UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K/A

(Amendment
No. 2)



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



For
the fiscal year ended April 30, 2012



Commission
File Number 000-52522



NORTH
AMERICAN ENERGY RESOURCES, INC.

(Exact
name of registrant as specified in its charter)



|Nevada                                                 | 98-0550352             
|------------------------------------------------------ | -----------------------
|(State
    or Other Jurisdiction                       | (IRS
    Employer      
|of
    Incorporation or Organization)                  | Identification
    No.)
|                                                       |                        
|1535
    Soniat St., New Orleans, LA                   | 70115                  
|(Address
    of Principal Executive Office)            | (Zip
    Code)         
|                                                       |                        
|228
    Saint Charles Ave., Suite 724, New Orleans, LA | 70130                  
|(Former
    Address of Principal Executive Office)     | (Zip
    Code)         



Issuer’s
telephone number (504) 561-1151



Securities
registered under Section 12(b) of the Exchange Act: None



Securities
registered under Section 12(g) of the Exchange Act: COMMON STOCK, $0.001 PAR VALUE

(Title
of each class)



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [  ] No
[X]



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



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes [  ] No [  ]



Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained here-in, and will
not 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. [  ]



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. (Check one)



Large
accelerated filer [  ] Accelerated filer [  ] Non-accelerated filer [  ] 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 [  ] No [X]



The
aggregate market value of the shares of our common stock, par value $0.001, held by non-affiliates computed by reference to the
price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business
day of the registrant’s most recently completed second fiscal quarter. $1,670,613.



As
of June 15, 2012, the registrant had outstanding 21,554,945 shares of its common stock, par value of $0.001.



DOCUMENTS
INCORPORATED BY REFERENCE



No
documents are incorporated by reference into this Report except those Exhibits so incorporated as set forth in the Exhibit index.


















EXPLANATORY
NOTE



We
filed our Annual Report on Form 10-K for the year ended April 30, 2012 on July 23, 2012 (the “original Report”) and
filed our first amended Annual Report on Form 10-K/A on July 27, 2012 solely to include XBRL disclosure. We are filing this Amendment
No. 2 on Form 10-K/A-2 (this “Amendment”) to make the following changes:



| | ● | Update
                                                                                                                                                                                                                      disclosure
                                                                                                                                                                                                                      in
                                                                                                                                                                                                                      Item
                                                                                                                                                                                                                      2
                                                                                                                                                                                                                      regarding
                                                                                                                                                                                                                      our
                                                                                                                                                                                                                      historical
                                                                                                                                                                                                                      production
                                                                                                                                                                                                                      and
                                                                                                                                                                                                                      our
                                                                                                                                                                                                                      use
                                                                                                                                                                                                                      of
                                                                                                                                                                                                                      a
                                                                                                                                                                                                                      third
                                                                                                                                                                                                                      party
                                                                                                                                                                                                                      engineer;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Update
                                                                                                                                                                                                                      disclosure
                                                                                                                                                                                                                      in
                                                                                                                                                                                                                      Item
                                                                                                                                                                                                                      11
                                                                                                                                                                                                                      regarding
                                                                                                                                                                                                                      executive
                                                                                                                                                                                                                      compensation;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Update
                                                                                                                                                                                                                      disclosure
                                                                                                                                                                                                                      in
                                                                                                                                                                                                                      Item
                                                                                                                                                                                                                      13
                                                                                                                                                                                                                      regarding
                                                                                                                                                                                                                      director
                                                                                                                                                                                                                      independence;
                                                                                                                                                                                                                      and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Add
                                                                                                                                                                                                                      additional
                                                                                                                                                                                                                      Exhibits
                                                                                                                                                                                                                      and
                                                                                                                                                                                                                      references
                                                                                                                                                                                                                      in
                                                                                                                                                                                                                      Item
                                                                                                                                                                                                                      15
                                                                                                                                                                                                                      for
                                                                                                                                                                                                                      Exhibits.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



This
Amendment is being filed in response to comments we received from the staff of the Division of Corporation Finance of the Securities
and Exchange Commission (the “SEC”) in connection with the staff’s review of the Original Report. We have made
no attempt in this Amendment to modify or update the disclosures presented in the Original Report other than as noted in the previous
paragraph. Also, this Amendment does not reflect events occurring after the filing of the Original Report. Accordingly, this Amendment
should be read in conjunction with the Original Report and our other filings with the SEC subsequent to the filing of the Original
Report.



2







NORTH
AMERICAN ENERGY RESOURCES, INC.



TABLE
OF CONTENTS



FORM
10-K



Part
I





|            |                                                                                                              |  | Page
|----------- | ------------------------------------------------------------------------------------------------------------ |  | ----
|PART I      |                                                                                                              |  |     
|Item
    1  | Business                                                                                                     |  | 4   
|Item
    1A | Risk Factors                                                                                                 |  | 10  
|Item
    2  | Properties                                                                                                   |  | 10  
|Item
    3  | Legal Proceedings                                                                                            |  | 15  
|Item
    4  | Removed and Reserved                                                                                         |  | 15  
|            |                                                                                                              |  |     
|PART II     |                                                                                                              |  |     
|Item
    5  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 16  
|Item
    6  | Selected Financial Data                                                                                      |  | 18  
|Item
    7  | Management’s Discussion and Analysis of Financial Condition and Results of Operation                         |  | 19  
|Item
    7A | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 23  
|Item
    8  | Financial Statements and Supplementary Data                                                                  |  | 24  
|Item
    9  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 25  
|Item
    9A | Controls and Procedures                                                                                      |  | 25  
|Item
    9B | Other Information                                                                                            |  | 25  
|            |                                                                                                              |  |     
|PART III    |                                                                                                              |  |     
|Item
    10 | Directors, Executive Officers and Corporate Governance                                                       |  | 26  
|Item
    11 | Executive Compensation                                                                                       |  | 28  
|Item
    12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 30  
|Item
    13 | Certain Relationships and Related Transactions, and Director Independence                                    |  | 32  
|Item
    14 | Principal Accountant Fees and Services                                                                       |  | 33  
|            |                                                                                                              |  |     
|PART IV     |                                                                                                              |  |     
|Item
    15 | Exhibits and Financial Statement Schedules                                                                   |  | 34  





3







From
time to time, we my publish forward-looking statements relative to such matters as anticipated financial results, business prospects,
technological developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. The following discussion and analysis should be read in conjunction with the report on the Consolidated
Financial Statements and the accompanying Notes to Consolidated Financial Statements appearing later in this report. All statements
other than statements of historical fact included in this Annual Report on Form 10-K are, or may be deemed to be, forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of
1934, as amended. Important factors that could cause actual results to differ materially from those discussed in such forward-looking
statements include, but are not limited to, the following: our current liquidity needs, as described in our periodic reports;
changes in the economy; our inability to raise additional capital; our involvement in potential litigation; volatility of our
stock price; the variability and timing of business opportunities; changes in accounting policies and practices; the effect of
internal organizational changes; adverse state and federal regulation and legislation; and the occurrence of extraordinary or
catastrophic events and terrorist acts. These factors and others involve certain risks and uncertainties that could cause actual
results or events to differ materially from management’s views and expectations. Inclusion of any information or statement
in this report does not necessarily imply that such information or statement is material. We do not undertake any obligation to
release publicly revised or updated forward-looking information, and such information included in this report is based on information
currently available and may not be reliable after this date.





PART
I



Item 1:Business



ORGANIZATION



North
American Energy Resources, Inc. (“NAEY” or the “Company”) was originally organized in Nevada on August 22,
2006 with the name Mar Ked Mineral Exploration, Inc. (“Mar Ked”). The Company changed its name from Mar Ked to North
American Energy Resources, Inc. on August 11, 2008.



NAEY
is an independent oil and natural gas company engaged in the acquisition, exploration and development of oil and natural gas properties
and the production of oil and natural gas. The Company operates in the upstream segment of the oil and gas industry which includes
the drilling, completion and operation of oil and gas wells. The Company has an interest in a pipeline in Washington County, Oklahoma
which is currently shut-in, but has been used to gather natural gas production. The Company’s gas production in Washington County,
Oklahoma was shut-in due to low prices in February 2009 and was sold effective October 1, 2010 along with the Company’s oil production
in the area. The Company has acquired an interest in a non-operated gas well in Texas County, Oklahoma and is continuing to seek
additional acquisition possibilities. The Company’s focus is on acquiring producing oil and gas properties or companies with development
potential.



At
a special meeting of shareholders held on April 23, 2009, 63% of our shareholders, either in person or by proxy, voted to approve
a 1:50 reverse split of the Company’s common stock. This amendment to the Company’s Articles of Incorporation was filed with the
Nevada Secretary of State and became effective on April 27, 2009. Accordingly, all references to shares of our common stock included
herein have been retroactively restated to give effect to the reverse split.



On
July 28, 2008, the Company acquired 100% of the outstanding stock of North American Exploration, Inc. (“NAE”) (formerly
Signature Energy, Inc.) for 420,000 shares of our common stock pursuant to a Stock Purchase Agreement (“SPA”). Completion
of the SPA resulted in the shareholders of NAE having control of NAEY. Accordingly, the transaction was recorded for accounting
purposes as the acquisition of NAE by NAEY with NAE as the acquirer (reverse acquisition). The financial statements of the Company
prior to July 28, 2008 are those of NAE. Formerly NAEY used a November 30 year-end. As a result of the reverse acquisition, the
Company chose to utilize the April 30 year-end of NAE after April 30, 2008.





4







NAE
was organized in Nevada on August 18, 2006 as Signature Energy, Inc. and changed its name to North American Exploration, Inc.
on June 2, 2008.



The
SPA provided that NAEY was to have $1,500,000 in cash and no liabilities at closing. At July 31, 2008, NAEY had $150,000 of the
required cash and on August 28, 2008, the parties to the SPA entered into a Modification Agreement (“MA”) which provided
an extension until January 27, 2009 for the additional cash to be contributed to the Company. At January 27, 2009, the Company
had received an additional $50,000 and was still short $1,300,000 of the amount agreed. The MA provided that the Buyer would make
contingent issuances of shares to the Seller equal to 95% of all the outstanding stock after issuance. Accordingly, effective
April 30, 2009, an additional 13,250,381 shares were issued to the Sellers. The total purchase price for NAE was 13,690,381 shares.



Mar
Ked was originally formed to acquire and explore mineral claims, principally in the Yukon Territory, Canada. All activity relating
to mining activity was abandoned when NAE was acquired.



Glossary
of Oil and Natural Gas Terms



The
definitions set forth below apply to the indicated terms as used in this report. All volumes of natural gas referred to herein
are stated at the legal pressure base of the state or area where the reserves exist and at 60 degrees Fahrenheit and in most
instances are rounded to the nearest major multiple.



Bbl.One stock tank barrel, or 42 U.S. gallons liquid volume, used herein in reference to crude oil or other liquid hydrocarbons.



Bcf.One billion cubic feet of natural gas.



Boe.Barrels of oil equivalent in which six Mcf of natural gas equals one Bbl of oil.



Btu.
British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water from 58.5 to 59.5 degrees
Fahrenheit.



Completion.The installation of permanent equipment for the production of oil or natural gas or, in the case of a dry hole, the reporting
of abandonment to the appropriate agency.



Development
well. A well drilled within the proved areas of an oil or natural gas reservoir to the depth of a stratigraphic horizon known
to be productive.



Dry
hole or well. A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the
sale of such production exceed production expenses and taxes.



Exploratory
well. A well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or
natural gas in another reservoir.



Field.An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological
structural feature and/or stratigraphic condition.



Gross
acres or gross wells. The total acres or wells, as the case may be, in which a working interest is owned.



MBbls.One thousand barrels of crude oil or other liquid hydrocarbons.



MBoe.One thousand Boe.



MMBoe.One million Boe.



Mcf.One thousand cubic feet of natural gas.



5







MMBbls.One million barrels of crude oil or other liquid hydrocarbons.



MMBtu.
One million Btus.



MMcf.One million cubic feet of natural gas.



Net
acres or net wells. The sum of the fractional working interests owned in gross acres or gross wells, as the case may be.



Operator.
The individual or company responsible for the exploration, exploitation and production of an oil or natural gas well or lease.



PV-10
Value. When used with respect to oil and natural gas reserves, the estimated future gross revenues to be generated from the
production of proved reserves, net of estimated production and future development costs, using the guidelines provided by the
SEC with prices provided in this report and costs applicable as of the date indicated, without giving effect to non-property related
expenses such as general and administrative expenses, debt service and future income tax expenses or to depreciation, depletion
and amortization, discounted using an annual discount rate of 10%.



Productive
well. A well that is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale
of such production exceed production expenses and taxes.



Proved
developed producing reserves. (“PDP”) Proved developed reserves that are expected to be recovered from completion
intervals currently open in existing wells and capable of production.



Proved
developed non producing reserves. (“PDNP”) Proved reserves that are expected to be recovered from existing wellbores,
whether or not currently producing, without drilling additional wells. Production of such reserves may require a recompletion.



Proved
reserves. Those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated
with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing
economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right
to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic
methods are used for estimation.



Proved
undeveloped location. A site on which a development well can be drilled consistent with spacing rules for purposes of recovering
proved undeveloped reserves.



Proved
undeveloped reserves. (“PUD”) Proved reserves that are expected to be recovered from new wells on undrilled acreage
or from existing wells where a relatively major expenditure is required.



Recompletion.The completion for production of an existing wellbore in another formation from that in which the well has been previously
completed.



Reserve
life. A ratio determined by dividing our estimated existing reserves determined as of the stated measurement date by production
from such reserves for the prior twelve month period.



Reservoir.A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is
confined by impermeable rock or water barriers and is individual and separate from other reservoirs.



3-D
seismic. The method by which a three dimensional image of the earth’s subsurface is created through the interpretation
of reflection seismic data collected over a surface grid. 3-D seismic surveys allow for a more detailed understanding of the subsurface
than do conventional surveys and contribute significantly to field appraisal, exploitation and production.



6







Undeveloped
acreage. Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial
quantities of oil and natural gas regardless of whether such acreage contains proved reserves.



Working
interest. The operating interest that gives the owner the right to drill, produce and conduct operating activities on the
property and a share of production.



Workover.Operations on a producing well to restore or increase production.



OIL
AND GAS DRILLING PROSPECTS



NAE
is an independent oil and natural gas company engaged in the acquisition, exploration and development of oil and natural gas properties
and the production of oil and natural gas. The Company operates in the upstream segment of the oil and gas industry which includes
the drilling, completion and operation of oil and gas wells. The Company has an interest in a pipeline in Washington County, Oklahoma
which is currently shut-in, but has been used to gather natural gas production. The Company’s gas production in Washington County,
Oklahoma was shut-in due to low prices in February 2009 and was sold effective October 1, 2010 along with the Company’s oil production
in the area. The Company has acquired an interest in a non-operated gas well in Texas County, Oklahoma and is continuing to seek
additional acquisition possibilities.



DEVELOPMENT
STAGE COMPANY



We
are considered a development stage company because we have had limited resources and do not currently have sufficient capital
to complete our business plan, which includes acquiring and operating producing properties with development potential. Accordingly,
the operations of the Companies are presented as those of a development stage enterprise, from inception (August 18, 2006).



OTHER



Our
principal executive office is located at 1535 Soniat St. New Orleans, La 70115 and our telephone number is (504) 561-1151.



FINANCIAL
POSITION AND FUTURE FINANCING NEEDS



We
are a development stage company. We have a limited history in the oil and gas development and production business.



We
have not established sources of revenues sufficient to fund the development of business, projected operating expenses and commitments
for our fiscal year ending April 30, 2012. We have been in the development stage since our inception, August 18, 2006, have accumulated
a net loss of $3,628,467 through April 30, 2012, and incurred a loss of $655,449 for the year then ended.



The
Company’s strategy to raise additional funds include: sales of its common stock or preferred stock in private transactions, sales
of its common or preferred stock in public transactions or to borrow the funds. Any such potential transactions would be as needed
to raise sufficient capital to fund acquisitions and the development of business, projected operating expenses and commitments.
However, there can be no assurance that we will be able to obtain sufficient funding to develop our current business plan.



COMPETITION



The
Company expects to concentrate the majority of its resources on oil and gas development and production. The Company is much smaller
than most participants in this industry and has now retained individuals with expertise in operating an energy business and performing
the steps necessary to complete its business plan.



7







GOVERNMENTAL
REGULATIONS, APPROVAL, COMPLIANCE



When
we elect to participate directly in development of oil and gas properties, our operations are subject to various types of regulation
at the federal, state and local levels. Such regulations includes requiring permits for the drilling of wells; maintaining bonding
requirements in order to drill or operate wells; implementing spill prevention plans; submitting notification
and receiving permits relating to the presence, use and release of certain materials incidental to oil and gas operations; and
regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids
and materials used in connection with drilling and production activities, surface usage and the restoration of properties upon
which wells have been drilled, the plugging and abandoning of wells and the transporting of production. Our operations will also
be subject to various conservation matters, including the regulation of the size of drilling and spacing units or pro-ration units,
the number of wells which may be drilled in a unit, and the unitization or pooling of oil and gas properties. In this regard,
some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling
of lands and leases, which may make it more difficult to develop oil and gas properties. In addition, state conservation laws
establish maximum rates of production from oil and gas wells, generally limit the venting or flaring of gas, and impose certain
requirements regarding the ratable purchase of production. The effect of these regulations is to limit the amounts of oil and
gas we may be able to produce from our wells and to limit the number of wells or the locations at which we may be able to drill.



Our
business is affected by numerous laws and regulations, including energy, environmental, conservation, tax and other laws and regulations
relating to the oil and gas industry. We plan to develop internal procedures and policies to ensure that our operations are conducted
in full and substantial environmental regulatory compliance.



Failure
to comply with any laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition
of injunctive relief or both. Moreover, changes in any of these laws and regulations could have a material adverse effect on business.
In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us,
we cannot predict the overall effect of such laws and regulations on our future operations.



We
believe that our operations comply in all material respects with applicable laws and regulations and that the existence and enforcement
of such laws and regulations have no more restrictive an effect on our operations than on other similar companies in the energy
industry. We do not anticipate any material capital expenditures to comply with federal and state environmental requirements.



ENVIRONMENTAL



Operations
on properties in which we have an interest are subject to extensive federal, state and local environmental laws that regulate
the discharge or disposal of materials or substances into the environment and otherwise are intended to protect the environment.
Numerous governmental agencies issue rules and regulations to implement and enforce such laws, which are often difficult and costly
to comply with and which carry substantial administrative, civil and criminal penalties and in some cases injunctive relief for
failure to comply.



Some
laws, rules and regulations relating to the protection of the environment may, in certain circumstances, impose “strict
liability” for environmental contamination. These laws render a person or company liable for environmental and natural resource
damages, cleanup costs and, in the case of oil spills in certain states, consequential damages without regard to negligence or
fault. Other laws, rules and regulations may require the rate of oil and gas production to be below the economically optimal rate
or may even prohibit exploration or production activities in environmentally sensitive areas. In addition, state laws often require
some form of remedial action, such as closure of inactive pits and plugging of abandoned wells, to prevent pollution from former
or suspended operations.



8







Legislation
has been proposed in the past and continues to be evaluated in Congress from time to time that would reclassify certain oil and
gas exploration and production wastes as “hazardous wastes.” This reclassification would make these wastes subject
to much more stringent storage, treatment, disposal and clean-up requirements, which could have a significant adverse impact on
operating costs. Initiatives to further regulate the disposal of oil and gas wastes are also proposed in certain states from time
to time and may include initiatives at the county, municipal and local government levels. These various initiatives could have
a similar adverse impact on operating costs.



The
regulatory burden of environmental laws and regulations increases our cost and risk of doing business and consequently affects
our profitability. The federal Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, also known as
the “Superfund” law, imposes liability, without regard to fault, on certain classes of persons with respect to the
release of a “hazardous substance” into the environment. These persons include the current or prior owner or operator
of the disposal site or sites where the release occurred and companies that transported, disposed or arranged for the transport
or disposal of the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances
under CERCLA may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been
released into the environment and for damages to natural resources, and it is not uncommon for the federal or state government
to pursue such claims.



It
is also not uncommon for neighboring landowners and other third parties to file claims for personal injury or property or natural
resource damages allegedly caused by the hazardous substances released into the environment. Under CERCLA, certain oil and gas
materials and products are, by definition, excluded from the term “hazardous substances.” At least two federal courts
have held that certain wastes associated with the production of crude oil may be classified as hazardous substances under CERCLA.
Similarly, under the federal Resource, Conservation and Recovery Act, or RCRA, which governs the generation, treatment, storage
and disposal of “solid wastes” and “hazardous wastes,” certain oil and gas materials and wastes are exempt
from the definition of “hazardous wastes.” This exemption continues to be subject to judicial interpretation and increasingly
stringent state interpretation. During the normal course of operations on properties in which we have an interest, exempt and
non-exempt wastes, including hazardous wastes, that are subject to RCRA and comparable state statutes and implementing regulations
are generated or have been generated in the past. The federal Environmental Protection Agency and various state agencies continue
to promulgate regulations that limit the disposal and permitting options for certain hazardous and non-hazardous wastes.



