UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 
 Washington,
D.C. 20549
 
 FORM
10-QSB
 
 xQUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the
quarterly period ended     February 29, 2008
 
 oTRANSITION REPORT
UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
 For the
transition period from _________________to_________________
 
 Commission
file number    000-52309
 
 Gulf
Western Petroleum Corporation
 
 
 
 Nevada
              
              98-0489324(State
      or other jurisdiction of incorporation or organization)
              
              (I.R.S.
      Employer Identification No.)
   4801
Woodway Drive, Suite 306W
 Houston,
Texas 77056
 
 
 (713)
355-7001
 
 
  
 
 Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes xNo o
  
 1
  APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
 
 Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes oNo o
 
 APPLICABLE
ONLY TO CORPORATE ISSUERS
 
 Registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes oNo x
 
 The
number of shares outstanding of the issuer’s common equity as of April 14, 2009
was 57,853,107
shares of common stock, par value $0.001.
 
 Transitional
Small Business Disclosure Format (Check one): Yes oNo x
  
 PART
I – Financial Information
 
 Item
      1.
              Financial
      Statements
 
 Our
consolidated financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles.
  
  GULF
WESTERN PETROLEUM CORPORATION
 CONSOLIDATED
BALANCE SHEETS
 (Unaudited)
 
 February
      29,
              
              
              August
      31,2008
              
              
              2007ASSETSCurrent
      assetsCash
              
              $
              -
              
              
              $
              1,925Accounts
      receivable -  gas sales
              
              
              194,222
              
              
              
              -Accounts
      receivable – joint interest
              
              
              198,073
              
              
              
              198,106Accounts
      receivable – related party
              
              
              -
              
              
              
              11,488Deferred
      financing costs, net of amortization of $164,910, and $0,
      respectively
              
              
              187,090
              
              
              
              -Other
      current assets
              
              
              21,200
              
              
              
              -Total
      current assets
              
              
              600,585
              
              
              
              211,519Deferred
      financing costs, net of amortization of $63,138 and $7,015,
      respectively
              
              
              -
              
              
              
              56,123Office
      equipment, net of depreciation of $10,415 and $6,507,
      respectively
              
              
              20,336
              
              
              
              13,185Oil
      and gas properties, full cost method:Properties
      subject to amortization, net of amortization of $104,536.  and
      $0, respectively
              
              
              4,518,644
              
              
              
              1,090,988Properties
      not subject to amortization
              
              
              8,119,312
              
              
              
              10,642,207Total
      assets
              
              $
              13,258,877
              
              
              $
              12,014,022LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilitiesBank
      overdraft
              
              $
              9,553
              
              
              $
              -Accounts
      payable
              
              
              404,367
              
              
              
              1,065,092Accounts
      payable – related parties
              
              
              605,761
              
              
              
              677,402Advances
      from stockholder
              
              
              157,496
              
              
              
              120,000Accrued
      interest
              
              
              250,381
              
              
              
              15,041Accrued
      interest – convertible note related party
              
              
              66,301
              
              
              
              116,712Convertible
      notes payable, net of unamortized debt discount of $817,903 and $11,290,
      respectively
              
              
              2,882,097
              
              
              
              238,710Stock
      payable
              
              
              150,000
              
              
              
              100,000Total
      current liabilities
              
              
              4,525,956
              
              
              
              2,332,957Convertible
      note – related party
              
              
              2,000,000
              
              
              
              2,000,000Convertible
      notes payable, net of unamortized debt discount of $-0- and $17,536,
      respectively
              
              
              25,000
              
              
              
              482,464Asset
      retirement obligation
              
              
              52,002
              
              
              
              50,949Total
      liabilities
              
              
              6,602,958
              
              
              
              4,866,370STOCKHOLDERS’
      EQUITYCommon
      shares, $0.001 par value, 1.2 billion shares authorized, 56,603,107 and
      53,489,662 shares issued and outstanding, respectively
              
              
              56,603
              
              
              
              53,490Additional
      paid-in capital
              
              
              13,685,926
              
              
              
              10,911,412Accumulated
      deficit
              
              
              (7,086,610
              )
              
              
              (3,817,250
              )Total
      stockholders’ equity
              
              
              6,655,919
              
              
              
              7,147,652Total
      liabilities and stockholders’ equity
              
              $
              13,258,877
              
              
              $
              12,014,022
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  
  GULF
WESTERN PETROLEUM CORPORATION
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 For
the Three and Six Months Ended February 29, 2008 and February 28,
2007
 (Unaudited)
 
 Three
      Months Ended
              
              
              Three
      Months Ended
              
              
              Six
      Months Ended
              
              
              Six
      Months EndedFebruary
      29,
              
              
              February
      28,
              
              
              February
      29,
              
              
              February
      28,2008
              
              
              2007
              
              
              2008
              
              
              2007Oil
      and gas revenue
              
              $
              288,980
              
              
              $
              -
              
              
              $
              288,980
              
              
              $
              -Production
      expenses
              
              
              44,819
              
              
              
              -
              
              
              
              44,819
              
              
              
              -Severance
      taxes
              
              
              21,039
              
              
              
              -
              
              
              
              21,039
              
              
              
              -Depletion
      expense
              
              
              104,536
              
              
              
              -
              
              
              
              104,536
              
              
              
              -Net
      Operating Income
              
              
              118,586
              
              
              
              -
              
              
              
              118,586
              
              
              
              -Operating
      expensesGeneral
      & administrative
              
              
              983,983
              
              
              
              670,848
              
              
              
              2,206,335
              
              
              
              790,693Depreciation
              
              
              2,761
              
              
              
              1,494
              
              
              
              3,908
              
              
              
              2,169Total
      operating expenses
              
              
              986,744
              
              
              
              672,342
              
              
              
              2,210,243
              
              
              
              792,862Operating
      loss
              
              
              (868,158
              )
              
              
              (672,342
              )
              
              
              (2,091,657
              )
              
              
              (792,862
              )Other
      expenses and (income)Interest
      income
              
              
              (2
              )
              
              
              -
              
              
              
              (738
              )
              
              
              -Gain
      on extinguishment debt
              
              
              (150,000
              )
              
              
              -
              
              
              
              (150,000
              )
              
              
              -Interest
      expense
              
              
              662,417
              
              
              
              494,344
              
              
              
              1,328,441
              
              
              
              516,005Foreign
      currency exchange gain
              
              
              -
              
              
              
              (4,314
              )
              
              
              -
              
              
              
              (14,308
              )Total
      other expense
              
              
              512,415
              
              
              
              490,030
              
              
              
              1,177,703
              
              
              
              501,697Net
      loss
              
              $
              (1,380,573
              )
              
              $
              (1,162,372
              )
              
              $
              (3,269,360
              )
              
              $
              (1,294,559
              )Net
      loss per share:Basic
      and diluted
              
              
              0.02
              
              
              
              (0.03
              )
              
              
              (0.06
              )
              
              
              (0.04
              )Weighted
      average shares outstanding:Basis
      and diluted
              
              
              56,603,107
              
              
              
              40,046,185
              
              
              
              56,362,531
              
              
              
              33,724,622
  The
accompanying notes are an integral part of these consolidated financial
statements.
  
