UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington
D.C. 20549





FORM
10-K/A


(AMENDMENT
No. 3)









(Mark
One)


x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE


ACT
OF 1934




For
the fiscal year ended December 31, 2008


or




 ̈
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934




For the
transition period from __________________ to __________________




Commission
File No. - 000-32507







EGPI
FIRECREEK, INC.


(Exact Name of Registrant as
Specified in Its Charter)




Nevada
              88-0345961(State or Other Jurisdiction of
      Incorporation or Organization)
              (I.R.S.
      Employer Identification No.)




6564
Smoke Tree Lane Scottsdale, AZ 85253


(Address of
Principal Executive Offices) (Zip
Code)




(480)
948-6581


(Registrant’s
Telephone Number, Including Area Code)




Securities
registered pursuant to Section 12(b) of the Act:




Title
      of Each Class
              
              Name
      of Each Exchange On Which RegisteredCommon
      Stock, $0.001 par value
              
              None




Securities
registered pursuant to Section 12(g) of the Act:




None


(Title of Class)







Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yeso    Nox




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.


Yeso    Nox




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




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 o    No o




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405) is not contained herein, 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. x




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




Large
      Accelerated Filer o
            Accelerated
      Filer oNon-Accelerated
      Filer o
            Smaller
      Reporting Company x(Do
      not check if a smaller reporting company)




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yeso    Nox




State the
aggregate market value of the voting and non-voting common equity 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.




The aggregate market value on March 31,
2009 of common stock held by non-affiliates was approximately $332,877 based on
the average of the closing bid and asked prices of the registrant’s common stock
on such date, as quoted by the National Quotation Bureau.




Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.




As of March 31, 2009, the registrant
had 9,547,207 shares of its $0.20 par value common stock issued and outstanding.
There are  no shares of Series A, B or C preferred
stock,  issued and outstanding, at $0.001 par value for each of the
Series of Preferred, and no shares of non-voting common stock issued and
outstanding.




DOCUMENTS
INCORPORATED BY REFERENCE




No
documents are incorporated herein by reference.









EXPLANATORY
NOTE




EGPI
Firecreek, Inc. (referred to as “us,” “we,” the “Company,” ) is filing this
Amendment No. 3 (this “Amendment”) to amend certain items contained in our
Annual Report on Form 10-K for our fiscal year ended December 31, 2008,
which was originally filed with the Securities Exchange Committee (the “SEC”) on
April 14, 2009, the original report and as amended on April 15, 2009, and April
23, 2009 (the “Report”).




On March
1, 2010 our Board of Directors determined that we needed to restate the
financial statements contained in the Report and our Quarterly Reports on Form
10-Q for the quarterly period ended September 30, 2009. The determination
was made by our Board of Directors and our Chief Financial Officer based upon
comments from the staff (the “Staff”) of the Securities and Exchange Commission,
and following consultation with our senior management, legal advisor and
independent registered public accounting firm. This Amendment is in response to
such comments and to effectuate certain other changes that we believe are
appropriate.




The changes to our financial statements
contained in this Amendment result in a change in the net loss of the Company
from $578,717 to $1,145,717 for the period ended December 31, 2008 which are
reflected in changes to the Company’s financial statements
herein.




The
purpose of this Amendment is to amend and restate the following Items in the
Original Report as amended including updating the Title Page to the most current
version:




•
            Item 1, “Description of the
      Business,” to, among other
things:




¡
            Amend the discussion under “Risk
      Factors” to conform the net loss on continuing operations and net income
      with the Amended financial
statements.







•
            Item 7, “Management’s
      Discussion and Analysis or Plan of Operation,” to, among other
      things:




¡
            Revise the 2008 the Management
      Discussion to include the changes from the loss from continuing operations
      to conform to the financial statements. The net income and loss per share
      discussion were also revised to conform to the financial
      statements.




•
            Item 8, “Financial
      Statements,” to, among other
things:




¡
            Revise the 2008 the report of our
      independent registered public accounting firm with respect to our
      financial statements as of and for the year ended December 31,
      2008.




¡
            Restate the balance sheet and
      statement of stockholders’ deficit for the year ended December 31,
      2008 that has been corrected to eliminate the Other Comprehensive Loss of
      $567,000 and to increase the accumulated deficit by the same
      amount.




¡
            Restate our statement of
      operations for the year ended December 31, 2008, that has been
      corrected to show the loss on asset disposal of $567,000 and to increase
      the Net Loss from Continuing Operations by the same amount. As a result of
      the change in the profit and loss for the year it was necessary to
      recalculate earnings by share. The new earnings per share amount is $.44
      cents per share basic and fully diluted for the year ended December 31,
      2008.




¡
            Restate our statement of cash
      flows for the year ended December 31, 2008 that has been corrected to
      include a decrease in the net income by $567,000 and recording the loss on
      asset disposal by the same
amount.




¡
            Amend Note 4, “Net Income (Loss)
      Per Share,” of the Notes to Financial Statements to remove the effects of
      our options and debenture outstanding at December 31, 2008, when
      calculating fully diluted shares
  outstanding.




¡
            Expanded Note 9 of the Notes to
      Financial Statements to expand the disclosure concerning legal
      extinguishment of debt held by Dutchess, extinguished in connection with
      foreclosure.;




¡
            Amend Note 12 “Income Tax
      Provisions,” of the Notes to Financial Statements to revise disclosure to
      include the amount of income tax expense or benefit allocated to
      discontinued operations. Reflects change in net loss to conform to the
      amended financial statement.




¡
            Amend Note 12 “Income Tax
      Provisions,” of the Notes to Financial Statements to Expand our disclosure
      to clarify the nature of our "timing
  differences."




¡
            Amend Note 13 (formerly Note 9),
      “Gain on Sale of Asset” of the Notes to Financial Statements to reflect
      that the Star Energy stock was sold in 2008 as reclassified from other
      comprehensive income to loss on sale of
  asset.




¡
            Amend Note 15, “Supplemental
      Information on Oil & Gas Operations,” of the Notes to Financial
      Statements to reflect the recalculation for the accumulated
      depreciation.




¡
            Add Note 18, “Restatement of
      Previously Issued Financial Statement,” of the Notes to Financial
      Statements to reflect changes to the financial
      statements.




¡
            Changed
      Note 18, “Subsequent Events” and moved to new Note 19
    added.




•
            Item 9AT, “Controls and
      Procedures,” to revise the discussion therein in light of this
      Amendment.




In
accordance with Rule 12b-15 under the Securities Exchange Act of 1934, this
Amendment also includes as exhibits, currently dated certifications from our
Chief Executive Officer and Chief Financial Officer as required by Sections 302
and 906 of the Sarbanes-Oxley Act of 2002.








EGPI
FIRECREEK, INC.


FORM
10-K


FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2008


INDEX





PART
      IItem
      1.
              Description
      of Business
              3Item
      1A.
              Risk
      Factors
              8Item
      2.
              Description
      of Property
              15Item
      3.
              Legal
      Proceedings
              18Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              18PART
      IIItem
      5.
              Market
      for Common Equity and Related Stockholder Matters
              18Item
      6.
              Selected
      Financial Data
              23Item
      7.
              Management’s
      Discussion and Analysis or Plan of Operation
              23Item
      8.
              Financial
      Statements and Supplementary Data
              F-1-17Item
      9.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              28Item
      9AT.
              Controls
      and Procedures
              28Item
      9B.
              Other
      Information
              29PART
      IIIItem
      10.
              Directors,
      Executive Officers, Corporate Governance
              31Item
      11.
              Executive
      Compensation
              33Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management
              35Item
      13.
              Certain
      Relationships And Related Transactions, And Director
      Independence
              36Item
      14.
              Principal
      Accountant Fees and Services
              41PART
      IVItem
      15.
              Exhibits,
      Financial Statement Schedules
              41SIGNATURES
              44


2




This
Annual Report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The Company
has based these forward-looking statements on the Company’s current expectations
and projections about future events. These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about us and
the Company’s subsidiaries that may cause the Company’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 such forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “may,” “will,” “should,”
“could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“continue” or the negative of such terms or other similar expressions. Factors
that might cause or contribute to such a material difference include, but are
not limited to, those discussed elsewhere in this Annual Report, including the
section entitled “Risks Particular to the Company’s Business” and the risks
discussed in the Company’s other Securities and Exchange Commission filings. The
following discussion should be read in conjunction with the Company’s audited
Consolidated Financial Statements and related Notes thereto included elsewhere
in this report.





PART
I





ITEM
1 - DESCRIPTION OF BUSINESS




HISTORY




EGPI
Firecreek, Inc. (the “Company”, “EGPI”, “we”, “us” or “our” ) was incorporated
in the state of Nevada on October 4, 1995 as Sterling Market Positions, Inc.
with 10,000,000 shares of $.001 par value common stock authorized. Effective
June 24, 1999, the Company changed its name to Energy Producers, Inc. and
increased its authorized common shares to 50,000,000 with a par value of $0.001.
The Company’s principal place of business is 6564 Smoke Tree Lane, Scottsdale,
AZ 85253.




On August
25, 1999, the Company was acquired by Energy Producers Group, Inc., and its
wholly owned subsidiary, Producers Supply, Inc. The purpose of the acquisition
and reverse merger was to become an oil and gas company, and later diversify.
The Company focused its business on oil and gas exploration and acquiring
existing production with proven reserves.




On
December 31, 2005 the board of directors of the Company authorized the disposal
of the Company’s wholly owned subsidiary marine sales segment assets and
operations International Yacht Sales Group, Ltd. located in Torquay Devon,
United Kingdom.




In March
2006 the Company through its wholly owned subsidiary Firecreek Petroleum, Inc,
(“Firecreek”), began production and sale of natural gas from completed wells
located in Sweetwater County, Wyoming.




On
December 13, 2006, the Company increased its total authorized capital stock from
980,000,000 shares to 1,300,000,000.




On July
1, 2007 the Company through its wholly owned subsidiary Firecreek began
production and sale of oil from the Fant Ranch Unit located in Knox County,
Texas.





On July
3, 2008 the Company through its wholly owned subsidiary Firecreek began
production and sale of oil and gas from the J.B. Tubb leasehold estate located
in Ward County, Texas.





Effective
on October 8, 2008 the Company affected a one (1) for two hundred (200) reverse
stock split whereby, as of the Record Date, for every two hundred shares of
common stock then owned, each shareholder received one share of common
stock.





On
October 30, 2008 the Company’s wholly owned subsidiary Firecreek sold its 50%
undivided interest in the Ten Mile Draw natural gas leases in Sweetwater County,
Wyoming.





On
December 2, 2008 as a result of a default notice received October 24, 3008 on
Promissory Notes and Debentures held by Dutchess Private Equities Fund, Ltd
(“Dutchess”), all of the assets were transferred or disposed of.




Overview




The
Company, through its wholly-owned subsidiary Firecreek, has been building and
integrating a line segment of operations facilitating plans for the Company’s
oil and gas operations.




In 2007
the Company began focusing its efforts on development of domestically based oil
and gas acquisition and production located in Texas and Wyoming.





In 2008
the Company expanded its oil and gas operations in Texas with the acquisition
and development of majority interests held in the J.B. Tubb leasehold
estate.


3





RECENT
DEVELOPMENTS





On
December 3, 2008, the Company received resignations from each of Douglas
Leighton, Michael Novielli, Theodore Smith, and Douglas D’Agata as members of
the Company’s board of directors. Further, on December 3, 2008, Mr. Douglas
D’Agata resigned as the Company’s authorized officer.





On
December 3, 2008, Mr. Dennis Alexander was re-appointed to the Board of
Directors of the Company and as the Chief Executive Officer and Chief Financial
Officer. Further, on December 3, 2008, Larry W. Trapp, and Mike Trapp were
appointed to the Board of Directors. Further, Larry W. Trapp was appointed as
Executive Vice President and Co-Treasurer, and Melvena Alexander was appointed
Secretary, Comptroller, and Co-Treasurer.





On
December 2, 2008 based upon completion of the disposal by Dutchess of all EGPI
assets, all the debt to Dutchess claimed in the Notice of Default and all
obligations of EGPI to Dutchess under the Loan Agreements were deemed fully
satisfied. Further the Company issued a promissory note in favor of Dutchess in
the principal face amount of $47,564.78 in consideration of certain Oil and Gas
Property Participation and Rights Agreement. For additional information please
see our Current Report on Form 8-K filed December 3, 2008, incorporated herein
by reference, and Exhibits 10.32 (Oil and Gas Property Participation and Rights
Agreement), and Exhibit 10.34 (Promissory Note Agreement) filed with this
report.





The
Company throughout its first quarter of operations for 2009 has been pursuing
projects, seeking financing, and in negotiations for acquisition and development
of select targeted oil and gas proved producing properties with revenues, having
upside potential and prospects for enhancement, rehabilitation, and future
development. These prospects are primarily located in Eastern Texas, and in
other core areas of the Permian Basin.




THE
BUSINESS




The
Company has been building and integrating a line segment of operations
facilitating plans for the Company’s continuation of its oil and gas
infrastructure and domestically focused oil and gas operations.




In 2007,
the Company commenced with oil production related to the acquisition of the Fant
Ranch Unit in Knox County, Texas (“Fant Unit or Fant”). The Company’s production
of oil was initiated from 17 producing oil wells and 1 injection well in the
Fant system. In September of 2007 two more wells were brought online, one well
for oil production, and one for water stimulation.





Throughout
most of fiscal 2008 we deployed enhancement and rehabilitation programs on
several wells in the Fant Ranch Unit system increasing its overall performance.
Further we acquired a 75% working interests in the J.B. Tubb leasehold estate
located in the Amoco Crawar Field, Ward County Texas, and began a turn key
re-entry and development program for oil and gas.  The Company
successfully completed two wells, and added a third stripper well for production
of oil and gas.





The
Company was seeking to continue its expansion and growth for oil and gas
development, but due to economic circumstances which led to downturn factors, we
received an untimely default notice which resulted in forced disposition of our
assets.





We have
been pursuing a re-build of our basic infrastructure and negotiating for new
acquisitions.





Firecreek
Oil and Gas - Shift of Focus to Domestic Operations




Our goal
is to become an independent oil and gas company engaged in the exploration,
development and exploitation of crude oil and natural gas primarily in the
United States.




In 2007
due to the rising costs related to the pursuit of overseas activities relative
to the cost of financing for our Company, we elected to curtail foreign
expenditures and concentrate on domestic projects (see historical information in
previous reports filed on Form 10-KSB).




Firecreek’s
2008 Oil and Gas Operations




Ten
Mile Draw Project, Sweetwater County, Wyoming




Effective
November 15, 2005, Firecreek purchased a 50% undivided non-operating interest in
certain leases, wells, equipment, mineral interests including oil and gas
reserves, and other rights, (the “Assets”) located in Sweetwater County, Wyoming
from Newport Oil Corporation (“Newport”), under the prospect named “Ten Mile
Draw” (“TMD”). An Operating Agreement was entered into at the time of the
purchase, whereas Newport became operator for Firecreek’s non-operated 50%
interests, and Newport’s operated 50% interests.


4





Sale
of TMD





On
October 30, 2008, the Company and NOC entered into an Agreement for Sale of
Mineral Rights and an Assignment and Bill of Sale (collectively, the
“Agreements”) relating to the Company’s sale, and NOC’s purchase, of the
Company’s fifty percent (50%) undivided interest in the mineral rights created
by oil and gas leases on the TMD real property, as described in the Agreements
(“Mineral Rights”). Moreover, included in the sale was all of the Company’s
interest in a lawsuit currently pending in the Third Judicial District Court of
Sweetwater County, Wyoming (case Number Civil C-07-821-R, and styled Newport Oil
Corp. v. Inter-Mountain Pipe and Threading Co.) (the “Suit”).The purchase price
for these Mineral Rights and Suit was $125,000, payable in cash at
closing.





A copy of
the Agreement for Sale of Mineral Rights and Assignment and Bill of Sale are
filed as Exhibits 10.1 and 10.2, respectively in a Current Report on Form 8-K
filed on October 31, 2008, incorporated herein by reference.





Fant
Ranch Unit Project, Knox County, Texas





Effective
July 1, 2007, Firecreek purchased a 100% working interest and corresponding 75%
net revenue interest  in certain leases, wells, equipment, mineral
interests, oil and gas reserves (the “Assets”), known as the Fant Ranch Unit
(“Fant”) located in Knox County, Texas from Ward Energy LP (“Ward”). We entered
into a standard operating agreement at the time of the purchase with Success Oil
Co. Inc., (“Success”) whereas Success became operator on behalf of the interests
in Fant held by the Company through Firecreek, and subsequently taking over
operations in transition from Wards then Operating unit. In September and
October 2007, Firecreek engaged Success to initiate a Phase 1 workover and
restoration program for two additional wells, the no.’s 7-1 and 1-4, to restore
their production to bring on line for sales of oil. In January 2008, Firecreek
commenced with a phase 2 enhancements /rehabilitation program for the Fant. The
program included cleaning out casing perforations, maintenance, paraffin
removal, repair and acid stimulation for a majority of the oil wells in the
unit. The purpose of the program authorized was to maintain the existing wells
regularly, and to increase the overall well efficiency and production for the
field. The Company spent approximately $325,000 in its phase 2
program.