We
plan to establish guidelines and management systems to ensure compliance with environmental laws, rules and regulations if we
participate directly in the development of oil and gas resources. The existence of these controls cannot, however, guarantee total
compliance with environmental laws, rules and regulations. We will rely on the operator of the properties in which we have an
interest to be in substantial compliance with applicable laws, rules and regulations relating to the control of air emissions
at all facilities on those properties. Although we plan to maintain insurance against some, but not all, of the risks described
above, including insuring the costs of clean-up operations, public liability and physical damage, there is no assurance that our
insurance will be adequate to cover all such costs, that the insurance will continue to be available in the future or that the
insurance will be available at premium levels that justify our purchase. The occurrence of a significant event not fully insured
or indemnified against could have a material adverse effect on our financial condition and operations. Compliance with environmental
requirements, including financial assurance requirements and the costs associated with the cleanup of any spill, could have a
material adverse effect on our capital expenditures, earnings or competitive position. We do believe, however, that our operators
are in substantial compliance with current applicable environmental laws and regulations. Nevertheless, changes in environmental
laws have the potential to adversely affect operations. At this time, we have no plans to make any material capital expenditures
for environmental control facilities.



Employees



Unless
an acquisition is completed, it is anticipated that the only active employees of this business in the near future will be its
Chief Executive Officer and its President and Chief Financial Officer. All other operative functions, such as acquiring leaseholds,
creating joint ventures and development and production of oil and gas will be handled by the Chief Executive Officer and its President
and Chief Financial Officer or independent contractors and consultants.



9







Item
1A: RISK FACTORS



Not
applicable.



Item
2: PropertIES



The
Company’s oil and gas business is primarily involved in the development and production of oil and gas. As of April 30, 2012,
we have 160 acres under lease in Texas County, Oklahoma which includes 1 producing gas well. The Company’s current focus is to
identify, evaluate, and obtain financing to potentially acquire producing oil and gas properties with development potential.



Proved
Reserves and Estimated Future Net Revenue



The
following table sets forth our estimated proved reserves and the related estimated pre-tax future net revenues, pre-tax 10% present
value and after-tax standardized measure of discounted future net cash flows as of April 30, 2012. These estimates correspond
with the method used in presenting the “Supplemental Information on Oil and Gas Operations” in Note 10 to our consolidated
financial statements included herein. At April 30, 2012, 100% of the proved reserves have been classified as proved developed
producing (“PDP”). There are no proved developed non-producing (“PDNP”) reserves.



|                                                                |  | Total    |        |  | Proved    |   |        | Proved      | 
|--------------------------------------------------------------- |  | -------- | ------ |  | --------- | - | ------ | ----------- | 
|                                                                |  | Proved   |        |  | Developed |   |        | Undeveloped | 
|                                                                |  | Reserves |        |  | Reserves  |   |        | Reserves    | 
|Total Reserves                                                  |  |          |        |  |           |   |        |             | 
|Oil (BBLs)                                                      |  |          | -      |  |           |   | -      |             | 
|Gas (MCF)                                                       |  |          | 12,679 |  |           |   | 12,679 |             | 
|BOE (1)                                                         |  |          | 2,113  |  |           |   | 2,113  |             | 
|Pre-tax future net revenue (2)                                  |  | $        | 9,021  |  |           | $ | 9,021  |             | 
|Pre-tax 10% present value (2)                                   |  |          | 4,671  |  |           |   | 4,671  |             | 
|Standardized measure of discounted future net cash flows (2)(3) |  | $        | 4,671  |  |           | $ | 4,671  |             | 





| | (1) | Gas
                                                                                                                                                                                                                  reserves
                                                                                                                                                                                                                  are
                                                                                                                                                                                                                  converted
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  barrels
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  oil
                                                                                                                                                                                                                  equivalent
                                                                                                                                                                                                                  (“BOE”)
                                                                                                                                                                                                                  at
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  rate
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  six
                                                                                                                                                                                                                  MCF
                                                                                                                                                                                                                  per
                                                                                                                                                                                                                  BBL
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  oil,
                                                                                                                                                                                                                  based
                                                                                                                                                                                                                  upon
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  approximate
                                                                                                                                                                                                                  relative
                                                                                                                                                                                                                  energy
                                                                                                                                                                                                                  content
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  natural
                                                                                                                                                                                                                  gas
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  oil,
                                                                                                                                                                                                                  which
                                                                                                                                                                                                                  rate
                                                                                                                                                                                                                  is
                                                                                                                                                                                                                  not
                                                                                                                                                                                                                  necessarily
                                                                                                                                                                                                                  indicative
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  relationship
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  gas
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  oil
                                                                                                                                                                                                                  prices.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Estimated
                                                                                                                                                                                                                  pre-tax
                                                                                                                                                                                                                  future
                                                                                                                                                                                                                  net
                                                                                                                                                                                                                  revenue
                                                                                                                                                                                                                  represents
                                                                                                                                                                                                                  estimated
                                                                                                                                                                                                                  future
                                                                                                                                                                                                                  revenue
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  be
                                                                                                                                                                                                                  generated
                                                                                                                                                                                                                  from
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  production
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  proved
                                                                                                                                                                                                                  reserves,
                                                                                                                                                                                                                  net
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  estimated
                                                                                                                                                                                                                  production
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  development
                                                                                                                                                                                                                  costs
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  site
                                                                                                                                                                                                                  restoration
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  abandonment
                                                                                                                                                                                                                  charges.
                                                                                                                                                                                                                  The
                                                                                                                                                                                                                  amounts
                                                                                                                                                                                                                  shown
                                                                                                                                                                                                                  do
                                                                                                                                                                                                                  not
                                                                                                                                                                                                                  give
                                                                                                                                                                                                                  effect
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  depreciation,
                                                                                                                                                                                                                  depletion
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  amortization,
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  non-property
                                                                                                                                                                                                                  related
                                                                                                                                                                                                                  expenses
                                                                                                                                                                                                                  such
                                                                                                                                                                                                                  as
                                                                                                                                                                                                                  debt
                                                                                                                                                                                                                  service
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  income
                                                                                                                                                                                                                  tax
                                                                                                                                                                                                                  expense.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | See
                                                                                                                                                                                                                  Note
                                                                                                                                                                                                                  11
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  consolidated
                                                                                                                                                                                                                  financial
                                                                                                                                                                                                                  statements
                                                                                                                                                                                                                  included
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  Item
                                                                                                                                                                                                                  8.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



No
estimates of our proved reserves have previously been filed with or included in reports to any federal governmental authority
or agency except for our Form 10-K for the years ended April 30, 2011, 2010 and 2009.



The
prices used in calculating the estimated future net revenues attributable to proved reserves do not necessarily reflect market
prices for oil and gas production subsequent to April 30, 2012. There can be no assurance that all of the proved reserves will
be produced and sold within the periods indicated, that the assumed prices will be realized or that existing contracts will be
honored or judicially enforced.



10







Proved
Reserves Disclosures



Recent
SEC Rule-Making Activity. In December 2008, the SEC announced that it had approved revisions to modernize the oil and gas
reserve reporting disclosures. The new disclosure requirements include provisions that:



| | ● | Introduce
                                                                                                                                                                                                                     a
                                                                                                                                                                                                                     new
                                                                                                                                                                                                                     definition
                                                                                                                                                                                                                     of
                                                                                                                                                                                                                     oil
                                                                                                                                                                                                                     and
                                                                                                                                                                                                                     gas
                                                                                                                                                                                                                     producing
                                                                                                                                                                                                                     activities.
                                                                                                                                                                                                                     This
                                                                                                                                                                                                                     new
                                                                                                                                                                                                                     definition
                                                                                                                                                                                                                     allows
                                                                                                                                                                                                                     companies
                                                                                                                                                                                                                     to
                                                                                                                                                                                                                     include
                                                                                                                                                                                                                     in
                                                                                                                                                                                                                     their
                                                                                                                                                                                                                     reserve
                                                                                                                                                                                                                     base
                                                                                                                                                                                                                     volumes
                                                                                                                                                                                                                     from
                                                                                                                                                                                                                     unconventional
                                                                                                                                                                                                                     resources.
                                                                                                                                                                                                                     Such
                                                                                                                                                                                                                     unconventional
                                                                                                                                                                                                                     reserves
                                                                                                                                                                                                                     include
                                                                                                                                                                                                                     bitumen
                                                                                                                                                                                                                     extracted
                                                                                                                                                                                                                     from
                                                                                                                                                                                                                     oil
                                                                                                                                                                                                                     sands
                                                                                                                                                                                                                     and
                                                                                                                                                                                                                     oil
                                                                                                                                                                                                                     and
                                                                                                                                                                                                                     gas
                                                                                                                                                                                                                     extracted
                                                                                                                                                                                                                     from
                                                                                                                                                                                                                     coal
                                                                                                                                                                                                                     beds
                                                                                                                                                                                                                     and
                                                                                                                                                                                                                     shale
                                                                                                                                                                                                                     formations.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Report
                                                                                                                                                                                                                     oil
                                                                                                                                                                                                                     and
                                                                                                                                                                                                                     gas
                                                                                                                                                                                                                     reserves
                                                                                                                                                                                                                     using
                                                                                                                                                                                                                     an
                                                                                                                                                                                                                     un-weighted
                                                                                                                                                                                                                     average
                                                                                                                                                                                                                     price
                                                                                                                                                                                                                     using
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     prior
                                                                                                                                                                                                                     12-month
                                                                                                                                                                                                                     period,
                                                                                                                                                                                                                     based
                                                                                                                                                                                                                     on
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     closing
                                                                                                                                                                                                                     prices
                                                                                                                                                                                                                     on
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     first
                                                                                                                                                                                                                     day
                                                                                                                                                                                                                     of
                                                                                                                                                                                                                     each
                                                                                                                                                                                                                     month,
                                                                                                                                                                                                                     rather
                                                                                                                                                                                                                     than
                                                                                                                                                                                                                     year-end
                                                                                                                                                                                                                     prices.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Permit
                                                                                                                                                                                                                     companies
                                                                                                                                                                                                                     to
                                                                                                                                                                                                                     disclose
                                                                                                                                                                                                                     their
                                                                                                                                                                                                                     probable
                                                                                                                                                                                                                     and
                                                                                                                                                                                                                     possible
                                                                                                                                                                                                                     reserves
                                                                                                                                                                                                                     on
                                                                                                                                                                                                                     a
                                                                                                                                                                                                                     voluntary
                                                                                                                                                                                                                     basis.
                                                                                                                                                                                                                     In
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     past,
                                                                                                                                                                                                                     proved
                                                                                                                                                                                                                     reserves
                                                                                                                                                                                                                     were
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     only
                                                                                                                                                                                                                     reserves
                                                                                                                                                                                                                     allowed
                                                                                                                                                                                                                     in
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     disclosures.
                                                                                                                                                                                                                     (We
                                                                                                                                                                                                                     have
                                                                                                                                                                                                                     chosen
                                                                                                                                                                                                                     not
                                                                                                                                                                                                                     to
                                                                                                                                                                                                                     make
                                                                                                                                                                                                                     disclosure
                                                                                                                                                                                                                     under
                                                                                                                                                                                                                     these
                                                                                                                                                                                                                     categories.)
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Requires
                                                                                                                                                                                                                     companies
                                                                                                                                                                                                                     to
                                                                                                                                                                                                                     provide
                                                                                                                                                                                                                     additional
                                                                                                                                                                                                                     disclosure
                                                                                                                                                                                                                     regarding
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     aging
                                                                                                                                                                                                                     of
                                                                                                                                                                                                                     proved
                                                                                                                                                                                                                     undeveloped
                                                                                                                                                                                                                     reserves.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Permit
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     use
                                                                                                                                                                                                                     of
                                                                                                                                                                                                                     reliable
                                                                                                                                                                                                                     technologies
                                                                                                                                                                                                                     to
                                                                                                                                                                                                                     determine
                                                                                                                                                                                                                     proved
                                                                                                                                                                                                                     reserves
                                                                                                                                                                                                                     if
                                                                                                                                                                                                                     those
                                                                                                                                                                                                                     technologies
                                                                                                                                                                                                                     have
                                                                                                                                                                                                                     been
                                                                                                                                                                                                                     demonstrated
                                                                                                                                                                                                                     empirically
                                                                                                                                                                                                                     to
                                                                                                                                                                                                                     lead
                                                                                                                                                                                                                     to
                                                                                                                                                                                                                     reliable
                                                                                                                                                                                                                     conclusions
                                                                                                                                                                                                                     about
                                                                                                                                                                                                                     reserve
                                                                                                                                                                                                                     volumes.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Replace
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     existing
                                                                                                                                                                                                                     “certainty”
                                                                                                                                                                                                                     test
                                                                                                                                                                                                                     for
                                                                                                                                                                                                                     areas
                                                                                                                                                                                                                     beyond
                                                                                                                                                                                                                     one
                                                                                                                                                                                                                     offsetting
                                                                                                                                                                                                                     drilling
                                                                                                                                                                                                                     unit
                                                                                                                                                                                                                     from
                                                                                                                                                                                                                     a
                                                                                                                                                                                                                     productive
                                                                                                                                                                                                                     well
                                                                                                                                                                                                                     with
                                                                                                                                                                                                                     a
                                                                                                                                                                                                                     “reasonable
                                                                                                                                                                                                                     certainty”
                                                                                                                                                                                                                     test.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Require
                                                                                                                                                                                                                     additional
                                                                                                                                                                                                                     disclosures
                                                                                                                                                                                                                     regarding
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     qualifications
                                                                                                                                                                                                                     of
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     chief
                                                                                                                                                                                                                     technical
                                                                                                                                                                                                                     person
                                                                                                                                                                                                                     who
                                                                                                                                                                                                                     oversees
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     company’s
                                                                                                                                                                                                                     overall
                                                                                                                                                                                                                     reserve
                                                                                                                                                                                                                     estimation
                                                                                                                                                                                                                     process.
                                                                                                                                                                                                                     Additionally,
                                                                                                                                                                                                                     disclosures
                                                                                                                                                                                                                     regarding
                                                                                                                                                                                                                     internal
                                                                                                                                                                                                                     controls
                                                                                                                                                                                                                     over
                                                                                                                                                                                                                     reserve
                                                                                                                                                                                                                     estimation,
                                                                                                                                                                                                                     as
                                                                                                                                                                                                                     well
                                                                                                                                                                                                                     as
                                                                                                                                                                                                                     a
                                                                                                                                                                                                                     report
                                                                                                                                                                                                                     addressing
                                                                                                                                                                                                                     the
                                                                                                                                                                                                                     independence
                                                                                                                                                                                                                     and
                                                                                                                                                                                                                     qualifications
                                                                                                                                                                                                                     of
                                                                                                                                                                                                                     its
                                                                                                                                                                                                                     reserves
                                                                                                                                                                                                                     preparer
                                                                                                                                                                                                                     or
                                                                                                                                                                                                                     auditor
                                                                                                                                                                                                                     will
                                                                                                                                                                                                                     be
                                                                                                                                                                                                                     mandatory.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We
adopted the rules effective April 30, 2010.



Internal
Controls Over Reserve Estimates.Our reserve estimates were prepared by an independent petroleum consulting firm who was engaged
to audit our reserves as of May 1, 2011. The 2011 reserve estimate was prepared by, and overseen by Gary Christopher of Christopher
Energy, LLC, an independent third party engineering firm. It was reviewed by the Company’s President. Mr. Christopher has
a petroleum engineering degree, and over 38 years of experience in the energy industry. Mr. Christopher’s industry experience
has been diverse: he has experience as a drilling engineer, production engineer, reservoir engineer, an acquisitions advisor,
and an energy lending professional. Mr. Christopher has also served as President and CEO of a publicly traded oil and natural
gas company and now serves on the audit committee of a NYSE publicly traded oil and natural gas company. He currently consults
on financial and engineering matters in the oil and natural gas industry. We updated our reserves at May 1, 2012 using the new
pricing guidelines required by the SEC and the same decline curve utilized by the independent petroleum consulting firm at May
1, 2011. Our President, with over 13 years’ experience as a petroleum engineer, oversaw the preparation of our 2012 reserve
estimate.



Production



We
acquired an interest in a non-operated gas well in Texas County, Oklahoma on November 1, 2010 and it represents our current production.



Project
Summary



The
Company acquired an interest in a non-operated gas well and continues to evaluate other investment opportunities.



11







Acreage



The
following table summarizes gross and net developed acreage at April 30, 2012 and 2011.



|                       |  | Developed Acreage |    
|---------------------- |  | ----------------- | ---
|                       |  | Gross             |    
|Texas County, Oklahoma |  |                   | 160





Production
History



The
following table presents the historical information about our natural gas and oil production volumes.



|                                   |  | Year ended April 30, |      
|---------------------------------- |  | -------------------- | -----
|                                   |  | 2012                 |      
|Oil production (BBLs)              |  |                      | -    
|Gas production (MCF)               |  |                      | 751  
|Total production (BOE)             |  |                      | 125  
|Daily production (BOE/d)           |  |                      | 0.34 
|Average sales price:               |  |                      |      
|Oil (per BBL)                      |  | $                    | -    
|Gas (per MCF)                      |  | $                    | 2.79 
|Total (per BOE)                    |  | $                    | 16.74
|Average production cost (per BOE)  |  | $                    | 8.57 
|Average production taxes (per BOE) |  | $                    | 1.21 



The
average oil sales price amounts above are calculated by dividing revenue from oil sales by the volume of oil sold in BBLs. The
average gas price amounts above are calculated by dividing revenue from gas sales by the volume of gas sold in MCF. The total
average sales price amounts above are calculated by dividing total revenues by total volume sold in BOE. The average production
costs and average production taxes above are calculated by dividing production costs by total production in BOE.



Productive
wells



The
following table presents our ownership at April 30, 2012 and 2011, in oil and natural gas wells (a net well is our percentage
ownership of a gross well).



|     |      |  |  |          | Oil wells |  |   | Gas wells |  |  | Total wells | 
|---- | ---- |  |  | -------- | --------- |  | - | --------- |  |  | ----------- | 
|Year |      |  |  |          | Gross     |  |   | Net       |  |  | Gross       | 
|     |      |  |  |          |           |  |   |           |  |  |             | 
|     | 2012 |  |  | Oklahoma |           |  | - |           |  |  | -           | 
|     | 2011 |  |  | Oklahoma |           |  | - |           |  |  | -           | 



Drilling
Activities



We
did not participate in any drilling activities during 2012 or 2011.





12







Cost
information



We
conduct our oil and natural gas activities entirely in the United States and to date only in Oklahoma. Costs incurred for property
acquisition, exploration and development activities during the years ended April 30, 2012 and 2011 are shown below.



|                                        |  | For the years ended April 30, |  
|--------------------------------------- |  | ----------------------------- | -
|                                        |  | 2012                          |  
|Acquisition of proved properties        |  | $                             | -
|Acquisition on non-producing properties |  |                               | -
|Development costs                       |  |                               | -
|Total costs incurred                    |  | $                             | -



Reserve
Quantity Information



Our
estimates of proved reserves and valuation were prepared by an independent petroleum consultant, Christopher Energy in 2011. Those
estimates were updated internally in 2012 by updating the oil and gas prices. The estimates of proved reserves are inherently
imprecise and continually subject to revision based on production history, results of additional exploration and development,
price changes and other factors. Our oil and natural gas reserves are attributed solely to properties within the United States.
A summary of the changes in quantities of proved developed oil and natural gas reserves is shown below.



|                                 |  |            |        |   | Natural Gas | 
|-------------------------------- |  | ---------- | ------ | - | ----------- | 
|                                 |  | Oil (BBLs) |        |   | (MCF)       | 
|Balance, April 30, 2010          |  |            | 2,250  |   |             | 
|Acquisition of minerals in place |  |            | -      |   |             | 
|Sales of properties              |  |            | (2,186 | ) |             | 
|Production                       |  |            | (64    | ) |             | 
|Revisions of estimates           |  |            | -      |   |             | 
|Balance, April 30, 2011          |  |            | -      |   |             | 
|Production                       |  |            | -      |   |             | 
|Revisions of estimates           |  |            | -      |   |             | 
|Balance, April 30, 2012          |  |            | -      |   |             | 



Standardized
Measure of Discounted Future Net Cash Flows



Our
standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves and changes in the standardized
measure as described below were prepared in accordance with generally accepted accounting principles.



Future
income tax expenses are calculated by applying appropriate year-end tax rates to future pre-tax net cash flows relating to proved
oil and natural gas reserves, less the tax basis of properties involved. Future income tax expenses give effect to permanent differences,
tax credits and loss carryforwards relating to the proved oil and natural gas reserves. Future net cash flows are discounted at
a rate of 10% annually to derive the standardized measure of discounted future net cash flows. This calculation procedure does
not necessarily result in an estimate of the fair market value or the present value of our oil and natural gas properties. Future
income tax expenses were not included due to the Company’s net operating loss carryforwards.