  
 GULF
WESTERN PETROLEUM CORPORATION
 CONSOLIDATED
STATEMENTS OF CASH FLOW
 For
the Six Months Ended February 29, 2008 and February 28, 2007
 (Unaudited)
 
 Six
      Months
              
              
              Six
      MonthsEnded
              
              
              EndedFebruary
      29, 2008
              
              
              February
      28, 2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (3,269,360
              )
              
              $
              (1,294,559
              )Adjustments
      to reconcile net loss to cash used in operating
activities:Depreciation
              
              
              3,908
              
              
              
              2,169Depletion
              
              
              104,536
              
              
              
              -Gain
      on extinguishment of debt
              
              
              (150,000
              )
              
              
              -Foreign
      currency exchange (gain) loss
              
              
              -
              
              
              
              (14,308
              )Amortization
      of debt discount
              
              
              760,633
              
              
              
              75,390Amortization
      of deferred financing costs
              
              
              221,033
              
              
              
              -Bonus
      shares on notes payable
              
              
              -
              
              
              
              400,000Issuance
      of shares for services and notes payable
              
              
              20,887
              
              
              
              -Amortization
      of stock option expense
              
              
              761,030
              
              
              
              -Accretion
      expense
              
              
              1,053
              
              
              
              -Net
      change in:Bank
      overdraft
              
              
              9,553
              
              
              
              -Accounts
      receivable – joint interest
              
              
              (194,189
              )
              
              
              -Accounts
      receivable – related parties
              
              
              11,488
              
              
              
              -Other
      assets
              
              
              (21,200
              )
              
              
              -Accounts
      payable
              
              
              (660,724
              )
              
              
              (84,150
              )Accounts
      payable - related parties
              
              
              (71,642
              )
              
              
              42,153Accrued
      interest
              
              
              235,340
              
              
              
              15,071Accrued
      interest – related parties
              
              
              (50,411
              )
              
              
              -CASH
      FLOWS USED IN OPERATING ACTIVITIES
              
              
              (2,288,065
              )
              
              
              (858,234
              )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of property and equipment
              
              
              (11,059
              )
              
              
              (12,320
              )Investment
      in oil and gas properties
              
              
              (1,009,297
              )
              
              
              (2,707,050
              )CASH
      FLOWS USED IN INVESTING ACTIVITIES
              
              
              (1,020,356
              )
              
              
              (2,719,370
              )CASH
      FLOWS FROM FINANCING ACTIVITIESStock
      subscription advances, net
              
              
              50,000
              
              
              
              425,000Advances
      (to)/from stockholder
              
              
              37,496
              
              
              
              (841
              )Proceeds
      from private placements
              
              
              500,000
              
              
              
              3,205,000Proceeds
      from notes payable
              
              
              -
              
              
              
              353,030Proceeds
      from convertible notes payable
              
              
              2,969,000
              
              
              
              -Repayment
      of notes payable
              
              
              -
              
              
              
              (585,530
              )Repayment
      of convertible notes payable
              
              
              (250,000
              )
              
              
              -CASH
      FLOWS PROVIDED BY FINANCING ACTIVITIES
              
              
              3,306,496
              
              
              
              3,396,659NET
      INCREASE (DECREASE) IN CASH
              
              
              (1,925
              )
              
              
              (180,945
              )Cash,
      beginning of period
              
              
              1,925
              
              
              
              312,581Cash,
      end of period
              
              $
              -
              
              
              $
              131,636Cash
      paid for:Interest
              
              $
              6,328
              
              
              $
              1,302Interest
      – related parties
              
              $
              150,137
              
              
              $
              100,934Income
      taxes
              
              $
              -
              
              
              $
              -Supplemental
      Schedule of Non-cash Investing and Financing Activities:Assignment
      and rescission of oil and gas properties from parent
              
              
              -
              
              
              
              (460,496
              )Common
      shares issued to acquire oil and gas properties
              
              
              -
              
              
              
              893,906Convertible
      note to related party for acquisition of oil and gas
    interests
              
              
              -
              
              
              
              2,000,000Discount
      on senior secured convertible notes for beneficial conversion feature of
      notes, and relative fair value of stock and warrants issued in connection
      with notes
              
              
              1,399,710
              
              
              
              -Issuance
      of common shares to placement agent in connection with senior secured
      convertible notes
              
              
              96,000
              
              
              
              -Issuance
      of common shares for convertible debentures
              
              
              -
              
              
              
              78,477Asset
      retirement obligation incurred
              
              
              -
              
              
              
              39,700
  The
accompanying notes are an integral part of these consolidated financial
statements.
  
  GULF
WESTERN PETROLEUM CORPORATION
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
 For
the Period from August 31, 2007
 Through
February 29, 2008
 (Unaudited)
 
 Common
      Shares
              
              
              Par
      Amount
              
              
              Additional
      Paid-In-Capital
              
              
              Accumulated
      Deficit
              
              
              TotalBalance,
      August 31, 2007
              
              
              53,489,662
              
              
              $
              53,490
              
              
              $
              10,911,412
              
              
              $
              (3,817,250
              )
              
              $
              7,147,652Intrinsic
      value of beneficial conversion feature of, and relative fair value of
      common shares and warrants issued in conjunction with convertible secured
      notes issued on September 10, 2007
              
              
              1,500,000
              
              
              
              1,500
              
              
              
              1,398,210
              
              
              
              -
              
              
              
              1,399,710Issuance
      of common shares for services-
      September 10, 2007($0.32 per share)
              
              
              300,000
              
              
              
              300
              
              
              
              95,700
              
              
              
              -
              
              
              
              96,000-
      September 12, 2007($0.32 per share)
              
              
              51,725
              
              
              
              52
              
              
              
              16,500
              
              
              
              -
              
              
              
              16,552Issuance
      of common shares under terms of note payable, September 14, 2007 ($0.37
      per share)
              
              
              11,720
              
              
              
              11
              
              
              
              4,324
              
              
              
              -
              
              
              
              4,335Issuance
      of units for cash in private placement, September 20, 2007 ($0.40 per
      unit)
              
              
              1,250,000
              
              
              
              1,250
              
              
              
              498,750
              
              
              
              -
              
              
              
              500,000Amortization
      of stock options
              
              
              -
              
              
              
              -
              
              
              
              380,512
              
              
              
              -
              
              
              
              380,512Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,888,787
              )
              
              
              (1,888,787
              )Balance,
      November 30, 2007
              
              
              56,603,107
              
              
              $
              56,603
              
              
              $
              13,305,408
              
              
              $
              (5,706,037
              )
              
              $
              7,655,974Amortization
      of stock options
              
              
              -
              
              
              
              -
              
              
              
              380,518
              
              
              
              -
              
              
              
              380,518Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,380,573
              )
              
              
              (1,380,573
              )Balance,
      February 29, 2008
              
              
              56,603,107
              
              
              $
              56,603
              
              
              $
              13,685,926
              
              
              $
              (7,086,610
              )
              
              $
              6,655,919
  The
accompanying notes are an integral part of these consolidated financial
statements.
 GULF
WESTERN PETROLEUM CORPORATION
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 
 