Disposition
of Fant Ranch Unit Interests





On
December 2, 2008, in connection with the Default notice received October 24,
2008, and actions of Dutchess Private Equities Fund, Ltd., the Fant Ranch Unit
was disposed of and is no longer owned by the Company.





J.B.
Tubb Leasehold Estate, AMOCO CRAWAR FIELD, Ward County, Texas





In
January, 2008, Firecreek entered into an Assignment and Bill of Sale (the
“Assignment”) with Success Oil Co., Inc. (“SOC”) relating to the purchase and
sale of  75% working interests along with 56.25% corresponding net
revenue in certain 40 acre tract of land and leases (the “North 40”), with and
including a first right for an additional 40 acre lease (the “South 40”),
located in Ward County, Texas, more commonly known as the J.B. Tubb leasehold
estate (the “Tubb Lease”). The Company participated in a workover, drilling and
development program, and brought three wells online as a result. The Company
paid $1,400,000 for the lease, equipment and a Participation Agreement which
provided for turnkey drilling, re-entry, and included multiple wells on the
North 40 Acres. Firecreek subsequently acquired assignment of one Lower
Clearfork formation in the Crawar Highland 2 Wellbore which is located on the
South 40 of the J.B. Tubb Leasehold Estate (also see information contained in
Current Report on Form 8-K/A filed on April 30, 2008). The Tubb Lease workover,
drilling and development programs brought three wells online resulting in two of
the three wells effectively producing and selling oil and gas through the
disposition of the leases on December 2, 2008.  For further
information please see our Current Report on Form 8-K, as amended, originally
filed on January 9, 2008, and amended and filed on April 30, 2008, incorporated
herein by reference.




Disposition
of J.B. Tubb Interests





On
December 2, 2008, in connection with the Default notice received October 24,
2008, and actions of Dutchess Private Equities Fund, Ltd., the 75% Working
Interests held in the J.B. Tubb Leasehold Estate was disposed of and is no
longer owned by the Company.


5





Competition





The oil
and gas industry is highly competitive. As a new independent domestic producer
entering the oil and gas business, the Company will not initially own and may
never own any refining or retail outlets and may have little control over the
price it will receive for planned crude oil production. Although management has
established relationships in its proposed acquisition activities, significant
competition by individual producers and operators or major oil companies exists.
Integrated and independent companies and individual producers and operators are
active bidders for desirable oil and gas properties. Many of these competitors
have greater financial resources than the Company currently has now or may have
in the near future.




Sales
and Marketability




TMD
Project, Wyoming




Through
its Disposition, October 30, 2008





The
Company through its Firecreek unit commenced selling natural gas during 2006
through the interests it held in the leases, wells, and equipment in the TMD. A
Gas Purchase Agreement was entered into November 11, 2005 by Emerald Operating
Company (“Emerald”) as “Producer”, and Western Gas Resources, Inc. (“Western”).
Effective January 1, 2006, Newport, the Company’s Operator for its interests in
the TMD Project and Western, signed a Ratification Agreement, adopting the Gas
Purchase Agreement as the agreement between them covering gas purchases,
pursuant to which Newport became the “Producer”. Newport is the operating
partner for our non operated interests owned in the TMD. The Gas Purchase
Agreement had a term of three years, continuing thereafter until either party
gives written notice of termination at least thirty days prior to the expiration
of the primary term or any extension of the primary term. Payments relative to
the Company’s receipt from Newport, based on Gas received to the pipeline were
estimated to be a standard 45-60 days following monthly settlement and
calculation by Western. The British Thermal Unit (BTU) content of our gas
produced in the TMD workover wells tested above standard. Through Newport we
were entitled to receive bonus payment adjustment increase for sales of gas,
less gathering fees, as applicable, in accordance with the then terms and
calculations of the Gas Purchase Agreement. Prices paid by Western accordingly
were adjusted for a BTU content of each zone as well as the liquids revenue
received. The Company believes it had no commitment that obligated us to produce
any set amount of natural gas.




Fant
Ranch Unit, Texas




The
Company received, through December 2, 2008, its monthly payment for the Fant
Units production of oil in Knox County, Texas by division order with BML Inc. to
Success Oil Co., Inc. BML purchases all of the Company’s crude oil pertaining to
its interests owned based on a month-to-month contract, which could then be
terminated upon thirty (30) day’s notice by either party. A division order is a
contract for the sale of oil, by the holder of a revenue interest in well or
property, to the purchaser.  It lists the names of revenue interest owners
of a producible oil well or wells, along with the respective share of production
revenues, and directs the purchaser to distribute the proceeds of production
sales, accordingly. The Company received according to its interests for the oil
sold to BML, through December 2, 2008, the average of the Plains price for the
oil in for the month sold, adjusted by Platt pricing, less a transportation cost
for the oil of $1.75 per barrel. The Company had no commitment that obligated us
to produce any set amount of oil (see also “Management’s Discussion and Analysis
of Financial Condition, and Plan of Operation", and "Description of
properties").





Historically
the marketability of the Company's crude oil has not posed a problem for us.
 Crude oil can be easily sold wherever it is produced in the state(s) that
the Company operates subject to the transportation cost. For example, the crude
oil produced by the Company via certain of its oil and gas interests which were
disposed of on December 2, 2008 had been transported by truck.  On the
other hand, natural gas can be considered more difficult to sell since
transportation requires a pipeline.  In some of the areas that the Company
has pursued new drilling activity for natural gas, other companies have been
delayed up to a year because of the unavailability of a pipeline. No assurance
can be given that natural gas wells drilled by the Company, if any, will be
placed on line within a year after the well is drilled and
completed.





Future
Development Contemplated,





J.B.
Tubb Leasehold Estate, AMOCO CRAWAR FIELD, Ward County, Texas





As part
of the disposition of its assets the Company and Dutchess entered into an Oil
and Gas Property Participation and Rights Agreement (“Participation Agreement”),
filed on Exhibit 10.32 with this report, whereby Dutchess granted EGPI, under
certain circumstances listed therein the participation agreement, a right of
first refusal, as provided in Section VIII of that certain participation
agreement between Success Oil Co. and EGPI and its wholly-owned subsidiary,
Firecreek Petroleum, Inc., dated January 3, 2008.


6





Wyoming
Regulations





Any oil
undertaking within the State of Wyoming requires obtaining the necessary permits
and approvals from the Wyoming Oil and Gas Conservation Commission (“WOGCC”).
Once a lease is obtained, an operator’s agreement must be on file with the
WOGCC. In addition, federal regulations including those governed by the
Environmental Protection Agency must be strictly followed (see additional
discussion addressing the regulatory environment governing oil & gas
drilling and production found under “Business Risks”; “Governmental
Regulation”). We believe our operator Newport has obtained all necessary permits
to operate the two workover wells associated with the Company’s interests in TMD
project held by Firecreek prior to October 30, 2008.




Texas
Regulations




Any oil
undertaking with the State of Texas requires obtaining necessary permits and
approvals from the Railroad Commission of Texas (“RRC”). Once a lease is
obtained an operator’s agreement must be on file with the RRC.  Federal
regulations including those governed by the Environmental Protection Agency must
also be strictly followed (see additional discussion addressing the regulatory
environment governing oil & gas drilling and production found under
“Business Risks”; “Governmental Regulation”). We believe our operator Success
has obtained and or filed all necessary permits and reports to operate the wells
and maintain compliance associated with the Company’s interests in Fant Ranch
Unit held by Firecreek prior to December 3, 2008.




Entry
and Eventual Stability In The Oil And Gas Business Will Be Dependent Largely On
Our Ability To Acquire Significant Financing Amounts




The
Company’s entry and eventual stability in the oil and gas business will be
dependent largely on our ability to continuously acquire significant financing
amounts, and other potential financing providers, to carry out and implement its
plans (see “Management Discussion and Analysis”, “Business Risks”, and
“Liquidity and Capital Resources” sections).




The
Company and its Firecreek unit are presently in different stages of review and
discussion, gathering data and information, and any available reports on other
potential field acquisitions, work over programs, and new drilling projects,
located in Texas, New Mexico, and other productive regions and areas in the U.S.
However, no assurances can be given by the Company that will be successful in
pursuing these other prospects.




Successful
negotiations for acquisitions, confidentiality, timing and the Company’s
financial capabilities will continue to play a significant role in any success
of both current and future operations for the Company activities, including its
subsidiary operations, and or any future planned subsidiary or special purpose
entity (SPE) operations which in the future may exist.




From time
to time Management will examine oil and gas operations in other geographical
areas for potential acquisition and joint venture development.





Firecreek’s
Overseas Project Activity Development in Central Asian and European
Countries




Strategic
Alliance with Sahara Group




For
historical information regarding the Sahara Group please see the section titled
“The Business” and other information contained in Form 10-KSB, as amended, filed
April 14, 2006, and in Form 10-KSB/A (Amendment No. 3), as amended filed April
11, 2008.




In 2007
and 2008, the Company focused on its domestic US oil and gas operations. There
was no further activity with the Sahara group in Russia, Kazakhstan, Ukraine and
Turkey, with the exception of the sale of certain opportunity rights to access
of projects in Ukraine (for further information please see Item 6, Management
Discussion and Analysis or Plan of Operation presented further this Report).
 It is the Company’s intention  to wind down the Sahara entity. The
Company may re enter negotiations at a future date predicated on the contacts
and business relationships previously established in these
countries.




Firecreek’s
Future Planned Oil and Gas Operations




Status
of Firecreek’s Overseas Project Activity




For
current status of Firecreek please see information in this section “The
Business” under above sub heading “Firecreek Oil and Gas Segment”. For
historical information please also see “The Business” and other information
contained in Form 10-KSB, Amendment No. 1, filed on July 24, 2008, and in Form
10-KSB/A (Amendment No. 3), as amended filed April 11, 2008,


7





In 2007
and 2008 the Company focused on its’ domestic US oil and gas operations. There
was no further activity for Firecreek’s Overseas project activity in Romania and
Libya. The Company may re enter negotiations at a future date predicated on the
contacts and business relationships previously established in these
countries.





ITEM
      1A.
            RISK
      FACTORS





RISKS
RELATED TO OUR BUSINESS




We
incurred historical losses and have a working capital deficit. As a result, we
may not be able to generate profits, support our operations, or establish a
return on invested capital.




We had a
net loss on continuing operations in the fiscal year ended December 31, 2008 of
$1,145,717 and a net loss on continuing operation in fiscal year ended December
31, 2007 of $359,182. We incurred a net income in fiscal year ended December 31,
2008 of $2,697,439 and a net loss in fiscal year ended December 31, 2007 of
$1,474,050. As of December 31, 2008, we had a working capital deficit of
$594,702. In addition, we expect to increase our infrastructure and operating
expenses to fund our anticipated growth. As a result, we may not be able to
generate profits in 2009 or thereafter and may not be able to support our
operations or otherwise establish a return on invested capital. We cannot assure
you that any of our business strategies will be successful or that significant
revenues or profitability will ever be achieved or, if they are achieved, that
they can be consistently sustained or increased on a quarterly or annual
basis.




We
Expect Our Operating Losses To Continue




The
Company expects to incur increased operating expenses during fiscal year 2009.
The amount of net losses and the time required for the Company to reach and
sustain profitability are uncertain. The likelihood of the Company’s success
must be considered in light of the problems, expenses, difficulties, and delays
frequently encountered in connection with a new business, including, but not
limited to, uncertainty as to development and acquisitions and the time required
for the Company’s planned production to become available in the marketplace.
There can be no assurance that the Company will ever generate increased product
revenue or achieve profitability at all or on any substantial
basis.




Our
Level Of Indebtedness May Affect Our Business.




Our level
of indebtedness could have important consequences for our operations,
including:




We may
need to use a large portion of our cash flow to repay principal and pay interest
on our current and anticipated debt, which will reduce the amount of funds
available to finance our operations and other business activities;




Our debt
level may make us vulnerable to economic downturns and adverse developments in
our businesses and markets; and




Our debt
level may limit our ability to pursue other business opportunities, borrow money
for operations or capital expenditures in the future or implement our business
strategy.





We expect
to obtain the funds to pay our expenses and to pay principal and interest on our
debt by utilizing cash flow from operations. Our ability to meet these payment
obligations will depend on our future financial performance, which will be
affected by financial, business, economic and other factors. We will not be able
to control many of these factors, such as economic conditions in the markets in
which we operate. We cannot be certain that our future cash flow from operations
will be sufficient to allow us to pay principal and interest on our debt and
meet our other obligations. If cash flow from operations is insufficient, we may
be required to refinance all or part of our existing debt, sell assets, and
borrow more money or issue additional equity.




We
have a limited amount of cash and are likely to require additional capital to
continue our operations.




We have a
limited amount of available cash and will likely require additional capital to
successfully implement our business plan; There can be no assurance that we will
be able to obtain additional funding when needed, or that such funding, if
available, will be obtainable on terms acceptable to us. In the event that our
operations do not generate sufficient cash flow, or we cannot obtain additional
funds if and when needed, we may be forced to curtail or cease our activities,
which would likely result in the loss to investors of all or a substantial
portion of their investment.


8





Production
Risks





All of
the Company’s current and proposed oil and gas activities would be subject to
the risks normally incident to the exploration for, and development and
production of, natural gas and crude oil. These include, but are not limited to,
blowouts, cratering and fires, each of which could result in damage to life and
property. In accordance with customary industry practices, the Company plans to
maintain future insurance for its proposed operations against some, but not all,
of the risks. Losses and liabilities arising from such events could reduce
revenues and increase costs to the Company to the extent not covered by
insurance.




Risks
And Uncertainties Can Impact Our Growth




There are
several risks and uncertainties, including those relating to the Company’s
ability to raise money and grow its business and potential difficulties in
integrating new acquisitions for the oil and gas sector of operations,
especially as they pertain to foreign markets and market conditions. These risks
and uncertainties can materially affect the results predicted. Other risks
include the Company’s limited operating history, the limited financial
resources, domestic or global economic conditions, activities of competitors and
the presence of new or additional competition, and changes in federal or state
laws and conditions of equity markets.




The
Company’s future operating results over both the short and long term will be
subject to annual and quarterly fluctuations due to several factors, some of
which are outside the control of the Company. These factors include but are not
limited to fluctuating market demand for our services, and general economic
conditions.




Governmental
Regulation




Effect
of Probable Governmental Regulation on the Business Domestically and in Foreign
Countries




As we
expand our efforts to develop our business, we will have to remain attentive to
relevant federal and state regulations. We intend to comply fully with all laws
and regulations, and the constraints of federal and state restrictions could
impact the success of our efforts.




Our oil
and gas business and services may become established in multiple states and
foreign countries. These jurisdictions may claim that we are required to qualify
to do business as a foreign corporation in each such state and foreign country.
New legislation or the application of laws and regulations from jurisdictions in
this area could have a detrimental effect upon our business. We cannot predict
the impact, if any, that future regulatory changes or developments may have on
our business, financial condition, or results of operation.




The
Company and its current and future operations are subject to federal, state and
local laws, and regulations and ordinances relating to the production and sale
of oil and gas. Some of the laws that the Company is subject to include the
Clean Air Act, the Clean Water Act, and the Endangered Species Act. Other laws
and regulations include laws governing allowable rates of production, well
spacing, air emissions, water discharges, marketing, pricing, taxes, and use
restrictions and other laws relating to the petroleum industry. For example,
coal bed methane wells are being highly regulated for disposing of produced
fresh water on the surface. The EPA is requiring that the fresh water meet more
stringent standards than before, and can require the water be injected
underground making drilling these wells potentially uneconomical. As another
example, Governmental regulation may delay drilling in areas that have
endangered species. Therefore, if the Company were to undertake a drilling
program in such an area by a proposed development project in the future, no
assurance could be given that such delays would not become more expensive.
Regulations may have a negative financial impact on us depending on the
compliance costs.




Any
failure to obtain, or delays in obtaining regulatory approvals by the Company or
its operators, could delay or adversely affect the Company’s ability to generate
revenues. These laws and regulations could impose substantial liabilities for
the Company if it fails to comply. Further, there can be no assurance that the
Company through its contract operators will be able to obtain necessary
regulatory approvals for any of its future activities including those which may
be proposed for the further development of oil and gas. Although the Company
does not anticipate problems satisfying any of the regulations involved, the
Company cannot foresee the possibility of new regulations, which could adversely
affect the business of the Company.




