing or similar benefit
plans.





(1) No
Executive Officer received any bonus, restricted stock awards, options,
non-equity incentive plan compensation, or nonqualified deferred compensation
earnings since the Company was incorporated.





(2)
Represents Directors fees paid.





(3) Mr.
Jacobs served as our CEO, CFO, Treasurer and Director from inception to
September 15, 2008 when he resigned as an officer and Director of the
Company.





(4) Mr.
Reiersen served as our Secretary and Director from our inception until July 23,
2007, when he resigned as an officer and Director of the Company.





COMPENSATION
DISCUSSION AND ANALYSIS





The
Company entered into a Retainer Agreement for Executive Services with Traction
Consulting Pty Ltd, a company wholly owned by our sole director and President,
Mr. James Moses on October 2, 2008 with an effective date of September 15, 2008.
The agreement stipulates that Mr. Moses will be paid $5,000 per month or that
such shares will be accrued at the commencement of each month. Payment is
prescribed to be in cash or shares as permitted by the Company’s cash position.
On March 5, 2009 the Company and Mr. Moses agreed to settle the outstanding fees
of $30,000 (accrued for 6 months until March 15, 2009) for the issue of 1,000
Class A Preferred Shares as detailed in the Subsequent Events financial footnote
under the financial statements and notes accompanying this Report.





We
consider him to be our President and interim Chief Financial
Officer.





There
were no formal arrangements under which our directors were compensated by us
during the most recently completed fiscal year for their services solely as
directors.




INDEMNIFICATION




Pursuant
to the articles of incorporation and bylaws of the corporation, we may indemnify
an officer or director who is made a party to any proceeding, including a
lawsuit, because of his position, if he acted in good faith and in a manner he
reasonably believed to be in our best interest. In certain cases, we may advance
expenses incurred in defending any such proceeding. To the extent that the
officer or director is successful on the merits in any such proceeding as to
which such person is to be indemnified, we must indemnify him against all
expenses incurred, including attorney's fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.


-28-






Regarding
indemnification for liabilities arising under the Securities Act of 1933, as
amended, which may be permitted to directors or officers pursuant to the
foregoing provisions, we are informed that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy, as expressed
in the Act and is, therefore unenforceable.




ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS




The following table sets forth certain
information with respect to the beneficial ownership of our common stock by each
stockholder known by us to be the beneficial owner of more than 5% of our common
stock and by each of our current directors and executive officers. Each person
has sole voting and investment power with respect to the shares of common stock,
except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated. As of the
December 31, 2008, the date of this Annual Report, there are 11,620,500 shares
of common stock issued and outstanding.




Name
      of Beneficial
              Owner
            Amount
      and Nature of
              Beneficial
      Owner (1) (2)
            Position
            Percent
              of
      Class(3)James
      Moses
              c/o
      3500 Washington Ave, Suite 200
              Houston
      TX  77007
            10,000
            President,
      President, Interim Chief Financial Officer and a Director
            .008%Franciscus
      A, Jacobs (a/k/a Frank Jacobs)
              16499
      – 64th
      Ave, Suite 306
              Surrey
      BC Canada
              V3S
      6V7
            9,930,000
            Former,
      CEO and Director
            85%




All
Officers and Directors as a
group:                     10,000                                                                                                                                      .008%




(1)              These
are restricted shares of common stock.




(2)              Under
Rule 13d-3, a beneficial owner of a security includes any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares: (i) voting power, which includes the power to vote,
or to direct the voting of shares; and (ii) investment power, which includes the
power to dispose or direct the disposition of shares. Certain shares may be
deemed to be beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the shares). In
addition, shares are deemed to be beneficially owned by a person if the person
has the right to acquire the shares (for example, upon exercise of an option)
within 60 days of the date as of which the information is provided. In computing
the percentage ownership of any person, the amount of shares outstanding is
deemed to include the amount of shares beneficially owned by such person (and
only such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does not
necessarily reflect the person's actual ownership or voting power with respect
to the number of shares of common stock actually outstanding as of the date of
this Annual Report. The above figures do not consider outstanding
warrants


-29-






One
person currently holds warrants to purchase 200,000 shares of our common stock
at an exercise price of $0.10 per share, which warrants expire if unexercised on
May 20, 2011, with a cashless exercise provision.  38 shareholders who
purchased an aggregate of 610,500 Units in our past offshore offering from
September 2006 to August 2007, received one (1) three year Class A Warrant to
purchase one (1) share of our common stock at an exercise price of $0.25 per
share, and one (1) three year Class B Warrant to purchase one (1) share of our
common stock at an exercise price of $0.50 per share, as well as one (1) share
of common stock (each collectively a “Unit”).