13







The
standardized measure of discounted future net cash flows relating to the proved oil and natural gas reserves are shown below.



|                                                       |  | For the years ended April 30, |        
|------------------------------------------------------ |  | ----------------------------- | -------
|                                                       |  | 2012                          |        
|Future cash flows                                      |  | $                             | 35,375 
|Future production costs                                |  |                               | (26,354
|Future income taxes                                    |  |                               | -      
|Future net cash flows                                  |  |                               | 9,021  
|10% annual discount for estimated timing of cash flows |  |                               | (4,350 
|Standardized Measure of Discounted Cash Flows          |  | $                             | 4,671  



The
changes in the standardized measure of discounted future net cash flows relating to the proved oil and natural gas reserves are
shown below.



|                                                       |  | For the years ended April 30, |      
|------------------------------------------------------ |  | ----------------------------- | -----
|                                                       |  | 2012                          |      
|Beginning of year                                      |  | $                             | 5,690
|Purchase of minerals in place                          |  |                               | -    
|Sale of properties                                     |  |                               | -    
|Development costs incurred during the year             |  |                               | -    
|Sales of oil and gas produced, net of production costs |  |                               | (991 
|Impairments                                            |  |                               | -    
|Net changes in price and production costs              |  |                               | (28  
|Revision of previous quantity estimates                |  |                               | -    
|End of year                                            |  | $                             | 4,671



Management’s
Business Strategy Related to Properties



Our
goal is to focus on acquiring oil properties with existing production and upside drilling and re-development potential, initially
primarily in the Gulf Coast area.



Title
to Properties



Title
to properties is subject to contractual arrangements customary in the oil and gas industry, liens for current taxes not yet due
and, in some instances, other encumbrances. We believe that such burdens do not materially detract from the value of such properties
or from the respective interests therein or materially interfere with their use in the operation of the business.



As
is customary in the industry, other than a preliminary review of local records, little investigation of record title is made at
the time of acquisitions of undeveloped properties. Investigations, which generally include a title opinion of outside counsel,
are made prior to the consummation of an acquisition of producing properties and before commencement of drilling operations on
undeveloped properties.



IMPAIRMENTS



In
2011, the Company recorded an impairment of $46,894 on its properties in Washington County, Oklahoma to adjust the carrying value
to the proceeds received on sale of the properties.



OTHER



The
Company’s corporate office is maintained at 1535 Soniat St., New Orleans, LA 70115 on a month-to-month basis at a cost of $2,000
per month until May 31, 2012 and $250 per month thereafter.



14







Item
3: LEGAL PROCEEDINGS



There
are no pending or threatened lawsuits against us.



Item
4: REMOVED AND RESERVED



15







PART
II



|Item 5: |  | MArket
                                                                                                                                                                                     for
                                                                                                                                                                                     REGISTRANT’S
                                                                                                                                                                                     Common
                                                                                                                                                                                     Equity,
                                                                                                                                                                                     Related
                                                                                                                                                                                     Stockholder
                                                                                                                                                                                     Matters
                                                                                                                                                                                     and
                                                                                                                                                                                     issuer
                                                                                                                                                                                     purchases
                                                                                                                                                                                     of
                                                                                                                                                                                     equity
                                                                                                                                                                                     securities
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(a) |  | MARKET INFORMATION
|--- |  | ------------------



Our
$0.001 par value per share common stock is traded in the over-the-counter market and is quoted on the OTCQB under the symbol “NAEY.”
Until we began trading on July 24, 2007, there was no public market for our common stock. Previously we traded under the symbol
NAEN.



The
following table sets forth the quarterly high and low daily close for our common stock as reported by the OTCQB for the two years
ended April 30, 2012 and 2011. The bids reflect inter dealer prices without adjustments for retail mark-ups, mark-downs or commissions
and may not represent actual transactions.



|Period (Quarter ended) |  | High |      |  | Low |  
|---------------------- |  | ---- | ---- |  | --- | -
|                       |  |      |      |  |     |  
|2012                   |  |      |      |  |     |  
|April 30, 2012         |  | $    | 0.10 |  |     | $
|January 31, 2012       |  | $    | 0.20 |  |     | $
|October 31, 2011       |  | $    | 0.10 |  |     | $
|July 31, 2011          |  | $    | 0.08 |  |     | $
|                       |  |      |      |  |     |  
|2011                   |  |      |      |  |     |  
|April 30, 2011         |  | $    | 0.12 |  |     | $
|January 31, 2011       |  | $    | 0.12 |  |     | $
|October 31, 2010       |  | $    | 0.04 |  |     | $
|July 31, 2010          |  | $    | 0.04 |  |     | $



The
OTCQB is the middle tier of the OTC market. OTCQB companies report to the SEC, making it easy for investors to identify companies
that are current in their reporting obligations. There are no financial or qualitative standards to be in this tier. OTCQB securities
may also be quoted on the FINRA.BB. The OTCQB allows investors to easily identify reporting companies traded in the OTC market
regardless of where they are quoted.



PENNY
STOCK CONSIDERATIONS



Our
shares will be “penny stocks” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity
securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure
requirements on broker-dealers who engage in certain transactions involving a penny stock.



(1)
In general.No broker or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect
any transaction in, or to induce or attempt to induce the purchase or sale of, any penny stock by any customer except in accordance
with the requirements below.



(2)
Risk disclosure with respect to penny stocks. Prior to effecting any transaction in any penny stock, a broker or dealer
shall give the customer a risk disclosure document that -



| | a) | contains
                                                                                                                                                                                                                  a
                                                                                                                                                                                                                  description
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  nature
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  level
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  risk
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  market
                                                                                                                                                                                                                  for
                                                                                                                                                                                                                  penny
                                                                                                                                                                                                                  stocks
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  both
                                                                                                                                                                                                                  public
                                                                                                                                                                                                                  offerings
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  secondary
                                                                                                                                                                                                                  trading;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | b) | contains
                                                                                                                                                                                                                  a
                                                                                                                                                                                                                  description
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  broker’s
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  dealer’s
                                                                                                                                                                                                                  duties
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  customer
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  rights
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  remedies
                                                                                                                                                                                                                  available
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  customer
                                                                                                                                                                                                                  with
                                                                                                                                                                                                                  respect
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  violations
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  such
                                                                                                                                                                                                                  duties
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  other
                                                                                                                                                                                                                  requirements
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  Federal
                                                                                                                                                                                                                  securities
                                                                                                                                                                                                                  laws;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | c) | contains
                                                                                                                                                                                                                  a
                                                                                                                                                                                                                  brief,
                                                                                                                                                                                                                  clear,
                                                                                                                                                                                                                  narrative
                                                                                                                                                                                                                  description
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  a
                                                                                                                                                                                                                  dealer
                                                                                                                                                                                                                  market,
                                                                                                                                                                                                                  including
                                                                                                                                                                                                                  “bid”
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  “ask”
                                                                                                                                                                                                                  prices
                                                                                                                                                                                                                  for
                                                                                                                                                                                                                  penny
                                                                                                                                                                                                                  stocks
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  significance
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  spread
                                                                                                                                                                                                                  between
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  bid
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  ask
                                                                                                                                                                                                                  prices;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | d) | contains
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  established
                                                                                                                                                                                                                  toll
                                                                                                                                                                                                                  free
                                                                                                                                                                                                                  telephone
                                                                                                                                                                                                                  number
                                                                                                                                                                                                                  for
                                                                                                                                                                                                                  inquiries
                                                                                                                                                                                                                  on
                                                                                                                                                                                                                  disciplinary
                                                                                                                                                                                                                  actions;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16







| | e) | defines
                                                                                                                                                                                                                  significant
                                                                                                                                                                                                                  terms
                                                                                                                                                                                                                  used
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  disclosure
                                                                                                                                                                                                                  document
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  conduct
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  trading
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  penny
                                                                                                                                                                                                                  stocks;
                                                                                                                                                                                                                  and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| | f) | contains
                                                                                                                                                                                                                  such
                                                                                                                                                                                                                  other
                                                                                                                                                                                                                  information,
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  is
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  such
                                                                                                                                                                                                                  form
                                                                                                                                                                                                                  (including
                                                                                                                                                                                                                  language,
                                                                                                                                                                                                                  type
                                                                                                                                                                                                                  size,
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  format),
                                                                                                                                                                                                                  as
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  Commission
                                                                                                                                                                                                                  shall
                                                                                                                                                                                                                  require
                                                                                                                                                                                                                  by
                                                                                                                                                                                                                  rule
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  regulation.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

(3)
Commission rules relating to disclosure. The Commission shall adopt rules setting forth additional standards for the disclosure
by brokers and dealers to customers of information concerning transactions in penny stocks. Such rules -



| | a) | shall
                                                                                                                                                                                                                  require
                                                                                                                                                                                                                  brokers
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  dealers
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  disclose
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  each
                                                                                                                                                                                                                  customer,
                                                                                                                                                                                                                  prior
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  effecting
                                                                                                                                                                                                                  any
                                                                                                                                                                                                                  transaction
                                                                                                                                                                                                                  in,
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  at
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  time
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  confirming
                                                                                                                                                                                                                  any
                                                                                                                                                                                                                  transaction
                                                                                                                                                                                                                  with
                                                                                                                                                                                                                  respect
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  any
                                                                                                                                                                                                                  penny
                                                                                                                                                                                                                  stock,
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  accordance
                                                                                                                                                                                                                  with
                                                                                                                                                                                                                  such
                                                                                                                                                                                                                  procedures
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  methods
                                                                                                                                                                                                                  as
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  Commission
                                                                                                                                                                                                                  may
                                                                                                                                                                                                                  require
                                                                                                                                                                                                                  consistent
                                                                                                                                                                                                                  with
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  public
                                                                                                                                                                                                                  interest
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  protection
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  investors
                                                                                                                                                                                                                  -
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | i. | the
                                                                                                                                                                                                                bid
                                                                                                                                                                                                                and
                                                                                                                                                                                                                ask
                                                                                                                                                                                                                prices
                                                                                                                                                                                                                for
                                                                                                                                                                                                                penny
                                                                                                                                                                                                                stock,
                                                                                                                                                                                                                or
                                                                                                                                                                                                                such
                                                                                                                                                                                                                other
                                                                                                                                                                                                                information
                                                                                                                                                                                                                as
                                                                                                                                                                                                                the
                                                                                                                                                                                                                Commission
                                                                                                                                                                                                                may,
                                                                                                                                                                                                                by
                                                                                                                                                                                                                rule,
                                                                                                                                                                                                                require
                                                                                                                                                                                                                to
                                                                                                                                                                                                                rovide
                                                                                                                                                                                                                customers
                                                                                                                                                                                                                with
                                                                                                                                                                                                                more
                                                                                                                                                                                                                useful
                                                                                                                                                                                                                and
                                                                                                                                                                                                                reliable
                                                                                                                                                                                                                information
                                                                                                                                                                                                                relating
                                                                                                                                                                                                                to
                                                                                                                                                                                                                the
                                                                                                                                                                                                                price
                                                                                                                                                                                                                of
                                                                                                                                                                                                                such
                                                                                                                                                                                                                stock;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | ii. | the
                                                                                                                                                                                                                 number
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 shares
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 which
                                                                                                                                                                                                                 such
                                                                                                                                                                                                                 bid
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 ask
                                                                                                                                                                                                                 prices
                                                                                                                                                                                                                 apply,
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 other
                                                                                                                                                                                                                 comparable
                                                                                                                                                                                                                 information
                                                                                                                                                                                                                 relating
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 depth
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 liquidity
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 market
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 such
                                                                                                                                                                                                                 stock;
                                                                                                                                                                                                                 and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| | iii. | the
                                                                                                                                                                                                                  amount
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  a
                                                                                                                                                                                                                  description
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  any
                                                                                                                                                                                                                  compensation
                                                                                                                                                                                                                  that
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  broker
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  dealer
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  associated
                                                                                                                                                                                                                  person
                                                                                                                                                                                                                  thereof
                                                                                                                                                                                                                  will
                                                                                                                                                                                                                  receive
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  has
                                                                                                                                                                                                                  received
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  connection
                                                                                                                                                                                                                  with
                                                                                                                                                                                                                  such
                                                                                                                                                                                                                  transaction;
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | b) | shall
                                                                                                                                                                                                                  require
                                                                                                                                                                                                                  brokers
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  dealers
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  provide,
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  each
                                                                                                                                                                                                                  customer
                                                                                                                                                                                                                  whose
                                                                                                                                                                                                                  account
                                                                                                                                                                                                                  with
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  broker
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  dealer
                                                                                                                                                                                                                  contains
                                                                                                                                                                                                                  penny
                                                                                                                                                                                                                  stocks,
                                                                                                                                                                                                                  a
                                                                                                                                                                                                                  monthly
                                                                                                                                                                                                                  statement
                                                                                                                                                                                                                  indicating
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  market
                                                                                                                                                                                                                  value
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  penny
                                                                                                                                                                                                                  stocks
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  that
                                                                                                                                                                                                                  account
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  indicating
                                                                                                                                                                                                                  that
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  market
                                                                                                                                                                                                                  value
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  such
                                                                                                                                                                                                                  stock
                                                                                                                                                                                                                  cannot
                                                                                                                                                                                                                  be
                                                                                                                                                                                                                  determined
                                                                                                                                                                                                                  because
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  unavailability
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  firm
                                                                                                                                                                                                                  quotes;
                                                                                                                                                                                                                  and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | c) | may,
                                                                                                                                                                                                                  as
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  Commission
                                                                                                                                                                                                                  finds
                                                                                                                                                                                                                  necessary
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  appropriate
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  public
                                                                                                                                                                                                                  interest
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  for
                                                                                                                                                                                                                  the
                                                                                                                                                                                                                  protection
                                                                                                                                                                                                                  of
                                                                                                                                                                                                                  investors,
                                                                                                                                                                                                                  require
                                                                                                                                                                                                                  brokers
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  dealers
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  disclose
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  customers
                                                                                                                                                                                                                  additional
                                                                                                                                                                                                                  information
                                                                                                                                                                                                                  concerning
                                                                                                                                                                                                                  transactions
                                                                                                                                                                                                                  in
                                                                                                                                                                                                                  penny
                                                                                                                                                                                                                  stocks.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | (4) | Exemptions.The
                                                                                                                                                                                                                 Commission,
                                                                                                                                                                                                                 as
                                                                                                                                                                                                                 it
                                                                                                                                                                                                                 determines
                                                                                                                                                                                                                 consistent
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 public
                                                                                                                                                                                                                 interest
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 protection
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 investors,
                                                                                                                                                                                                                 may
                                                                                                                                                                                                                 by
                                                                                                                                                                                                                 rule,
                                                                                                                                                                                                                 regulation,
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 order
                                                                                                                                                                                                                 exempt
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 whole
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 part,
                                                                                                                                                                                                                 conditionally
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 unconditionally,
                                                                                                                                                                                                                 any
                                                                                                                                                                                                                 person
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 class
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 persons,
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 any
                                                                                                                                                                                                                 transaction
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 class
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 transactions,
                                                                                                                                                                                                                 from
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 requirements
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 this
                                                                                                                                                                                                                 subsection.
                                                                                                                                                                                                                 Such
                                                                                                                                                                                                                 exemptions
                                                                                                                                                                                                                 shall
                                                                                                                                                                                                                 include
                                                                                                                                                                                                                 an
                                                                                                                                                                                                                 exemption
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 brokers
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 dealers
                                                                                                                                                                                                                 based
                                                                                                                                                                                                                 on
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 minimal
                                                                                                                                                                                                                 percentage
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 broker’s
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 dealer’s
                                                                                                                                                                                                                 commissions,
                                                                                                                                                                                                                 commission-equivalents,
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 markups
                                                                                                                                                                                                                 received
                                                                                                                                                                                                                 from
                                                                                                                                                                                                                 transactions
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 penny
                                                                                                                                                                                                                 stocks.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | (5) | Regulations.
                                                                                                                                                                                                                 It
                                                                                                                                                                                                                 shall
                                                                                                                                                                                                                 be
                                                                                                                                                                                                                 unlawful
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 any
                                                                                                                                                                                                                 person
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 violate
                                                                                                                                                                                                                 such
                                                                                                                                                                                                                 rules
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 regulations
                                                                                                                                                                                                                 as
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 Commission
                                                                                                                                                                                                                 shall
                                                                                                                                                                                                                 prescribe
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 public
                                                                                                                                                                                                                 interest
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 protection
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 investors
                                                                                                                                                                                                                 or
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 maintain
                                                                                                                                                                                                                 fair
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 orderly
                                                                                                                                                                                                                 markets
                                                                                                                                                                                                                 -
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | a) | as
                                                                                                                                                                                                                  necessary
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  appropriate
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  carry
                                                                                                                                                                                                                  out
                                                                                                                                                                                                                  these
                                                                                                                                                                                                                  requirements;
                                                                                                                                                                                                                  or
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | b) | as
                                                                                                                                                                                                                  reasonably
                                                                                                                                                                                                                  designed
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  prevent
                                                                                                                                                                                                                  fraudulent,
                                                                                                                                                                                                                  deceptive,
                                                                                                                                                                                                                  or
                                                                                                                                                                                                                  manipulative
                                                                                                                                                                                                                  acts
                                                                                                                                                                                                                  and
                                                                                                                                                                                                                  practices
                                                                                                                                                                                                                  with
                                                                                                                                                                                                                  respect
                                                                                                                                                                                                                  to
                                                                                                                                                                                                                  penny
                                                                                                                                                                                                                  stocks.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



RECENT
SALES OF UNREGISTERED SECURITIES



There
were no sales of our common stock during the quarter ended April 30, 2012.



|(b) |  | HOLDERS
|--- |  | -------



There
are 38 shareholders of record of the Company’s common stock at April 30, 2012.



|(c) |  | DIVIDENDS
|--- |  | ---------



The
Company has not paid dividends to date and has no plans to do so in the foreseeable future.



17







|(d) |  | SECURITIES
                                                                                                                                                                                                             AUTHORIZED
                                                                                                                                                                                                             FOR
                                                                                                                                                                                                             ISSUANCE
                                                                                                                                                                                                             UNDER
                                                                                                                                                                                                             EQUITY
                                                                                                                                                                                                             COMPENSATION
                                                                                                                                                                                                             PLANS
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
following table summarizes certain information as of April 30, 2012, with respect to compensation plans (including individual
compensation arrangements) under which our common stock is authorized for issuance:



|Plan category                                           |  |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights |  |  |  | Weighted average exercise price of outstanding options, warrants and rights |  |  |  | Number of securities remaining available 
for future issuance | 
|------------------------------------------------------- |  |  | ------------------------------------------------------------------------------------------- |  |  |  | --------------------------------------------------------------------------- |  |  |  | ------------------------------------------------------------- | 
|Equity compensation plans approved by security holders: |  |  |                                                                                             |  |  |  |                                                                             |  |  |  |                                                               | 
|2008 Plan                                               |  |  | -                                                                                           |  |  |  |                                                                             |  |  |  | 1,242,333                                                     | 
|                                                        |  |  | -                                                                                           |  |  |  |                                                                             |  |  |  | 1,242,333                                                     | 



The
North American Energy Resources, Inc. 2008 Stock Option Plan (“Plan”) was filed on September 11, 2008 and reserves
2,500,000 shares for Awards under the Plan. The Company’s Board of Directors is designated to administer the Plan and may
designate a Compensation Committee for this purpose. There are no options outstanding at April 30, 2012 and 2011.