Environmental
regulations and taxes imposed by state governments in a jurisdiction wherein oil
and gas properties are located impose a burden on the cost of production. Of the
gross production revenues, severance and ad valorem taxes in Wyoming for oil and
gas amount to approximately 12%.




Environmental
requirements do have a substantial impact upon the energy industry. Generally,
these requirements do not appear to affect the proposed Company operations any
differently, or to any greater or lesser extent, than other companies in the
domestic industry as a whole. The Company will establish policies and procedures
for compliance with environmental laws and regulations affecting its proposed
operations. The Company believes that compliance with environmental laws and
regulations will not have a material adverse effect on the Company’s operations
or financial condition. There can be no assurances, however, that changes in or
additions to laws or regulations regarding the protection of the environment
will not have such an impact in the future.


9





At this
time no regulatory or additional regulatory approvals are necessary and, to the
best knowledge of the officers, we have complied with all laws, rules and
regulations.




Cost
And Effects Of Compliance With Environmental Laws




Our
business will be subject to regulation under the state and federal laws
regarding environmental protection and hazardous substances control with respect
to its current and future oil and gas operations. We are unaware of any bills
currently pending in Congress that could change the application of such laws so
that they would affect us.




Risk
Factors Affecting Our Future Results Of Operations For The Company




Due to
the Company’s limited operating history, it is difficult to predict future
revenues accurately. This may result in one or more future quarters where the
Company’s financial results may fall below the expectation of management and
investors. However firmly management may believe in its prospects, the Company
could fail. Operating results may vary, depending upon a number of factors, many
of which are outside the Company’s control. Material factors expected to impact
the Company’s operating results include, legal costs associated with
registration of options and other filing requirements, expansion activities,
increased interest and expenses for borrowings and possible hiring of additional
full time employees. Every investor should evaluate the risks, uncertainties,
expenses and difficulties frequently encountered by companies in the early stage
of development. The past performance of the Company cannot be used to predict
the future performance.




Lack
Of Experience




Certain
of our management may only devote a small percentage of their time to Company
business. This lack of specific training, and experience for integration of the
oil and gas sector coupled with working in the regulatory environment and less
than full time effort in certain cases will probably cause management to miss
opportunities that more experienced managers would recognize and take advantage
of. Management’s decisions and choices may not be well thought out and
operations and earnings and ultimate financial success may suffer irreparable
harm. Additionally, these individuals have not previously worked together. If
senior executives and managers are unable to work effectively as a team,
business operations could be considerably disrupted.




Oil
And Gas Prices Fluctuate Widely, And Low Prices For An Extended Period Of Time
Are Likely To Have A Material Adverse Impact On Our Business




Our
revenues, operating results, financial condition and ability to borrow funds or
obtain additional capital depend substantially on prevailing prices for natural
gas and, to a lesser extent, oil. Declines in oil and natural gas prices may
materially adversely affect our financial condition, liquidity, ability to
obtain financing and operating results. Lower oil and gas prices also may reduce
the amount of oil and gas that we can produce economically. Historically, oil
and gas prices and markets have been volatile, with prices fluctuating widely,
and they are likely to continue to be volatile.





Prices
for oil and natural gas are subject to wide fluctuations in response to
relatively minor changes in the supply of and demand for oil and gas, market
uncertainty and a variety of additional factors that are beyond our control.
These factors include:




·
            The
      domestic and foreign supply of oil and natural
  gas.





·
            The
      level of consumer product demand.





·
            Weather
      conditions.





·
            Political
      conditions in oil producing regions, including the Middle
      East.





·
            The
      ability of the members of the Organization of Petroleum Exporting
      Countries to agree to and maintain oil price and production
      controls.





·
            The
      price of foreign imports.


10





·
            Actions
      of governmental authorities.





·
            Domestic
      and foreign governmental
regulations.





·
            The
      price, availability and acceptance of alternative
  fuels.





·
            Overall
      economic conditions.




These
factors make it impossible to predict with any certainty the future prices of
oil and gas.




Drilling
natural gas and oil wells is a high-risk activity.




Our
growth is materially dependent upon the success of our drilling program.
Drilling for natural gas and oil involves numerous risks, including the risk
that no commercially productive natural gas or oil reservoirs will be
encountered. The cost of drilling, completing and operating wells is substantial
and uncertain, and drilling operations may be curtailed, delayed or cancelled as
a result of a variety of factors beyond our control, including:





·
            unexpected
      drilling conditions, pressure or irregularities in
    formations;





·
            equipment
      failures or accidents;





·
            adverse
      weather conditions;





·
            compliance
      with governmental requirements; and





·
            shortages
      or delays in the availability of drilling rigs or crews and the delivery
      of equipment.




Our
future drilling activities may not be successful and, if unsuccessful, such
failure will have an adverse affect on our future results of operations and
financial condition. Our overall drilling success rate or our drilling success
rate for activity within a particular geographic area may decline. We may
ultimately not be able to lease or drill identified or budgeted prospects within
our expected time frame, or at all. We may not be able to lease or drill a
particular prospect because, in some cases, we identify a prospect or drilling
location before seeking an option or lease rights in the prospect or location.
Similarly, our drilling schedule may vary from our capital budget. The final
determination with respect to the drilling of any scheduled or budgeted wells
will be dependent on a number of factors, including:




·
            the
      results of exploration efforts and the acquisition, review and analysis of
      the seismic data




·
            the
      availability of sufficient capital resources to us and the other
      participants for the drilling of the
prospects




·
            the
      approval of the prospects by other participants after additional data has
      been compiled




·
            economic
      and industry conditions at the time of drilling, including prevailing and
      anticipated prices for natural gas and oil and the availability of
      drilling rigs and crews




·
            our
      financial resources and results;
and




·
            the
      availability of leases and permits on reasonable terms for the
      prospects.




These
projects may not be successfully developed and the wells, if drilled, may not
encounter reservoirs of commercially productive natural gas or
oil.


11





Reserve estimates depend on many
assumptions that may prove to be inaccurate. Any material inaccuracies in our
reserve estimates or underlying assumptions could cause the quantities and net
present value of our reserves to be overstated.





Reserve engineering is a subjective
process of estimating underground accumulations of natural gas and crude oil
that cannot be measured in an exact manner. The process of estimating quantities
of proved reserves is complex and inherently uncertain, and the reserve data
included in this document are only estimates. The process relies on
interpretations of available geologic, geophysic, engineering and production
data. As a result, estimates of different engineers may vary. In addition, the
extent, quality and reliability of this technical data can vary. The differences
in the reserve estimation process are substantially due to the geological
conditions in which the wells are drilled. The process also requires certain
economic assumptions, some of which are mandated by the Securities and Exchange
Commission, such as natural gas and oil prices. Additional assumptions include
drilling and operating expenses, capital expenditures, taxes and availability of
funds. The accuracy of a reserve estimate 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 judgment of the persons
      preparing the estimate.





Results of drilling, testing and
production subsequent to the date of an estimate may justify revising the
original estimate. Accordingly, initial reserve estimates often vary from the
quantities of natural gas and crude oil that are ultimately recovered, and such
variances may be material. Any significant variance could reduce the estimated
quantities and present value of our reserves.




Our future performance depends on our
ability to find or acquire additional natural gas and oil reserves that are
economically recoverable.




In general, the production rate of
natural gas and oil properties declines as reserves are depleted, with the rate
of decline depending on reservoir characteristics. Unless we successfully
replace the reserves that we produce, our reserves will decline, eventually
resulting in a decrease in natural gas and oil production and lower revenues and
cash flow from operations. Our future natural gas and oil production is,
therefore, highly dependent on our level of success in finding or acquiring
additional reserves. We may not be able to replace reserves through our
exploration, development and exploitation activities or by acquiring properties
at acceptable costs. Low natural gas and oil prices may further limit the kinds
of reserves that we can develop economically. Lower prices also decrease our
cash flow and may cause us to decrease capital expenditures.




Exploration, development and
exploitation activities involve numerous risks that may result in dry holes, the
failure to produce natural gas and oil in commercial quantities and the
inability to produce discovered reserves fully. We are continually identifying
and evaluating opportunities to acquire natural gas and oil properties. We may
not be able to consummate any acquisition successfully, to acquire producing
natural gas and oil properties that contain economically recoverable reserves,
or to integrate the properties into our operations
profitably.




Seasonality




Demand for natural gas has historically
been seasonal, with peak demand and typically higher prices occurring during the
colder winter months.




Regulation of Oil and Natural Gas
Exploration and Production




Exploration and production operations
are subject to various types of regulation at the federal, state and local
levels. This regulation includes requiring permits to drill wells, maintaining
bonding requirements to drill or operate wells, and regulating the location of
wells, the method of drilling and casing wells, the surface use and restoration
of properties on which wells are drilled, and the plugging and abandoning of
wells. Our operations are also subject to various conservation laws and
regulations. These include the regulation of the size of drilling and spacing
units or proration units, the density of wells that may be drilled in a given
field and the unitization or pooling of oil and natural gas properties. Some
states allow the forced pooling or integration of tracts to facilitate
exploration while other states rely on voluntary pooling of lands and leases. In
addition, state conservation laws establish maximum rates of production from oil
and natural gas wells, generally prohibiting the venting or flaring of natural
gas and impose certain requirements regarding the ratability of production. The
effect of these regulations is to limit the amounts of oil and natural gas we
can produce from our wells, and to limit the number of wells or the locations
where we can drill. Because these statutes, rules and regulations undergo
constant review and often are amended, expanded and reinterpreted, we are unable
to predict the future cost or impact of regulatory compliance. The regulatory
burden on the oil and gas industry increases the cost of doing business and,
consequently, affects profitability. We do not believe, however, that we are
affected differently by these regulations than others in the industry.




12




We have limited control over the
activities on properties we do not operate.




Other companies operate some of the
properties in which we have an interest. We have limited ability to influence or
control the operation or future development of these non-operated properties or
the amount of capital expenditures that we are required to fund with respect to
them. The failure of an operator of our wells to perform operations adequately,
an operator’s breach of the applicable agreements or an operator’s failure to
act in ways that are in our best interest could reduce our production and
revenues. Our dependence on the operator and other working interest owners for
these projects and our limited ability to influence or control the operation and
future development of these properties could materially adversely affect the
realization of our targeted returns on capital in drilling or acquisition
activities and lead to unexpected future costs.




Requirement For Additional
Capital




The Company believes that additional
debt or equity financing will be necessary to develop its planned activities
through the next twelve to twenty four months. However, no assurance can be
given that all or a significant portion of any debt or equity financing will be
consummated, or that any changes in the Company’s operations and expansion plans
would not consume available resources more rapidly than anticipated. The Company
will need substantial funding to support the long-term expansion, development,
and marketing of its business and subsidiary operations.




To the extent that the Company’s capital
resources, including the proceeds of any offering, are insufficient to meet
current or planned requirements, the Company will continue to seek additional
funds through equity or debt financing, collaborative, or other arrangements
with corporate partners, and from other sources, which may have the effect of
diluting the holdings of existing shareholders. The Company has no effective or
approved current arrangement with respect to such additional financing that is
either secured or finalized at this time. Even though the Company has existing
prospects for general or project financing, the outcome may change, be delayed,
or may not be conclusive, therefore financing is not assured or guaranteed.
Financing to be potentially obtained from prospects is not assured or guaranteed
until actually consummated and financing actually provided.




Need For Expansion




The Company expects expansion will be
required to address potential growth. This need for expansion will continue to
place a significant strain on the management and financial resources of the
Company. Failure to manage growth could disrupt the operations and ultimately
prevent the Company from generating expected revenues. The Company’s business
strategy includes entering into business partnerships and may include acquiring
future businesses, such as, existing production or products, technology and
acquisitions related to oil and gas or other resources, oil and gas field
operations, and engineering. Other areas of future operations may include real
estate, land and commercial development, technology and facilities, and fuel
cell technology. The Company may be unable to complete suitable business
partnerships and acquisitions on commercially reasonable terms, if at all.
Competition could impair the Company’s ability to pursue these aspects
successfully of this business strategy.




Business partnerships or acquisitions
could disrupt ongoing business, distract management and employees and increase
expenses. If the Company makes an acquisition, it could face difficulties
assimilating that company’s personnel and operations. Key personnel of the
acquired company may decide not to work for the Company. Acquisition of
additional services or technologies also involves risk of incompatibility and
lack of integration into existing operations. If the Company finances the
acquisitions by issuing equity securities, this could dilute existing
stockholders positions. Additionally, funding instruments may have rights,
preferences or privileges senior to, or more favorably than, those of the
Company’s stockholders.




Limited Financial
Data




As a result of its limited operating
history, the Company has limited historical financial data upon which to
forecast revenues and results of operation. The actual effect of these factors
on the price of stock will be difficult to assess. Results of operation may fall
well below the expectations of securities analysts and investors, and the
trading price of the Company’s common stock may drop.





Estimating
Inaccuracies




There are numerous uncertainties
inherent in estimating quantities of proven reserves and in projecting future
rates of production and timing of development expenditures, including many
factors beyond the control of the Company. Reserve engineering is a subjective
process of estimating underground accumulations of crude oil, condensate and
natural gas liquids that cannot be measured in an exact manner. The accuracy of
any reserve estimate is a function of the amount and quality of data and of
engineering and geological interpretation. Estimates by different engineers may
vary. Results of drilling, testing and production after the date of an estimate
may justify revision of such estimates. Reserve estimates are often different
from the quantities ultimately recovered including the continual possibility of
failure to find oil or gas and the drilling of a dry hole, and concentrations of
oil in unexpected differing amounts on certain holes or targets
drilled.




13




Declining Reserves





Volumes of proposed oil and gas reserves
acquired by the Company will decline as reserves are depleted. Reserve volumes
generated from future activities of the Company are highly dependent upon the
level of success in acquiring or finding additional
reserves.




Key Officers Management Services Were
Provided By Outside Consulting Firms, And Individuals Contributing Additional
Key Officers Management Services, During Fiscal Year Ended December 31,
2008




Individual outside consulting firms
owned by key Officers and/or current Directors, Dennis R. Alexander, Chairman,
President and CFO, Rupert C. Johnson, Director until June 9, 2008, Dermot
McAtamney, Co-Treasurer and Director until June 9, 2008, Larry W. Trapp,
Executive Vice President, Co-Treasurer and current Director beginning December
3, 2008, Mike Trapp, current Director beginning December 3, 2008, and Melvena
Alexander, Co-Treasurer, Secretary and Comptroller, managed the business of the
Company. Accordingly, the loss of the services of any key individual could have
an effect on the development of the Company’s business. The Company may hire
future employees and additional employees not provided through outside
consulting firms, and depend on their services, the loss of which may effect the
development of the Company’s business and could adversely affect the conduct of
our business. While it intends to do so, the Company has not yet applied for
key-man life insurance and the Company has not obtained insurance covering the
possibility that any of its key officers and management personnel might become
disabled or otherwise unable to render services to the Company. The success of
the Company is also dependent upon its ability to attract, contract with and
retain highly qualified technical, managerial and marketing personnel. The
Company faces competition for such personnel from other companies, many of which
have significantly greater resources than the Company. There can be no assurance
that the Company will be able to recruit and retain such
personnel.




Officers And Directors Beneficially Own
And Represent Approximately 41.60 % Of the Company’s Issued and Outstanding
Common Stock




The executive officers and directors of
the Company currently beneficially own and represent approximately 41.60% of the
issued and outstanding Common Stock. Accordingly, such persons may be able to
maintain control of the Board of Directors of the Company and direct the affairs
of the Company.




Penny Stock As A
Risk




Definition And Rule Reference: The
Securities and Exchange Commission has adopted Rule 3a51-1 of General Rules and
Regulations, Promulgated under the Securities and Exchange Act of 1934, which
established the definition of a “penny stock”, for the purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share, or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require: (i) that broker or dealer approve a person’s account for
transactions in penny stocks; and, (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased.




Future sales of our Shares of Common
Stocks in the public market could lower our share price.




We may sell additional Shares of Common
Stock in subsequent offerings. We may also issue additional Shares of Common
Stock to finance future acquisitions, including acquisitions larger than those
we have done in the past. We cannot predict the size of future issuances of our
Shares of Common Stock or the effect, if any, that future issuances and sales of
our Shares of Common Stock will have on the market price of our Shares of Common
Stock. Sales of substantial amounts of Shares of Common Stock, or the perception
that such sales could occur, may adversely affect prevailing market prices for
our Shares of Common Stock.




Obligations And
Contingencies




The Company is liable for future
restoration and abandonment costs associated with its oil and gas properties.
These costs include future site restoration and plugging costs of wells. The
cost of future abandonment of producing wells has not been determined the date
of this report. Management believes that these costs will not have a material
adverse effect upon its financial position or results of
operations.