 NOTE
1 – ORGANIZATION AND BUSINESS OPERATIONS
  Gulf
Western Petroleum Corporation (“Gulf Western”) was incorporated on February 21,
2006 in the State of Nevada as “Georgia Exploration, Inc.”.   The
name was changed to Gulf Western on March 8, 2007.  Gulf Western is
engaged in the acquisition, exploration and development of oil and natural gas
reserves in the United States.  Gulf Western holds oil and gas lease
interests in Texas, Kansas and Kentucky.  Gulf Western is actively
engaged in the drilling and development of Frio formation wells located in
Dewitt and Lavaca County, Texas; it holds proved undeveloped reserves in Wharton
County, Texas; and it is engaged in a supply and infrastructure development
program in Southeast Kansas.   Gulf Western also holds oil and
gas lease interests in the State of Kentucky that are exploratory in
nature.
  On
January 3, 2007, Gulf Western and Wharton Resources Corp. (“Wharton” or “Wharton
Corp.”) consummated a merger that was effected through a reverse merger with the
oil and gas lease interests and reserves held by Wharton becoming the primary
core assets of Gulf Western.   Concurrent with the merger,
Wharton’s executive management and directors assumed control and responsibility
for Gulf Western’s activities and its strategic direction.   The
merger effected a change in control of Gulf Western and immediately following
the merger, Wharton’s former stockholders held approximately 71.4% of Gulf
Western’s issued and outstanding common shares.
  For
Securities and Exchange Commission ("SEC") reporting purposes, the merger
between Gulf Western and Wharton was treated as a reverse merger with Wharton
being the “accounting acquirer” and, accordingly, it assumed Gulf Western’s
reporting obligations with the SEC.   In accordance with SEC
requirements, the historical consolidated financial statements and related
disclosures presented herein for the period prior to the date of merger (i.e.,
January 3, 2007) are those of Wharton since its inception on January 20,
2005.   In conjunction with the merger, each outstanding share of
Wharton was converted into 25,000 common shares in Gulf Western with a total of
30,000,000 common shares issued to the former Wharton
stockholders.  Of the 27,645,000 shares of Gulf Western outstanding at
the time of the merger, 15,645,000 shares of Gulf Western’s outstanding common
stock were cancelled concurrent with the closing of the
merger.   Immediately following the merger, a total of 42,000,000
shares of common stock were issued and outstanding.  Wharton assumed
the net liabilities of Gulf Western totaling$66,631which
were recorded as an expense on the date of merger.
  The
accompanying unaudited interim consolidated financial statements of Gulf Western
have been prepared in accordance with accounting principles generally accepted
in the United States of America and the rules of the SEC, and should be read in
conjunction with the audited consolidated financial statements and notes thereto
contained in Gulf Western’s Annual Report on Form 10-KSB/A filed with the SEC on
April
21, 2008.   In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the consolidated financial statements which would
substantially duplicate the disclosures contained in the audited consolidated
financial statements for the most recent fiscal year ending August 31, 2007 as
reported in its Form 10-KSB/A have been omitted.
 
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Basis
of presentation
  Gulf
Western’s consolidated balance sheets and related consolidated statements of
operations, stockholders’ equity and cash flows for the periods from inception
through February 29, 2008 are presented in U.S. dollars and have been prepared
in accordance with accounting principles generally accepted in the United States
of America (“GAAP”) and the rules of the Securities and Exchange
Commission.
  Gulf
Western exited from the development stage during the three months ended February
29, 2008 as the Company began producing a recurring source of oil and gas
revenues in December 2007.  Therefore, Gulf Western no longer prepares
its consolidated financial statements in accordance with Statement of Financial
Accounting Standards (“SFAS”) No. 7, Accounting and Reporting by Development
Stage Enterprises.
  
  Use
of estimates
  The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting periods.  Actual results could materially differ from those
estimates.
  Management
believes that it is reasonably possible the following material estimates
affecting the consolidated financial statements could significantly change in
the coming year:  (1) estimates of proved oil and gas reserves, and
(2) forecast forward price curves for natural gas and crude
oil.   The oil and gas industry in the United States has
historically experienced substantial commodity price volatility, and such
volatility is expected to continue in the future.   Commodity
prices affect the level of reserves that are considered commercially
recoverable; significantly influence Gulf Western’s current and future expected
cash flows; and impact the valuation of proved reserves.
  Accounts
receivable
  Gulf
Western routinely assesses the recoverability of all material trade, joint
interest and other receivables. Gulf Western accrues a reserve on a
receivable when, based on the judgment of management, it is probable that a
receivable will not be collected and the amount of any reserve may be
reasonably estimated. Actual write-offs may exceed the recorded allowance. No
allowance for doubtful accounts was considered necessary at February 29,
2008 or at August 31, 2007.
  Oil
and gas properties
  Gulf
Western follows the full cost method of accounting for its oil and natural gas
properties, whereby all costs incurred in connection with the acquisition,
exploration for and development of oil and natural gas reserves are
capitalized.  Such costs include lease acquisition, geological and
geophysical activities, rentals on non-producing leases, drilling, completing
and equipping of oil and gas wells, and asset retirement costs. Disposition
of oil and gas properties are accounted for as a reduction of capitalized costs,
with no gain or loss recognized unless such adjustment would significantly alter
the relationship between capital costs and proved reserves of oil and gas, in
which case the gain or loss is recognized to income.
  Depletion
and depreciation of proved oil and gas properties is calculated on the
units-of-production method based upon estimates of proved
reserves.  Such calculations include the estimated future costs to
developed proved reserves.  Oil and gas reserves are converted to a
common unit of measure based on the energy content of 6 Mcf of gas to one barrel
of oil. Costs of undeveloped properties are not included in the costs subject to
amortization. These costs are assessed periodically for impairment.
  Ceiling
test
  In
applying the full cost method, Gulf Western performs an impairment test (ceiling
test) at each reporting date, whereby the carrying value of property and
equipment is compared to the estimated present value, of its proved reserves
discounted at a 10-percent interest rate of future net revenues based on current
economic and operating conditions, plus the cost of properties not being
amortized plus the lower of cost or fair market value of unproved properties
included in costs being amortized, less the income tax effects related to book
and tax basis differences of the properties.  As of February 29, 2008
no impairment of oil and gas properties was determined to be
required.
  Oil
and gas properties, amortization of capital investment
  Gulf
Western holds oil and gas interests in Texas, Kansas and Kentucky pursuant to
lease agreements.  Gulf Western has interests in eleven wells that had
production during the quarter ending February 29, 2008.  These wells
are located in Dewitt County (Shamrock Project) and Lavaca County
(Brushy Creek Project), Texas.   Gulf Western amortizes capital costs
incurred in its acquisition, geological and geophysical, drilling and
development activities on a unit-of-production basis.  The unit rate
is derived from actual capital expenditures incurred plus future estimated
development costs for proved reserves, divided by total estimated proved
recoverable reserves.   The amortization rate is applied to
actual quantities of production sold from Gulf Western’s interests in the
wells.   Reserve quantities used in the derivation of the
amortization rate are based on initial proved recoverable reserves estimates
provided to Gulf Western by the well operators.   As specific
production and decline rates are established, ultimate recoverable proved
reserves for each well will be developed by Gulf Western’s petroleum reservoir
engineers, and the amortization rate will be refined as appropriate and adjusted
as required.
  
  The
amortization of the oil and gas properties not classified as proved begins when
the oil and gas properties become proved, or their values become impaired. Gulf
Western assesses the realizability of its properties not characterized as proved
on at least an annual basis or when there is or has been an indication that an
impairment in value may have occurred.  The impairment of properties
not classified as proved is assessed based on management’s intention with regard
to future exploration and development of individually significant properties,
and Gulf Western’s ability to source capital funding required to finance such
exploration and development.   If the result of an assessment
indicates that a property is impaired, the amount of the impairment is added to
the capitalized costs in its full cost pool and they are amortized over proved
reserves.
  Debt
  Gulf
Western accounts for debt at fair value and recognizes interest expense for
accrued interest payable under the terms of the debt. Principal and
interest payments due within one year are classified as current, whereas
principal and interest payments for periods beyond one year are classified
as long term. Beneficial conversion features of debt are valued and the related
amounts recorded as discounts on the debt. Discounts are amortized to
interest expense using the effective interest method over the term of the debt.
Any unamortized discount upon settlement or conversion of debt is
recognized immediately as interest expense.
  Asset
retirement obligations
  In
accordance with SFAS No. 143, “Accounting for Asset Retirement Obligations” Gulf
Western records the fair value of a liability for asset retirement obligations
(“ARO”) in the period in which an obligation is incurred and a corresponding
increase in the carrying amount of the related long-lived asset. The present
value of the estimated asset retirement cost is capitalized as part of the
carrying amount of the long-lived asset and is depreciated over the useful life
of the asset.  The settlement date fair value is discounted at Gulf
Western’s credit adjusted risk-free rate in determining the abandonment
liability.  The abandonment liability is accreted with the passage of
time to its expected settlement fair value.  At February 29, 2008,
Gulf Western has recorded an asset retirement obligation of $52,002, and
interest expense associated with the accretion of the obligation totaled $529
and $1,053 for the three and six months ending,
respectively.   No liabilities were settled during the
period.
  Revenue
and cost recognition
  Gulf
Western uses the sales method to account for sales of crude oil and natural
gas.  Under this method, revenues are recognized based on actual
volumes of oil and gas sold to purchasers. The volumes sold may differ from the
volumes to which Gulf Western is entitled based on our interest in the
properties. These differences create imbalances which are recognized as a
liability only when the imbalance exceeds the estimate of remaining
reserves. Costs associated with production are expensed in the period
incurred.
  NOTE
3 – GOING CONCERN
  Gulf
Western is in its development stage and, accordingly, has limited operations and
revenues.  Gulf Western has incurred operating losses since its
inception and has a working capital deficit of $(3,925,371)at February 29, 2008.  These factors raise substantial doubt
about Gulf Western’s ability to continue as a going
concern.
 