WARRANTS



As
a part of their initial compensation, on December 15, 2010, the new Executive Team was granted Warrants with the following primary
terms and conditions. The strike price exceeded the market price when the Warrants were granted.



a)	Each
Warrant shall entitle the owner to purchase one share of common stock of the Company. The warrants contain price protection when
the shares will be used for an acquisition at a price lower than the conversion price in force. The anti dilution provision will
not apply to financings done below the strike price.



b)	The
Executive Team was granted three Warrant Certificates as follows:



| | 1. | Certificate
                                                                                                                                                                                                                 #1
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 10,000,000
                                                                                                                                                                                                                 warrants
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 strike
                                                                                                                                                                                                                 price
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 $0.025
                                                                                                                                                                                                                 per
                                                                                                                                                                                                                 share
                                                                                                                                                                                                                 must
                                                                                                                                                                                                                 be
                                                                                                                                                                                                                 exercised
                                                                                                                                                                                                                 within
                                                                                                                                                                                                                 one
                                                                                                                                                                                                                 year
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 date
                                                                                                                                                                                                                 Executive
                                                                                                                                                                                                                 Team
                                                                                                                                                                                                                 begins
                                                                                                                                                                                                                 collecting
                                                                                                                                                                                                                 salaries
                                                                                                                                                                                                                 from
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 Company,
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | 2. | Certificate
                                                                                                                                                                                                                 #2
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 10,000,000
                                                                                                                                                                                                                 warrants
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 strike
                                                                                                                                                                                                                 price
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 $0.04
                                                                                                                                                                                                                 per
                                                                                                                                                                                                                 share
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 Term
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 5
                                                                                                                                                                                                                 years
                                                                                                                                                                                                                 from
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 vesting
                                                                                                                                                                                                                 date,
                                                                                                                                                                                                                 and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | 3. | Certificate
                                                                                                                                                                                                                 #3
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 10,000,000
                                                                                                                                                                                                                 warrants
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 strike
                                                                                                                                                                                                                 price
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 $0.055
                                                                                                                                                                                                                 per
                                                                                                                                                                                                                 share
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 Term
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 5
                                                                                                                                                                                                                 years
                                                                                                                                                                                                                 from
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 vesting
                                                                                                                                                                                                                 date.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

c)	Other
warrant terms are as follows:



| | 1. | Certificate
                                                                                                                                                                                                                 #1
                                                                                                                                                                                                                 vests
                                                                                                                                                                                                                 immediately,
                                                                                                                                                                                                                 Certificate
                                                                                                                                                                                                                 #2
                                                                                                                                                                                                                 shall
                                                                                                                                                                                                                 vest
                                                                                                                                                                                                                 upon
                                                                                                                                                                                                                 execution
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 Certificate
                                                                                                                                                                                                                 #1
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 Certificate
                                                                                                                                                                                                                 #3
                                                                                                                                                                                                                 shall
                                                                                                                                                                                                                 vest
                                                                                                                                                                                                                 upon
                                                                                                                                                                                                                 execution
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 Certificate
                                                                                                                                                                                                                 #1.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| | 2. | All
                                                                                                                                                                                                                 Warrants
                                                                                                                                                                                                                 may
                                                                                                                                                                                                                 vest
                                                                                                                                                                                                                 early
                                                                                                                                                                                                                 if
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 Company
                                                                                                                                                                                                                 has
                                                                                                                                                                                                                 revenue
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 $12,500,000
                                                                                                                                                                                                                 total
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 two
                                                                                                                                                                                                                 consecutive
                                                                                                                                                                                                                 quarters
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 records
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 pre-tax
                                                                                                                                                                                                                 net
                                                                                                                                                                                                                 profit
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 two
                                                                                                                                                                                                                 quarters
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 other
                                                                                                                                                                                                                 conditions
                                                                                                                                                                                                                 including
                                                                                                                                                                                                                 change
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 control,
                                                                                                                                                                                                                 termination,
                                                                                                                                                                                                                 etc.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | 3. | The
                                                                                                                                                                                                                 Warrant
                                                                                                                                                                                                                 Certificates
                                                                                                                                                                                                                 may
                                                                                                                                                                                                                 be
                                                                                                                                                                                                                 allocated
                                                                                                                                                                                                                 among
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 Executive
                                                                                                                                                                                                                 Team
                                                                                                                                                                                                                 as
                                                                                                                                                                                                                 they
                                                                                                                                                                                                                 so
                                                                                                                                                                                                                 determine.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | 4. | The
                                                                                                                                                                                                                 Warrants
                                                                                                                                                                                                                 shall
                                                                                                                                                                                                                 be
                                                                                                                                                                                                                 registered
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 first
                                                                                                                                                                                                                 registration
                                                                                                                                                                                                                 statement
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 Company
                                                                                                                                                                                                                 files,
                                                                                                                                                                                                                 subject
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 legal
                                                                                                                                                                                                                 counsel
                                                                                                                                                                                                                 approval.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Board of Directors issued a warrant to acquire 500,000 shares of the Company’s common stock at $0.18 per share to its new
director, Larry D. Hall, on November 10, 2011. The strike price exceeded the market price when the warrants were granted.



|Item 6: |  | SELECTED
FINANCIAL DATA
|------- |  | -----------------------



Not
applicable.



18







|Item 7: |  | Management’s
Discussion and Analysis OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------



This
statement contains forward-looking statements within the meaning of the Securities Act. Discussions containing such forward-looking
statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the
forward-looking statements as a result of various factors, including, without limitation, the matters set forth in this statement.



Revenues
for the years ended April 30, 2012 and 2011 consisted of the following.



|          |  | 2012 |       |  | 2011 |  
|--------- |  | ---- | ----- |  | ---- | -
|Oil sales |  | $    | -     |  |      | $
|Gas sales |  |      | 2,094 |  |      |  
|          |  | $    | 2,094 |  |      | $



In
2012, the Company had gas sales of 751 MCF at an average price of $2.79. In 2011, the Company had oil sales of 64 BBL at an average
price of $63.51 and gas sales of 291 MCF at an average price of $2.87. The Company sold its oil production on October 1, 2010
due primarily to its high operating cost.



Costs
and expenses consisted of the following for the years ended April 30, 2012 and 2011.



|                                                                     |  | 2012 |         |  | 2011 |  
|-------------------------------------------------------------------- |  | ---- | ------- |  | ---- | -
|Oil and natural gas production taxes                                 |  | $    | 151     |  |      | $
|Oil and natural gas production expenses                              |  |      | 993     |  |      |  
|Depreciation and amortization                                        |  |      | 130     |  |      |  
|Non-cash compensation                                                |  |      | -       |  |      |  
|Asset impairment                                                     |  |      | -       |  |      |  
|General and administrative expenses, net of operator’s overhead fees |  |      | 652,759 |  |      |  
|                                                                     |  | $    | 654,033 |  |      | $



Production
taxes are a percentage of revenue and vary directly with revenue. Production expenses have decreased due to the sale of the oil
properties on October 1, 2010. For 2012 all production expenses were for gas properties. For 2011, $8,415 of production expenses
were for oil properties which were sold and $399 was for the gas well acquired on November 1, 2010. Non-cash compensation primarily
includes the cost of stock grants for consultants in 2011. The decrease in 2011 is related to hiring a new CEO and CFO in December
2010 who began working without pay until June 15, 2011, at which time they began accruing compensation until January 31, 2012
when all accruals were voluntarily discontinued.



Asset
impairment amounted to $46,894 in 2011, which represents the impairment on its properties in Washington County, Oklahoma to adjust
the carrying value to the proceeds received on sale of the properties.



General
and administrative expenses, net of operator’s overhead fees, are summarized as follows for the two years ended April 30, 2012
and 2011.



19







|                           |  | 2012 |         |  | 2011 |  
|-------------------------- |  | ---- | ------- |  | ---- | -
|Accounting and auditing    |  | $    | 20,345  |  |      | $
|Legal and professional     |  |      | 287,484 |  |      |  
|Rent                       |  |      | 64,229  |  |      |  
|Bad debt expense           |  |      | -       |  |      |  
|Office and other expenses  |  |      | 25,673  |  |      |  
|Travel expenses            |  |      | 43,885  |  |      |  
|Shareholder communications |  |      | 2,393   |  |      |  
|Officer compensation       |  |      | 208,750 |  |      |  
|Operator overhead fees     |  |      | -       |  |      |  
|                           |  | $    | 652,759 |  |      | $



Accounting
and auditing expense declined in 2012 primarily due to a reduction in activity with the sale of the properties in Washington County,
Oklahoma which the Company had operated. Legal and professional fees increased in 2012 from the amount in 2011 primarily due to
the costs associated with due diligence incurred for a possible acquisition. Rent was added in 2011 when the Company opened its
new office in New Orleans (approximately 4 1/2 months) in 2011 and twelve months in 2012. The Company moved into less expensive
space in the fourth quarter of 2012 and has a monthly cost of $2,000 through May 2012. Travel expenses and office and other expenses
increased in 2012 primarily due to the increased activity associated with reviewing acquisition candidates. Officer compensation
began accruing on June 15, 2011 after the 6 month anniversary of the officers hire dates. The officers both agreed to discontinue
their compensation accrual until conditions improve.

Other
income (expense) consisted of the following for the years ended April 30, 2012 and 2011.



|                                             |  | 2012 |         |   | 2011 |  
|-------------------------------------------- |  | ---- | ------- | - | ---- | -
|Other income                                 |  | $    | 9,619   |   |      | $
|Interest expense - officers and stockholders |  |      | (13,129 | ) |      |  
|                                             |  | $    | (3,510  | ) |      | $



The
Company incurred interest expense in 2012 and 2011 with officers and shareholders. In December the full balance of convertible
notes was converted into common stock. A new note in the amount of $38,678 was added in January 2011. The CEO established a $500,000
line of credit with the Company in November 2011, which has a balance of $392,810 at April 30, 2012. The reduction in interest
expense is due to the reduction in the weighted average balance of notes payable from 2011 to 2012.



LIQUIDITY
AND CAPITAL RESOURCES



Historical
information



At
April 30, 2012, we had $316 in cash, $367 in accounts receivable and a working capital deficit of $770,891. Comparatively, we
had cash of $716 and a working capital deficit of $115,572 at April 30, 2011.



We
entered into an Asset Purchase Agreement which expired in December 2011. The majority of our increased administrative cost during
2012 was a result of due diligence costs and preliminary financing costs associated with the attempted purchase.



Evaluation
of the amounts and certainty of cash flows



Our
current cash flow is nominal and insufficient to pay current expenses. We continue to seek other acquisition possibilities, which
will require new external financing in some form of debt and equity financing.



20







Cash
requirements and capital expenditures



We
have made arrangement with our CEO to loan us up to $500,000 to meet the initial operating expenses during the due diligence phase
of a potential acquisition. At April 30, 2012, our CEO has loaned $392,810 for this purpose. If a potential acquisition is identified
additional capital may be required to be raised from as yet unidentified external sources in the form of equity or debt.



Known
trends and uncertainties



The
Company is in a very competitive business. The economy has been very uncertain over the past two to three years and may make it
very difficult to raise the capital required to complete any asset purchase agreement.



Expected
changes in the mix and relative cost of capital resources



The
Company is now seeking another acquisition candidate. If identified, the initial phase for the Company will be due diligence and
raising the purchase price for the acquisition. In order to take advantage of any undeveloped properties, the Company may require
additional financing to continue development plans. The actual amounts required and the timing of the requirements has not been
determined.



What
balance sheet, income or cash flow items should be considered in assessing liquidity



The
Company’s current liabilities far exceed its current assets. Should any of the existing material creditors demand payment it is
unknown if the Company could satisfy such demand. We will seek funding to finance such demand and due diligence and the cost of
an as yet unidentified acquisition. Such funding may require significant new external financing and, if successful, may materially
change the existing capital structure of the Company.



Our
prospective sources for and uses of cash



Our
current significant issue is identifying a new acquisition candidate, financing the due diligence and raising the funds to complete
the acquisition. If successful, the Company expects to use a combination of debt and equity.



CASH
USED IN OPERATING ACTIVITIES



Cash
used in operating activities was $357,721 for 2012 and cash used in operating activities was $69,104 for the comparable 2011 period.
Losses incurred arose primarily from due diligence costs and the initial cost of raising funds for the planned acquisition which
expired in December 2011.



CASH
USED IN INVESTING ACTIVITIES



We
incurred capital costs of $4,893 in the 2011 period and none in the 2012 period.



CASH
FROM FINANCING ACTIVITIES



During
2012, we received $392,810 in proceeds from the loan with our CEO. In 2011, we received $17,500 in loans from shareholders. The
2011 loan was subsequently converted into common stock. The Company received $54,187 in advances from related parties during 2011
and reduced these advances by $35,489 in 2012.



GOING
CONCERN



We
have not attained profitable operations and are dependent upon obtaining substantial debt and equity financing to complete an
acquisition, which we have not yet identified. For these reasons, there is substantial doubt we will be able to continue as a
going concern, since we are dependent upon an as yet unknown source to provide sufficient funds to finance future operations until
our revenues are adequate to fund our cost of operations. The financial statements do not include any adjustments that may result
from the outcome of these uncertainties.



21







New
Accounting Standards



There
are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not
yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe
any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating
results. See Note 1 to the financial statements.



Critical
Accounting Policies



Our
discussion of financial condition and results of operations is based upon the information reported in our financial statements.
The preparation of these statements requires us to make assumptions and estimates that affect the reported amounts of assets,
liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities at the date of our financial
statements. We base our assumptions and estimates on historical experience and other sources that we believe to be reasonable
at the time. Actual results may vary from our estimates due to changes in circumstances, weather, politics, global economics,
mechanical problems, general business conditions and other factors. Our significant accounting policies are detailed in Note 1
to our financial statements included in this Annual Report. We have outlined below certain of these policies as being of particular
importance to the portrayal of our financial position and results of operations and which require the application of significant
judgment by our management.



REVENUE
RECOGNITION –We have derived our revenue primarily from the
sale of produced crude oil and natural gas. Revenue is recorded in the month the product is delivered to the purchaser. We receive
payment from one to three months after delivery. At the end of each month, we estimate the amount of production delivered to purchasers
and the price we will receive. Variances between our estimated revenue and actual payment are recorded in the month the payment
is received; however, the differences should be insignificant.



FULL
COST METHOD OF ACCOUNTING – We account for our oil and natural gas operations using the full cost method of accounting.
Under this method, all costs associated with property acquisition, exploration and development of oil and gas reserves are capitalized.
Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties
and cost of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs.
All of our properties are currently located within the continental United States.



OIL
AND NATURAL GAS RESERVE QUANTITIES – Reserve quantities and the related estimates of future net cash flows affect our periodic
calculations of depletion and impairment of our oil and natural gas properties. Proved oil and natural gas reserves are the estimated
quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future periods from known reservoirs under existing economic and operating conditions. Reserve
quantities and future cash flows included in this Annual Report are prepared in accordance with guidelines established by the
SEC and FASB. The accuracy of our reserve estimates is a function of:



|● |  | The quality and quantity of
available data;
|- |  | -------------------------------------------

|● |  | The interpretation of that
data;
|- |  | --------------------------------

|● |  | The accuracy of various mandated
economic assumptions; and
|- |  | ----------------------------------------------------------

|● |  | The judgments of the person
preparing the estimates.
|- |  | ----------------------------------------------------



Our
proved reserve information included in this Annual Report is based on estimates prepared by an independent petroleum consultant,
Christopher Energy. Because these estimates depend on many assumptions, all of which may differ substantially from actual results,
reserve estimates may be different from the quantities of oil and natural gas that are ultimately recovered. We will make changes
to depletion rates and impairment calculations in the same period that changes in reserve estimates are made.



All
capitalized costs of oil and gas properties, including estimated future costs to develop proved reserves and estimated future
costs of site restoration, are amortized on the unit-of-production method using our estimate of proved reserves. Investments in
unproved properties and major development projects are not amortized until proved reserves associated with the projects can be
determined.



22







IMPAIRMENT
OF OIL AND NATURAL GAS PROPERTIES – We review the value of our oil and natural gas properties whenever management judges
that events and circumstances indicate that the recorded carrying value of properties may not be recoverable. We provide for impairments
on undeveloped property when we determine that the property will not be developed or a permanent impairment in value has occurred.
Under the full cost method the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed
the estimated after-tax future net revenues from proved oil and natural gas properties, discounted at 10% (the “Ceiling
Limitation”). In arriving at estimated future net revenues, estimated lease operating expenses, development costs, and certain
production-related taxes are deducted. In calculating future net revenues, prices and costs in effect at the time of the calculation
are held constant indefinitely, except for changes that are fixed and determinable by existing contracts. The net book value is
compared to the ceiling limitation on a quarterly and yearly basis. The excess, if any, of the net book value above the ceiling
limitation is charged to expense in the period in which it occurs and is not subsequently reinstated.



Off-Balance
Sheet Arrangements



We
do not have any material off-balance sheet arrangements.



TABULAR
DISCLOSURE OF CONTRACTUAL OBLIGATIONS



None.





|ITEM 7A: |  | QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- |  | ----------------------------------------------------------



Not
applicable.





23













|Item 8: |  | Financial
Statements AND SUPPLEMENTARY DATA
|------- |  | -------------------------------------------



The
consolidated financial statements of North American Energy Resources, Inc. and Subsidiary together with the report thereon of
Paritz & Company, P.A. for the years ended April 30, 2012 and 2011 and the period from inception (August 18, 2006) through
April 30, 2012, is set forth as follows:



Index
to Financial Statements



|                                                         |  | Page |    
|-------------------------------------------------------- |  | ---- | ---
|Report of Independent Registered Public Accounting Firm: |  |      |    
|Paritz & Company, P. A.                                  |  |      | F-1
|Consolidated Balance Sheet                               |  |      | F-2
|Consolidated Statements of Operations                    |  |      | F-3
|Consolidated Statements of Stockholders’ Deficit         |  |      | F-4
|Consolidated Statements of Cash Flows                    |  |      | F-8
|Notes to Consolidated Financial Statements               |  |      | F-9



24











REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Board of Directors

North
American Energy Resources, Inc. and Subsidiary

(A
Development Stage Company)



We
have audited the accompanying consolidated balance sheets of North American Energy Resources, Inc. and Subsidiary (A Development
Stage Company) as of April 30, 2012 and 2011, and the related consolidated statements of operations, stockholders’ deficit
and cash flows for the years ended April 30, 2012 and 2011 and from inception (August 18, 2006) through April 30, 2012. 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
conduct our audits in accordance with 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 consolidated financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.



In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position
of North American Energy Resources, Inc. and subsidiary (A Development Stage Company) as of April 30, 2012 and 2011, and the consolidated
results of its operations and its cash flows for the years then ended and for the period from inception (August 18, 2006) to April
30, 2012, in conformity with accounting principles generally accepted in the United States of America.



The
accompanying financial statements are prepared assuming the company will continue as a going concern. As discussed in note 8,
as of April 30, 2012, the Company’s current liabilities exceed its current assets by $770,891 and its total liabilities
exceed its total assets by $768,715. The company has also incurred net losses since its inception. These factors, among others,
raise substantial doubt as to the Company’s ability to continue as a going concern. Managements’ plans concerning
these matters are also described in note 8. The consolidated financial statements do not include any adjustments that might result
from the outcome of this uncertainty.



|/s/
    Paritz & Company, P.A. | 
|------------------------------ | 
|                               | 
|Paritz
    & Company, P.A.     | 
|Hackensack,
    New Jersey     | 
|July
    12, 2012              | 



F-1







NORTH
AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(A
Development Stage Company)

Consolidated
Balance Sheets

April
30, 2012 and 2011



|                                                                                                                                   |  | 2012 |            |   | 2011 |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|ASSETS                                                                                                                             |  |      |            |   |      |  
|Current assets:                                                                                                                    |  |      |            |   |      |  
|Cash and cash equivalents                                                                                                          |  | $    | 316        |   |      | $
|Accounts receivable                                                                                                                |  |      | 367        |   |      |  
|Prepaid expenses                                                                                                                   |  |      | -          |   |      |  
|Total current assets                                                                                                               |  |      | 683        |   |      |  
|Properties and equipment, at cost:                                                                                                 |  |      |            |   |      |  
|Proved oil and natural gas properties and equipment using full cost accounting                                                     |  |      | 2,358      |   |      |  
|                                                                                                                                   |  |      | 2,358      |   |      |  
|Accumulated depreciation and amortization                                                                                          |  |      | (182       | ) |      |  
|Total properties and equipment                                                                                                     |  |      | 2,176      |   |      |  
|Total assets                                                                                                                       |  | $    | 2,859      |   |      | $
|LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                              |  |      |            |   |      |  
|Current liabilities:                                                                                                               |  |      |            |   |      |  
|Accounts payable                                                                                                                   |  |      |            |   |      |  
|Trade                                                                                                                              |  | $    | 97,616     |   |      | $
|Related parties                                                                                                                    |  |      | 18,698     |   |      |  
|Oil and gas proceeds due others                                                                                                    |  |      | -          |   |      |  
|Accrued expenses                                                                                                                   |  |      | 223,772    |   |      |  
|Convertible notes payable due officer                                                                                              |  |      | 392,810    |   |      |  
|Convertible notes payable                                                                                                          |  |      | 38,678     |   |      |  
|Total current liabilities                                                                                                          |  |      | 771,574    |   |      |  
|Commitments and contingencies                                                                                                      |  |      |            |   |      |  
|Stockholders’ deficit:                                                                                                             |  |      |            |   |      |  
|Preferred stock: $0.001 par value; 100,000,000 shares authorized; no shares issued and outstanding                                 |  |      | -          |   |      |  
|Common stock: $0.001 par value; 100,000,000 shares authorized; 21,554,945 shares issued and outstanding at April 30, 2012 and 2011 |  |      | 21,555     |   |      |  
|Additional paid in capital                                                                                                         |  |      | 2,838,197  |   |      |  
|Deficit accumulated during the development stage                                                                                   |  |      | (3,628,467 | ) |      |  
|Total stockholders’ deficit                                                                                                        |  |      | (768,715   | ) |      |  
|Total liabilities and stockholders’ deficit                                                                                        |  | $    | 2,859      |   |      | $



See
accompanying notes to consolidated financial statements



F-2







NORTH
AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(A
Development Stage Company)

Consolidated
Statements of Operations

For
the years ended April 30, 2012 and April 30, 2011 and the period

from
inception (August 18, 2006) through April 30, 2012





|                                                                    |  |      |            |   |      |   |            | Inception         | 
|------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ----------------- | 
|                                                                    |  |      |            |   |      |   |            | (August 18, 2006) | 
|                                                                    |  |      |            |   |      |   |            | through           | 
|                                                                    |  |      |            |   |      |   |            | April 30,         | 
|                                                                    |  | 2012 |            |   | 2011 |   |            | 2012              | 
|Oil and natural gas sales                                           |  | $    | 2,094      |   |      | $ | 4,879      |                   | 
|Pipeline fees                                                       |  |      | -          |   |      |   | -          |                   | 
|Total revenues                                                      |  |      | 2,094      |   |      |   | 4,879      |                   | 
|Costs and expenses                                                  |  |      |            |   |      |   |            |                   | 
|Oil and natural gas production taxes                                |  |      | 151        |   |      |   | 349        |                   | 
|Oil and natural gas production expenses                             |  |      | 993        |   |      |   | 8,814      |                   | 
|Depreciation and amortization                                       |  |      | 130        |   |      |   | 1,530      |                   | 
|Non-cash compensation                                               |  |      | -          |   |      |   | 266,754    |                   | 
|Asset impairment                                                    |  |      | -          |   |      |   | 46,894     |                   | 
|General and administrative expense, net of operator’s overhead fees |  |      | 652,759    |   |      |   | 105,873    |                   | 
|                                                                    |  |      | 654,033    |   |      |   | 430,214    |                   | 
|Loss from operations                                                |  |      | (651,939   | ) |      |   | (425,335   | )                 | 
|Other income (expense):                                             |  |      |            |   |      |   |            |                   | 
|Other income                                                        |  |      | 9,619      |   |      |   | -          |                   | 
|Interest income - stockholder                                       |  |      | -          |   |      |   | -          |                   | 
|Interest expense - officer and stockholders                         |  |      | (13,129    | ) |      |   | (37,057    | )                 | 
|Total other income (expense)                                        |  |      | (3,510     | ) |      |   | (37,057    | )                 | 
|Net loss                                                            |  |      | (655,449   | ) |      |   | (462,392   | )                 | 
|Other comprehensive loss                                            |  |      |            |   |      |   |            |                   | 
|Unrealized loss on available-for-sale securities                    |  |      | -          |   |      |   | 1,000      |                   | 
|Net comprehensive loss                                              |  | $    | (655,449   | ) |      | $ | (461,392   | )                 | 
|                                                                    |  |      |            |   |      |   |            |                   | 
|Net loss per common share, basic and diluted                        |  | $    | (0.03      | ) |      | $ | (0.02      | )                 | 
|                                                                    |  |      |            |   |      |   |            |                   | 
|Weighted average common shares outstanding                          |  |      | 21,554,945 |   |      |   | 19,063,503 |                   | 



See
accompanying notes to consolidated financial statements.