14




Other





The Company’s corporate parent
operations during fiscal year ended 2008 did not retain any employees.
Individual consulting firms owned by two key officers/directors along with three
additional key officers/directors contributing time and effort managed the
day-to-day operations of our Company. We have accounting consultants, legal
consultants, oil and gas technical team consultants and engineers available for
project purposes on a part time basis; one advisor assists us with project
evaluations and business development, information and research, technical
writing and presentation. The Company will consider full time employees upon
sufficient capitalization and cash flow which may include accounting systems and
data processing coordinator, oil and gas staff analyst and coordinator,
financing officer; assistant to executive officers, and other. Future
performance will be substantially dependent on the continued services of
management and the ability to retain and motivate them. The loss of the services
of any officers or senior managers could affect activities of our business and
its operations until additional personnel can be retained and trained to perform
some of the management tasks. At the present time the Company does not have
long-term employment agreements with any key personnel and does not maintain any
life insurance policies.




ITEM 2.
            DESCRIPTION OF
      PROPERTY





Glossary of Oil and Gas
Terms.




Barrel: Equal to 42 U.S.
gallons.




Basin: A depressed sediment-filled area,
roughly circular or elliptical in shape, sometimes very elongated. Regarded as a
good area to explore for oil and gas.




British thermal unit, (BTU): A measure
of the heating value of a fuel.




Completion: The installation of
permanent equipment for the production of oil or gas.




Field: A geographic region situated over
one or more subsurface oil and gas reservoirs encompassing at least the
outermost boundaries of all oil and gas accumulations known to be within those
reservoirs vertically projected to the land surface.




Fracturing: The application of hydraulic
pressure to the reservoir formation to create fractures through which oil or gas
may move to the wellbore.




Improved Oil Recovery (“IOR”): Effort to
improve or enhance oil recovery that does not include secondary or tertiary
basic recovery methods. In most oil fields, only a fraction of the oil can be
produced by natural reservoir pressure and by conventional methods such as
pumping. The remaining, or residual, oil can be recovered only by using recovery
methods that restore pressure and fluid flow in underground formations through
the introduction of water, gas, chemicals, or heat into the
reservoir.




License: Formal or legal permission to
explore for oil and gas in a specified area.




Log: Io conduct a survey inside a
borehole to gather information about the subsurface formations; the results of
such a survey. Logs typically consist of several curves on a long grid that
describe properties within the wellbore or surrounding formations that can be
interpreted to provide information about the location of oil, gas, and water.
Also called well logs, borehole logs, wireline logs.




Mcf: Is a thousand cubic feet of natural
gas.




Mineral interest: The ownership of
rights to gas, oil, or other minerals as they naturally occur in place, at or
below the surface of a tract of land. Ownership of the minerals carries with it
the right to make such reasonable use of the surface as may be necessary to
explore for and produce the minerals. Only the mineral owner (or fee owner) may
execute an oil or gas lease conveying his interest in a tract of land.




Oil: Crude oil or
condensate.




Operator: An individual, company, trust,
or foundation responsible for the exploration, development, and production of an
oil or gas well or lease.




Productive: Able to produce oil and/or
gas.




15




Proved reserves: Estimated quantities of
crude oil, condensate, natural gas, and natural gas liquids that geological and
engineering data demonstrate with reasonable certainty to be commercially
recoverable in the future from known reservoirs under existing conditions using
established operating procedures and under current governmental
regulations.




Proved undeveloped reserves:
Economically recoverable reserves estimated to exist in proved reservoirs, which
will be recovered from wells, drilled in the future.




Reserves: The estimated value of oil,
gas and/or condensate, which is economically recoverable.




Tons: A ton of oil is equal to 7.29
barrels of oil.




Working interest: The percentage of the
operating, drilling, completing and reworking costs that the Company is required
to pay. The net revenue interest is the percentage of the revenues that the
Company receives from the sale of oil that is produced from the
wells.




Working interest on a “Third for Quarter
Basis”: The non-operator usually will pay all costs attributable to restoring
the well or wells to production and will own 75% of the working interest in the
well or wells; The operator receives the remaining 25% working interest as a
free carried working interest.




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




Severance: The owner of all rights to a
tract of land (vertically or horizontally). In horizontal severance, for
example, if he chooses to sell all or part of the mineral rights, two distinct
estates are created: the surface rights to the tract of land and the mineral
rights to the same tract. The two estates may change hands independently of each
other. Severed mineral rights may be restricted as to mineral type, or limited
by depth, in which case the landowner retains the rights to minerals other than
those severed, and to depth intervals other than those
severed.




Workover: Operations on a producing well
to restore or increase production. A workover may be performed to stimulate the
well, remove sand or wax from the wellbore, to mechanically repair the well, or
for other reasons.




The Company may participate in the
drilling of a well or wells if it is able to successfully acquire attractive oil
and gas leases with substantially proven undeveloped reserves, a preferred
majority or suitable working interest being available, and can obtain or provide
financing or market an interest on terms acceptable to the
Company.




Oil and Gas Properties, Leases, and
Interests





Knox County, Texas





Disposition as of December 2,
2008


In connection with the Default notice
received October 24, 2008, and actions of Dutchess Private Equities Fund, Ltd.,
the 100% Working Interests held in the Fant Ranch Unit was disposed of and is no
longer owned by the Company.





Ward County, Texas





Disposition as of December 2,
2008


In connection with the Default notice
received October 24, 2008, and actions of Dutchess Private Equities Fund, Ltd.,
the 75% Working Interests held in the J.B. Tubb Leasehold Estate was disposed of
and is no longer owned by the Company.




Sweetwater County,
Wyoming




Sale of TMD





On October 30, 2008, the Company and NOC
entered into an Agreement for Sale of Mineral Rights and an Assignment and Bill
of Sale (collectively, the “Agreements”) relating to the Company’s sale, and
NOC’s purchase, of the Company’s fifty percent (50%) undivided interest in the
mineral rights created by oil and gas leases on the TMD real property, as
described in the Agreements (“Mineral Rights”). Moreover, included in the sale
was all of the Company’s interest in a lawsuit currently pending in the Third
Judicial District Court of Sweetwater County, Wyoming (case Number Civil
C-07-821-R, and styled Newport Oil Corp. v. Inter-Mountain Pipe and Threading
Co.) (the “Suit”).The purchase price for these Mineral Rights and Suit was
$125,000, payable in cash at closing.




16




A copy of the Agreement for Sale of
Mineral Rights and Assignment and Bill of Sale are filed as Exhibits 10.1 and
10.2, respectively in a Current Report on Form 8-K filed on October 31, 2008,
incorporated herein by reference.




Wells And Acreage




On December 2, 2008, in connection with
the Default notice received October 24, 2008, and actions of Dutchess Private
Equities Fund, Ltd., all oil and gas properties/leasehold interests were
foreclosed and no longer owned by the Company.




Set fourth below is information
respecting the developed and undeveloped acreage owned by the Company in Knox
and Ward Counties, Texas, and Sweetwater County, Wyoming. The Company sold its
Wyoming interests included in the table below on October 30, 2008 and on
December 2, 2008 all of its Texas interests were disposed
of:




Developed Acreage
                    
                    
                    Undeveloped AcreageGross
                    
                    
                    Net
                    
                    
                    Gross
                    
                    
                    NetSweetwater County, Wyoming, owned
      through October 30, 2008
                    
                    
                    320
                    
                    
                    
                    160
                    
                    
                    
                    960
                    
                    
                    
                    360Knox County, Texas, owned through
      December 2, 2008
                    
                    
                    2520
                    
                    
                    
                    1890
                    
                    
                    
                    -0-
                    
                    
                    
                    -0-Ward County, Texas, owned through
      December 2, 2008
                    
                    
                    40
                    
                    
                    
                    22.5
                    
                    
                    
                    -0-
                    
                    
                    
                    -0-Total
                    
                    
                    2880
                    
                    
                    
                    2067.5
                    
                    
                    
                    960
                    
                    
                    
                    360




Production And Sale Of Oil And
Gas




The following table summarizes certain
information relating to the Company's net Natural oil and natural gas produced
and from the Company’s property interests held, after royalties, during the
periods indicated.




Year Ended December 31,*2008
                          
                          
                          2007Average net daily production of
      oil (Bbl)
                          
                          
                          30.71
                          
                          
                          
                          22.56Average net daily production of
      gas (Mcf)
                          
                          
                          129.05
                          
                          
                          
                          73.79Average sales price of oil ($ per
      Bbl)
                          
                          $
                          103.74
                          
                          
                          $
                          81.73Average sales price of gas ($ per
      Mcf)
                          
                          $
                          8.00
                          
                          
                          $
                          5.02Average lifting cost per bbl oil
      equiv.
                          
                          $
                          36.96
                          
                          
                          $
                          26.52




*Calculations for 2008 Average net daily
production of oil and gas (Mcf) was based on partial year start up activity
averages for the Tubb leasehold estate beginning February 2008 and ending
12/2/2008; for TMD, from January 1, 2008 through October 30, 2008, the sale date
for the Company’s 50% Working Interests in the leases and equipment; for Fant
Ranch Unit, from January 1, 2008 through December 2, 2008 the date of final
disposition for the Company’s 100% Working Interests in the leases and
equipment.





Out Corporate offices are located in
Scottsdale, Arizona, and our wholly-owned subsidiary Firecreek Petroleum,
maintained an office in Fort Worth, Texas, but moved its operations primarily to
Scottsdale, Arizona during second quarter of operations in 2006. Please see also
“Certain Relationships and Related Transactions” for further
discussion.




The Chief Executive Officer of the
Company provided corporate office space through 2007 and 2008 at no charge.
There is no further agreement in place to pay for the premises. At December 31,
2008 through March 31, 2009 the premises continue to be provided free of charge.
Please see “Certain Relationships and Related Transactions”.




17





ITEM 3.
            LEGAL
      PROCEEDINGS





None





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




No matters were submitted to a vote of
our security holders during the fourth quarter of 2008.




PART II





ITEM 5.
            MARKET FOR COMMON EQUITY AND
      RELATED STOCKHOLDER MATTERS





MARKET PRICE AND DIVIDENDS OF
COMPANY




The Company became available for
quotation on the over-the-counter, NASDAQ NQB Pink Sheets initially January 20,
2000. As of March 14, 2003, the Company moved to the over-the-counter market,
NASDAQ OTC Electronic Bulletin Board quotation medium system, and is presently
dually quoted on both Pink Sheets and Bulletin Board. The range of high and low
bid information for the shares of the Company’s stock for the last two complete
fiscal years, as reported by the OTC Bulletin Board National Quotation Bureau,
is set forth below. Such quotations represent prices between dealers, do not
include retail markup, markdown or commission, and do not represent actual
transactions.




2009
                      
                      High
                      
                      
                      LowFirst
    Quarter
                      
                      $
                      0.1600
                      
                      
                      $
                      0.0300




Year Ended December 31, 2008
                      
                      High
                      
                      
                      LowFirst
    Quarter
                      
                      $
                      0.0057
                      
                      
                      $
                      0.0009Second
    Quarter
                      
                      
                      0.0050
                      
                      
                      
                      0.0006Third
    Quarter
                      
                      
                      0.0025
                      
                      
                      
                      0.0005Fourth Quarter (October 1 through
      October 7, 2008)
                      
                      
                      0.0070
                      
                      
                      
                      0.0050*Fourth Quarter (October 8 through
      December 31, 2008)
                      
                      
                      0.2000
                      
                      
                      
                      0.0500





*Reflects Prices For the Period After a
One for Two Hundred (1:200) Reverse Stock Split Effective October 8,
2008.





Year Ended December 31, 2007
                      
                      High
                      
                      
                      LowFirst
    Quarter
                      
                      $
                      0.0870
                      
                      
                      $
                      0.0061Second
    Quarter
                      
                      
                      0.0760
                      
                      
                      
                      0.0031Third
    Quarter
                      
                      
                      0.0064
                      
                      
                      
                      0.0025Fourth
    Quarter
                      
                      
                      0.0031
                      
                      
                      
                      0.0007





As of March 31, 2009, the Company had
issued and outstanding 9,547,207 shares of its common stock held by 611 holders
of record, and no shares of Series A, B or C preferred stock, issued and
outstanding.





There have been no cash dividends
declared by the Company since its inception. Further, there are no restrictions
that would limit the Company’s ability to pay dividends on its common equity or
that would be likely to do so in the future.




SECURITIES AUTHORIZED FOR ISSUANCE UNDER
EQUITY COMPENSATION PLANS.




The following information is provided
for the fiscal year ended December 31, 2008, with respect to compensation plans
(including individual compensation arrangements) under which equity securities
of the issuer are authorized for issuance, aggregated as
follows:





(i)
            All compensation plans previously
      approved by security holders;
and





(ii)
            All compensation plans not
      previously approved by security
holders.




18




Equity Compensation Plan
Information





Plan category
                
                Number of securities to be
                  issued upon exercise of
                  outstanding options,
                  warrants and rights
                  (a)(1a.)
                
                
                Weighted average exercise
                  price of outstanding
                  options,
                  warrants and rights
                  (see footnotes)
                  (b)(*)(1.a)
                
                
                Number of securities
                  remaining available for
                  future
                  issuance
                  (c)(1.a)(i) Equity compensation
      plans approved by security holders (Form S-8)2004 Stock Incentive
      Plan
                
                
                12,500
                
                
                $
                n/a
                
                
                
                -0-2004 Stock Incentive Plan
      2
                
                
                7,000
                
                
                $
                n/a
                
                
                
                -0-2005 Stock Incentive Plan
      (1)
                
                
                13,000
                
                
                $
                8.00
                *
                
                
                6,500Total for Plans Filed On Form
      S-8
                
                
                32,500
                
                
                $
                
                
                
                
                6,500Equity compensation plans approved
      by security holdersTirion Group, Inc. -Warrant
      (2)(5)
                
                
                10,000
                
                
                
                n/a
                (5)
                
                
                -0-DLM Asset Management,-Warrant
      (2)(7)
                
                
                16,750
                
                
                $
                12.00
                
                
                
                16,750Tirion Group, Inc.-Warrant
      (7)
                
                
                16,750
                
                
                
                12.00
                
                
                
                16,750John R Taylor-Option
      (4)
                
                
                10,000
                
                
                $
                140.00
                
                
                
                10,000William E. Merritt-Option
      (4)
                
                
                10,000
                
                
                $
                140.00
                
                
                
                10,000George B. Faulder-Option
      (4)
                
                
                10,000
                
                
                $
                140.00
                
                
                
                10,000Dr. Mousa Hawamdah-Option
      (4)
                
                
                10,000
                
                
                $
                140.00
                
                
                
                10,000James Barker-Option
      (4)
                
                
                5,000
                
                
                $
                140.00
                
                
                
                5,000Charles Alliban-Option
      (4)
                
                
                10,000
                
                
                $
                140.00
                
                
                
                10,000Dennis R. Alexander-Option
      (4)
                
                
                10,000
                
                
                $
                140.00
                
                
                
                10,000Gregg Fryett-Option
      (4)
                
                
                10,000
                
                
                $
                140.00
                
                
                
                10,000Peter Fryett-Option
      (4)
                
                
                10,000
                
                
                $
                140.00
                
                
                
                10,000Equity compensation plans approved
      by security holdersM. Herzog-Option
      (3)
                
                
                3,000
                
                
                $
                n/a
                
                
                
                -0-(Mel Herzog and Charlotte Herzog
      TTEE UA DTD Jan 31, 1994 Herzog Revocable Living Trust JT
      Grantors)
                
                
                
                
                
                
                n/a
                
                
                
                -0-D. Alexander-Option
      (3)
                
                
                3,000
                
                
                $
                n/a
                
                
                
                -0-M. Alexander-Option
      (3)
                
                
                2,500
                
                
                $
                n/a
                
                
                
                -0-D. Kronenburg-Option
      (3)
                
                
                2,500
                
                
                $
                n/a
                
                
                
                -0-(David J. Kronenberg Assigned to
      D.J. and S.M. Kronenberg Family LLLP)
                
                
                
                
                
                
                n/aL. Trapp-Option
      (3)
                
                
                3,000
                
                
                $
                n/a
                
                
                
                -0-T. Richards-Option
      (3)
                
                
                2,500
                
                
                $
                n/a
                
                
                
                -0-Bradley Ray-Option
      (3)
                
                
                2,500
                
                
                $
                n/a
                
                
                
                -0-Steven Antebi-Warrant
      (2)
                
                
                20,000
                
                
                $
                5.00
                
                
                
                -0-Sapphire Consultants-Warrant
      (2)(6)
                
                
                12,500
                
                
                $
                4.00
                
                
                
                12,500Confin International Inv.-Warrant
      (2)(6)
                
                
                18,750
                
                
                $
                4.00
                
                
                
                18,750John Brigandi-Warrant
      (2)
                
                
                3,125
                
                
                $
                4.00
                
                
                
                1,560Steven Antebi-Warrant
      (8)
                
                
                20,000
                
                
                $
                10.00
                
                
                
                20,000Joseph M. Vasquez
      (9)
                
                
                2,500
                
                
                $
                4.00
                
                
                
                2,500Joseph M. Vasquez
      (9)
                
                
                2,500
                
                
                $
                12.00
                
                
                
                2,500Joseph M. Vasquez
      (9)
                
                
                2,500
                
                
                $
                24.00
                
                
                
                2,500Total (1)
                
                
                229,375
                
                
                $
                71.81
                **
                
                
                178,810




(1a.)   Information
listed under column (a), (b) and (c) reflects adjustment for 1:200 post reverse
split (one (1) share for two hundred (200)) share basis which was effective at
October 8, 2008.