 Gulf
Western’s ability to achieve and maintain profitability and sustainable positive
cash flows is dependent on its ability to source sufficient financing to fund
the acquisition, drilling and development of existing and future oil and gas
interests.   To date, Gulf Western has raised a combination of
secured and unsecured debt and equity financing to fund the development of its
projects.  Management is seeking financing that it believes would
allow Gulf Western to establish and sustain commercial
production.   There are no assurances that Gulf Western will be
able to obtain additional financing from investors or private lenders and, if
available, such financing may not be on commercial terms acceptable to Gulf
Western or its stakeholders.  The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
  
  NOTE
4 - RELATED PARTY TRANSACTIONS
  Mound
Branch Project, Elk County, Kansas
 Gulf
Western issued 4,039,053 common shares to Orbit Energy, LLC (“Orbit”) for the
January 30, 2007 purchase of the Mound Branch Project.  The common
shares were subject to surrender if Orbit's delivery of an independent report
assessing the fair value of the purchased assets was less than the purchase
price of $6.8 million.  In the event the valuation was less than the
$6.8 million purchase price, then the number of shares to be surrendered by
Orbit would be ratably determined based on the lower valuation, and would be
cancelled and returned to Gulf Western’s treasury.   The purchase
and sale agreement provided for Orbit to deliver the independent valuation
report to Gulf Western not later than January 30, 2008.   On
January 30, 2008, Gulf Western agreed to extend Orbit’s delivery of the
independent valuation report for three months until April 30,
2008.  In connection with the extension, Orbit agreed to defer the
quarterly interest payment due on January 30, 2008 for the $2.0 million
convertible note until April 30, 2008.
 
  Advances
from Stockholders
  From time
to time during Gulf Western’s development, stockholders have expended amounts on
behalf of Gulf Western and loaned the Company funds to meet operating and
capital requirements.  Advances from shareholders totaling $120,000 at
August 31, 2007 were repaid in November 2007.  At February 29, 2009
advances from shareholders total $157,796.
   NOTE
5 – OIL AND GAS PROPERTIES
  All of
Gulf Western’s oil and gas properties are located in the United
States.  Gulf Western holds interest in eleven wells that had
production during the six months ending February 29, 2008.
  Oil and
gas property costs classified as “Properties subject to amortization” at
February 29, 2008  are associated with Gulf Western’s capital
investments in the Oakcrest prospect located in Wharton County, Texas, and in
the Shamrock and Brushy Creek Projects in Dewitt County and Lavaca Counties,
Texas.   Amortization of the capital costs began during the
quarter ending February 29, 2008 with the commencement of commercial production
from the Shamrock and Brushy Creek projects.   Oil and gas
property costs classified as “Properties subject to amortization” are amortized
on a unit-of-production basis over the estimated future recoverable proved
reserves under the full cost method of accounting.  Amortization of
$104,586 was recorded for the three-month period ending February 29,
2008.
  
  Oil and
gas property costs excluded from amortization at February 29, 2008, and
identified on the consolidated balance sheet as “Properties not subject to
amortization”, are as follows:
  Fiscal
      Year Incurred
              
              Acquisition
                Costs
              
              
              Exploration
                Costs
              
              
              TotalYear
      Ending August 31, 2006
              
              $
              12,000
              
              
              $
              -
              
              
              $
              12,000Year
      Ending August 31, 2007
              
              
              5,267,722
              
              
              
              2,710,633
              
              
              
              7,978,355Six
      Months Ending February 29, 2008
              
              
              -
              
              
              
              128,957
              
              
              
              128,957Total
              
              $
              5,279,722
              
              
              $
              2,839,590
              
              
              $
              8,119,312
 
 The above
oil and gas property costs identified in the above table as costs not subject to
amortization are associated with Gulf Western’s investments in the Mound Branch
project in Elk County, Kansas; and the Bell and Baxter Bledsoe prospects in
the State of Kentucky.
  
 NOTE
6 – SECURED CONVERTIBLE NOTES PAYABLE
 
 Senior
Secured Convertible Notes Payable
  On
September 10, 2007, Gulf Western entered into a Security Purchase Agreement (the
“SPA”) with two lenders under which Gulf Western borrowed a total of $3,700,000
under Senior Secured Convertible Notes (the “Convertible Notes”) with Metage
Funds Limited (“Metage”) and NCIM Limited (“NCIM”).  Gulf Western
borrowed $3,200,000 from Metage and $500,000 from NCIM.  Pursuant to
the SPA, Gulf Western issued 1,500,000 common shares and issued 3,461,538
warrants to purchase shares of common stock in Gulf Western at an exercise price
of $0.26 per share for a period of five years.  The Convertible Notes
and related interest are convertible into common shares of Gulf Western at
a price of $0.39 per share at or before
maturity.   The Convertible Notes bear interest at 15% per
annum, and mature on September 10, 2008.  Interest for the first six
months is due on March 10, 2008 and is payable monthly thereafter; with the
total principal balance due at maturity.  The total $3,700,000
Convertible Notes may be prepaid at any time after the six-month anniversary of
the Convertible Notes with a 2.5% prepayment penalty. Gulf Western received net
proceeds of $2,944,000 (after $256,000 of placement fees) and the exchange of
the $500,000 NCIM Convertible Secured Note issued on July 3, 2007 for $500,000
of the Convertible Notes.
  In
conjunction with the SPA, Gulf Western entered into a registration rights
agreement (the “Registration Rights Agreement”) with the lenders pursuant to
which Gulf Western was required to: (i) file a registration statement with the
Securities and Exchange Commission with respect to the Common Stock issued under
the SPA and the Common Stock issuable upon exercise of the Warrants and
conversion of the Senior Secured Convertible Notes within 60 days after
September 12, 2007; and to: (ii) cause such registration statement to be
declared effective under the Securities Act of 1933, as amended, and the rules
promulgated there under, not later than 150 days after September 12, 2007. If
such registration statement is not filed by the 60th day after September 12,
2007, (November 12, 2007), or the registration statement is not declared
effective on or prior to the 150th day after September 12, 2007, liquidated
damages in the form of registration rights penalties, calculated based on a
prescribed formula in the SPA, in the maximum amount of $150,000.
  On April
8, 2008, in connection with the recently adopted reduced holding periods for
non-affiliates under Rule 144 under the Securities Act of 1933, as amended,
Gulf Western, Metage and NCIM executed a Termination of Registration Rights
Agreement which (i) terminated the registration rights agreement and (ii)
waived, released and discharged any further obligations under the registration
rights agreement, including the obligation on  the part of the Company
to pay any registration delay payments accrued or incurred
thereunder.  Accordingly, Gulf Western reversed its prior accrual for
the estimated liability for registration delay penalties as of February 29,
2008.  On April 14, 2008 Gulf Western filed an Application to Withdraw
the Registration Statement on Form SB-2,  originally filed with the
SEC on December 5, 2007.
  