Also,
there are a total of 10,000,000 shares of Preferred Stock authorized for
issuance of which 1,000 shares have been issued to Mr. Moses of our Company. In
summary, please note:





Shares of
Preferred Stock may be issued from time to time in one or more series, each of
which shall have such distinctive designation or title as shall be determined by
our Board of Directors ("Board of Directors") prior to the issuance of any
shares thereof. Preferred Stock shall have such voting powers, full or limited,
or no voting powers, and such preferences and relative, participating, optional
or other special rights and such qualifications, limitations or restrictions
thereof, as shall be stated in such resolution or resolutions providing for the
issue of such class or series of Preferred Stock as may be adopted from time to
time by the Board of Directors prior to the issuance of any shares thereof. The
number of authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the voting power of all the then
outstanding shares of our capital stock entitled to vote generally in the
election of the directors, voting together as a single class, without a separate
vote of the holders of the Preferred Stock, or any series thereof, unless a vote
of any such holders is required pursuant to any Preferred Stock
Designation.





While we
do not currently have any plans for the issuance of Preferred Stock, the
issuance of such Preferred Stock could adversely affect the rights of the
holders of common stock and, therefore, reduce the value of the common stock. It
is not possible to state the actual effect of the issuance of any shares of
Preferred Stock on the rights of holders of the common stock until the board of
directors determines the specific rights of the holders of the Preferred Stock,
which rights may be superior to those associated with our common stock; which
effects may include:





o
            Restricting
      dividends on the common stock;o
            Rights
      and preferences including dividend and dissolution rights, which are
      superior to our common stock;o
            Diluting
      the voting power of the common stock;o
            Impairing
      the liquidation rights of the common stock; oro
            Delaying
      or preventing a change in control of the Company without further action by
      the stockholders.




-30-


CHANGES
IN CONTROL




We are
unaware of any contract, or other arrangement or provision, the operation of
which may at a subsequent date result in a change of control.




ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE





None of
our directors, officers or principal stockholders, nor any associate or
affiliate of the foregoing, have any interest, direct or indirect, in any
transaction to the date of this Annual Report, or in any proposed transactions,
which has materially affected or which we believe will materially affect us,
except as noted in our financial statements and these include shareholder loans
relating to Mr. Frank Jacobs.





ITEM
13. EXHIBITS





EXHIBIT
            DESCRIPTION3.1
            Articles
      of Incorporation *3.2
            Bylaws
      *4.1
            Specimen
      copy of stock certificate for Common *10
            Consulting
      Agreement, re: James Moses *10.1(1)
            Acquisition
      & Participation Agreement with Polaris Holdings,
  Inc.*10.2(1)
            $8,000
      Promissory Note with Capersia Pte. Ltd.*10.3(1)
            Amendment
      to Acquisition & Participation
Agreement*10.4(2)
            Assignment
      of Membership Interests*10.5(2)
            Assignment
      of Production Payment*10.6(2)
            Purchase
      and Sale Agreement By and Between Entek USA Inc. and Velocity Oil &
      Gas, Inc.*10.7(3)
            Amended
      Restated Participation Agreement between South Marsh, Ridgelake,
      GulfX*10.8(2)
            Amendment
      to Amended and Restated Participation Agreement*10.14(3)
            Amended
      Promissory Note with Capersia*10.15(3)
            Letter
      Agreement Regarding Terms of Jacobs Oil & Gas, Inc.
      Advances*10.16(3)
            Letter
      Agreement Regarding Terms of Jacobs Oil & Gas, Inc.
      Advances*10.17(4)
            Assignment
      agreement with Ridgelake Energy, Inc.*31
            Certifications
      From Officers Filed herewith.





*filed
under our Company with the Commission




-31-


ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.




AUDIT
FEES




The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for our audit of annual financial
statements and review of financial statements included in our Form 10-Q/10-QSB
or services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years
was:




2008:
$21,000




2007:
$18,000




AUDIT
RELATED FEES




The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported in the preceding paragraph, if any:




2008:
$0




2007:
$0




TAX
FEES




The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning was, if any:




2008:
$0




2007:
$0




-32-


ALL
OTHER FEES




The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
above was, if any:




2008:
$0




2007:
$0




When
existing, our audit committee's pre-approval policies and procedures described
in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit
committee pre-approve all accounting related activities prior to the performance
of any services by any accountant or auditor.




The
percentage of hours expended on the principal accountant's engagement to audit
our financial statements for the most recent fiscal year that were attributed to
work performed by persons other than the principal accountant's full time,
permanent employees was 0%.





-33-




SIGNATURES







In
accordance with Section 13 or 15(d) of the Exchange Act,  the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





Dated:
      March30, 2009
              By:
              /s/ James
      MosesJames
      MosesPresident

                (principal
      executive officer)
 
 Dated:
      March30, 2009
                By:
                /s/ James
      MosesJames
      MosesInterim
      Chief Financial Officer

                  (principal
      financial officer)





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.




Signatures
            Title
            Date/s/ James
      Moses
              James
      Moses
            Director
            March
      30, 2009








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