(*)     Information
listed for column (b) in the table above represents the exercise or strike price
for each option or warrant, excluding those noted (1) and (5). The calculation
for Column (b) note (1) is the estimated average of the closing bid prices on
the effective date of issuances under the plan prior to February 9,
2005.




(**)   The final Total
listed for column (b) in the table above represents the weighted average
exercise price for all 2005 options and warrants listed and noted (2), through
(9) in the table only (please see additional information listed in this Report,
under Item 9. “Issuance of Warrants” located in the “Notes to the Consolidated
Financial Statements For the Years Ended December 31, 2007 and December 31,
2006”).




(1) The balance of shares available
under the 2005 Stock Incentive Plan registered on Form S-8 are not available for
further issuance after February 9, 2005 unless authorized, pursuant to terms of
various agreements with our lenders during the year ended December 31, 2007,
December 31, 2006, and December 31, 2005, and information has been excluded from
the final total calculations listed above for columns (a), (b), and (c)
accordingly.




19




(2) The Company provided warrants to a
lender and various consultants during 2005. For further information regarding
terms of these warrants to purchase underlying shares of the Company’s common
stock issued, please see our Registration Statement on Form SB-2, as amended,
and incorporated herein by reference.




(3) Represents historical options issued
by the Company. For further information regarding terms for these options,
please see information furnished in our Form 10-KSB, Amendment No. 3, filed on
October 4, 2002, and incorporated herein by reference. As of November 30, 2007
these options have expired.




(4) Represents options issued by the
Company as part of the Firecreek Petroleum, Inc. acquisition which vested,
becoming available for exercise February 9, 2005. For terms of these options,
please see information furnished in a Current Report on Form 8-K/A (Amendment
No. 2), filed on September 16, 2004, and incorporated herein by
reference.




(5) The strike price for the Tirion
Warrant is 80% of the average of the then lowest three closing bids for the
previous 30 days from the date the warrants are exercised. For further
information regarding terms of the Warrant please see our Registration Statement
on Form SB-2, as amended, and incorporated herein by reference. As of May 19,
2007 these options have expired.




(6) On March 14, 2006 the Company
notified the holders of the Warrants that they must exercise their Warrants for
cash or the Warrants will be cancelled without further notice, 30 days following
such notice thereof.




(7) Represents an assignment of
3,350,000 shares underlying Warrants held by DLM Asset Management, Inc. to
Tirion Group, Inc. on February 14, 2006.




(8) Represents options issued by the
Company in behalf of an extension and amendment of a Corporate Advisory
Agreement with Steven Antebi, dated January 30, 2006. For further information
regarding the terms of the extension and amendment of a Corporate Advisory
Agreement, and corresponding option agreement please see a Current Report on
Form 8-K/A, filed on February 3, 2006, incorporated herein by
reference.




(9) Represents options issued by the
Company on behalf of an Advisory Service Agreement with Joseph M. Vasquez dated
March 1, 2006. For further information regarding the terms of the option
agreements please see an amended Current Report on Form 8-K/A, filed on March
17, 2006, incorporated herein by reference.




RECENT SALES OF UNREGISTERED
SECURITIES





I.  On February 8, 2009, by
majority consent of the Board of Directors, the Company approved the following
issuances of its restricted common stock, par value $0.001 per share, to the
following persons for services rendered.





Name
                      
                      Date
                      
                      Share Amount(***)
                      
                      Type of Consideration
                      
                      Fair Market Value of
                        ConsiderationJeffrey M.
      Proper
                        c/o 6564 Smoke Tree
      Lane
                        Scottsdale, Arizona
      85253
                      
                      2/8/09
                      
                      
                      250,000
                      
                      For services rendered to
      theCompany or FPI
                      
                      $
                      15,000Thomas J.
      Richards
                        c/o 6564 Smoke Tree
      Lane
                        Scottsdale, Arizona
      85253
                      
                      2/8/09
                      
                      
                      390,000
                      
                      For services rendered to
      theCompany or FPI
                      
                      $
                      23,400Larry W. Trapp
                        c/o 6564 Smoke Tree
      Lane
                        Scottsdale, Arizona
      85253
                      
                      2/8/09
                      
                      
                      300,000
                      
                      For services rendered to
      theCompany or FPI
                      
                      $
                      18,000Melvena
      Alexander
                        c/o 6564 Smoke Tree
      Lane
                        Scottsdale, Arizona
      85253
                      
                      2/8/09
                      
                      
                      180,000
                      
                      For services rendered to
      theCompany or FPI
                      
                      $
                      10,800Joanne M.
      Sylvanus
                        c/o 6564 Smoke Tree
      Lane
                        Scottsdale, Arizona
      85253
                      
                      2/8/09
                      
                      
                      275,000
                      
                      For services rendered to
      theCompany or FPI
                      
                      $
                      16,500Clifton Onolfo
                        c/o 6564 Smoke Tree
      Lane
                        Scottsdale, Arizona
      85253
                      
                      2/8/09
                      
                      
                      150,000
                      
                      For services rendered to
      theCompany or FPI
                      
                      $
                      9,000




20




(*) Issuances are approved, subject to
such persons being entirely responsible for their own personal, Federal, State,
and or relevant single or multi jurisdictional income taxes, as
applicable.





(**) $92,700 of the financing proceeds
in the immediately preceding table was used primarily in consideration of
services rendered to the Company and/or Firecreek Petroleum, Inc.
(“FPI”).




(1)
            Mr. Jeffrey M. Proper, Esq., for
      legal advisory and consulting services; Mr. Proper is a
      shareholder.





(2)
            Mr. Thomas J. Richards, for
      business and consulting and advisory services; Mr. Richards is a
      shareholder and an advisor of the
  Company.





(3)
            Mr. Larry W. Trapp, for business
      and consulting and advisory services; He is a shareholder, an officer,
      (Executive Vice President, and Co-Treasurer) and director of the Company
      and Firecreek Petroleum,
Inc.





(4)
            Melvena Alexander, for day to day
      operational services and business provisions; Mrs. Alexander is a
      shareholder, and an officer (Secretary, Comptroller, and Co Treasurer) of
      the Company.





(5)
            Joanne M. Sylvanus provides
      accounting and advisory services to the Company and FPI, and is a
      shareholder of the
Company.





(6)
            Mr. Cliff Onolfo, Miami Florida,
      for business and financial advisory services; He is a shareholder and
      advisor of the Company. The shares are to be held at the Company offices
      to be released as additional financial success fee compensation. The
      shares to be returned to Company Treasury if there is no performance
      completed within 90 days of the date of this
      Resolution.





(***) The shares of common stock were
issued pursuant to an exemption from registration as provided by Section 4(2) of
the Securities Act of 1933, as amended (the “1933 Act”). All such certificates
representing the shares issued by the Company shall bear the standard 1933 Act
restrictive legend restricting resale.





II. On February 5, 2009, by majority
consent of the Board of Directors, the Company approved the following issuances
of its restricted common stock, par value $0.001 per share, to the following
persons for services rendered.





Name
                      
                      Date
                      
                      Share Amount(***)
                      
                      Type of Consideration
                      
                      Fair Market Value of
                        ConsiderationJoseph M. Vazquez
      III
                        5324 Pine Tree
      Drive
                        Miami Beach, FL.
      33140
                      
                      2/5/09
                      
                      
                      340,000
                      
                      For services
      rendered
                      
                      $
                      20,400David M. Rees
                        175 E. 400 South, Suite
      2000
                        Salt Lake City, Utah
      84111
                      
                      2/5/09
                      
                      
                      300,000
                      
                      For services
      rendered
                      
                      $
                      18,000Callie Tempest
      Jones
                        175 E. 400 South, Suite
      2000
                        Salt Lake City, Utah
      84111
                      
                      2/5/09
                      
                      
                      25,000
                      
                      For services
      rendered
                      
                      $
                      1,500Chase Chandler
                        175 E. 400 South, Suite
      2000
                        Salt Lake City, Utah
      84111
                      
                      2/5/09
                      
                      
                      15,000
                      
                      For services
      rendered
                      
                      $
                      900





(*) Issuances are approved, subject to
such persons being entirely responsible for their own personal, Federal, State,
and or relevant single or multi jurisdictional income taxes, as
applicable.





(**) $40,800 of the financing proceeds
in the immediately preceding table was used primarily in consideration of
services rendered to the Company and/or Firecreek Petroleum, Inc.
(“FPI”).




21




(1)
            (****) Mr. Joseph M. Vazquez for
      legal advisory and consulting services, and is a shareholder of the
      Company.





(2)
            Mr. David M. Rees  for
      legal engagement and advisory services with the firm Vincent & Rees.
      Mr. Rees is a shareholder of the
Company.





(3)
            Mrs. Callie Tempest Jones for
      legal engagement and advisory services with the firm Vincent & Rees,
      Mrs. Jones is a shareholder of the
  company.





(4)
            Mr. Chase Chandler for legal
      engagement and advisory services with the firm Vincent & Rees. Mr.
      Chandler is a shareholder of the
Company.





(***) The shares of common stock were
issued pursuant to an exemption from registration as provided by Section 4(2) of
the Securities Act of 1933, as amended (the “1933 Act”). All such certificates
representing the shares issued by the Company shall bear the standard 1933 Act
restrictive legend restricting resale.





(****) See also Item 8B Other
Information which can be found further listed in this
Report.





On March 27 and December 26 of 2007, the
Company issued to Dutchess two convertible debentures one with a face value of
$140,000 and the other with a face amount $500,000, to pay an incentive fee to
the holder of the equity credit line. The debentures became convertible at the
date of the issuances and mature in March 27, 2012 and December 26, 2014,
respectively. The Company claims an exemption from the registration requirements
of the Securities Act of 1933, as amended (the “Act”) for the private placement
of these securities pursuant to Section 4(2) of the Act and/or Rule 506 of
Regulation D promulgated thereunder since, among other things, the transaction
does not involve a public offering, the Investor is an “accredited investor”
and/or qualified institutional buyer, the Investor has access to information
about the Company and its investment, the Investor will take the securities for
investment and not resale, and the Company is taking appropriate measures to
restrict the transfer of the securities. For terms of the debentures please see
information furnished in our Current Reports and Exhibits thereto on Form 8-K
filed on March 29, 2007 and January 7, 2008, respectively, incorporated herein
by reference.




On June 11, 2007 the Company issued to
Dutchess a debenture in the face amount of $2,000,000 for acquisitions and
working capital. The Debenture bears interest at 12% per annum and matures on
June 11, 2014. For terms of the debenture please see information furnished in
our Current Report on Form 8-K, and Exhibits thereto filed on Jun 11, 2007,
incorporated herein by reference.




On December 26, 2007, EGPI Firecreek,
Inc. the Company issued to Dutchess a debenture in the face amount of
$2,100,000. The Debenture bears interest at 12% per annum and matures on
December 26, 2014. The Company claims an exemption from the registration
requirements of the Act for the private placement of these securities pursuant
to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated
thereunder since, among other things, the transaction does not involve a public
offering, the Investor is an “accredited investor” and/or qualified
institutional buyer, the Investor has access to information about the Company
and its investment, the Investor will take the securities for investment and not
resale, and the Company is taking appropriate measures to restrict the transfer
of the securities. For terms of the debenture please see information furnished
in our Current Report on Form 8-K, and Exhibits thereto filed on January 7,
2008, incorporated herein by reference.




On April 21 and June 29 of 2006, the
Company issued to Dutchess convertible debentures with a face value of $171,875
and $300,000 respectively, to pay an incentive fee to the holder of the equity
credit line. The debentures became convertible at the date of the issuances and
mature in April and June of 2011. The Company claims an exemption from the
registration requirements of the Act for the private placement of these
securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D
promulgated thereunder since, among other things, the transaction does not
involve a public offering, the Investor is an “accredited investor” and/or
qualified institutional buyer, the Investor has access to information about the
Company and its investment, the Investor will take the securities for investment
and not resale, and the Company is taking appropriate measures to restrict the
transfer of the securities. For terms of the debentures please see information
furnished in Exhibit “A” to each of Exhibits 99.1 and 99.2 to our Current
Reports on Form 8-K filed on April 27, 2006 and June 7, 2006, respectively,
incorporated herein by reference.




On November 14 and December 15 of 2005,
the Company issued to Dutchess convertible debentures with a face value of
$375,000 and $82,500, respectively, to pay an incentive fee to the holder of the
equity credit line. The debentures became convertible at the date of the
issuances and mature in November and December 2010. The Company claims an
exemption from the registration requirements of the Act for the private
placement of these securities pursuant to Section 4(2) of the Act and/or Rule
506 of Regulation D promulgated thereunder since, among other things, the
transaction does not involve a public offering, the Investor is an “accredited
investor” and/or qualified institutional buyer, the Investor has access to
information about the Company and its investment, the Investor will take the
securities for investment and not resale, and the Company is taking appropriate
measures to restrict the transfer of the securities. For terms of the debentures
please see information furnished in Exhibit “A” to each of Exhibits 10.3, and
99.1 to our Current Reports on Form 8-K filed on November and December 16, 2005,
respectively, incorporated herein by reference.




22





ITEM 6.
            SELECTED FINANCIAL
      DATA




Not Applicable





ITEM 7.
            MANAGEMENT’S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS




Summary Results Of
Operations




Overview




You should read the following discussion
and analysis in conjunction with the audited Consolidated Financial Statements
and Notes thereto, and the other financial data appearing elsewhere in this
Annual Report.




The information set forth in
Management’s Discussion and Analysis of Financial Condition and Results of
Operations (“MD&A”) contains certain “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of
the Securities Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995, including, among others (i) expected changes in
the Company’s revenues and profitability, (ii) prospective business
opportunities and (iii) the Company’s strategy for financing its business.
Forward-looking statements are statements other than historical information or
statements of current condition. Some forward-looking statements may be
identified by use of terms such as “believes”, “anticipates”, “intends” or
“expects”. These forward-looking statements relate to the plans, objectives and
expectations of the Company for future operations. Although the Company believes
that its expectations with respect to the forward-looking statements are based
upon reasonable assumptions within the bounds of its knowledge of its business
and operations, in light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this report should
not be regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved. In light of these risks and
uncertainties, there can be no assurance that actual results, performance or
achievements of the Company will not differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. The foregoing review of important factors should not be construed as
exhaustive. The Company undertakes no obligation to release publicly the results
of any future revisions it may make to forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.




The Company has been focused on oil and
gas activities for development of interests held that were acquired in Texas and
Wyoming for the production of oil and natural gas through December 2, 2008. The
Company throughout 2008 was seeking to continue expansion and growth for oil and
gas development in its core projects. A downturn in economic circumstances
leading to a default notice received from our hedge fund lenders which in
combination with lack of timely credit availability resulted in forced
disposition of our assets. In 2009 we are once again pursuing a re-build of our
basic projects infrastructure, negotiating for new acquisitions. Through 2008 we
continued to limit and wind down the pursuit of projects overseas in Central
Asian and European countries, but reserve the right to re enter these activities
at a future date.




The Company has been making
presentations to asset-based lenders and other financial institutions for the
purpose of expanding and supporting our growth potential by development of new
oil and gas operations in 2009 with a goal to re build our revenue base and cash
flow; however, the Company makes no guarantees and can provide no assurances
that it will be successful in these endeavors.




One of the ways our plans for growth
could be altered if current opportunities now available become
unavailable:




The Company would need to identify,
locate, or address replacing current potential acquisitions or strategic
alliances with new prospects or initiate other existing available projects that
may have been planned for later stages of growth and the Company may therefore
not be ready to activate. This process can place a strain on the Company. New
acquisitions, business opportunities, and alliances, take time for review,
analysis, inspections and negotiations. The time taken in the review activities,
is an unknown factor, including the business structuring of the project and
related specific due diligence factors.