  Gulf
Western evaluated the terms of the Convertible Notes, the issuance of common
stock and attached warrants in accordance with EITF 98-5 and EITF 00-27, and
concluded that the intrinsic value of the conversion feature of the Convertible
Notes represented a beneficial conversion feature in the amount of $426,137. The
relative fair value of the warrants and common shares issued were $646,791 and
$326,782, respectively as derived through the Black-Scholes option pricing
model.   The total discount of $1,399,710 associated with
the intrinsic value of the beneficial conversion feature, and the relative fair
value of the warrants and stock is being amortized to interest expense using the
effective interest method over the twelve month term of the Convertible
Notes.  The total debt discount, including the estimated registration
rights penalties, on the issuance of the Convertible Notes was
$1,549,710.
  The
principal assumptions used in the Black-Scholes valuation model to determine the
intrinsic value of the conversion feature of the Convertible Notes and the
relative fair value of the warrants and common shares issued were: a risk-free
interest rate of 4.0%; the current stock price on the date of issuance of $0.32
per common share; the exercise price of the warrants of $0.26 per share;
expected warrant term of five years; conversion price of $0.39 per common share,
volatility of 121.16%; and a dividend yield of 0.0%.
  The
Convertible Notes are secured by a lien on substantially all of the assets of
the Gulf Western, including all of the equity interests of Gulf Western’s
subsidiaries and Gulf Western’s rights in certain real property, pursuant to the
terms of a Security Agreement and Pledge Agreement entered into in connection
with the closing of transactions under the SPA. In addition, Gulf Western
Petroleum, LP, Wharton Resources Corp. and Wharton Resources LLC, each a
wholly-owned subsidiary of Gulf Western, entered into a Guaranty with the
Buyers, whereby each of the subsidiaries guaranteed the payment and performance
of all obligations of Gulf Western under the Convertible Notes and terms of the
SPA.  Gulf Western Petroleum, LP also entered into a Mortgage, Deed of
Trust, Assignment of Production, Security Agreement, Fixture Filing and
Financing Statement with respect to certain properties in Texas and Kansas to
secure the obligations of Gulf Western under the SPA and the Convertible
Notes.
  In
conjunction with the Convertible Notes, Gulf Western issued 300,000 shares of
common stock to a placement agent valued at $96,000 ($0.32 per share) and cash
fees totaling $256,000.  A total of $352,000 was recorded as deferred
financing costs, and are being amortized using the effective interest method
over the one year life of the debt.  During the three and six months
ended February 29, 2008, deferred financing costs of $78,115 and $164,910,
respectively, were charged to interest expense associated with the issuance of
the Convertible Notes.  If the Convertible Notes are converted or
repaid prior to the maturity date, any unamortized cost at the time of
conversion or repayment will be immediately recognized and charged to net
income.
  Convertible
Secured Note
  On July
3, 2007, Gulf Western borrowed $500,000 under an eighteen-month convertible
secured note from NCIM with a maturity date of January 3,
2009.   Under the terms of the convertible note, principal
repayments were scheduled to commence in October 2007 at $33,333 per month and
the note bore interest at a rate of 12.0% per annum, payable
quarterly.   The note provided the lender the right to convert
all or part of the outstanding balance into shares of common stock at a
conversion rate of $0.45 per share, and could be repaid by Gulf Western at any
time at 105% of the then outstanding principal and accrued
interest.  In conjunction with the Convertible Notes issued September
10, 2007, this note was exchanged for the NCIM Convertible Note.
  Short-Term
Convertible Note
  On
September 14, 2007, Gulf Western repaid in full $250,000 under a short term
convertible note payable issued in June 2007 to a private
investor.  Gulf Western paid $6,329 in interest in connection with the
repayment of the note.
  Orbit
Energy, LLC Mound Branch Convertible Note
  As
consideration to Orbit Energy, LLC for Gulf Western’s purchase of its interests
in the Mound Branch Project, Gulf Western issued a thirty-six month $2.0 million
unsecured convertible note dated January 30, 2007 with principal due at
maturity, bearing interest at 10.0% per annum due quarterly in arrears (the
“Orbit Note”).   Pursuant to the terms of the Orbit Note, after
the initial twelve months: a) Orbit has the ability to convert the outstanding
principal and interest balance into common shares at a conversion price of $1.00
per share, and b) Gulf Western may prepay all or a portion of the convertible
loan without penalty.   In the event of a change in control of
Gulf Western, the maturity of the unsecured Orbit Note is accelerated and $2.0
million and accrued interest becomes due.
  
  On July
3, 2007, Gulf Western and Orbit amended the Orbit Note to provide that interest
payable by Gulf Western for the first quarter on the note was deferred until the
interest due date for the second quarter. Accrued interest through October 31,
2007 totaling $150,137 was paid by Gulf Western to Orbit on November 20,
2007.   At February 29, 2008 the outstanding principal under the note
is $2.0 million and accrued interest totals $66,301.
  Loan
Agreement
  On March
12, 2008, Gulf Western entered into a twelve month loan agreement with a private
investor under which Gulf Western borrowed $500,000.  The loan bears
interest at a rate of 10% per annum, payable monthly 90 days in
arrears.   In connection with the loan agreement, Gulf Western
issued 1,000,000 shares of common stock to the lender as bonus shares for making
the loan.   Concurrent with the loan, the lender requested that
Gulf Western cancel Class D warrants held by the lender from a prior private
equity placement with Gulf Western.  The Class D warrants cancelled
were valued at $73,924 through using the Black-Scholes valuation model on the
date of cancellation.
 The
shares were valued at $0.25 per share, and the relative fair value of the loan
and the shares issued were determined to be $385,184 and $188,740,
respectively.   A debt discount on the loan of $114,816 will be
amortized over the twelve month term of the loan based on the effective interest
method.
   NOTE
7 – STOCKHOLDERS’ EQUITY
  Issuance of Common Shares and
Warrants In Private Placement Offerings
  On
September 20, 2007, Gulf Western completed a private placement transaction for
1,250,000 units at a price of $0.40 per unit for aggregate proceeds of $500,000.
Each unit consisted of one common share, one Class C Warrant and one Class D
Warrant.  Each Class C Warrant may be exercised at a price of $0.65
per share for a period of 3 years to acquire one additional share of common
stock of Gulf Western. Each Class D Warrant may be exercised at a price of $2.00
per share for a period of three years to acquire one additional share of common
stock.  The relative fair value of the common shares and the Class C
and Class D Warrants for the private placement transactions closed on September
20, 2007, was as follows:
 
 Securities
      Issued
              
              Relative
                Fair
      ValueCommon
      Shares (1,250,000 shares)
              
              $
              265,918Class
      C Warrants (1,250,000 shares at $0.65 per share)
              
              
              145,384Class
      D Warrants (1,250,000 shares at $2.00 per share)
              
              
              88,698Total
      placement
              
              $
              500,000
 
 The
relative fair value of the Class C and Class D Warrants issued in connection
with the units sold were estimated using the Black-Scholes valuation model. The
parameters used in the Black-Scholes valuation model were: a risk-free interest
rate of 4.19%; the current stock price on the date of issuance of $0.33 per
common share; the exercise price of the warrants of $0.65 and $2.00 per share,
respectively; expected terms of three years; volatility of 108%; and a dividend
yield of 0.0%.
 
 On March
17, 2008, Gulf Western completed a private placement transaction for 250,000
units at a price of $0.25 per unit for aggregate proceeds of
$62,500.  Each unit consisted of one common share, one Class E Warrant
and one Class G Warrant.  Each Class E Warrant is for 1⁄2 common share
with a 3 year term, and each Class G warrant is for 1⁄2 common share with a 3 year
term.  Each whole warrant is for 1 common share, with an exercise
price of $0.45 and $2.00 per common share for the Class E and Class G warrants,
respectively.
 