F-3







NORTH
AMERICAN ENERGY RESOURCES., INC. AND SUBSIDIARY

(A
Development Stage Company)

Consolidated
Statements of Stockholders’ Deficit

For
the period from inception (August 18, 2006) through April 30, 2012



|                                                                 |  |      |            |  |              |  |            |         |  |   |            |  |  | Intrinsic     |         
|---------------------------------------------------------------- |  | ---- | ---------- |  | ------------ |  | ---------- | ------- |  | - | ---------- |  |  | ------------- | --------
|                                                                 |  |      |            |  |              |  |            |         |  |   | Additional |  |  | Value of      |         
|                                                                 |  |      |            |  | Common stock |  |            | Paid in |  |   | Common     | 
|                                                                 |  | Date |            |  | Shares       |  |            | Amount  |  |   | Capital    |  |  | Stock Options |         
|BALANCE August 18, 2006                                          |  |      |            |  |              |  | -          |         |  | $ | -          |  |  | $             | -       
|Common stock issued for net assets                               |  |      | 9/1/2006   |  |              |  | 11,264,485 |         |  |   | 11,265     |  |  |               | 88,735  
|Common stock issued for cash                                     |  |      | 9/7/2006   |  |              |  | 1,126,448  |         |  |   | 1,126      |  |  |               | 8,874   
|Common stock issued for cash                                     |  |      | 9/11/2006  |  |              |  | 1,126,448  |         |  |   | 1,126      |  |  |               | 8,874   
|Net loss                                                         |  |      |            |  |              |  | -          |         |  |   | -          |  |  |               |         
|BALANCE April 30, 2007                                           |  |      |            |  |              |  | 13,517,381 |         |  |   | 13,517     |  |  |               | 106,483 
|Net loss                                                         |  |      |            |  |              |  | -          |         |  |   | -          |  |  |               |         
|BALANCE April 30, 2008                                           |  |      |            |  |              |  | 13,517,381 |         |  |   | 13,517     |  |  |               | 106,483 
|Acquisition of North American Energy Resources, Inc.             |  |      | 7/28/2008  |  |              |  | 177,000    |         |  |   | 177        |  |  |               | 119,653 
|Conversion of note payable and accrued interest for common stock |  |      | 7/31/2008  |  |              |  | 153,000    |         |  |   | 153        |  |  |               | 35,377  
|Common stock options granted for:                                |  |      |            |  |              |  |            |         |  |   |            |  |  |               |         
|350,000 shares at $1.00 per share                                |  |      | 8/1/2008   |  |              |  | -          |         |  |   | -          |  |  |               | 178,000 
|50,000 shares at $1.25 per share                                 |  |      | 8/1/2008   |  |              |  | -          |         |  |   | -          |  |  |               | 27,096  
|Exercise common stock options:                                   |  |      |            |  |              |  |            |         |  |   |            |  |  |               |         
|for $1.25 per share                                              |  |      | 9/22/2008  |  |              |  | 100        |         |  |   | -          |  |  |               | 6,250   
|for $1.00 per share                                              |  |      | 9/22/2008  |  |              |  | 1,000      |         |  |   | 1          |  |  |               | 49,999  
|for $1.25 per share                                              |  |      | 10/13/2008 |  |              |  | 100        |         |  |   | -          |  |  |               | 6,250   
|for $1.00 per share                                              |  |      | 10/13/2008 |  |              |  | 70         |         |  |   | -          |  |  |               | 3,500   
|Accounts payable paid with common stock                          |  |      | 10/14/2008 |  |              |  | 90         |         |  |   | -          |  |  |               | 9,016   
|Amortize intrinsic value of options                              |  |      | 10/31/2008 |  |              |  | -          |         |  |   | -          |  |  |               | -       
|Cancel common stock options                                      |  |      | 11/5/2008  |  |              |  | -          |         |  |   | -          |  |  |               | (188,005
|Common stock issued for compensation                             |  |      | 11/7/2008  |  |              |  | 100        |         |  |   | -          |  |  |               | 6,250   
|Common stock issued for accounts payable                         |  |      | 11/7/2008  |  |              |  | 60         |         |  |   | -          |  |  |               | 3,000   
|Common stock issued for consulting service                       |  |      | 11/12/2008 |  |              |  | 3,000      |         |  |   | 3          |  |  |               | 310,497 
|Common stock issued for accounts payable                         |  |      | 11/17/2008 |  |              |  | 400        |         |  |   | 1          |  |  |               | 24,999  
|Capital contribution by shareholder in cash                      |  |      | 11/30/2008 |  |              |  | -          |         |  |   | -          |  |  |               | 50,000  
|Common stock issued for:                                         |  |      |            |  |              |  |            |         |  |   |            |  |  |               |         
|Compensation                                                     |  |      | 12/9/2008  |  |              |  | 338        |         |  |   | -          |  |  |               | 5,000   
|Accounts payable                                                 |  |      | 12/9/2008  |  |              |  | 300        |         |  |   | -          |  |  |               | 1,200   
|Accounts payable                                                 |  |      | 12/9/2008  |  |              |  | 400        |         |  |   | -          |  |  |               | 6,000   
|Compensation                                                     |  |      | 1/5/2009   |  |              |  | 500        |         |  |   | 1          |  |  |               | 4,999   
|Accounts payable                                                 |  |      | 1/5/2009   |  |              |  | 800        |         |  |   | 1          |  |  |               | 3,199   
|Accounts payable                                                 |  |      | 1/5/2009   |  |              |  | 400        |         |  |   | 1          |  |  |               | 3,999   
|Accounts payable                                                 |  |      | 1/19/2009  |  |              |  | 4,000      |         |  |   | 4          |  |  |               | 14,996  
|Compensation                                                     |  |      | 1/26/2009  |  |              |  | 1,500      |         |  |   | 2          |  |  |               | 4,998   
|Accounts payable                                                 |  |      | 2/24/2009  |  |              |  | 6,000      |         |  |   | 6          |  |  |               | 9,761   
|Compensation                                                     |  |      | 2/24/2009  |  |              |  | 1,000      |         |  |   | 1          |  |  |               | 1,999   
|Compensation                                                     |  |      | 3/4/2009   |  |              |  | 4,000      |         |  |   | 4          |  |  |               | 4,996   
|Compensation                                                     |  |      | 4/6/2009   |  |              |  | 4,000      |         |  |   | 4          |  |  |               | 5,996   
|Officer compensation                                             |  |      | 4/21/2009  |  |              |  | 160,000    |         |  |   | 160        |  |  |               | 145,440 
|Net loss                                                         |  |      |            |  |              |  | -          |         |  |   | -          |  |  |               | -       
|BALANCE April 30, 2009                                           |  |      |            |  |              |  | 14,035,539 |         |  | $ | 14,036     |  |  |               | 960,948 





(Continued)



See
accompanying notes to consolidated financial statements.



F-4







NORTH
AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(A
Development Stage Company)

Consolidated
Statements of Stockholders’ Deficit, continued

For
the period from inception (August 18, 2006) through April 30, 2012



|                                                                 |  |              |         |   |               |   |   | Deficit     |  |   |            |  
|---------------------------------------------------------------- |  | ------------ | ------- | - | ------------- | - | - | ----------- |  | - | ---------- | -
|                                                                 |  |              |         |   | Accumulated   |   |   | Accumulated |  |   |            |  
|                                                                 |  | Prepaid      |         |   | Other         |   |   | During the  |  |   |            |  
|                                                                 |  | Officer      |         |   | Comprehensive |   |   | Development |  |   |            |  
|                                                                 |  | Compensation |         |   | Loss          |   |   | Stage       |  |   | Total      |  
|BALANCE August 18, 2006                                          |  | $            | -       |   |               | $ | - |             |  | $ | -          |  
|Common stock issued for net assets                               |  |              | -       |   |               |   | - |             |  |   | -          |  
|Common stock issued for cash                                     |  |              | -       |   |               |   | - |             |  |   | -          |  
|Common stock issued for cash                                     |  |              | -       |   |               |   | - |             |  |   | -          |  
|Net loss                                                         |  |              | -       |   |               |   | - |             |  |   | (5,379     | )
|BALANCE April 30, 2007                                           |  |              | -       |   |               |   | - |             |  |   | (5,379     | )
|Net loss                                                         |  |              | -       |   |               |   | - |             |  |   | (24,805    | )
|BALANCE April 30, 2008                                           |  |              | -       |   |               |   | - |             |  |   | (30,184    | )
|Acquisition of North American Energy Resources, Inc.             |  |              | -       |   |               |   | - |             |  |   | -          |  
|Conversion of note payable and accrued interest for common stock |  |              | -       |   |               |   | - |             |  |   | -          |  
|Common stock options granted for:                                |  |              |         |   |               |   |   |             |  |   |            |  
|350,000 shares at $1.00 per share                                |  |              | -       |   |               |   | - |             |  |   | -          |  
|50,000 shares at $1.25 per share                                 |  |              | -       |   |               |   | - |             |  |   | -          |  
|Exercise common stock options:                                   |  |              |         |   |               |   |   |             |  |   |            |  
|for $1.25 per share                                              |  |              | -       |   |               |   | - |             |  |   | -          |  
|for $1.00 per share                                              |  |              | -       |   |               |   | - |             |  |   | -          |  
|for $1.25 per share                                              |  |              | -       |   |               |   | - |             |  |   | -          |  
|for $1.00 per share                                              |  |              | -       |   |               |   | - |             |  |   | -          |  
|Accounts payable paid with common stock                          |  |              | -       |   |               |   | - |             |  |   | -          |  
|Amortize intrinsic value of options                              |  |              | -       |   |               |   | - |             |  |   | -          |  
|Cancel common stock options                                      |  |              | -       |   |               |   | - |             |  |   | -          |  
|Common stock issued for compensation                             |  |              | -       |   |               |   | - |             |  |   | -          |  
|Common stock issued for accounts payable                         |  |              | -       |   |               |   | - |             |  |   | -          |  
|Common stock issued for consulting service                       |  |              | -       |   |               |   | - |             |  |   | -          |  
|Common stock issued for accounts payable                         |  |              | -       |   |               |   | - |             |  |   | -          |  
|Capital contribution by shareholder in cash                      |  |              | -       |   |               |   | - |             |  |   | -          |  
|Common stock issued for:                                         |  |              |         |   |               |   |   |             |  |   |            |  
|Compensation                                                     |  |              | -       |   |               |   | - |             |  |   | -          |  
|Accounts payable                                                 |  |              | -       |   |               |   | - |             |  |   | -          |  
|Accounts payable                                                 |  |              | -       |   |               |   | - |             |  |   | -          |  
|Compensation                                                     |  |              | -       |   |               |   | - |             |  |   | -          |  
|Accounts payable                                                 |  |              | -       |   |               |   | - |             |  |   | -          |  
|Accounts payable                                                 |  |              | -       |   |               |   | - |             |  |   | -          |  
|Accounts payable                                                 |  |              | -       |   |               |   | - |             |  |   | -          |  
|Compensation                                                     |  |              | -       |   |               |   | - |             |  |   | -          |  
|Accounts payable                                                 |  |              | -       |   |               |   | - |             |  |   | -          |  
|Compensation                                                     |  |              | -       |   |               |   | - |             |  |   | -          |  
|Compensation                                                     |  |              | -       |   |               |   | - |             |  |   | -          |  
|Compensation                                                     |  |              | -       |   |               |   | - |             |  |   | -          |  
|Officer compensation                                             |  |              | (84,933 | ) |               |   | - |             |  |   | -          |  
|Net loss                                                         |  |              | -       |   |               |   | - |             |  |   | (1,097,468 | )
|BALANCE April 30, 2009                                           |  |              | (84,933 | ) |               |   |   |             |  |   | (1,127,652 | )



(Continued)



See
accompanying notes to consolidated financial statements.



F-5







NORTH
AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(A
Development Stage Company)

Consolidated
Statements of Stockholders’ Deficit,continued

For
the period from inception (August 18, 2006) through April 30, 2012



|                                                          |  |      |           |  |              |  |            |         |  |   |            |  |  | Intrinsic     |          
|--------------------------------------------------------- |  | ---- | --------- |  | ------------ |  | ---------- | ------- |  | - | ---------- |  |  | ------------- | ---------
|                                                          |  |      |           |  |              |  |            |         |  |   | Additional |  |  | Value of      |          
|                                                          |  |      |           |  | Common stock |  |            | Paid in |  |   | Common     | 
|                                                          |  | Date |           |  | Shares       |  |            | Amount  |  |   | Capital    |  |  | Stock Options |          
|BALANCE April 30, 2009                                    |  |      |           |  |              |  | 14,035,539 |         |  | $ | 14,036     |  |  | $             | 960,948  
|Common stock issued for:                                  |  |      |           |  |              |  |            |         |  |   |            |  |  |               |          
|consulting agreement                                      |  |      | 5/1/2009  |  |              |  | 400,000    |         |  |   | 400        |  |  |               | 419,600  
|consulting agreement                                      |  |      | 5/1/2009  |  |              |  | 200,000    |         |  |   | 200        |  |  |               | 209,800  
|oil and gas non-producing property                        |  |      | 6/9/2009  |  |              |  | 700,000    |         |  |   | 700        |  |  |               | 125,300  
|accounts payable                                          |  |      | 7/27/2009 |  |              |  | 10,000     |         |  |   | 10         |  |  |               | 4,990    
|consulting agreement                                      |  |      | 7/27/2009 |  |              |  | 30,000     |         |  |   | 30         |  |  |               | 14,970   
|consulting agreement                                      |  |      | 7/27/2009 |  |              |  | 30,000     |         |  |   | 30         |  |  |               | 14,970   
|oil and gas producing property                            |  |      | 9/25/2009 |  |              |  | 350,000    |         |  |   | 350        |  |  |               | 192,150  
|consulting contract                                       |  |      | 9/25/2009 |  |              |  | 300,000    |         |  |   | 300        |  |  |               | 182,700  
|cash                                                      |  |      | 2/23/2010 |  |              |  | 200,000    |         |  |   | 200        |  |  |               | 5,800    
|consulting agreement                                      |  |      | 2/24/2010 |  |              |  | 400,000    |         |  |   | 400        |  |  |               | 31,600   
|consulting agreement - director fees                      |  |      | 2/24/2010 |  |              |  | 450,000    |         |  |   | 450        |  |  |               | 35,550   
|consulting agreement - director fees                      |  |      | 2/24/2010 |  |              |  | 150,000    |         |  |   | 150        |  |  |               | 11,850   
|officer compensation - director fees                      |  |      | 2/24/2010 |  |              |  | 120,000    |         |  |   | 120        |  |  |               | 9,480    
|Other comprehensive loss on available-for-sale securities |  |      |           |  |              |  | - -        |         |  |   | - -        |  |  |               | -        
|Amortize officer compensation                             |  |      |           |  |              |  | -          |         |  |   | -          |  |  |               | -        
|Net loss                                                  |  |      |           |  |              |  | -          |         |  |   | -          |  |  |               | -        
|BALANCE April 30, 2010                                    |  |      |           |  |              |  | 17,375,539 |         |  |   | 17,376     |  |  |               | 2,219,708
|Recission of available-for-sale securities transaction    |  |      |           |  |              |  | -          |         |  |   | -          |  |  |               | -        
|Amortize officer compensation                             |  |      |           |  |              |  | -          |         |  |   | -          |  |  |               | -        
|Convertible note payable forgiven by related party        |  |      | 12/3/2010 |  |              |  | -          |         |  |   | -          |  |  |               | 57,920   
|Common stock issued for:                                  |  |      |           |  |              |  |            |         |  |   |            |  |  |               |          
|Consulting agreement                                      |  |      | 12/2/2010 |  |              |  | 850,000    |         |  |   | 850        |  |  |               | 7,650    
|Conversion of convertible notes payable                   |  |      | 12/5/2010 |  |              |  | 3,329,406  |         |  |   | 3,329      |  |  |               | 552,919  
|Net loss                                                  |  |      |           |  |              |  | -          |         |  |   | -          |  |  |               | -        
|BALANCE April 30, 2011                                    |  |      |           |  |              |  | 21,554,945 |         |  |   | 21,555     |  |  |               | 2,838,197
|Net loss                                                  |  |      |           |  |              |  | -          |         |  |   | -          |  |  |               | -        
|BALANCE April 30, 2012                                    |  |      |           |  |              |  | 21,554,945 |         |  | $ | 21,555     |  |  | $             | 2,838,197



(Continued)



See
accompanying notes to consolidated financial statements.



F-6







NORTH
AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(A
Development Stage Company)

Consolidated
Statements of Stockholders’ Deficit, continued

For
the period from inception (August 18, 2006) through April 30, 2012



|                                                           |  |              |         |   |               |   |        | Deficit     |  |   |            |  
|---------------------------------------------------------- |  | ------------ | ------- | - | ------------- | - | ------ | ----------- |  | - | ---------- | -
|                                                           |  |              |         |   | Accumulated   |   |        | Accumulated |  |   |            |  
|                                                           |  | Prepaid      |         |   | Other         |   |        | During the  |  |   |            |  
|                                                           |  | Officer      |         |   | Comprehensive |   |        | Development |  |   |            |  
|                                                           |  | Compensation |         |   | Loss          |   |        | Stage       |  |   | Total      |  
|BALANCE April 30, 2009                                     |  | $            | (84,933 | ) |               | $ | -      |             |  | $ | (1,127,652 | )
|Common stock issued for:                                   |  |              |         |   |               |   |        |             |  |   |            |  
|consulting agreement                                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|consulting agreement                                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|oil and gas non-producing property                         |  |              | -       |   |               |   | -      |             |  |   | -          |  
|accounts payable                                           |  |              | -       |   |               |   | -      |             |  |   | -          |  
|consulting agreement                                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|consulting agreement                                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|oil and gas producing property                             |  |              | -       |   |               |   | -      |             |  |   | -          |  
|consulting contract                                        |  |              | -       |   |               |   | -      |             |  |   | -          |  
|cash                                                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|consulting agreement                                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|consulting agreement - director fees                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|consulting agreement - director fees                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|officer compensation - director fees                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|Other comprehensive loss on available-for- sale securities |  |              | -       |   |               |   | (1,000 | )           |  |   | -          |  
|Amortize officer compensation                              |  |              | 72,804  |   |               |   | -      |             |  |   | -          |  
|Net loss                                                   |  |              | -       |   |               |   | -      |             |  |   | (1,382,974 | )
|BALANCE April 30, 2010                                     |  |              | (12,129 | ) |               |   | (1,000 | )           |  |   | (2,510,626 | )
|Recission of available-for-sale                            |  |              |         |   |               |   |        |             |  |   |            |  
|securities transaction                                     |  |              | -       |   |               |   | 1,000  |             |  |   | -          |  
|Amortize officer compensation                              |  |              | 12,129  |   |               |   | -      |             |  |   | -          |  
|Convertible note payable forgiven by related party         |  |              | -       |   |               |   | -      |             |  |   | -          |  
|Common stock issued for:                                   |  |              |         |   |               |   |        |             |  |   |            |  
|Consulting agreement                                       |  |              | -       |   |               |   | -      |             |  |   | -          |  
|Conversion of convertible notes payable                    |  |              | -       |   |               |   | -      |             |  |   | -          |  
|Net loss                                                   |  |              | -       |   |               |   | -      |             |  |   | (462,392   | )
|BALANCE April 30, 2011                                     |  |              | -       |   |               |   | -      |             |  |   | (2,973,018 | )
|Net loss                                                   |  |              | -       |   |               |   | -      |             |  |   | (655,449   | )
|BALANCE April 30, 2012                                     |  | $            | -       |   |               | $ | -      |             |  | $ | (3,628,467 | )



See
accompanying notes to consolidated financial statements.