General




The Company historically derived its
revenues primarily from retail sales of oil and gas field inventory equipment,
service, and supply items primarily in the southern Arkansas area, and from
acquired interests owned in revenue producing oil wells, leases, and equipment
located in Olney, Young County, Texas. The Company disposed of these two
segments of operations in 2003. The Company acquired a marine vessel sales
brokerage and charter business, International Yacht Sales Group, Ltd. of Great
Britain in December 2003 later disposing of its operations in late 2005. We
accounted for the segments as discontinued operations in the consolidated
statements of operations for the related fiscal year.




23




Effective
July 1, 2004, we acquired Firecreek Petroleum, Inc., and its subsidiary
Firecreek Romania, SRL. Firecreek was focused on exploration and development
specializing in the niche market of rehabilitation and enhancement of existing
oilfields through modern management and state of the art technological
applications internationally. Throughout 2004 and 2005, the Firecreek unit
developed relationships, pursued and prepared for potential acquisitions in
Romania and Libya, and through its strategic alliances developed other potential
projects for acquisition located in Russia, Romania, Kazakhstan, Ukraine, and
Turkey. Firecreek’s business was subsequently restructured in the first quarter
of 2006. This process undertook closing our Firecreek subsidiary Ft. Worth Texas
offices, eliminating or lowering many expenses including employees, consultants,
telephones, long distance, cellular fees, travel, office supplies, data fees,
and other. Books, accounting records and data were transferred to the Parent
offices located in Scottsdale Arizona. The restructuring helped to decrease
overall operating losses for the year 2006, and also to a lesser extent
conserved existing cash flows. In 2007 and 2008 Firecreek focused primarily on
development of U.S. based domestic oil and gas operations, the Fant Ranch Unit
(acquired effective July 1, 2007), and Tubb Leasehold estate (acquired effective
January 1, 2008) which were located in Knox and Ward Counties, Texas,
respectively, and the Ten Mile Draw (TMD) project located in Sweetwater County
Wyoming,.





Effective
November 15, 2005, Firecreek purchased a 50% undivided working interest in
leases, wells, equipment, gas and to a lesser extent oil reserves, and other
rights, located in Green River Basin, Sweetwater County, Wyoming. The project is
listed under the prospect name “Ten Mile Draw” (“TMD”). Through our operator
Newport Oil Corporation (“Newport” or “NOC”) having completed a successful
workover program we commenced with gas production from two wells, the 16-1 and
7-16, in the first and second quarters of 2006, subsequently began a workover
program for a third well, the 13-9, in July of 2006. The Company encountered and
reported several technical issues with the 13-9 well, and in bringing the well
online to satisfactory commercial production levels. During the second quarter
of operations the Company reported that it may ultimately elect to shut the well
if reasonable commercial production levels were not achieved in a reasonable
amount of time. Due not achieving commercial levels of production, during
September and October 2008 the Company and NOC elected to shut in the 13-9, and
the Company thereafter elected to sell all of its remaining interests and rights
held in the TMD to NOC (for further information please see our Current Report on
Form 8-K filed October 31, 2008, incorporated herein by reference).




Effective
July 1, 2007, Firecreek purchased a 100% working interest and related 75% net
revenue interest in leases, wells, equipment, and oil reserves located in Knox
County, Texas. The project is listed as the Fant Ranch Unit. Through our
operator Success Oil Co. Inc., we took over operations, commenced with oil
production in the third and fourth quarter of 2007, and implemented a phase one
program to rehabilitate and bring two additional wells on line in the Fant Unit.
For additional information related to acquisition of Fant Ranch Unit please see
our Report on Form 8-K filed on July 16, 2007 incorporated herein by reference.
In January, 2008, Firecreek commenced with an enhancement/rehabilitation phase 2
program for the Fant Ranch Unit located in Knox County, Texas. The program
included cleaning out casing perforations, maintenance, paraffin removal, repair
and acid stimulation for a majority of the oil wells in the unit. The purpose of
the program was to maintain the existing wells regularly, and to increase the
overall well efficiency and production for the field. Disposition as of December
2, 2008: In connection with the Default notice received October 24, 2008, and
actions of Dutchess Private Equities Fund, Ltd., the 100% Working Interests held
in the Fant Ranch Unit was disposed of as of December 2, 2008, and is no longer
owned by the Company.





On August
3, 2007, the Company through its Firecreek unit concluded a transaction for the
sale of rights and opportunities for development works and projects located in
the Ukraine. Through the agreement the purchaser acquired the rights to acquire
licenses, permits and permissions to explore for and extract oil, natural gas or
other natural resources on the territories referenced in the agreement. For
additional information please see information and exhibits to a Report on Form
8-K filed on August 13, 2007, incorporated herein by reference. For updated
status please also see Item 1, Legal Proceedings in a report on Form 10-Q, filed
on November 21, 2008, incorporated herein by reference.




In
January, 2008, Firecreek entered into an Assignment and Bill of Sale (the
“Assignment”) with Success Oil Co., Inc. (“SOC”) relating to the purchase and
sale of 75% working interests along with 56.25% corresponding net revenue in
certain 40 acre tract of land and leases (the “North 40”), with and including a
first right for an additional 40 acre lease (the “South 40”), located in Ward
County, Texas, more commonly known as the J.B. Tubb leasehold estate (the “Tubb
Lease”). The Company participated in a workover, drilling and development
program, and has recently brought three wells online as a result. The Company
paid $1,400,000 for the lease, equipment and a Participation Agreement which
provided for turnkey drilling, re-entry, and included multiple wells on the
North 40 Acres. Firecreek has subsequently acquired assignment of one Lower
Clearfork formation in the Highland 2 Wellbore which is located on the South 40
of the J.B. Tubb Leasehold Estate (also see information contained in Current
Report on Form 8-K/A filed on April 30, 2008). The Tubb Lease workover, drilling
and development programs brought three wells online resulting in two of the
three wells effectively producing and selling oil and gas. For further
information please see our Current Report on Form 8-K, as amended, originally
filed on January 9, 2008, and amended and filed on April 30, 2008, incorporated
herein by reference. Disposition as of December 2, 2008: In connection with the
Default notice received October 24, 2008, and actions of Dutchess Private
Equities Fund, Ltd., the 75% Working Interests held in the J.B. Tubb Leasehold
Estate was disposed of as of December 2, 2008, and is no longer owned by the
Company.




The
Company expects to incur an increase in operating expenses during the next year
from commencing activities related to its plans for the Company’s oil and gas
operations. The amount of net losses and the time required for the Company to
reach and maintain profitability are uncertain at this time. There is a
likelihood that the Company will encounter difficulties and delays encountered
with business subsidiary operations, including, but not limited to uncertainty
as to development and the time and timing required for the Company’s plans to be
fully implemented, governmental regulatory responses to the Company’s plans,
fluctuating markets and corresponding spikes, or dips in our products demand,
currency exchange rates between countries, acquisition and development pricing,
related costs, expenses, offsets, increases, and adjustments. There can be no
assurance that the Company will ever generate significant revenues or achieve
profitability at all or on any substantial basis.


24


RESULTS
OF OPERATIONS – December 31, 2008 Compared to December 31, 2007




General
administrative expenses were $558,579 in 2008 compared to $1,008,982 in 2007.
The Company has treated the following oil and gas leases, properties and
interests, and equipment as a discontinued component of operations: i) the
undivided 50% Working Interests held in the Ten Mile Draw Prospect area natural
gas wells located in Sweetwater County, Wyoming, ii), the 100% oil and gas
Working Interests held in the leases, reserves, and equipment in the Fant Ranch
Unit located in Knox County, Benjamin Texas, and iii) the 75% oil and gas
Working Interests held in the leases, reserves, and equipment located in the
J.B. Tubb leasehold estate located in the AMOCO CRAWAR Field, Ward County,
Texas.




Following
is a breakdown of general and administrative costs for this period versus a year
ago:





Detail
of general & administrative expenses:





31-Dec-08
                  
                  
                  31-Dec-07Advertising
      & promotion
                  
                  $
                  1,639
                  
                  
                  $
                  3,159Administration
                  
                  
                  41,627
                  
                  
                  
                  32,482Consulting
                  
                  
                  56,399
                  
                  
                  
                  327,255Impairment
      expense
                  
                  
                  47,565
                  
                  
                  
                  0Investor
      incentives/commissions
                  
                  
                  42,376
                  
                  
                  
                  289,439Professional
      fees
                  
                  
                  300,952
                  
                  
                  
                  266,647Salaries
                  
                  
                  63,000
                  
                  
                  
                  90,000Travel
      costs
                  
                  
                  5,021
                  
                  
                  
                  0Total
                  
                  $
                  558,579
                  
                  
                  $
                  1,008,982





Advertising
and Promotion costs of $1,639 were used for investor relations and market
awareness.




Administration
Costs of $41,627 was used for office and general operating expenses of which
$26,362 was used for the costs related to the reverse stock split.




Consulting
Fees of $56,399 were incurred for consulting and advisory fees for business
management activities.





Impairment
expense of $47,565 was used to expense an acquired oil and gas participation
rights.




Investor
Incentives/commissions of $42,376 include costs related to obtaining financing
and credit lines.




Professional
Fees of $300,952 were incurred in regards to legal costs, audit costs, securing
financing, and the acquisition of leads and contacts with regard to possible new
business ventures and includes data acquisition costs, technical work, and
engineering reports.




Salaries
and Benefits of $63,000 were used to pay employees in 2008.





Travel
costs used $5,021 for business trips, two to Boston MA, and one to Dallas, Fort
Worth Texas during 2008.




After
deducting general and administrative expense, and interest expenses, the Company
experienced a loss from continuing operations of $1,145,717 in 2008 as compared
to a loss from continuing operations of $359,182 in fiscal 2007.





Interest
expense for fiscal year 2008 was $24,328 compared to $26,546 in fiscal year
2007.


25




After
accounting for Loss from operations of discontinued component (net of tax),
and Gain on disposal of discontinued component (net of tax), the Company
incurred a net income of $2,697,439 in fiscal year 2008 compared to a loss of
$1,474,050, in fiscal year 2007.





Fully
diluted income (loss) per share was $0.44 income per share in fiscal year 2008
compared to a loss of ($0.68) per share in fiscal 2007.





LIQUIDITY
AND CAPITAL RESOURCES





Cash on
hand at December 31, 2008 was $2,230 compared to $2,009,734 at the beginning of
the year. The Company had working capital deficit of $594,702 at December 31,
2008 compared to a working capital deficit of $3,467,364 at December 31,
2007.





Cash used
in operating activities was $282,504 for the year ended December 31, 2008,
compared with $784,190 for the year ended December 31, 2007.




The
Company paid $1,400,000 for J.B. Tubb leasehold interests and equipment,
and  $1,626,031in fiscal year 2007 of leases and equipment related to
the acquisition of the Fant Ranch Unit. The Company received  no new
loans in fiscal year 2008 compared to  $4,405,000 in fiscal year 2007 by
issuing convertible debentures and promissory notes on its equity credit
line.





The
Company paid $325,000 to Dutchess during 2008 to pay down the Equity Line
Loan.




Total
assets decreased to $2,230 at December 31, 2008 compared to $4,833,885 at the
beginning of the year mainly as a result of the loss of assets in default on
debt.




Shareholders
deficit decreased to $901,798 at December 31, 2008 from a deficit of $3,784,037
at December 31, 2007. During fiscal year 2007, the Company issued 50,714 shares
to consultants valued at $58,786 for services rendered. In addition, the Company
issued 393,737 shares to pay the equity line of $260,378. During fiscal year
2007, the Company issued convertible debentures with a face amount of $4,100,000
and 3,500,000 shares of common stock and 20,000,000 of preferred stock and
received net proceeds of $3,970,000. The issuances of the common stock and the
preferred stock were valued at fair market of $700,000 and $200,000
respectively. The fair value associated with the issuance of the debentures
using the Black Sholes Options pricing model was $1,853,360.




Finally,
we recorded a net income during 2008 of $2,697,439 compared with a net loss
during 2007 of $1,474,050, and which results in an ending shareholder deficit at
December 31, 2008 of $901,798, reduced from $3,784,037 at December 31, 2007 the
previous year.




The
Company must generally undertake certain ongoing expenditures in connection re
building, expanding and developing its oil and gas business, and for various
past and present legal, accounting, consulting, and technical review, and to
perform due diligence for activating one or more of its acquisition and
development programs; furthering research for new and ongoing business
prospects, and in pursuing capital financing for its existing available rights
and proposed operations.




As
previously reported, during 2007, the equity line financing company that
provided the Equity Line cancelled the Equity Line. As part of additional
financing on December 26, 2007 for $2.1 million dollars, the terms of that loan
included the issuance of two debentures, 40% of the revenues generated by the
Company which is applied to previously existing notes, and 85% of the stock of
the Company as an inducement (for further information please see Current Report
on form 8-K filed on January 7, 2008, incorporated herein by reference).
 In addition, certain members of the financing Company became members of
the Company’s Board of Directors. It was further reported that although
unlikely, there could be no assurance that the finance company issuing the notes
would continue to refrain from noticing or acting on a formal default, however
the Company believed that its present members were working uniformly to assist
growth of the Company.  Thus a change from a favorable circumstance with
our finance company, encountering a formal default, could, in lieu of positive
negotiations occurring, anticipate potentially detrimental conditions including
but not limited to one or more of the following: i) rapid conversion of
debentures to shares of the Company’s up to 85% of the common stock in
accordance with the terms and provisions of the note agreements, ii)
acceleration and foreclosure on one or all of the assets of the Company and its
subsidiaries, iii) imposing financial duress creating difficulty or inability to
run the Company or its business affairs, iv) create pressure on the Company’s
stock by increased supply, and v) increased dilution to shareholders. Although
the terms of the notes were stringent, the Company believed that it would
continue to secure needed financing for its growth plans.





In
January 2008, members of the financing company joined the Company’s Board of
Directors, as a condition of the financing received in December 2007. The Equity
Line was canceled with the financing that occurred on December 26, 2007. The
Company was working to secure up to $10,000,000 or more in asset based, and or
other debt or equity finance projected to assist its 2008 plans. There could be
no guarantee or assurance that the Company would receive or be successful in
obtaining additional financing. In addition, the Company had a covenant with its
equity line finance company, which managing members were directors, affiliates,
and shareholders of the Company, not to enter into any additional financing
agreements, debt or equity, without prior expressed written consent, which shall
not be unreasonably withheld.


26




Historically
noted, as previously disclosed in EGPI Firecreek, Inc.’s (“EGPI” or the
“Company”) filings with the U.S. Securities and Exchange Commission, the Company
has entered into, and issued, various debenture and note agreements (the “Loan
Documents”) with Dutchess Private Equities Fund Ltd, (“Dutchess”), successor in
interest to Dutchess Private Equities Fund LP and Dutchess Private Equities Fund
II, LP. The Company and Dutchess have also entered into that certain Security
Agreement, dated March 27, 2007, as amended, providing for, among other things,
Dutchess’ rights and remedies with respect to certain of the Company’s assets.
On October 24, 2008, the Company then did receive a default notice (“Default
Notice”) pursuant to the Loan Documents previously disclosed stating that the
Company was in default of their obligations to Dutchess, including, but not
limited to, failure to pay interest and principal when due. Further, pursuant to
the Default Notice, Dutchess gave notice that it is exercising its right to
increase the aggregate face amount of the obligations owing under the Loan
Documents by ten percent (10%) for each instance of default. Accordingly,
Dutchess accelerated and declared outstanding all unpaid principal, accrued
interest, liquidated damages, and any other costs and expenses to be immediately
due and payable in full. The aggregate amount owed to Dutchess, as provided in
the Default Notice, is $9,304,962; such amount is to be paid within five (5)
days of the Default Notice. Moreover, as stated in the Default Notice, Dutchess
reserved the right to pursue any and all available legal remedies for any
failure to pay any amount due to Dutchess. On December 2, 2008 as a result of a
default notice received October 24, 3008 on Promissory Notes and Debentures, all
of the assets were transferred or foreclosed on and transferred to Dutchess
Private Equities Fund, Ltd (“Dutchess”).




In
summary, the Company obtained $435,000 in March 2007, $2,000,000 in June 2007,
and $2,100,000 in December 2007 from Promissory Notes and Debentures as
previously reported. There were no funds obtained from financing activities in
2008. Cash provided for operations was provided primarily from its oil and gas
operations through December 2, 2008. Going forward for 2009, management has
estimated that such cost for initially paying down certain of the Company’s
recent debt, providing necessary working capital, and activating development of
its current plans for domestic oil and gas segment operations, will initially
require a very minimum of $500,000 to $750,000 to a maximum of $5 to $10 million
during the first six to twelve months of fiscal 2009.





Financing
our full expansion and development plans for our oil and gas operations could
require up to $50,000,000 or more. The Company may elect to reduce or increase
its requirement as circumstances dictate. We may elect to revise these plans and
requirements for funds depending on factors including; changes in acquisition
and development estimates; interim corporate and project finance requirements;
unexpected timing of markets as to cyclical aspects as a whole; currency and
exchange rates; project availability with respect to interest and timing factors
indicated from parties representing potential sources of capital; structure and
status of our strategic alliances, potential joint venture partners, and or our
targeted acquisitions and or interests.