 The
relative fair value of the common shares and the Class E and Class G Warrants
for the private placement transactions closed on March 17, 2008 was as
follows:
 Securities
      Issued
              
              Relative
                Fair
      ValueCommon
      Shares (250,000 shares)
              
              $
              41,698Class
      E Warrants (125,000 shares at $0.45 per share)
              
              
              13,029Class
      G Warrants (125,000 shares at $2.00 per share)
              
              
              7,773Total
      placement
              
              $
              62,500
  
  The
relative fair value of the Class E and Class G Warrants issued in connection
with the units sold were estimated using the Black-Scholes valuation
model.   The parameters used in the Black-Scholes valuation model
were: a risk-free interest rate of 1.52%; the current stock price on the date of
issuance of $0.24 per common share; the exercise price of the warrants of $0.45
and $2.00 per share, respectively; expected terms of three years; volatility of
123%; and a dividend yield of 0.0%.
  Shares Issued for
Services
  During
the six months ended February 29, 2008, Gulf Western issued 51,725 common shares
to consultants for their services to Gulf Western.  The shares issued
for services were valued at $16,552, which was determined based on the share
price on the date that Gulf Western became obligated to issue the shares to the
consultants.
   NOTE
8 – WARRANTS
  Warrants
outstanding and exercisable as of February 29, 2008, are summarized
below:
  Exercise
              
              
              Weighted
                Average
                Remaining
              
              
              Number
      of WarrantsDescription
              
              Price
              
              
              Life
      (years)
              
              
              Outstanding
              
              
              ExercisableClass
      A Warrants issued in private placements
              
              $
              2.00
              
              
              
              2.18
              
              
              
              6,442,500
              
              
              
              6,442,500Class
      B Warrants issued in private placements
              
              $
              3.00
              
              
              
              2.18
              
              
              
              6,442,500
              
              
              
              6,442,500Class
      C Warrants issued in private placements
              
              $
              0.65
              
              
              
              2.56
              
              
              
              1,250,000
              
              
              
              1,250,000Class
      D Warrants issued in private placements
              
              $
              2.00
              
              
              
              2.56
              
              
              
              1,250,000
              
              
              
              1,250,000Warrants
      issued in connection with senior secured convertible note
              
              $
              0.26
              
              
              
              4.54
              
              
              
              3,461,538
              
              
              
              3,461,538Convertible
      Secured Note
              
              $
              0.30
              
              
              
              2.35
              
              
              
              125,000
              
              
              
              125,000Short
      Term Note
              
              $
              0.32
              
              
              
              2.33
              
              
              
              200,000
              
              
              
              200,000Placement
      agent warrants
              
              $
              0.40
              
              
              
              1.35
              
              
              
              100,000
              
              
              
              100,000Total
              
              
              
              
              
              
              
              
              
              
              19,271,538
              
              
              
              19,271,538
 
 Warrants
for 85,000 common shares at $1.25 per share expired on January 3, 2008. On
February 29, 2008 Gulf Western’s common share price closed at $0.245 per share.
The intrinsic value of warrants outstanding as of February 29, 2008 was
$-0-.
  
  Item
      2.
              Management’s
      Discussion and Analysis and Plan of
Operations
  The
following Management Discussion and Analysis and related Plan of Operations
(collectively referred hereinafter as “Plan of Operations”) should be read in
conjunction with our consolidated financial statements and related notes
included elsewhere in this Form 10-QSB. Our consolidated financial statements
are prepared in accordance with United States Generally Accepted Accounting
Principles. In this quarterly report, unless otherwise specified, all dollar
amounts are expressed in United States dollars. All references to “common
shares” refer to the common shares in our capital stock.  As used in
this quarterly report, the terms “we”, “us” and “our” refer to Gulf Western
Petroleum Corporation, unless otherwise indicated.
  Overview
  We are an
oil and natural gas exploration and development company.  This
quarterly report, including the consolidated financial statements and notes
contained herein together with this Plan of Operations, should be read in
conjunction with the description of our business and the description of our
properties contained in our Annual Report on Form 10-KSB/A for the year ended
August 31, 2007.   Some of the statements made herein may be
“forward-looking statements” and are qualified in their entirety as further
described in last section of this Plan of Operations entitled – “Forward Looking
Statements”.
  We are
engaged in the acquisition, exploration and development of oil and natural gas
reserves in the United States.  We currently hold oil and gas lease
interests in Texas, Kansas and Kentucky.  We accomplished our first
commercial levels of natural gas production during the quarter ending February
29, 2008, and generated operating revenues of $ 288,980 for the quarter from the
sale of our natural gas production.  We exited from the development
stage (as defined by the Statement of Financial Accounting Standards No. 7,
Accounting for Development Stage Enterprises) during our quarter ending February
29, 2008.
  Eleven
natural gas wells in which we hold interests had production during the quarter
ending February 29, 2008. These wells are located in Dewitt County (Shamrock
Project) and Lavaca County (Brushy Creek Projects), Texas.  We hold
proved undeveloped reserves in our Oakcrest Prospect located in Wharton County,
Texas which have estimated proved undeveloped recoverable reserves of
approximately 3.9 Bcfe net to our 95.75% working interest.  With the
establishment of production and operating cash flows from our wells in Dewitt
and Lavaca Counties Texas, we are directing substantially all of efforts and
resources to the raising of financing necessary to fund the drilling of our
Wharton County, Texas reserves.
  We are
engaged in a natural gas supply and gas gathering system development project in
Southeast Kansas (the “Mound Branch Project”), and hold interests in eight
existing wells that are capable of production, if and when a natural gas
gathering system can be developed to deliver wellhead production into an
interconnecting downstream pipeline to deliver to markets.  To
progress this project we need to fund it either through project financing, joint
interest participation or other agreements that could entail a scaling back of
our economic participation in the gathering system or reducing our working
interest in the supply development program.  We also hold exploratory
oil and gas lease interests in Kentucky as part of our Baxter Bledsoe and Bell
Prospects.
  Current
Production
  During
the quarter ending February 29, 2008, we established commercial levels of
production from eleven natural gas wells that were drilled during the calendar
year 2007.  Total production, net to our interests in the wells, was
39,233 Mcf which generated revenues from natural gas sales totaling $267,941,
net of Texas severance taxes on the production.
  Our wells
in the Shamrock Project and the Brushy Creek Projects are identified in the
following tables together with the net production, and total revenues and
operating cash flows for our net interest in each well.  Also noted is
the average sales rate realized during the quarter for each individual well, and
our working and net revenue interests’ in each well.
  
  Shamrock Project, Dewitt
County, Texas
 
 Bushmill
                  No. 1
                
                
                Pollinard
      Lee
                  No. 1
                
                
                MillerThomas
                  No. 1
                
                
                Red
      Breast
                  No. 1
                
                
                Micheal
      Collins
                  No. 1Production,
      net (Mcf)
                
                
                8,862
                
                
                
                6,411
                
                
                
                6,736
                
                
                
                1,938
                
                
                
                781Revenues,
      net of severance
                
                $
                58,960
                
                
                $
                4,402
                
                
                $
                44,656
                
                
                $
                12,044
                
                
                $
                5,151Ave
      sales rate / (Mcf)
                
                $
                6.65
                
                
                $
                8.49
                
                
                $
                6.63
                
                
                $
                6.21
                
                
                $
                6.60Working
      interest
                
                
                90.0
                %
                
                
                90.0
                %
                
                
                90.0
                %
                
                
                45.0
                %
                
                
                9.0
                %Net
      revenue interest
                
                
                63.0
                %
                
                
                63.0
                %
                
                
                63.0
                %
                
                
                31.5
                %
                
                
                6.3
                %
 
 
 Brushy Creek Projects,
Lavaca County, Texas
 
 Goodrich-Poindexter
                  No. 1
                
                
                Williams
                  No. 6
                
                
                O’Neal-Smith
                  No.1
                
                
                Nichols
                  No. 1
                
                
                Goodrich-Deleplain
                  No.1
                
                
                Pope
                  No. 1Production,
      net (Mcf)
                
                
                5,570
                
                
                
                895
                
                
                
                1,485
                
                
                
                1,345
                
                
                
                3,875
                
                
                