F-7







NORTH
AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(A
Development Stage Company)

Consolidated
Statements of Cash Flows

For
the years ended April 30, 2012 and April 30, 2011 and the period

from
inception (August 18, 2006) through April 30, 2012



|                                                                                      |  |      |          |   |      |   |          | Inception         | 
|------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ----------------- | 
|                                                                                      |  |      |          |   |      |   |          | (August 18, 2006) | 
|                                                                                      |  |      |          |   |      |   |          | through           | 
|                                                                                      |  |      |          |   |      |   |          | April 30,         | 
|                                                                                      |  | 2012 |          |   | 2011 |   |          | 2012              | 
|Operating activities                                                                  |  |      |          |   |      |   |          |                   | 
|Net loss                                                                              |  | $    | (655,449 | ) |      | $ | (462,392 | )                 | 
|Adjustments to reconcile net loss to net cash used in operating activities:           |  |      |          |   |      |   |          |                   | 
|Depreciation and amortization                                                         |  |      | 130      |   |      |   | 1,530    |                   | 
|Non-cash compensation                                                                 |  |      | -        |   |      |   | 266,754  |                   | 
|Asset impairment                                                                      |  |      | -        |   |      |   | 46,894   |                   | 
|Bad debt expense                                                                      |  |      | -        |   |      |   | 12,828   |                   | 
|Changes in operating assets and liabilities:                                          |  |      |          |   |      |   |          |                   | 
|Accounts receivable                                                                   |  |      | (367     | ) |      |   | 321      |                   | 
|Accrued interest income - stockholder                                                 |  |      | -        |   |      |   | -        |                   | 
|Prepaid expenses and other assets                                                     |  |      | 8,664    |   |      |   | 9,040    |                   | 
|Accounts payable                                                                      |  |      | 66,756   |   |      |   | 24,693   |                   | 
|Accrued expenses                                                                      |  |      | 222,913  |   |      |   | 37,076   |                   | 
|Oil and gas proceeds due others                                                       |  |      | (368     | ) |      |   | (4,622   | )                 | 
|Advances from joint interest owners                                                   |  |      | -        |   |      |   | (1,226   | )                 | 
|Net cash used in operating activities                                                 |  |      | (357,721 | ) |      |   | (69,104  | )                 | 
|Investing activities                                                                  |  |      |          |   |      |   |          |                   | 
|Payments for oil and natural gas properties                                           |  |      | -        |   |      |   | (4,893   | )                 | 
|Cash received in excess of cash paid to acquire North American Energy Resources, Inc. |  |      | -        |   |      |   | -        |                   | 
|Proceeds from sale of oil and natural gas properties                                  |  |      | -        |   |      |   | -        |                   | 
|Payments for pipeline                                                                 |  |      | -        |   |      |   | -        |                   | 
|Net cash used in investing activities                                                 |  |      | -        |   |      |   | (4,893   | )                 | 
|Financing activities                                                                  |  |      |          |   |      |   |          |                   | 
|Loan proceeds                                                                         |  |      | -        |   |      |   | -        |                   | 
|Loans from officers and shareholders                                                  |  |      | 392,810  |   |      |   | 17,500   |                   | 
|Related party advances for working capital                                            |  |      | (35,489  | ) |      |   | 54,187   |                   | 
|Cash contributions from shareholders                                                  |  |      | -        |   |      |   | -        |                   | 
|Sale of common stock                                                                  |  |      | -        |   |      |   | -        |                   | 
|Net cash provided by financing activities                                             |  |      | 357,321  |   |      |   | 71,687   |                   | 
|Net increase (decrease) in cash                                                       |  |      | (400     | ) |      |   | (2,310   | )                 | 
|Cash, beginning of period                                                             |  |      | 716      |   |      |   | 3,026    |                   | 
|&Cash, end of period                                                                  |  | $    | 316      |   |      | $ | 716      |                   | 



(Continued)



See
accompanying notes to consolidated financial statements.



F-8







NORTH
AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(A
Development Stage Company)

Consolidated
Statements of Cash Flows, Continued

For
the years ended April 30, 2012 and April 30, 2011 and the period

from
inception (August 18, 2006) through April 30, 2012



|                                                                         |  |      |   |  |      |   |         | Inception         | 
|------------------------------------------------------------------------ |  | ---- | - |  | ---- | - | ------- | ----------------- | 
|                                                                         |  |      |   |  |      |   |         | (August 18, 2006) | 
|                                                                         |  |      |   |  |      |   |         | through           | 
|                                                                         |  |      |   |  |      |   |         | April 30,         | 
|                                                                         |  | 2012 |   |  | 2011 |   |         | 2012              | 
|Supplemental cash flow information                                       |  |      |   |  |      |   |         |                   | 
|Cash paid for interest and income taxes:                                 |  |      |   |  |      |   |         |                   | 
|Interest                                                                 |  | $    | - |  |      | $ | -       |                   | 
|Income taxes                                                             |  |      |   |  |      |   | -       |                   | 
|Non-cash investing and financing activities:                             |  |      |   |  |      |   |         |                   | 
|Common stock issued for:                                                 |  |      |   |  |      |   |         |                   | 
|Notes receivable                                                         |  | $    | - |  |      | $ | -       |                   | 
|Oil and gas properties                                                   |  |      | - |  |      |   | -       |                   | 
|Interest in pipeline                                                     |  |      | - |  |      |   | -       |                   | 
|Loans to shareholders assumed                                            |  |      | - |  |      |   | -       |                   | 
|Advance from joint interest participant assumed                          |  |      | - |  |      |   | -       |                   | 
|                                                                         |  |      |   |  |      |   |         |                   | 
|Common stock issued for convertible note payable and accrued interest    |  |      | - |  |      |   | 556,248 |                   | 
|Exchange of joint interest receivable for oil and natural gas properties |  |      | - |  |      |   | -       |                   | 
|Common stock options granted                                             |  |      | - |  |      |   | -       |                   | 
|Common stock options cancelled                                           |  |      | - |  |      |   | -       |                   | 
|Common stock issued for consulting agreements                            |  |      | - |  |      |   | 8,500   |                   | 
|Unevaluated oil and gas properties                                       |  |      | - |  |      |   | -       |                   | 
|Proven oil and natural gas properties                                    |  |      | - |  |      |   | -       |                   | 
|Accounts payable                                                         |  |      | - |  |      |   | -       |                   | 
|Chief executive officer compensation                                     |  |      | - |  |      |   | -       |                   | 
|Credit balance transferred from accounts receivable to accounts payable  |  |      | - |  |      |   | -       |                   | 
|Accounts receivable applied as payment on note payable to related party  |  |      | - |  |      |   | -       |                   | 
|Option exercises paid by reducing note payable to related party          |  |      | - |  |      |   | -       |                   | 
|Advance from shareholder converted to note                               |  |      | - |  |      |   | -       |                   | 
|Accounts payable converted to convertible note payable                   |  |      | - |  |      |   | 38,678  |                   | 



See
accompanying notes to consolidated financial statements.



F-9







ORTH
AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development
Stage Company)

Notes to
Consolidated Financial Statements



|Note 1: | Organization and summary of significant accounting policies
|------- | -----------------------------------------------------------



Organization



The consolidated financial
statements include the accounts of North American Energy Resources (“NAEY”) and its wholly owned subsidiary North American
Exploration, Inc. (“NAE”) (collectively the “Company”). All intercompany balances and transactions have been
eliminated in consolidation.



NAEY was originally organized
in Nevada on August 22, 2006 with the name Mar Ked Mineral Exploration, Inc. (“Mar Ked”). The Company changed its name
from Mar Ked to North American Energy Resources, Inc. on August 11, 2008.



On July 28, 2008, the
Company acquired 100% of the outstanding stock of NAE for 420,000 shares of our common stock pursuant to a Stock Purchase Agreement
(“SPA”). Completion of the SPA resulted in the shareholders of NAE having control of NAEY. Accordingly, the transaction
was recorded for accounting purposes as the acquisition of NAE by NAEY with NAE as the acquirer (reverse acquisition). The financial
statements of the Company prior to July 28, 2008 are those of NAE. Formerly NAEY used a November 30 year-end. The Company will
utilize the April 30 year-end of NAE after April 30, 2008.



The SPA provided that
NAEY was to have $1,500,000 in cash and no liabilities at closing. At closing, NAEY had $150,000 of the required cash and on August
28, 2008, the parties to the SPA entered into a Modification Agreement (“MA”) which provided an extension until January
27, 2009 for the additional cash to be contributed to the Company. At January 27, 2009, the Company had received an additional
$50,000 and was still short of the agreed amount by $1,300,000. The MA provided that the Buyer would make contingent issuances
of shares to the Seller equal to 95% of all the outstanding stock after issuance. Accordingly, effective April 30, 2009, an additional
13,250,381 shares were issued to the Sellers. Accordingly, the total purchase price for NAE was 13,690,381 shares of common stock.



NAE was organized in Nevada
on August 18, 2006 as Signature Energy, Inc. and changed its name to North American Exploration, Inc. on June 2, 2008.



Business



NAE is an independent
oil and natural gas company engaged in the acquisition, exploration and development of oil and natural gas properties and the production
of oil and natural gas. The Company operates in the upstream segment of the oil and gas industry which includes the drilling, completion
and operation of oil and gas wells. The Company has an interest in a pipeline in Washington County, Oklahoma which is currently
shut-in, but has been used to gather natural gas production. The Company’s gas production in Washington County, Oklahoma was shut-in
due to low prices in February 2009 and was sold effective October 1, 2010 along with the Company’s oil production in the area.
The Company has acquired an interest in a non-operated gas well in Texas County, Oklahoma and is continuing to seek additional
acquisition possibilities.



Development stage



We are considered a development
stage company because we have had limited resources and do not currently have sufficient capital to complete our business plan,
which includes acquiring and operating producing properties with development potential. Accordingly, the operations of the Companies
are presented as those of a development stage enterprise, from inception (August 18, 2006).



Cash



The Company maintains
cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation
up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federally insured limits. The Company
has not experienced any losses in such accounts.



F-10







Revenue recognition



We derive our revenue
primarily from the sale of produced crude oil and natural gas. Revenue is recorded in the month the product is delivered to the
purchaser. We receive payment from one to three months after delivery. At the end of each month, we estimate the amount of production
delivered to purchasers and the price we will receive. Variances between our estimated revenue and actual payment are recorded
in the month the payment is received; however, the differences should be insignificant.



Property and equipment



The Company follows the
full cost method of accounting for oil and natural gas operations. Under this method all productive and nonproductive costs incurred
in connection with the acquisition, exploration and development of oil and natural gas reserves are capitalized. No gains or losses
are recognized upon the sale or other disposition of oil and natural gas properties except in transactions that would significantly
alter the relationship between capitalized costs and proved reserves. The costs of unevaluated oil and natural gas properties are
excluded from the amortizable base until the time that either proven reserves are found or it has determined that such properties
are impaired. The Company had no capitalized costs related to unevaluated properties at April 30, 2012 and 2011. As properties
are evaluated, the related costs would be transferred to proven oil and natural gas properties using full cost accounting. All
capitalized costs were included in the amortization base as of April 30, 2012 and 2011.



Under the full cost method
the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed the estimated after-tax
future net revenues from proved oil and natural gas properties, discounted at 10% (the “Ceiling Limitation”). In arriving
at estimated future net revenues, estimated lease operating expenses, development costs, and certain production-related taxes are
deducted. In calculating future net revenues, revenues are based on the arithmetic average of beginning of month prices for both
years. Costs in effect at the time of the calculation for both years are held constant indefinitely, except for changes that are
fixed and determinable by existing contracts. The net book value is compared to the ceiling limitation on a quarterly and yearly
basis. The excess, if any, of the net book value above the ceiling limitation is charged to expense in the period in which it occurs
and is not subsequently reinstated. Reserve estimates used in determining estimated future net revenues have been prepared by an
independent engineer for 2011. Due to the cost of obtaining a new reserve estimate for 2012 and the relative insignificance of
the Company’s reserves, the Company updated the 2011 report for use in 2012. The Company recorded an impairment of $46,894
in 2011 and none in 2012.



Other property and equipment
consists principally of the Company’s interest in a pipeline. Other property and equipment and related accumulated amortization
and depreciation are relieved upon retirement or sale and the gain or loss is included in operations. Renewals and replacements
that extend the useful life of property and equipment are treated as capital additions. The pipeline was written off at the end
of 2010 and an asset impairment charge of $132,663 was recorded.



The Company assesses the
recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment in
value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the
carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of
the assets exceeds the estimated fair value of the asset.



Depreciation and amortization



All capitalized costs
of oil and natural gas properties and equipment, including the estimated future costs to develop proved reserves, are amortized
using the unit-of-production method based on total proved reserves. Depreciation of other equipment is computed on the straight-line
method over the estimated useful lives of the assets, which range from three to twenty-five years.



Natural gas sales and gas imbalances



The Company follows the
entitlement method of accounting for natural gas sales, recognizing as revenues only its net interest share of all production sold.
Any amount attributable to the sale of production in excess of or less than the Company’s net interest is recorded as a gas
balancing asset or liability. At April 30, 2012 and 2011, there were no natural gas imbalances.



F-11







Credit and market risk



The Company sells oil
and natural gas to one customer and participates with other parties in the drilling, completion and operation of oil and natural
gas wells. Joint interest and oil and natural gas sales receivables related to these operations are generally unsecured. The Company
provides an allowance for doubtful accounts for certain joint interest owners’ receivable balances when the Company believes
the recoverable balance may not be collected. The Company has the right of offset of the joint interest owners’ share of
oil and natural gas production against amounts owed by the joint interest owners. Accounts receivable are presented net of the
related allowance for doubtful accounts.



In 2012 and 2011, the
Company had cash deposits in certain banks that at times may have exceeded the maximum insured by the Federal Deposit Insurance
Corporation. The Company monitors the financial condition of the banks and has experienced no losses on these accounts.



General and administrative expense



The Company received fees
for the operation of jointly owned oil and natural gas properties and recorded such reimbursements as reductions of general and
administrative expense. Such fees totaled approximately $3,000 in 2011 and none in 2012.



Oil and natural gas reserve estimates



The Company engaged an
independent consultant to prepare its oil and natural gas reserves in 2011. Proved reserves, estimated future net revenues and
the present value of our reserves are estimated based upon a combination of historical data and estimates of future activity. Consistent
with SEC requirements, we have based our revenue projections on the arithmetic average of beginning of the month historical prices
in 2012 and 2011. The reserve estimates are used in calculating depletion, depreciation and amortization and in the assessment
of the Company’s Ceiling Limitation. Significant assumptions are required in the valuation of proved oil and natural gas
reserves which, as described herein, may affect the amount at which oil and natural gas properties are recorded. Actual results
could differ materially from these estimates.



Income taxes



Provisions for income
taxes are based on taxes payable or refundable for the current year and deferred taxes. Deferred taxes are provided on differences
between the tax bases of assets and liabilities and their reported amounts in the financial statements, and tax carry forwards.
Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to
the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates
are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.



At April 30, 2012 and
2011, the Company had no accrued interest or penalties relating to any tax obligations. The Company currently has no federal or
state examination in progress, nor has it had any federal or state examinations since its inception. The last three years of the
Company’s tax years are subject to federal and state tax examination.



In assessing the realization
of the deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets
will be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible. Management considers the projected future taxable income
and tax planning strategies in making this assessment. Based on this assessment, management has established a full valuation allowance
against all of the deferred tax assets relating to the NOLs for every period because it is more likely than not that all of the
deferred tax assets will not be realized.



F-12







Earnings (loss) per common share



The Company is required
to report both basic earnings per share, which is based on the weighted-average number of common shares outstanding, and diluted
earnings per share, which is based on the weighted-average number of common shares outstanding plus all potential dilutive shares
outstanding. At April 30, 2012 and 2011, there were no potentially dilutive common stock equivalents. Accordingly, basic and diluted
earnings (loss) per share are the same for each of the periods presented.



Estimates



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



Fair value of financial instruments



Financial instruments
consist of accounts payable, accrued expenses and short-term borrowings. The carrying amount of these financial instruments approximates
fair value due to their short-term nature or the current rates at which the Company could borrow funds with similar remaining maturities.



Stock option plans



The compensation cost
relating to share-based payment transactions (including the cost of all employee stock options) is required to be recognized in
the financial statements. That cost will be measured based on the estimated fair value of the equity or liability instruments issued.
The accounting literature covers a wide range of share-based compensation arrangements including share options, restricted share
plans, performance-based awards, share appreciation rights, and employee share purchase plans.



The Black-Scholes option
valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected
stock price volatility. Because the Company’s options have characteristics significantly different from those of traded options,
and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion,
the existing models may not necessarily provide a reliable single measure of the fair value of its options. However, the Black-Scholes
option valuation model provides the best available estimate for this purpose.



Contingencies



Certain conditions may
exist as of the date financial statements are issued, which may result in a loss to the Company, but which will only be resolved
when one or more future events occur or fail to occur. Company management and its legal counsel assess such contingencies related
to legal proceeding that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s
legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the
amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that
a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in
the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is
not probable but is reasonably possible, or if probable but cannot be estimated, then the nature of the contingent liability, together
with an estimate of the range of possible loss if determinable would be disclosed.



Asset retirement obligations



The fair value of a liability
for an asset retirement obligation is required to be recognized in the period in which it is incurred if a reasonable estimate
of fair value can be made, and that the associated retirement costs be capitalized as part of the carrying amount of the long-lived
asset. The Company determines its asset retirement obligation by calculating the present value of the estimated cash flows related
to the liability. Periodic accretion of the discount of the estimated liability would be recorded in the statement of operations.
At April 30, 2012 and 2011 the Company has estimated that its share of the cost of plugging and abandoning its producing properties
was $416 and $376, respectively.



F-13







Impairment of oil and gas properties



Producing properties and
significant unproved properties are assessed annually, or more frequently as economic events dictate, for potential impairment.
Any impairment loss is the difference between the carrying value of the asset and its fair value. Fair value is calculated as the
present value of estimated expected future cash flows from proved, probable and, as appropriate, possible reserves.



Recent accounting pronouncements



There
are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet
effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of June 15, 2012, none of
these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the
Company.



|Note 2: | accounts and note receivable
|------- | ----------------------------



Accounts receivable at
April 30, 2012 and 2011 include the following:



|                                |  | 2012 |        |   | 2011 |  
|------------------------------- |  | ---- | ------ | - | ---- | -
|                                |  |      |        |   |      |  
|Natural gas sales, net          |  | $    | 367    |   |      | $
|Note receivable                 |  |      | 5,000  |   |      |  
|Allowance for doubtful accounts |  |      | (5,000 | ) |      |  
|                                |  | $    | 367    |   |      | $



The Company received a
note for $5,000 when it sold its oil properties and gas leases in Washington County, Oklahoma in the fall of 2010. The Company
determined uncertainty about the collectability of the note exists and fully reserved the note balance at April 30, 2011.



|Note 3: | PREPAID EXPENSES
|------- | ----------------



The prepaid expense at
April 30, 2011 represents the unamortized balance of Directors and Officers insurance in the amount of $8,664.



|Note 4: | related party transactions
|------- | --------------------------



At April 30, 2012 and
2011, the Company owes its CEO and CFO the following amounts for expense reimbursements and cash advances.



|                        |  | 2012 |        |  | 2011
|----------------------- |  | ---- | ------ |  | ----
|                        |  |      |        |  |     
|Chief executive officer |  | $    | -      |  |     
|Chief financial officer |  |      | 18,698 |  |     
|                        |  | $    | 18,698 |  |     



In February 2010, the
Company issued 120,000 shares of its common stock valued at $9,600 for director fees to its former CEO, issued 450,000 shares of
its common stock valued at $36,000 to a Director for director fees and consulting services and issued 150,000 shares of its common
stock valued at $12,000 to a company controlled by a Director for director fees and management services.