The
Company cannot predict that it will be successful in obtaining funding for its
plans or that it will achieve profitability in fiscal
2009.




27


ITEM
8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA





EGPI
FIRECREEK, INC.


(formerly
Energy Producers, Inc.)





CONSOLIDATED


FINANCIAL
STATEMENTS


DECEMBER
31, 2008 AND DECEMBER 31, 2007


Index
to Financial Statements





Independent
      Auditor’s Report
                
                F-2Consolidated
      Balance Sheets
                
                F-3Consolidated
      Statement of Operations
                
                F-4Consolidated
      Statement of Cash Flows
                
                F-5Consolidated
      Statement of Changes in Shareholders Deficit
                
                F-6Notes
      to the Consolidated Financial Statements
                
                F-7
      – F-17




F-1




DONAHUE
ASSOCIATES, LLC


Certified
Public Accountants


27
Beach Road Suite CO5A


Monmouth
Beach, NJ 07750


Tel.
732-229-7723




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Stockholders of EGPI Firecreek, Inc.




We have
audited the accompanying consolidated balance sheets of EGPI Firecreek, Inc.
(the “Company”) as of December 31, 2008 and December 31, 2007, and the
related consolidated statements of operations, changes in shareholders’ deficit,
and cash flow for each of the two years ended December 31, 2008. These financial
statements and the financial statement schedule are the responsibility of
company’s management. Our responsibility is to express an opinion on the
financial statements and financial statement schedule based on our
audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. As
discussed in note 18 of the Notes to the Consolidated Financial Statements, the
accompanying financial statements have been restated. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes,
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.




In our
opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of EGPI Firecreek, Inc. (the “Company”) at
December 31, 2008 and December 31, 2007, and the results of its
operations, cash flows, and changes in shareholders’ equity for the years then
ended in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses and negative cash flows
from operations that raise substantial doubt about its ability to continue as a
going concern.  Management’s plans in regard to these matters are also
discussed in Note 2.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




By:
              /s/
      Donahue Associates, LLC.Donahue
      Associates, LLC.Monmouth
      Beach, New JerseyApril
      14, 2009




F-2




EGPI
Firecreek, Inc.


Consolidated
Balance Sheets


As
of December 31, 2008 and December 31, 2007





Restated
                  (note
      18)31-Dec-08
                
                
                31-Dec-07ASSETSCurrent
      assets:Cash
                
                $
                2,230
                
                
                $
                2,009,734Accounts
      receivable
                
                
                0
                
                
                
                76,348Deferred
      charges
                
                
                0
                
                
                
                13,739Total
      current assets
                
                $
                2,230
                
                
                $
                2,099,821Other
      assets:Investment
      in Star Energy, fair value
                
                
                0
                
                
                
                382,200Deferred
      charges
                
                
                0
                
                
                
                116,934Fixed
      assets- net
                
                
                0
                
                
                
                2,234,930Total
      assets
                
                $
                2,230
                
                
                $
                4,833,885LIABILITIES
      AND SHAREHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable & accrued expenses
                
                $
                549,367
                
                
                $
                815,836Note
      payable
                
                
                47,565
                
                
                
                0Notes
      payable- net of discount
                
                
                0
                
                
                
                4,753,349Total
      current liabilities
                
                $
                596,932
                
                
                $
                5,569,185Advances
      & notes payable to shareholders
                
                
                307,096
                
                
                
                269,200Convertible
      debentures- net of discount
                
                
                0
                
                
                
                632,563Derivative
      liability
                
                
                0
                
                
                
                2,146,974Total
      liabilities
                
                $
                904,028
                
                
                $
                8,617,922Shareholders'
      deficit:Series
      A preferred stock, 20 million authorized, par value $0.001,one share
      convertible to one common share, no stated dividend, none
      outstanding
                
                $
                0
                
                
                $
                0Series
      B preferred stock, 20 million authorized, par value $0.001,one share
      convertible to one common share, no stated dividend, none
      outstanding
                
                
                0
                
                
                
                0Series
      C preferred stock, 20 million authorized, stated value $.001,one share
      convertible to ten common shares, no stated dividend. 20 million shares
      outstanding
                
                
                0
                
                
                
                200,000Common
      stock- $0.20 par value, authorized 1,300,000,000 shares, issued and
      outstanding, 5,921,288 at December 31, 2007 and 6,921,288 at December 31,
      2008
                
                $
                1,384,257
                
                
                $
                1,184,257Additional
      paid in capital
                
                
                20,970,812
                
                
                
                20,970,812Other
      comprehensive loss
                
                
                0
                
                
                
                (184,800
                )Accumulated
      deficit
                
                
                (23,256,867
                )
                
                
                (25,954,306
                )Total
      shareholders' deficit
                
                
                (901,798
                )
                
                
                (3,784,037
                )Total
      Liabilities & Shareholders' Deficit
                
                $
                2,230
                
                
                $
                4,833,885





See
the notes to the consolidated financial statements.


F-3




EGPI
Firecreek, Inc.


Consolidated
Statements of Operations


For
the Years Ended December 31, 2008 and December 31, 2007





Restated
                  (note 18)31-Dec-08
                
                
                31-Dec-07General
      and administrative expenses:General
      administration
                
                $
                558,579
                
                
                $
                1,008,982Total
      general & administrative expenses
                
                
                558,579
                
                
                
                1,008,982Net
      loss from operations
                
                $
                (558,579
                )
                
                $
                (1,008,982
                )Other
      revenues and expenses:Gain
      (loss) on asset disposal
                
                
                (567,000
                )
                
                
                667,000Interest
      income
                
                
                4,190
                
                
                
                9,346Interest
      expense
                
                
                (24,328
                )
                
                
                (26,546
                )Net
      income (loss) before provision for income taxes
                
                $
                (1,145,717
                )
                
                $
                (359,182
                )Provision
      for income taxes
                
                
                0
                
                
                
                0Loss
      from continuing operations
                
                
                (1,145,717
                )
                
                $
                (359,182
                )Discontinued
      operations:Loss
      from operations of discontinued component (net of tax)
                
                
                (1,960,323
                )
                
                
                (1,114,868
                )Gain
      on disposal of discontinued component (net of tax)
                
                
                5,803,479
                
                
                
                0Net
      income (loss)
                
                $
                2,697,439
                
                
                $
                (1,474,050
                )Basic
      net income (loss) per common share:Basic
      income (loss) per share- continuing operations
                
                $
                (0.20
                )
                
                $
                (0.17
                )Basic
      income (loss) per share- discontinued component
                
                $
                0.64
                
                
                $
                (0.51
                )Basic
      income (loss) per share
                
                $
                0.44
                
                
                $
                (0.68
                )Fully
      diluted income (loss) per share- continuing operations
                
                $
                (0.20
                )
                
                $
                (0.17
                )Fully
      diluted income (loss) per share- discontinued component
                
                $
                0.64
                
                
                $
                (0.51
                )Fully
      diluted income (loss) per share
                
                $
                0.44
                
                
                $
                (0.68
                )Weighted
      average of common shares outstanding:Basic
                
                
                6,088,411
                
                
                
                2,158,841Fully
      diluted
                
                
                7,145,411
                
                
                
                2,158,841





See
the notes to the consolidated financial statements.


F-4




EGPI
Firecreek, Inc.


Consolidated
Statements of Cash Flows


For
the Years Ended December 31, 2008 and December 31, 2007





Restated
                    (note
      18)31-Dec-08
                  
                  
                  31-Dec-07Operating
      Activities:Net
      income (loss)
                  
                  
                  
                  $
                  2,697,439
                  
                  
                  $
                  (1,474,050
                  )Adjustments
      to reconcile net loss items not requiring the use of cash:Impairment
      expense
                  
                  
                  
                  
                  47,565
                  
                  
                  
                  135,786Interest
      expense
                  
                  
                  
                  
                  24,328
                  
                  
                  
                  26,546Consulting
      expense
                  
                  
                  
                  
                  0
                  
                  
                  
                  58,786Gain
      (loss) on asset disposal
                  
                  
                  
                  
                  567,000
                  
                  
                  
                  (567,000
                  )Depreciation
      & depletion expense
                  
                  Discontinued component
                  
                  
                  150,498
                  
                  
                  
                  124,184Interest
      expense
                  
                  Discontinued
      component
                  
                  
                  2,503,277
                  
                  
                  
                  1,134,606Amortization
      of deferred charges
                  
                  Discontinued
      component
                  
                  
                  36,376
                  
                  
                  
                  188,517Gain
      (loss) on asset disposal
                  
                  Discontinued
      component
                  
                  
                  (5,690,284
                  )
                  
                  
                  0Gain
      on derivative liability
                  
                  Discontinued
      component
                  
                  
                  (428,582
                  )
                  
                  
                  (361,964
                  )Changes
      in other operating assets and liabilities :Accounts
      receivable
                  
                  Discontinued
      component
                  
                  
                  76,348
                  
                  
                  
                  (76,338
                  )Accounts
      payable and accrued expenses
                  
                  
                  
                  
                  (266,469
                  )
                  
                  
                  26,737Net
      cash used by operations
                  
                  
                  
                  $
                  (282,504
                  )
                  
                  $
                  (784,190
                  )Investing
      activities:Purchase
      of lease & equipment
                  
                  Discontinued
      component
                  
                  $
                  (1,400,000
                  )
                  
                  $
                  (1,626,031
                  )Net
      cash used for investing activities
                  
                  
                  
                  
                  (1,400,000
                  )
                  
                  
                  (1,626,031
                  )Financing
      Activities:Credit
      equity line paid
                  
                  Discontinued
      component
                  
                  $
                  (325,000
                  )
                  
                  $
                  435,000Convertible
      debentures issued
                  
                  Discontinued
      component
                  
                  
                  0
                  
                  
                  
                  3,970,000Net
      cash provided (used) by financing activities
                  
                  
                  
                  
                  (325,000
                  )
                  
                  
                  4,405,000Net
      increase (decrease) in cash during the period
                  
                  
                  
                  $
                  (2,007,504
                  )
                  
                  $
                  1,994,779Cash
      balance at January 1st
                  
                  
                  
                  
                  2,009,734
                  
                  
                  
                  14,955Cash
      balance at December 31st
                  
                  
                  
                  $
                  2,230
                  
                  
                  $
                  2,009,734Supplemental
      disclosures of cash flow information:Interest
      paid during the year- discontinued component
                  
                  
                  
                  $
                  82,624
                  
                  
                  $
                  105,000Income
      taxes paid during the year
                  
                  
                  
                  $
                  0
                  
                  
                  $
                  0





See
the notes to the consolidated financial statements.


F-5




EGPI
Firecreek, Inc.


Consolidated
Statement of Changes in Shareholders’ Deficit


For
the Years Ended December 31, 2008 and December 31, 2007


As
Restated (note 18)





OtherPreferred
                
                
                Preferred
                
                
                Common
                
                
                Par
                
                
                Paid in
                
                
                Accumulated
                
                
                ComprehensiveShares
                
                
                Value
                
                
                Shares
                
                
                Value
                
                
                Capital
                
                
                Deficit
                
                
                Loss
                
                
                TotalBalance
      at December 31, 2006
                
                
                0
                
                
                $
                0
                
                
                
                1,976,837
                
                
                $
                395,367
                
                
                $
                18,887,178
                
                
                $
                (24,480,256
                )
                
                $
                0
                
                
                $
                (5,197,711
                )Issued
      shares to pay equity line
                
                
                
                
                
                
                
                
                
                
                393,737
                
                
                
                78,747
                
                
                
                181,631
                
                
                
                
                
                
                
                
                
                
                
                260,378Issued
      shares to consultants
                
                
                
                
                
                
                
                
                
                
                50,714
                
                
                
                10,143
                
                
                
                48,643
                
                
                
                
                
                
                
                
                
                
                
                58,786Issuance
      of preferred stock
                
                
                20,000,000
                
                
                $
                200,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                200,000Issuance
      of common stock
                
                
                
                
                
                
                
                
                
                
                3,500,000
                
                
                
                700,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                700,000Issuance
      of debenture- derivative value
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,853,360
                
                
                
                
                
                
                
                
                
                
                
                1,853,360Loss
      on investment (Star Energy)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (184,800
                )
                
                
                (184,800
                )Net
      loss for the fiscal year
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,474,050
                )
                
                
                
                
                
                
                (1,474,050
                )Balance
      at December 31, 2007
                
                
                20,000,000
                
                
                $
                200,000
                
                
                
                5,921,288
                
                
                $
                1,184,257
                
                
                $
                20,970,812
                
                
                $
                (25,954,306
                )
                
                $
                (184,800
                )
                
                $
                (3,784,037
                )Loss
      on investment (Star Energy)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                184,800
                
                
                
                184,800Convert
      preferred stock
                
                
                (20,000,000
                )
                
                $
                (200,000
                )
                
                
                1,000,000
                
                
                
                200,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                0Net
      income for the fiscal year
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,697,439
                
                
                
                
                
                
                
                2,697,439Balance
      at December 31, 2008
                
                
                0
                
                
                $
                0
                
                
                
                6,921,288
                
                
                $
                1,384,257
                
                
                $
                20,970,812
                
                
                $
                (23,256,867
                )
                
                $
                0
                
                
                $
                (901,798
                )





Please
see the notes to the consolidated financial statements.


F-6




EGPI
Firecreek, Inc.


Notes
to the Consolidated Financial Statements


For
the Years Ended December 31, 2008 and December 31, 2007




1.
Organization of the Company and Significant Accounting Principles




The
Company was incorporated in the State of Nevada October 1995. Effective October
13, 2004 the Company, previously known as Energy Producers Inc., changed its
name to EGPI Firecreek, Inc.




Prior to
December 2008, the Company had interests in various gas & oil wells located
in the Wyoming and Texas area. In December 2008, the Company’s major creditor,
Duchess Private Equities Ltd. (Duchess), foreclosed on the assets of the
Company.  As a result, all of the Company’s oil and gas properties
were transferred to Duchess in satisfaction of debt owed. See financial
statement Note 9 for further discussion.




In
October 2008, the Company effected a 1 share for 200 shares reverse split of its
common stock. See financial statement note 5 for a further
discussion.




Consolidation- the
accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary.  All significant inter-company
balances have been eliminated.




Use of Estimates- The
preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make reasonable estimates and
assumptions that affect the reported amounts of the assets and liabilities and
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses at the date of the consolidated financial statements and
for the period they include.  Actual results may differ from these
estimates.




Revenue and Cost Recognition-
Revenue is recognized from oil &gas sales at such time as the oil & gas
is delivered to the buyer..  For its producing activities, the Company uses successful
efforts costing.




Properties and Equipment-The
Company uses the successful efforts method of accounting for oil and gas
producing activities. Under this method, acquisition costs for proved and
unproved properties are capitalized when incurred. Exploration costs, including
geological and geophysical costs, the costs of carrying and retaining unproved
properties and exploratory dry hole drilling costs, are expensed. Development
costs, including the costs to drill and equip development wells, and successful
exploratory drilling costs to locate proved reserves are
capitalized.




Exploratory
drilling costs are capitalized when incurred pending the determination of
whether a well has found proved reserves. A determination of whether a well has
found proved reserves is made shortly after drilling is completed. The
determination is based on a process which relies on interpretations of available
geologic, geophysic, and engineering data. If a well is determined to be
successful, the capitalized drilling costs will be reclassified as part of the
cost of the well. If a well is determined to be unsuccessful, the capitalized
drilling costs will be charged to expense in the period the determination is
made. If an exploratory well requires a major capital expenditure before
production can begin, the cost of drilling the exploratory well will continue to
be carried as an asset pending determination of whether proved reserves have
been found only as long as: i) the well has found a sufficient quantity of
reserves to justify its completion as a producing well if the required capital
expenditure is made and ii) drilling of the additional exploratory wells is
under way or firmly planned for the near future. If drilling in the area is not
under way or firmly planned, or if the well has not found a commercially
producible quantity of reserves, the exploratory well is assumed to be impaired,
and its costs are charged to expense.




In the
absence of a determination as to whether the reserves that have been found can
be classified as proved, the costs of drilling such an exploratory well is not
carried as an asset for more than one year following completion of drilling. If,
after that year has passed, a determination that proved reserves exist cannot be
made, the well is assumed to be impaired, and its costs are charged to expense.
Its costs can, however, continue to be capitalized if a sufficient quantity of
reserves is discovered in the well to justify its completion as a producing well
and sufficient progress is made in assessing the reserves and the well’s
economic and operating feasibility.