                1,335Revenues,
      net of severance
                
                $
                35,320
                
                
                $
                5,954
                
                
                $
                9,620
                
                
                $
                8,932
                
                
                $
                24,510
                
                
                $
                8,392Ave
      sales rate/ (Mcf)
                
                $
                6.34
                
                
                $
                6.65
                
                
                $
                6.48
                
                
                $
                6.64
                
                
                $
                6.32
                
                
                $
                6.29Working
      interest
                
                
                43.7
                %
                
                
                38.3
                %
                
                
                35.0
                %
                
                
                31.0
                %
                
                
                30.6
                %
                
                
                30.6
                %Net
      revenue interest
                
                
                31.7
                %
                
                
                27.8
                %
                
                
                25.4
                %
                
                
                22.5
                %
                
                
                22.2
                %
                
                
                22.2
                %
  General
and Administrative and Other Costs
  General
and administrative costs for the six months ended February 29, 2008 compared to
the six month ended February 28, 2007 increased substantially reflecting
increases in personnel costs for wages and option expense and increases in
professional fee associated with corporate development and registration costs.
Interest expense increased substantially due to the issuance of the
$3,700,000 convertible notes in September
 2007.
  Oil
and Gas Properties Capital Investment at February 29, 2008
  A summary
of our capital investment in oil and gas properties as of February 29, 2008 is
provided in the following table.  Total capital investments in each
project / prospect are identified; and it is noted whether the capital costs are
subject to and included in our amortization of oil and gas properties or
not.
  Project/Prospect
                Location
                
                Capital
      InvestmentSubject to
      amortization:Brushy
      Creek projects
                Lavaca,
      TX
                
                $
                1,649,654Oakcrest
      prospect
                Wharton
      County, TX
                
                
                968,893Shamrock
      project
                Dewitt,
      TX
                
                
                1,937,032Other
                Louisiana
                
                
                67,601Cumulative
      amortization
                
                
                
                (104,536
                )Total
                
                
                $
                4,518,644Not subject to
      amortization:Mound
      Branch project
                Elk
      County, KS
                
                $
                7,450,837Baxter
      Bledsoe prospect
                Clay
      County, KY
                
                
                342,000Bell
      prospect
                Bell
      County, KY
                
                
                326,475Total
                
                
                $
                8,119,312
  The
amortization rate for our oil and gas property capital investments applied to
our production during the quarter ending February 29, 2008 was $2.665 per
Mcf.
  
  Capital
Resources and Liquidity
  During
the quarter ending February 29, 2008, we began to realize cash flows from the
sales of natural gas production through our interests in the Shamrock and Brushy
Creek Projects.   Since our inception, we have funded our oil and
gas exploration and development activities, and our operating and working
capital requirements through the issuance of equity and debt securities in
private placements, and through the contribution of funds and services by our
officers and directors.
  Our
current level of operating cash flows generated from the sale of natural gas
production are insufficient to meet our operating, general and administrative,
debt services and working capital requirements on a monthly
basis.  Our current available cash is not sufficient to fund our
capital requirements or to sustain our operating needs over the next
twelve-month period.  To execute our plans, we will require
substantial financing and are actively working on options to raise equity
through private placements, or alternatively utilizing third party joint
interest participation in our exploration and development projects so as to
reduce our capital project cash requirements.  Such third party joint
interest participation will reduce our interests in projects; but, would also
reduce our financing needs and allow us to progress our oil and gas capital
program; help us meet oil and gas lease time tables; reduce our project /
prospect risk profile; and reduce our dependence on the success of an individual
project / prospect.
  Should we
raise funds through equity placements, existing stakeholders’ interests in Gulf
Western could be negatively affected due to the dilution of their existing
interests in us.  Substantially all our assets are pledged as security
to the note holders of our senior secured convertible notes issued on September
10, 2007.  The senior secured notes mature on September 10, 2008 and
if we are not successful in executing our plans we will be unable to repay the
$3.7 million principal balance on the maturity of the notes; and we may not be
able to continue our business and could cause us to cease operations, or at a
minimum we will be required to scale back our business.  The result of
these actions would be that the existing stakeholders in us would lose some if
not all of their investment.
  On April
8, 2008, in connection with the recently adopted reduced holding periods for
non-affiliates under Rule 144 under the Securities Act of 1933, the senior
secured convertible note holders agreed to terminate our registration obligation
undertaken in connection with the original September 2007
transaction.  This will allow us to substantially reduce costs
associated with accomplishing the initial registration of the securities issued
or issuable in the September 2007 transaction, and will reduce recurring costs
that would have been expended to keep the securities’ registration updated and
“fresh”.
  Our
current operating income is approximately $125,000 per month.
  
  Estimated
      Funding Requirements During the Twelve Months Ending February
      29, 2009Exploration,
      drilling, development and operating expenditures:Oakcrest
      Prospect – Drilling and completion of two Wilcox formation
      wells
                
                $
                8,900,000Mound
      Branch Project – Progress natural gas reserve program and gas gathering
      system
                
                
                300,000Shamrock
      Project – Capital expended for interconnection and AFE final
      reconciliation
                
                
                215,000Other
      prospects
                
                
                250,000Debt
      service, principal on convertible notes:Senior
      secured convertible notes issued September 10, 2007
                
                
                3,700,000Loan
      agreement executed March 12, 2008
                
                
                500,000Operating,
      general and administrative, and interest, net(1)
                
                
                1,044,000Working
      capital
                
                
                500,000Total
                
                $
                15,409,000
 
  (1)
                Monthly
      operating, general and administrative, and interest on debt funding
      requirements identified are net of projected monthly operating cash flows
      from our Shamrock and Brushy Creek natural gas
      production.  Includes total monthly interest due on the senior
      secured convertible notes and the March 12, 2008 loan agreement of
      approximately $50,500 per month.
  The
status of our current oil and gas projects and prospects, specific milestones
and steps necessary to accomplish each milestone, timeframe and funding
necessary are:
  Texas
Shamrock and Brushy Creek Projects
  The five
Frio formation wells that comprise the Shamrock Project commenced production in
December 2007.  We hold an average net revenue interest of
approximately 45.4% in the five wells.   Approximately, $215,000 of
capital changes net to our interest in the wells for interconnection into the
downstream pipeline and AFE final reconciliation is due to the operator and
require funding.
  Of the
seven Frio formation wells that that constituted the Brushy Creek IV, V and VI
Projects.   Five of the wells have been completed in the Frio
formation and production sales have commenced.  A sixth well has been
completed into the shallower Miocene formation, and sales of production has
commenced.  The seventh well is not currently scheduled for
completion.   We hold an average net revenue interest of 25.5% in the
six wells.  No further capital expenditures are expected, and we have
elected not to participate in the three Frio formation wells that comprise
Brushy Creek VII Project
  Texas
Oakcrest (Wilcox formation) Prospect
  We hold
oil and gas lease interests in Wharton County, Texas.  Third party
technical reserve evaluations attribute total proved undeveloped recoverable
natural gas and condensate Wilcox formation reserves of approximately 3.9 Bcfe,
net to our interests.   For the Oakcrest Prospect, the Wilcox
formation is found at a depth of approximately 11,000 to 12,500 feet, and the
capital expenditure requirement to drill and complete each Wilcox well is
approximately $4.45 million per well, net to our interest.
  The
location for the first well to be drilled has been identified, surveyed and
staked, and a preliminary drilling permit has been secured.  Under the
terms of our oil and gas lease, we have an obligation to spud an initial well
before September 1, 2008.  Approximately, 45 days are required to
drill a well with approximately 15 days necessary to complete a well once
drilled.  After the completion of a well, we have an obligation to
maintain a continuous drilling schedule with no more than 120 days elapsing
between completion of a well and the spudding of a new well.  Parcels
of acreage drilled that are capable of production are “held by production” and
bear a 23.75% landowner and overriding royalty burden.
  