F-14







Effective June 15, 2011,
the Board of Directors approved compensation to begin accruing at the rate of $10,000 per month for each of the two listed executive
officers. Beginning effective November 1, 2011, the compensation rate for Mr. Coldren increased to $20,833 per month and for Mr.
Massara increased to $18,750 per month. Both agreed to discontinue accruing their salary effective January 31, 2012 until conditions
improve.



Accrued expenses include
the following:



|                                  |  | 2012 |         |  | 2011 |  
|--------------------------------- |  | ---- | ------- |  | ---- | -
|                                  |  |      |         |  |      |  
|Accrued compensation due officers |  | $    | 208,750 |  |      | $
|Accrued interest due CEO          |  |      | 11,583  |  |      |  
|Amount due related parties        |  |      | 220,333 |  |      |  
|Other accrued expenses            |  |      | 994     |  |      |  
|Accrued interest - other          |  |      | 2,029   |  |      |  
|Asset retirement obligation       |  |      | 416     |  |      |  
|                                  |  | $    | 223,772 |  |      | $



Convertible note payable
– officer



Interim financing for
due diligence expenses and operations is being funded pursuant to a $500,000 multiple advance bridge loan provided to the Company
by Clinton W. Coldren, CEO. In evidence of the loan, on November 3, 2011, the Company issued to Clinton W. Coldren that certain
8% Convertible Note in the principal amount of $500,000. The Convertible Note has a term of one year and is convertible, at the
option of the Holder, into shares of common stock of the Company, in whole or in part at any time, at an initial conversion price
equal to 130% of the volume-weighted average price of the common stock for the 50 trading days following October 31, 2011, subject
to adjustment for distributions to shareholders, stock splits, reclassification of shares and tender or exchange offers. The Company
does not have the right to prepay all or any portion of the Note prior to the Maturity Date.



Warrants



On December 15, 2010, the Board of Directors
granted Warrants to its new Executive Team as described in Note 6 below.



The Board of Directors
issued a warrant to acquire 500,000 shares of the Company’s common stock at $0.18 per share to its new director, Larry D.
Hall, on November 10, 2011. The strike price exceeded the market price when the warrants were granted.





|Note 5: | CONVERTIBLE NOTES PAYABLE
|------- | -------------------------



Convertible
notes payable at April 30, 2012 and 2011 consists of one convertible note in the amount of $38,678 with interest accruing at 4%
per annum which is due January 6, 2013. The note is convertible into the Company’s common stock at the rate of $0.10 per
share. The note consists of accounts payable to a consultant that was converted into the convertible note.



|Note 6: | Stockholder’s equity
|------- | --------------------



PREFERRED STOCK



The Company has 100,000,000
shares of $0.001 par value preferred stock authorized and no shares issued or outstanding at April 30, 2012 and 2011.



F-15







COMMON STOCK



The Company has 100,000,000
shares of its $0.001 par value common stock authorized. At April 30, 2012 and 2011 the Company had 21,554,945 shares issued and
outstanding.



WARRANTS



As a part of their initial
compensation, on December 15, 2010, the new Executive Team was granted Warrants with the following primary terms and conditions.
The strike price exceeded the market price when the Warrants were granted.



| | a) | Each Warrant shall entitle the owner to purchase one share of common stock of the Company. The warrants contain price protection when the shares will be used for an acquisition at a price lower than the conversion price in force. The anti dilution provision will not apply to financings done below the strike price.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                            
| | b) | The Executive Team was granted three Warrant Certificates as follows:                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 1.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 2.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 3.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                            
| | c) | Other warrant terms are as follows:                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 1.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 2.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 3.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 4.                                                                                                                                                                                                                                                                                                                         



The Board of Directors
issued a warrant to acquire 500,000 shares of the Company’s common stock at $0.18 per share to its new director, Larry D.
Hall, on November 10, 2011. The strike price exceeded the market price when the warrants were granted.



CONTINGENT SHARES



On July 28, 2008, the
Company acquired 100% of the outstanding stock of NAE for 420,000 shares of our common stock pursuant to a Stock Purchase Agreement
(“SPA”). Completion of the SPA resulted in the shareholders of NAE having control of NAEY.



The SPA provided that
NAEY was to have $1,500,000 in cash and no liabilities at closing. At July 28, 2008, the closing date, NAEY had $150,000 of the
required cash and on August 28, 2008, the parties to the SPA entered into a Modification Agreement (“MA”) which provided
an extension until January 27, 2009 for the additional cash to be contributed to the Company. At January 27, 2009, the Company
had received an additional $50,000 and was still short $1,300,000 of the agreed amount. The MA provided that the Buyer would make
contingent issuances of shares to the Seller equal to 95% of all the outstanding stock after issuance. Accordingly, effective April
30, 2009, an additional 13,250,381 shares were issued to the Sellers. The total purchase price of NAE was 13,670,381 shares.



F-16







COMMON STOCK OPTIONS



The North American Energy
Resources, Inc. 2008 Stock Option Plan (“Plan”) was filed on September 11, 2008 and reserved 2,500,000 shares for awards
under the Plan. The Company’s Board of Directors is designated to administer the Plan and may form a Compensation Committee for
this purpose. The Plan terminates on July 23, 2013.



Options granted under
the Plan may be either “incentive stock options” intended to qualify as such under the Internal Revenue Code, or “non-qualified
stock options.” Options outstanding under the Plan have a maximum term of up to ten years, as designated in the option agreements.



At April 30, 2012 and
2011, there are 1,242,333 shares available for grant. There was no activity in options during 2012 or 2011.



|Note 7: | income taxes
|------- | ------------



The Company has not provided
a deferred tax benefit or expense for the years ended April 30, 2012 and 2011, as all net deferred tax assets have a full valuation
allowance.



Actual income tax benefit
applicable to net loss before income taxes is reconciled with the “normally expected” federal income tax as follows:



|                                                     |  | 2012 |          |   | 2011 |  
|---------------------------------------------------- |  | ---- | -------- | - | ---- | -
|                                                     |  |      |          |   |      |  
|“Normally expected” income tax benefit               |  | $    | (222,900 | ) |      | $
|State income taxes net of federal income tax benefit |  |      | (26,200  | ) |      |  
|Other                                                |  |      | 500      |   |      |  
|Valuation allowance                                  |  |      | 248,600  |   |      |  
|Total                                                |  | $    | -        |   |      | $



The Company’s income
tax provision was computed based on the federal statutory rate and the average state rate, net of the related federal benefit.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred
tax assets and liabilities are as follows:



|                                                     |  | 2012 |            |   | 2011 |  
|---------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|                                                     |  |      |            |   |      |  
|Net operating loss carryforward                      |  | $    | 1,087,000  |   |      | $
|Accrued compensation and accrued interest            |  |      | 84,300     |   |      |  
|Depreciable/depletable property, plant and equipment |  |      | 47,700     |   |      |  
|Bad debts                                            |  |      | 1,900      |   |      |  
|Valuation allowance                                  |  |      | (1,220,900 | ) |      |  
|Total                                                |  | $    | -          |   |      | $



At April 30, 2012, the
Company has net operating loss carryforwards in the amount of approximately $3,272,000, which expire between 2027 and 2032.



F-17







|Note 8: | Going concern
|------- | -------------



The accompanying financial
statements are prepared assuming the company will continue as a going concern. As of April 30, 2012, the Company’s current
liabilities exceed its current assets by $770,891 and its total liabilities exceed its total assets by $768,715. The company has
also incurred net losses since its inception. These factors, among others, raise substantial doubt as to the Company’s ability
to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



The Company expects to
attempt to raise capital with private placements of common stock and borrow funds as necessary to implement its business plan.



|Note 9: | ASSET IMPAIRMENTS
|------- | -----------------



The Company recorded an
asset impairment during the year ended April 30, 2011 in the amount of $46,894 due to a ceiling test limitation on oil and gas
reserves, which resulted from selling the properties below book value.



|Note10: | SUBSEQUENT EVENT
|------- | ----------------



The Company has evaluated
events occurring after the date of these financial statements through July 12, 2012, the date that these financial statements were
issued. There were no material subsequent events as of that date which would require disclosure in or adjustments to these financial
statements.



|Note 11: | supplementary oil and gas reserve information (unaudited)
|-------- | ---------------------------------------------------------



The Company has an interest in a gas well in
Texas County, Oklahoma at April 30, 2012 and 2011.



The Company engaged an
independent consultant to prepare its year-end estimates of future net recoverable oil and natural gas reserves at April 30, 2011.
Due to the cost involved and the relative limited value of the reserves, the Company incorporated the assumptions used by the independent
consultant in 2011 and prepared its own estimate as of April 30, 2012. Estimated proved net recoverable reserves as shown below
include only those quantities that can be expected to be commercially recoverable using the beginning of month average prices and
costs in effect at the balance sheet dates existing under existing regulatory practices and with conventional equipment and operating
methods.



Proved developed reserves
represent only those reserves expected to be recovered through existing wells. Proved undeveloped reserves would include those
reserves expected to be recovered from new wells on un-drilled acreage or from existing wells on which a relatively major expenditure
is required for re-completion.



Capitalized costs relating
to oil and natural gas producing activities and related accumulated depreciation and amortization at April 30, 2012 and 2011 are
summarized as follows:



|                                                      |  | 2012 |       |   | 2011 |  
|----------------------------------------------------- |  | ---- | ----- | - | ---- | -
|                                                      |  |      |       |   |      |  
|Proved oil and natural gas properties under full cost |  | $    | 2,358 |   |      | $
|Accumulated depreciation and amortization             |  |      | (182  | ) |      |  
|                                                      |  | $    | 2,176 |   |      | $



F-18







Costs incurred in oil
and natural gas producing activities for the year ended April 30, 2012 and 2011 are summarized as follows:



|                                     |  | 2012 |      |  | 2011 |  
|------------------------------------ |  | ---- | ---- |  | ---- | -
|                                     |  |      |      |  |      |  
|Acquisition of proved properties     |  | $    | -    |  |      | $
|Development costs                    |  |      | -    |  |      |  
|                                     |  | $    | -    |  |      | $
|                                     |  |      |      |  |      |  
|Amortization rate per equivalent BOE |  | $    | 1.03 |  |      | $



Net quantities of proved and proved developed
reserves of oil and natural gas are summarized as follows:



|                                  |  | Oil (BBLs) |        |   | Gas (MCF) | 
|--------------------------------- |  | ---------- | ------ | - | --------- | 
|                                  |  |            |        |   |           | 
|Balance, April 30, 2010           |  |            | 2,250  |   |           | 
|Extensions and discoveries        |  |            | -      |   |           | 
|Acquisition of producing reserves |  |            | -      |   |           | 
|Sale of producing reserves        |  |            | (2,186 | ) |           | 
|Revisions of estimates            |  |            | -      |   |           | 
|Production                        |  |            | (64    | ) |           | 
|Balance, April 30, 2011           |  |            | -      |   |           | 
|Production                        |  |            | -      |   |           | 
|Revisions of estimates            |  |            | 0      |   |           | 
|Balance, April 30, 2012           |  |            | -      |   |           | 



The following is a summary
of a standardized measure of discounted net cash flows related to the Company’s proved oil and natural gas reserves. For
these calculations, estimated future cash flows from estimated future production of proved reserves were computed using the arithmetic
average of beginning of month prices. Future development and production costs attributable to the proved reserves were estimated
assuming that existing conditions would continue over the economic lives of the individual leases and costs were not escalated
for the future. Estimated future income tax expenses were calculated by applying future statutory tax rates (based on the current
tax law adjusted for permanent differences and tax credits) to the estimated future pretax net cash flows related to proved oil
and natural gas reserves, less the tax basis of the properties involved.



The Company cautions against
using this data to determine the fair value of its oil and natural gas properties. To obtain the best estimate of the fair value
of the oil and natural gas properties, forecasts of future economic conditions, varying discount rates, and consideration of other
than proved reserves would have to be incorporated into the calculation. In addition, there are significant uncertainties inherent
in estimating quantities of proved reserves and in projection rates of production that impair the usefulness of the data.



The standardized measure of discounted future
net cash flows relating to proved oil and natural gas reserves at April 30, 2012 and 2011 are summarized as follows:



|                                                         |  | 2012 |         |   | 2011 |  
|-------------------------------------------------------- |  | ---- | ------- | - | ---- | -
|                                                         |  |      |         |   |      |  
|Future cash inflows                                      |  | $    | 35,375  |   |      | $
|Future production costs                                  |  |      | (26,354 | ) |      |  
|Future income tax expenses                               |  |      | -       |   |      |  
|Future net cash flows                                    |  |      | 9,021   |   |      |  
|10% annual discount for estimated timing of cash flows   |  |      | (4,350  | ) |      |  
|Standardized measure of discounted future net cash flows |  | $    | 4,671   |   |      | $



F-19







The following are the principal sources of
changes in the standardized measure of discounted future net cash flows of the Company for the years ended April 30, 2012 and 2011:



|                                                                                    |  |   | 2012   |   |  |   | 2011    |  
|----------------------------------------------------------------------------------- |  | - | ------ | - |  | - | ------- | -
|Standardized
    measure of discounted future net cash flows at beginning of period |  | $ | 5,690  |   |  | $ | 52,250  |  
|Changes during the period:                                                          |  |   |        |   |  |   |         |  
|Sales of natural gas produced, net of production costs                              |  |   | (991   | ) |  |   | 4,284   |  
|Net changes in prices and production costs                                          |  |   | (28    | ) |  |   | 6,247   |  
|Impairments                                                                         |  |   | -      |   |  |   | (46,984 | )
|Development costs incurred and revisions                                            |  |   | -      |   |  |   | 2,893   |  
|Purchase of reserves in place                                                       |  |   | -      |   |  |   | 2,000   |  
|Sale of properties                                                                  |  |   | -      |   |  |   | (15,000 | )
|Net change                                                                          |  |   | (1,019 | ) |  |   | (46,560 | )
|Standardized measure of discounted future net cash flows at end of period           |  | $ | 4,671  |   |  | $ | 5,690   |  



Prices used in computing
these calculations of future production of proved reserves were $2.79 and $2.97 per thousand cubic feet (MCF) of natural gas at
April 30, 2012 and 2011, respectively.



F-20







|Item 9: | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------



None.



|Item 9A: | Controls and Procedures
|-------- | -----------------------



Evaluation of disclosure controls and procedures



Under the PCAOB standards,
a control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course
of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency,
or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet
important enough to merit the attention by those responsible for oversight of the company’s financial reporting. A material weakness
is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected
on a timely basis.



Under the supervision
and with the participation of our management, including our principal executive officer and principal financial officer, we conducted
an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated
under the Securities Exchange Act of 1934, as amended (Exchange Act), as of April 30, 2012. Our management has determined that,
as of April 30, 2012, the Company’s disclosure controls and procedures are effective.



Management’s report on internal control
over financial reporting



Management of the Company
is responsible for establishing and maintaining effective internal control over financial reporting, as defined in Rule 13a-15(f)
under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance to
the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements
in accordance with the United States’ generally accepted accounting principles (US GAAP), including those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition
of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with US GAAP and that receipts and expenditures are being made only in accordance with authorizations
of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.



Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.



Under the supervision
and with the participation of our management, including our chief executive officer and our chief financial officer, we conducted
an evaluation of the effectiveness of our internal control over financial reporting based on the framework established by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in its Internal Control - Integrated Framework. Based
on our evaluation under the framework in Internal Control - Integrated Framework, our management has concluded that our internal
control over financial reporting was effective as of April 30, 2012.



There were no significant
changes in internal controls or in other factors that could significantly affect these controls during the quarter ended April
30, 2012.



|Item 9B: | Other Information
|-------- | -----------------



Not applicable.



25







PART III



|Item 10: | Directors, Executive Officers and corporate governance
|-------- | ------------------------------------------------------



Executive Officers and Directors



The following section
sets forth the names, ages and current positions with the Company held by the Directors, Executive Officers and Significant Employees;
together with the year such positions were assumed. We are not aware of any arrangement or understanding between any Director or
Executive Officer and any other person pursuant to which he was elected to his current position. Each Executive Officer will serve
until he or she resigns or is removed or otherwise disqualified to serve, or until his or her successor is elected and qualified.



Each Director will serve
until he or she resigns or is removed or otherwise disqualified to serve or until his or her successor is elected. The Company
currently has four Directors.



|                   |  |     |  |                                       |  | DATE FIRST       
|------------------ |  | --- |  | ------------------------------------- |  | -----------------
|NAME               |  | AGE |  | POSITION                              |  | ELECTED/APPOINTED
|                   |  |     |  |                                       |  |                  
|Clinton W. Coldren |  | 56  |  | Chairman, Chief Executive Officer     |  | December 15, 2010
|                   |  |     |  |                                       |  |                  
|Alan G. Massara    |  | 58  |  | President, Chief Financial Officer    |  | December 15, 2010
|                   |  |     |  |                                       |  |                  
|Michael D. Pruitt  |  | 51  |  | Executive Vice President and Director |  | December 29, 2009
|                   |  |     |  |                                       |  |                  
|Larry D. Hall      |  | 69  |  | Director                              |  | November 9, 2011 



Clinton W. Coldren
- Chairman and Chief Executive Officer - Mr. Coldren, brings 33+ years of oil and gas management, financial and operational
experience to the Company. For most of these years he focused on domestic operating basins, specifically the Louisiana and Texas
Gulf coast. He has held management positions with Gulf Oil/Chevron and CNG Producing. Mr. Coldren has had great success as a company
builder - he founded Cenergy Corporation, an oil and gas consulting company, and was a founding member of Energy Partners, Ltd.,
which became a publicly traded company focused on the shallow-water region of the Gulf of Mexico. At Energy Partners, he held several
senior positions, including Executive Vice President and Chief Operating Officer. Mr. Coldren then founded Coldren Oil & Gas
Company LP, where he was Director, President and CEO for this Gulf of Mexico oil and gas company. Most recently he did a start-up,
Bayou Bend Petroleum, a publicly traded exploration company where he was Director, President and CEO. These were all successful
companies completing major acquisitions and transactions up to $500 Million in the Gulf region. In 1977 Mr. Coldren graduated from
Lehigh University with a degree in Mechanical Engineering. He later received his MBA from the University of Pittsburgh in 1992.



Alan G. Massara - President,
Chief Financial Officer and Director - Mr. Massara, has over 35 years of experience primarily in energy and investment
banking. Alan has raised over $2.5 Billion in privately placed debt and equity and he has provided M&A, lending and advisory
services to over 2 dozen companies ranging in size from $1 Million to over $1 Billion. Mr. Massara’s energy career began
as a petroleum engineer in the Gulf of Mexico with Gulf Oil Corp. This initial exposure included reservoir engineering, drilling,
workovers, platform and equipment design and strategic planning. Moving to the corporate headquarters of Texaco Inc. he managed
many overseas exploration and production ventures. This included negotiating one of the first concessions with the Peoples Republic
of China, and managing operations in Spain, the Netherlands, Egypt and Indonesia. During his oversight of Texaco’s Australian
subsidiary its earnings grew from a loss to over $100 Million profit. Moving to Wall Street he became a VP in Citicorp’s
Global Mergers and Acquisitions Group providing advisory services throughout the upstream energy and utility industries. Subsequently
as an SVP for ING Barings, he expanded the energy group from mezzanine lending to merchant banking. Most recently he was CEO of
Four Springs Energy LLC., and President of Natural Resources Advisors, Inc. In 1975 Mr. Massara graduated from Lehigh University
with a degree in Civil Engineering. He later received his MBA in Finance and Strategic Planning from the Wharton Business School
in 1979.



26







Michael D. Pruitt -
Director - Mr. Pruitt is a long-time entrepreneur with a proven track record, possesses the expertise
to evaluate potential investments, form key relationships and recognize a strong management team. Mr. Pruitt founded Avenel Financial
Group, a boutique financial services firm concentrating on emerging technology company investments. The business succeeded immediately,
and in order to grow Avenel Financial Group to its full potential and better represent the company’s ongoing business model, he
formed Avenel Ventures, an innovative technology investment and business development company. In the late 1980s, Mr. Pruitt owned
Southern Cartridge, Inc., which he eventually sold to MicroMagnetic, Inc., where he continued working as Executive Vice President
and a Board member until Southern Cartridge was sold to Carolina Ribbon in 1992. From 1992 to 1996, Mr. Pruitt worked in a trucking
firm where he was instrumental in increasing revenues from $6 million to $30 million. The firm was sold in 1996 to Priority Freight
Systems. Between 1997 and 2000, Mr. Pruitt assisted several public and private companies in raising capital, recruiting management
and preparing companies to go public or be sold. He was the CEO, President and Chairman of the Board of Onetravel Holdings, Inc.
(formerly RCG Companies), a publicly traded holding company formerly listed on the AMEX. Mr. Pruitt received a Bachelor of
Arts degree from Coastal Carolina University in Conway, South Carolina, where he sits on the Board of Visitors of the Wall School
of Business.Mr. Pruitt is currently a director and Chief Executive Officer of Chanticleer Holdings, Inc. and Efftec International,
Inc.



Larry D. Hall - Director
– Mr. Hall previously served as Chairman/CEO and COO of KN Energy, Inc. a diversified and integrated natural gas company.
Under his leadership KN Energy, Inc. grew from approximately $450 Million in assets to over $9 Billion in assets through growth
in the business and strategic acquisitions of companies and assets. Mr. Hall obtained a Bachelor of Arts in Business and a Juris
Doctor degree, with honors, from the University of Nebraska. During his time at KN Energy he also represented the company before
the Federal Energy Regulatory Commission and state regulatory agencies in the states of Colorado, Wyoming, Kansas, Nebraska, Oklahoma
and Texas. Mr. Hall was Vice Chairman of, and on the Board of Directors of, the Interstate Natural Gas Association of America and
also served as Director of the Colorado Association Commerce and Industry, Mountain States Employers’ Council, Inc. and the Public
Education and Business Coalition



Audit Committee



The Board of Directors of the Company serves
as the audit committee.



Compliance with Section 16(a) Of the Exchange Act



Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires the Company’s executive officers, directors and persons who own more than ten
percent of the Company’s common stock to file initial reports of ownership and changes in ownership with the SEC. Additionally,
SEC regulations require that the Company identify any individuals for whom one of the referenced reports was not filed on a timely
basis during the most recent fiscal year or prior fiscal years. The Company is unaware of any late filings.



Code of Ethics



The Company has not yet
adopted a code of ethics to apply to its principal executive officer, principal financial officer, principal accounting officer
and controller, or persons performing similar functions.



Nominating Committee



We do not currently have
a standing nominating committee, or a committee performing similar functions. The full Board of Directors currently serves this
function.



27







|Item 11: | Executive Compensation
|-------- | ----------------------



The Compensation Committee
of the Board of Directors deliberates executive compensation matters to the extent they are not delegated to the Chief Executive
Officer.



|a. | Summary Compensation Table
|-- | --------------------------



The following table shows
the compensation of the Company’s Chief Executive Officer and each executive officer whose total cash compensation exceeded
$100,000 for the two years ended April 30, 2012.



Annual
Compensation



|                                   |  |  |      |  |  |   |         | Option |  |   | Stock  |  |  |   |       
|---------------------------------- |  |  | ---- |  |  | - | ------- | ------ |  | - | ------ |  |  | - | ------
|Name
    and Principal Position    |  |  | Year |  |  |   | Salary  |        |  |   | Awards |  |  |   | Awards
|                                   |  |  |      |  |  |   |         |        |  |   |        |  |  |   |       
|Clinton W. Coldren (CEO since      |  |  | 2012 |  |  | $ | 107,500 |        |  | $ | -      |  |  | $ | -     
|December 15, 2010) (a)             |  |  | 2011 |  |  | $ | -       |        |  | $ | -      |  |  | $ | -     
|                                   |  |  |      |  |  |   |         |        |  |   |        |  |  |   |       
|Ross E. Silvey (CEO from           |  |  | 2012 |  |  | $ | -       |        |  | $ | -      |  |  | $ | -     
|June 2008
    until December 2010) |  |  | 2011 |  |  | $ | -       |        |  | $ | -      |  |  | $ | 12,129
|                                   |  |  |      |  |  |   |         |        |  |   |        |  |  |   |       
|Alan G. Massara (CFO since         |  |  | 2012 |  |  | $ | 101,250 |        |  | $ | -      |  |  | $ | -     
|December 15, 2010) (a)             |  |  | 2011 |  |  | $ | -       |        |  | $ | -      |  |  | $ | -     



|(a) | Salaries in 2012 were accrued and unpaid at April 30, 2012.
|--- | -----------------------------------------------------------



Narrative disclosure to summary compensation
table



Required columns for bonus,
option awards, non-entity incentive plan compensation, change in pension value and nonqualified deferred compensation earnings
and all other compensation are omitted from the table above as the amounts are all zero. Compensation levels and amounts are determined
by the Board of Directors based on amounts paid to executives in similar sized companies with similar responsibilities.



As a part of their initial
compensation, on December 15, 2010, the new Executive Team, consisting of Mr. Coldren and Mr. Massara, was granted Warrants with
the following primary terms and conditions. The strike price exceeded the market price when the Warrants were granted.



| | a) | Each Warrant shall entitle the owner to purchase one share of common stock of the Company. The warrants contain price protection when the shares will be used for an acquisition at a price lower than the conversion price in force. The anti dilution provision will not apply to financings done below the strike price.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                            
| | b) | The Executive Team was granted three Warrant Certificates as follows:                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 1.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 2.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                            
| |    | 3.                                                                                                                                                                                                                                                                                                                         



28







| | c) | Other warrant terms are as follows:
| | -- | -----------------------------------
| |    |                                    
| |    | 1.                                 
| |    |                                    
| |    | 2.                                 
| |    |                                    
| |    | 3.                                 
| |    |                                    
| |    | 4.                                 



Mr. Silvey was granted
160,000 shares of our restricted common stock valued at $145,600 in exchange for his services for the period July 1, 2008 through
June 30, 2010. The $145,600 value was included as compensation when earned by Mr. Silvey with $60,667 recorded in the fiscal year
ended April 30, 2009, $72,804 recorded in the fiscal year ended April 30, 2010 and the balance of $12,129 recorded in the fiscal
year ended April 30, 2011.



Outstanding Equity
Awards at Fiscal Year-End



The Executive Team, consisting
of Mr. Coldren and Mr. Massara, had the option to allocate the warrants as they deem appropriate. The warrants have been allocated
equally between the two.



|                   |  | Number of  |                                                                                                                                             |  | Number of  |  |                                                                                                                                             |          |  |   |       
|------------------ |  | ---------- | ------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  | - | ------
|                   |  | Securities |                                                                                                                                             |  | Securities |  |                                                                                                                                             |          |  |   |       
|                   |  | Underlying |                                                                                                                                             |  | Underlying |  |                                                                                                                                             | Option   |  |   |       
|                   |  | Unexpired  |                                                                                                                                             |  | Unexpired  |  |                                                                                                                                             | Exercise |  |   | Option
|                   |  |            | Options
                                                                                                                                (#) |  |            |  | Options
                                                                                                                                (#) |          |  |   | Price 
|Name               |  |            | Exercisable                                                                                                                                 |  |            |  | Unexercisable                                                                                                                               |          |  |   | ($)   
|                   |  |            |                                                                                                                                             |  |            |  |                                                                                                                                             |          |  |   |       
|Clinton W. Coldren |  |            | 5,000,000                                                                                                                                   |  |            |  | -                                                                                                                                           |          |  | $ | 0.025 
|                   |  |            | -                                                                                                                                           |  |            |  | 5,000,000                                                                                                                                   |          |  | $ | 0.040 
|                   |  |            | -                                                                                                                                           |  |            |  | 5,000,000                                                                                                                                   |          |  | $ | 0.055 
|                   |  |            |                                                                                                                                             |  |            |  |                                                                                                                                             |          |  |   |       
|Alan G. Massara    |  |            | 5,000,000                                                                                                                                   |  |            |  | -                                                                                                                                           |          |  | $ | 0.025 
|                   |  |            | -                                                                                                                                           |  |            |  | 5,000,000                                                                                                                                   |          |  | $ | 0.040 
|                   |  |            | -                                                                                                                                           |  |            |  | 5,000,000                                                                                                                                   |          |  | $ | 0.055 



| | (a) | The first warrant expires one year after the Executive Team begins collecting salaries from the
Company.
| | --- | --------------------------------------------------------------------------------------------------------

| | (b) | The second two options vest upon execution of the $0.025 warrant and expire five years from that
date.
| | --- | ------------------------------------------------------------------------------------------------------



EMPLOYMENT AGREEMENTS



The new Executive Team
agreed to defer any salary during the initial six months of their employment. Effective June 15, 2011, the Board of Directors approved
compensation to begin accruing at a rate of $10,000 per month for each of the two listed executive officers. Beginning effective
November 1, 2011, the compensation rate for Mr. Coldren increased to $20,833 per month and for Mr. Massara increased to $18,750
per month. Both agreed to discontinue accruing their salary effective January 31, 2012 until conditions improve. All salary remains
unpaid.



Appropriate employment
agreements will be developed within six months of completion of a major acquisition. The Company intends to pay its Executives
and Directors salaries, wages, or fees commensurate with experience and industry standards in relationship to the success of the
company.



29







|b. | Compensation of directors
|-- | -------------------------



The Board of Directors
issued a warrant to acquire 500,000 shares of the Company’s common stock at $0.18 per share to its new director, Larry D.
Hall, on November 10, 2011. The strike price exceeded the market price when the warrants were granted. None in 2011.



|Item 12: | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------



|(a) | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|--- | --------------------------------------------------------------



The table below lists
the beneficial ownership of the Company’s voting securities by each person known to be the beneficial owner of more than
5% of such securities. As of April 30, 2012 and June 15, 2012, there were 21,554,945 shares of the Company’s common stock
issued and outstanding. To the best of our knowledge, the persons named have sole voting and investment power with respect to such
shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.



The information presented
below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities
and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed
to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the
security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security
as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion
or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial
owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing
the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right
to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number
of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator
used for calculating such percentage may be different for each beneficial owner. We believe that the beneficial owners of our common
stock listed below have sole voting and investment power with respect to the shares shown.



The following information lists, as to each
class, equity securities beneficially owned by all officers and directors, and of the directors and officers of the issuer, as
a group as of April 30, 2012.



30







|               |  | Name and Amount and        |  |            |            |  |          | 
|-------------- |  | -------------------------- |  | ---------- | ---------- |  | -------- | 
|               |  | address                    |  | nature of  |            |  |          | 
|               |  | of beneficial              |  | beneficial |            |  | Percent  | 
|Title of class |  | owner                      |  | owner      |            |  | of class | 
|               |  |                            |  |            |            |  |          | 
|Common         |  | Clinton W. Coldren (1)     |  |            | 15,000,000 |  |          | 
|               |  | 1535 Soniat St             |  |            |            |  |          | 
|               |  | New Orleans, LA 70115      |  |            |            |  |          | 
|               |  |                            |  |            |            |  |          | 
|Common         |  | Alan G. Massara (1)        |  |            | 15,000,000 |  |          | 
|               |  | 1535 Soniat St.            |  |            |            |  |          | 
|               |  | New Orleans, LA 70115      |  |            |            |  |          | 
|               |  |                            |  |            |            |  |          | 
|Common         |  | Michael D. Pruitt (2)      |  |            | 2,992,577  |  |          | 
|               |  | 11220 Elm Lane, Ste 203    |  |            |            |  |          | 
|               |  | Charlotte, NC 28277        |  |            |            |  |          | 
|               |  |                            |  |            |            |  |          | 
|Common         |  | All officers and directors |  |            | 32,992,577 |  |          | 
|               |  | as a group (3 persons)     |  |            |            |  |          | 



(1) Mr. Coldren and Mr. Massara are parties
to a warrant agreement described in Item 10 above. The total warrants in the plan of 30,000,000 are split equally between the two
in the table above.



(2) The shares beneficially owned by Mr. Pruitt
include 352,137 shares owned by Avenel Financial Group, Inc. which is wholly owned by Mr. Pruitt; 700,000 shares owned by Chanticleer
Holdings, Inc. of which Mr. Pruitt is Chief Executive Officer, a director and 15% owner; and 1,940,440 shares owned by Avenel Ventures,
LLC, which is wholly owned by Chanticleer Holdings, Inc.



Equity Compensation Plan Information



|                                                          |  |                            |                                                                                                                                                                                                                                                                         |  |                           |                   | Number of securities   
|--------------------------------------------------------- |  | -------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ----------------- | -----------------------
|                                                          |  |                            |                                                                                                                                                                                                                                                                         |  |                           |                   | remaining available for
|                                                          |  |                            |                                                                                                                                                                                                                                                                         |  |                           |                   | future issuance under  
|                                                          |  | Number of securities to be |                                                                                                                                                                                                                                                                         |  | Weighted-average exercise |                   | equity compensation    
|                                                          |  | issued upon exercise of    |                                                                                                                                                                                                                                                                         |  | price of outstanding      |                   | plans (excluding       
|                                                          |  |                            | outstanding options,                                                                                                                                                                                                                                                    |  |                           | options, warrants |                        
|Plan category                                             |  |                            | warrants
                                                                                                                          and
                                                                                                                          rights |  |                           | and rights        |                        
|                                                          |  |                            |                                                                                                                                                                                                                                                                         |  |                           |                   |                        
|Equity compensation plans approved by security holders    |  |                            | -                                                                                                                                                                                                                                                                       |  |                           |                   |                        
|                                                          |  |                            |                                                                                                                                                                                                                                                                         |  |                           |                   |                        
|Equity compensation plans not approve by security holders |  |                            | -                                                                                                                                                                                                                                                                       |  |                           |                   |                        
|                                                          |  |                            |                                                                                                                                                                                                                                                                         |  |                           |                   |                        
|Total                                                     |  |                            | -                                                                                                                                                                                                                                                                       |  |                           |                   |                        



The North American Energy
Resources, Inc. 2008 Stock Option Plan (“Plan”) was filed on September 11, 2008 and reserved 2,500,000 shares for Awards
under the Plan. The Company’s Compensation Committee is designated to administer the Plan at the direction of the Board of
Directors. No options were granted during the two years ended April 30, 2012 and 2011.



31







|Item 13: | Certain Relationships and Related Transactions and director independence
|-------- | ------------------------------------------------------------------------



At April 30, 2012 and
2011, the Company owes its CEO and CFO the following amounts for expense reimbursements.



|                        |  | 2012 |        |  | 2011 |  
|----------------------- |  | ---- | ------ |  | ---- | -
|                        |  |      |        |  |      |  
|Chief executive officer |  | $    | -      |  |      | $
|Chief financial officer |  |      | 18,698 |  |      |  
|                        |  | $    | 18,698 |  |      | $



In February 2010, the
Company issued 120,000 shares of its common stock valued at $9,600 for director fees to its former CEO, issued 450,000 shares of
its common stock valued at $36,000 to a Director for director fees and consulting services and issued 150,000 shares of its common
stock valued at $12,000 to a company controlled by a Director for director fees and management services.



Effective June 15, 2011,
the Board of Directors approved compensation to begin accruing at the rate of $10,000 per month for each of the two listed executive
officers. Beginning effective November 1, 2011, the compensation rate for Mr. Coldren increased to $20,833 per month and for Mr.
Massara increased to $18,750 per month. Both agreed to discontinue accruing their salary effective January 31, 2012 until conditions
improve.



Accrued expenses include
the following:



|                                  |  | 2012 |         |  | 2011 |  
|--------------------------------- |  | ---- | ------- |  | ---- | -
|                                  |  |      |         |  |      |  
|Accrued compensation due officers |  | $    | 208,750 |  |      | $
|Accrued interest due CEO          |  |      | 11,583  |  |      |  
|Amount due related parties        |  |      | 220,333 |  |      |  
|Other accrued expenses            |  |      | 994     |  |      |  
|Accrued interest - other          |  |      | 2,029   |  |      |  
|Asset retirement obligation       |  |      | 416     |  |      |  
|                                  |  | $    | 223,772 |  |      | $



Convertible note payable
– officer



Interim financing for
due diligence expenses and operations is being funded pursuant to a $500,000 multiple advance bridge loan provided to the Company
by Clinton W. Coldren, CEO. In evidence of the loan, on November 3, 2011, the Company issued to Clinton W. Coldren that certain
8% Convertible Note in the principal amount of $500,000. The Convertible Note has a term of one year and is convertible, at the
holder’s option, into shares of common stock of the Company, in whole or in part at any time, at an initial conversion price equal
to 130% of the volume-weighted average price of the common stock for the 50 trading days following October 31, 2011, subject to
adjustment for distributions to shareholders, stock splits, reclassification of shares and tender or exchange offers. The Company
does not have the right to prepay all or any portion of the Note prior to the Maturity Date.



Warrants



On December 15, 2010, the Board of Directors
granted Warrants to its new Executive Team as described in Note 6 below.



The Board of Directors
issued a warrant to acquire 500,000 shares of the Company’s common stock at $0.18 per share to its new director, Larry D.
Hall, on November 10, 2011. The strike price exceeded the market price when the warrants were granted.



32







Director Independence



We undertook a review
of the independence of our directors and, using the definitions and independence standards of directors provided in the rules of
The Nasdaq Stock Market, although not required as the standard for the Company as it is traded on the Over-the-Counter Market considered
whether any director has a material relationship with us that could interfere with his ability to exercise independent judgment
in carrying out his responsibilities. As a result of this review, we determined that Larry D. Hall is an “independent director”
as defined under the rules of The Nasdaq Stock Market as of April 30, 2012.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------



Audit Fees – The
aggregate fees billed as of May 31, 2011 for professional services rendered by the Company’s accountant was approximately
$10,945 and $13,930 for the audit of the Company’s annual financial statements and the quarterly reviews for the fiscal years
ended April 30, 2012 and 2011. The costs for the audit of 2010 is included in the 2011 amount and the cost of the 2011 audit is
included in the 2012 amount.



Audit-Related Fees – None.



Tax Fees – None.



All Other Fees –
Other than the services described above, no other fees were billed for services rendered by the principal accountant.



Audit Committee Policies
and Procedures – Not applicable.



If greater than 50 percent,
disclose the percentage of hours expended on the principal accountant’s engagement to audit the registrant’s 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 – Not applicable.



33







part
iv



|ITEM 15: | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------



| | (a) | The following documents are filed as part of this report:
| | --- | ---------------------------------------------------------
| |     |                                                          
| |     | 1.                                                       
| |     |                                                          
| |     |                                                          
| |     |                                                          
| |     |                                                          
| |     |                                                          
| |     |                                                          
| |     |                                                          



| | 2. | Financial Statement Schedules were omitted, as they are not required or are not applicable, or the required information is included in the Financial Statements.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Exhibits – The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32 under the Securities Exchange Act of 1934.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Exhibit |  | Description                                                                                                                   
|------- |  | ------------------------------------------------------------------------------------------------------------------------------
|        |  |                                                                                                                               
|3.1     |  | Articles of Incorporation (Amendment dated April 27, 2009) **                                                                 
|3.2     |  | By-Laws **                                                                                                                    
|4.1     |  | Form of Specimen of common stock *                                                                                            
|4.2     |  | Form of Warrant *                                                                                                             
|10.1    |  | Stock Purchase Agreement dated July 24, 2008 (incorporated by reference to Form 8-K filed August 1, 2008)                     
|10.2    |  | North American Energy Resources, Inc. 2008 Stock Option Plan (incorporated by reference to Form S-8 filed September 11, 2008) 
|10.3    |  | Assignment and Bill of Sale for purchase of Teas County, Oklahoma gas well **                                                 
|10.4    |  | Warrant Agreement dated December 10, 2010 **                                                                                  
|10.5.1  |  | Warrant Agreement NAEY001A with Clinton Coldren dated December 14, 2010 **                                                    
|10.5.2  |  | Warrant Agreement NAEY002A with Clinton Coldren dated December 14, 2010 **                                                    
|10.5.3  |  | Warrant Agreement NAEY003A with Clinton Coldren dated December 14, 2010 **                                                    
|10.6.1  |  | Warrant Agreement NAEY001B with Alan Massara dated December 14, 2010 **                                                       
|10.6.2  |  | Warrant Agreement NAEY002B with Alan Massara dated December 14, 2010 **                                                       
|10.6.3  |  | Warrant Agreement NAEY003B with Alan Massara dated December 14, 2010 **                                                       
|10.7    |  | Warrant Agreement NAEY 004 with Larry Hall dated November 10, 2011 **                                                         
|23.1    |  | Consent of Christopher Energy, LLC **                                                                                         
|31.1    |  | Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934                   
|31.2    |  | Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934                   
|32.1    |  | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
|32.2    |  | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
|99.1    |  | Christopher Energy, LLC reserve estimate effective May 1, 2011 **                                                             



|* |  | Incorporated by reference to Form SB-2 filed March 14, 2007
|- |  | -----------------------------------------------------------

|** |  | attached herewith
|-- |  | -----------------



34







SIGNATURES



In accordance with the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



|             |  | NORTH AMERICAN ENERGY RESOURCES, INC.
|------------ |  | -------------------------------------
|             |  |                                      
|May 13, 2013 |  | /s/ Clinton W. Coldren               
|             |  | Clinton W. Coldren, Chairman and CEO 
|             |  |                                      
|May 13, 2013 |  | /s/ Alan G. Massara                  
|             |  | Alan G. Massara, President and CFO   



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.



|May 13, 2013 |  | /s/ Clinton W. Coldren              
|------------ |  | ------------------------------------
|             |  | Clinton W. Coldren, Chairman and CEO
|             |  |                                     
|May 13, 2013 |  | /s/ Alan G. Massara                 
|             |  | Alan G. Massara, President and CFO  
|             |  |                                     
|May 13, 2013 |  | /s/ Michael D. Pruitt               
|             |  | Michael D. Pruitt, Director         
|             |  |                                     
|May 13, 2013 |  | /s/ Larry D. Hall                   
|             |  | Larry D. Hall, Director             



35