  Our next
major milestone for the Oakcrest Prospect continues to be the sourcing of
financing to fund the drilling of a minimum of two wells.  We will
require $8.9 million to fund our capital expenditure requirements to accomplish
this milestone.   The lead time necessary to schedule a drilling
rig capable of drilling to necessary depths is approximately 60
days.  Thus, in order to accomplish a September 1, 2008 spud date for
the first well, the placement and funding of financing needs to be completed by
June 1, 2008.   Once financing is secured, we intend to proceed
to schedule a drilling rig, formalize the drilling permit, commission a drilling
survey, and acquire a drilling title opinion, all of which will need to be
accomplished concurrently with the closing of the financing.
  Mound
Branch Reserve and Gathering System Project
  The Mound
Branch Project is comprised of two interrelated and interdependent phases
(completion of the gathering system and the drilling of wells), both of which
must be accomplished in order to progress the overall Mound Branch program. In
order to source financing necessary to fund a contemplated three year 150-well
natural gas drilling project, we believe that we will have to demonstrate that
the 15-mile low pressure gathering system will be built, in service and ready to
transport wellhead production to market once production
commences.   For either us or other participants to commit to
financing to construct a low-pressure gas gathering system, we must have
confidence that investments will be made to drill and develop the natural gas
reserves that would utilize the gathering system.
  The next
major milestone for the Mound Branch Project is for us to secure support for and
commitments to the gas supply drilling program and to the gathering system
development, both in terms of financial commitments and counterparty commitments
to participate in their development.   Since our core business is
the exploration and production of oil and gas reserves, we may find it necessary
to scale back our economic participation in the gathering system in
order to expedite its development.  We believe that commitments
to develop the gathering system will assist us and enhance our ability to
raise sufficient funding to undertake a multi-year drilling
program.
  We hold
oil and gas leases for approximately 8,800 acres in Elk County, Kansas with
expiration dates of 2009 and later.  We have acquired the right of way
necessary to site and accomplish the construction of the gathering system. The
next milestone for the Mound Branch Project is for us to facilitate and effect
the construction and interconnection of the gathering system. We are currently
negotiating with a third party developer to build the gathering system under
terms that are commercially reasonable to us and which are equitable with the
level of risk being assumed by the parties.
  Our plan
of action is to finalize the terms and conditions of the gas gathering system
with the third party developer by the end of calendar year 2008.  The
construction period for the gas gathering system is approximately 75 – 90 days,
and once a deal is in place, we expect that the third-party gathering system
developer would have the system constructed and placed in service by
the first quarter of 2009.   Concurrent with the gathering
system being placed into service, our next milestone will be to acquire funding
for the initial stage of our proposed 150-well drilling
program.  Assuming completion of the gathering system during
the first quarter 2009, we expect to commence the drilling program by the
middle of calendar year 2009.
  Off
Balance Sheet Arrangements
  We do not
have any off balance sheet financial arrangements.
  Forward
Looking Statements
  This
quarterly report contains forward-looking statements as that term is defined in
the Private Securities Litigation Reform Act of 1995. These statements relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as “may”, “should”,
“expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”,
“potential” or “continue” or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled “Risk Factors” in our Annual Report on Form 10-KSB/A for the year ended
August 31, 2007, that may cause our or our industry’s actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements.
  Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
   Item
      3.
              Controls
      and Procedures
  Evaluation
of Disclosure Controls and Procedures
  As of the
end of the period covered by this report, the Company’s management, including
its Chief Executive Officer, President and Chief Financial Officer, carried out
an evaluation of the effectiveness of the Company’s disclosure controls and
procedures pursuant to Rule 13a-15 of the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”). Based on that evaluation, the Chief Executive
Officer, President and Chief Financial Officer concluded the
following:
  
 (i)
              that
      the Company’s disclosure controls and procedures are designed to
      ensure (a) that information required to be disclosed by the Company in the
      reports it files or submits under the Exchange Act is recorded, processed,
      summarized and reported, within the time periods specified in the SEC’s
      rules and forms, and (b) that such information is accumulated and
      communicated to the Company’s management, including the Chief Executive
      Officer, President and Chief Financial Officer, as appropriate, to allow
      timely decisions regarding required disclosure;
  and
 (ii)
              that
      the Company’s disclosure controls and procedures are
      effective.
  Changes
in Internal Control Over Financial Reporting
  There
have been no changes in the Company’s internal control over financial reporting
during the three months ended February 29, 2008 that have materially affected,
or that are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
  
  PART
II – OTHER INFORMATION
 
 Item
      1.
              Legal
      Proceedings
  We know
of no material, active or pending legal proceedings against us, nor are we
involved as a plaintiff in any material proceeding or pending litigation. There
are no proceedings in which any of our directors, officers or affiliates, or any
registered or beneficial shareholder, is an adverse party or has a material
interest adverse to our interest.
  Item
      2.
              Recent
      Sale of Unregistered Securities
 
 None
 
 Item
      3.
              Default
      Upon Senior Securities
  None
  Item
      4.
              Submission
      of Matters to a Vote of Security
Holders
  None
  Item
      5.
              Other
      Information
  None
  
  Item
      6.
              Exhibits
 
 3.1
              
              Articles
      of Incorporation of the Company (incorporated by reference to Exhibit 3.1
      to the Company’s Registration Statement (Registration No. 333-133759) on
      Form SB-2 filed on May 3, 2006).3.2
              
              Certificate
      of Amendment to Article of Incorporation of the Company (incorporated by
      reference to Exhibit 3.2 to the Company’s Registration Statement
      (Registration No. 333-141234) on Form S-8 filed on March 12,
      2007).3.2
              
              Bylaws
      of the Company (incorporated by reference to Exhibit 3.2 to the Company’s
      Registration Statement on Form 8-A filed on November 9,
    2006).4.1
              
              Specimen
      Stock Certificate (incorporated by reference to Exhibit 4.1 to the
      Company’s Registration Statement on Form 8-A filed on November 9,
      2006).4.2+
              
              2007
      Non-Qualified Stock Option  Plan (incorporated by reference to
      Exhibit 4.1 to the Company’s Registration Statement (Registration No.
      333-141234) on Form S-8 filed on  March 12,
    2007).31.1*
              
              Section
      302 Certification under Sarbanes-Oxley Act of 2002 of Wm. Milton Cox
      (principal executive officer).31.2*
              
              Section
      302 Certification under Sarbanes-Oxley Act of 2002 of
      Donald L. Sytsma (principal financial and accounting
      officer).32.1*
              
              Section
      906 Certification under Sarbanes-Oxley Act of 2002 0f Wm. Milton Cox
      (principal executive officer).32.2*
              
              Section
      906 Certification under Sarbanes-Oxley Act of 2002 0f
      Donald L. Sytsma (principal financial and accounting
      officer).
 
 
 *
              Filed
      herewith.
 
 +
              Management
      contract or compensatory plan or
arrangement
  
  SIGNATURES
 
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this quarterly report on Form
10-QSB to be signed on its behalf by the undersigned, thereunto duly
authorized.
  GULF
      WESTERN PETROLEUM CORPORATIONDate:  April
      21, 2008
              By:
              /s/
      Wm. Milton CoxWm.
      Milton Cox, Chairmanand
      Chief Executive Officer
   Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
quarterly report on Form 10-QSB has been signed by the following persons in the
capacities and on the dates indicated.
  Signature
              
              Capacity
      In Which Signed
              
              Date/s/ Wm.MiltonCox
              
              Chairman
      and Chief Executive Officer and Director
              
              April
      21, 2008Wm.
      Milton Cox
              
              (Principal
      Executive Officer)/s/DonaldL.Sytsma
              
              Chief
      Financial Officer, Corporate Secretary and  Treasurer and
      Director
              
              April
      21, 2008Donald L. Sytsma
              
              (Principal
      Financial and Principal Accounting Officer)/s/BassamNastat
              
              President
      and Director
              
              April
      21, 2008Bassam Nastat