The
impairment of unamortized capital costs is measured at a lease level and is
reduced to fair value if it is determined that the sum of expected future net
cash flows is less than the net book value. The Company determines if impairment
has occurred through either adverse changes or as a result of the annual review
of all fields. During 2008 and 2007, the Company did not record any
impairment.


F-7




Development
costs of proved oil and gas properties, including estimated dismantlement,
restoration and abandonment costs and acquisition costs, are depreciated and
depleted on a field basis by the units-of-production method using proved
developed and proved reserves, respectively. The costs of unproved oil and gas
properties are generally combined and impaired over a period that is based on
the average holding period for such properties and the Company's experience of
successful drilling.




Costs of
retired, sold or abandoned properties that make up a part of an amortization
base (partial field) are charged to accumulated depreciation, depletion and
amortization if the units-of-production rate is not significantly affected.
Accordingly, a gain or loss, if any, is recognized only when a group of proved
properties (entire field) that make up the amortization base has been retired,
abandoned or sold.




Cash- For the purpose of
compiling the statement of changes in cash flows, cash includes all cash
balances and highly liquid short-term investments with original maturity dates
of three months or less.




Investment in Star Energy, fair
value- The Company accounts for its investments in Star Energy as per
SFAS 115,Accounting for
Certain Investments in Debt and Equity Securities . Management has
designated its investments in Star Energy as “available for sale”. Accordingly,
investment is recorded at market value and earnings and losses on investments
are recognized in the consolidated balance sheets as other comprehensive
income.





The
Company has also adopted Statement of Financial Accounting Standards (“SFAS”)
No. 157,Fair Value
Measurements (“SFAS No. 157”), to account for its investment, which among
other things, requires enhanced disclosures about financial instruments carried
at fair value.




After
adoption of SFAS No.157, investments measured and reported at fair value are
classified and disclosed in one of the following categories:





•
            Level
      I—Quoted prices are available in active markets for identical investments
      as of the reporting date. The type of investments in Level I include
      listed equities and listed
derivatives.


•
            Level
      II—Pricing inputs are other than quoted prices in active markets, which
      are either directly or indirectly observable as of the reporting date, and
      fair value is determined through the use of models or other valuation
      methodologies. Investments which are generally included in this category
      include corporate bonds and loans, less liquid and restricted equity
      securities and certain over-the-counter
  derivatives.


•
            Level
      III—Pricing inputs are unobservable for the investment and includes
      situations where there is little, if any, market activity for the
      investment. The inputs into the determination of fair value require
      significant management judgment or estimation. Investments that are
      included in this category generally include general and limited
      partnership interests in corporate private equity and real estate funds,
      funds of hedge funds, distressed debt and non-investment grade residual
      interests in securitizations and collateralized debt
      obligations.





The
investment in Star Energy is a Level I investment at December 31, 2007 and was
sold in December 2008,


Deferred costs- Deferred
costs are the costs of obtaining the equity line of credit discussed in Note 9
and are amortized over the life of the loan.




Fixed Assets- Fixed assets are stated at
cost. Depreciation expense is computed using the straight-line method over the
estimated useful life of the asset. The following is a summary of the estimated
useful lives used in computing depreciation expense:




Office
      equipment
                3
      yearsComputer
      hardware & software
                3
      yearsImprovements
      & furniture
                5
      yearsWell
      equipment
                7
      years




Expenditures
for major repairs and renewals that extend the useful life of the asset are
capitalized.  Minor repair expenditures are charged to expense as
incurred.




Long Lived Assets- The
Company reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and its eventual
disposition is less than its carrying amount.


F-8




The
Company applied SFAS No. 144,Accounting for the Impairment or Disposal of Long Lived Assets, to
account for the sale of the oil & gas properties in December 2008 as more
fully discussed in financial statement note 9.  Accordingly, the
results of operations and cash flows from these assets for both 2008 and 2007
are separately recorded in the consolidated statements of operations and cash
flows as a discontinued component.




Income taxes- The Company
accounts for income taxes in accordance with the Statement of Accounting
Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes
".  SFAS No. 109 requires an asset and liability approach to financial
accounting and reporting for income taxes.  Deferred income tax assets and
liabilities are computed annually for differences between financial statement
and income tax bases of assets and liabilities that will result in taxable
income or deductible expenses in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income.  Valuation allowances are established when necessary to
reduce deferred tax assets and liabilities to the amount expected to be
realized.  Income tax expense is the tax payable or refundable for the
period adjusted for the change during the period in deferred tax assets and
liabilities.




Recent
accounting pronouncements:




In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS 157”). SFAS 157 provides guidance for using fair value to
measure assets and liabilities. It also responds to investors’ requests for
expanded information about the extent to which companies measure assets and
liabilities at fair value, the information used to measure fair value and the
effect of fair value measurements on earnings. SFAS 157 applies whenever
other standards require (or permit) assets or liabilities to be measured at fair
value. The standard does not expand the use of fair value in any new
circumstances, but provides clarification on acceptable fair valuation methods
and applications. SFAS 157 was effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. The adoption of SFAS 157 will not have a material
affect on the Company’s consolidated financial statements.




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities ” (“SFAS 159”). SFAS 159
permits entities to choose to measure many financial assets and financial
liabilities at fair value. Unrealized gains and losses on items for which the
fair value option has been elected are reported in earnings. SFAS 159 is
effective for fiscal years beginning after November 15, 2007. The adoption
of SFAS 159 will not have a material affect on the Fund’s financial
statements.




In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”
(“SFAS 141(R)”). SFAS 141(R) establishes principles and requirements
for how the acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. The statement also provides guidance
for recognizing and measuring the goodwill acquired in the business combination
or a gain from a bargain purchase and determines what information to disclose to
enable users of financial statements to evaluate the nature and financial
effects of the business combination. SFAS 141(R) is effective for financial
statements issued for fiscal years beginning after December 15, 2008. The
adoption of SFAS 141(R) will not have a material affect on the Company’s
consolidated financial statements.




In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities-an amendment of FASB Statement
No. 133 ” (“SFAS 161”). SFAS 161 updates guidance
regarding disclosure requirements for derivative instruments and hedging
activities. It responds to constituents’ concerns that FASB Statement
No. 133 does not provide adequate information about how derivative and
hedging activities affect an entity’s financial position, financial performance,
and cash flows. SFAS 161 is effective for financial statements issued for
fiscal years and interim period beginning after November 15, 2008. The
adoption of SFAS 161 will not have a material affect on the Company’s
consolidated financial statements.




2.
Going Concern




The
accompanying consolidated financial statements have been presented in accordance
with generally accepted accounting principals, which assume the continuity of
the Company as a going concern.  However, in December 2008 all of the
producing assets of the Company were foreclosed on by Duchess to pay down loans
owed.  This situation raises the doubt of the Company’s ability to continue
as a going concern.




Management’s
plans with regard to this matter are as follows:




-Raise
interim and long term finance to assist new oil and gas acquisitions, with good
potential for rehabilitation to increase production, and upside potential
initially for principally targeted shallow drilling
development.


F-9




-Raise
6-12 months working capital for corporate operations.




-Pursue
to obtain asset based project finance or develop joint ventures to fund work
programs for oil and gas domestically.




-Pursue
formation of strategic alliances with more firmly established peer groups to
assist acquisition activities.




-Initiate
search for experienced oil and gas personnel to add to our staff.




3.
Fair Values of Financial Instruments




The
carrying amounts of the cash, accounts receivable, deferred charges, investment
in Star Energy, accounts payable and accrued expenses, note payable, equity line
notes payable, advances & notes payable to shareholders, convertible
debentures payable and derivative liability payable reported in the balance
sheets are estimated by management to approximate fair value at December 31,
2008 and December 31, 2007.




4.
Net Income (Loss) per Share




The
Company applies SFAS No. 128,Earnings per Share to compute net loss per share. In accordance with SFAS No.
128, basic net loss per share has been computed based on the weighted average of
common shares outstanding during the years.




Net
income (loss) per common share has been computed as follows:





Restated(Note
      18)31-Dec-08
                    
                    
                    31-Dec-07Net
      income (loss) from continuing operations
                    
                    $
                    (1,145,717
                    )
                    
                    $
                    (359,182
                    )Net
      income (loss) from discontinued operations
                    
                    
                    3,843,156
                    
                    
                    
                    (1,114,868
                    )Net
      income (loss)
                    
                    $
                    2,697,439
                    
                    
                    $
                    (1,474,050
                    )Total
      shares outstanding
                    
                    
                    6,922,206
                    
                    
                    
                    5,921,288Basic
      weighted average of shares outstanding
                    
                    
                    6,088,411
                    
                    
                    
                    2,158,841Add
      effects of options and debenture outstanding
                    
                    
                    0
                    
                    
                    
                    0Fully
      diluted weighted average of shares outstanding
                    
                    
                    6,088,411
                    
                    
                    
                    2,158,841Basic
      income (loss) per share- continuing operations
                    
                    $
                    (0.20
                    )
                    
                    $
                    (0.17
                    )Basic
      income (loss) per share- discontinued operations
                    
                    $
                    0.64
                    
                    
                    $
                    (0.51
                    )Basic
      income (loss) per share
                    
                    $
                    0.44
                    
                    
                    $
                    (0.68
                    )Fully
      diluted income (loss) per share- continuing operations
                    
                    $
                    (0.20
                    )
                    
                    $
                    (0.17
                    )Fully
      diluted income (loss) per share- discontinued operations
                    
                    $
                    0.64
                    
                    
                    $
                    (0.51
                    )Fully
      diluted income (loss) per share
                    
                    $
                    0.44
                    
                    
                    $
                    (0.68
                    )




All
amounts for fiscal year 2007 have been adjusted for the 1 for 200 reverse stock
split more fully discussed Note 5.




F-10




5.
Common and Preferred Stock Transactions and Reverse Stock Split




During
the year ended December 31, 2007, the Company issued 50,714 shares of common
stock to pay consulting fees.




During
the year ended December 31, 2007, the Company issued 393,737 shares of common
stock to pay down the equity line.




During
the year ended December 31, 2007, the Company issued 3,500,000 shares of common
stock and received proceeds of $700,000.




During
the year ended December 31, 2007, the Company issued 20,000,000 shares of
Preferred C stock to Duchess and received proceeds of $200,000.




In
October 2008 Duchess converted their shares into 1,000,000 shares of common
stock.




In
October 2008, the Company effected a 1 share for 200 shares reverse split of its
common stock.  As a result, the issued and outstanding shares at
December 31, 2007 were decreased from 1,184,257,619 shares to 5,921,288 shares
and basic and fully diluted loss per share for fiscal year 2007 was decreased
from $0.00 to $0.68.  In addition, the par value of the common stock
was increased from $0.001 to $0.20.




6.
Preferred Stock Series




Series A preferred stock:
Series A preferred stock has a par value of $0.001 per share and no stated
dividend preference.  The Series A is convertible into common stock at a
conversion ratio of one preferred share for one common share.   Preferred A
has liquidation preference over Preferred B stock and common stock.




Series B preferred stock:
Series B preferred stock has a par value of $0.001 per share and no stated
dividend preference.  The Series B is convertible into common stock at a
conversion ratio of one preferred share for one common share.  The Series B
has liquidation preference over Preferred C stock and common stock.




Series C preferred stock: The
Preferred C stock has a stated value of $.001 and no stated dividend rate and is
non-participatory.  One share of preferred is convertible into 10 shares of
common stock.  The Series C has liquidation preference over common
stock.





7.
Fixed Assets- Net




The
following is a detailed list of fixed assets:




31-Dec-08
                                          
                                          
                                          31-Dec-07Well
      leases
                                          
                                          $
                                          0
                                          
                                          
                                          $
                                          1,068,650Well
      equipment
                                          
                                          
                                          0
                                          
                                          
                                          
                                          1,316,710Accumulated
      depreciation & depletion
                                          
                                          
                                          0
                                          
                                          
                                          
                                          (150,430
                                          )Fixed
      assets- net
                                          
                                          $
                                          0
                                          
                                          
                                          $
                                          2,234,930




In fiscal
year 2007, the Company closed its former Firecreek offices in Fort Worth, Texas
as part of its restructuring efforts.  Management elected to impair
the value of the fixed assets associated with this office and recorded the
impairment expense in the statement of operations for 2007.


F-11




8.
 Options Outstanding




The
Company applies SFAS No. 123, “Accounting for Stock-Based Compensation” to
account for option issues.  Accordingly, all options granted are recorded
at fair value using a generally accepted option pricing model at the date of the
grant.   There is no formal stock option plan for employees.




A listing
of options outstanding at December 31, 2008 is as follows.  Options
outstanding and their attendant exercise prices have been adjusted for the 1 for
200 reverse split of the common stock discussed in Note 5.




Weighted Average
                                    
                                    
                                    Weighted AverageAmount
                                    
                                    
                                    Exercise Price
                                    
                                    
                                    Years to MaturityOutstanding
      at December 31, 2006
                                    
                                    
                                    207,810
                                    
                                    
                                    $
                                    80.00000
                                    
                                    
                                    
                                    2.72Issued
                                    
                                    
                                    0Exercised
                                    
                                    
                                    0Expired
                                    
                                    
                                    (29,000
                                    )Outstanding
      at December 31, 2007
                                    
                                    
                                    178,810
                                    
                                    
                                    $
                                    72.00000
                                    
                                    
                                    
                                    1.61Issued
                                    
                                    
                                    0Exercised
                                    
                                    
                                    0Expired
                                    
                                    
                                    0Outstanding
      at December 31, 2008
                                    
                                    
                                    178,810
                                    
                                    
                                    $
                                    71.77026
                                    
                                    
                                    
                                    0.61




9.
Disposal of Tubb, Ten-Mile Draw, and Fant Ranch Properties




In fiscal
year 2005, the Company entered into an equity line credit agreement with
Duchess, a financing company, and a shareholder. Under the terms of the equity
line agreement, the Company was obligated to pay the face value of the equity
line notes in cash or an equivalent amount in common stock. All of the assets of
the Company secured the equity line notes. The notes had an effective interest
rate of approximately 20%.  As an incentive to enter the equity line of
credit, the Company also issued convertible debentures, see reference footnote
10, the fair market value of which had been discounted against the face of the
equity line notes and was being amortized to interest expense over the life of
the equity line notes.




The
following is the schedule of the equity line notes payable at December 2, 2008
and December 31, 2007, and of which were extinguished as a result of foreclosure
by Dutchess on December 2, 2008 further listed in this note 9 information
following:




31-Dec-08
                  
                  
                  31-Dec-07Matured
      in September 2006, effective interest of 18.55%
                  
                  $
                  0
                  
                  
                  $
                  1,086,803Matured
      in November 2006, effective interest of 22.12%
                  
                  
                  0
                  
                  
                  
                  1,488,215Matured
      in December 2006, effective interest of 22.12%
                  
                  
                  0
                  
                  
                  
                  129,885Matured
      in April 2007, effective interest of 22.12%
                  
                  
                  0
                  
                  
                  
                  581,603Matured
      in December 2007, effective interest of 17.34%
                  
                  
                  0
                  
                  
                  
                  1,042,651Matured
      in March 2008, effective interest of 25.68%
                  
                  
                  0
                  
                  
                  
                  474,623Less
      discount
                  
                  
                  0
                  
                  
                  
                  (50,431
                  )Total
      equity line of credit
                  
                  $
                  0
                  
                  
                  $
                  4,753,349




F-12




At
December 2, 2008, the Dutchess foreclosed on all of the assets of the
Company.  As a result of the foreclosure by Duchess, the Company
transferred all of its assets in its Tubb and Fant Ranch oil & gas
properties and $50,000 to retire all the debt legally extinguishing $9,201,166
owed to Duchess by equity line notes payable or other instruments.  As
a result of the foreclosure the Company recognized a gain on the disposal of
these assets of $6,385,133 in its consolidated statement of operations at
December 31, 2008.  The Ten-Mile Draw property had been earlier sold
in October 2008 for $125,000.  The Company recognized a loss on this
asset disposal of $581,654 in the consolidated statement of
operations.




Gain of disposal of discontinued
      componentCash
      received
                    
                    $
                    75.000Debentures  retired
      –legally extinguished
                    
                    
                    9,201,166Assets
      transferred- net
                    
                    
                    (3,472,687
                    )Gain
      of disposal of discontinued component
                    
                    $
                    5,803,479




lossfromoperationsofdiscontinuedcomponent
                    
                    2008
                    
                    
                    2007Revenues
      from sales of oil & gas
                    
                    $
                    1,437,437
                    
                    
                    $
                    451,514Cost
      of revenues
                    
                    
                    (921,690
                    )
                    
                    
                    (447,264
                    )Net
      revenues
                    
                    $
                    515,747
                    
                    
                    $
                    4,250Operating
      costs
                    
                    
                    356,647
                    
                    
                    
                    241,476Income
      from operations
                    
                    $
                    159,100
                    
                    
                    $
                    (237,226
                    )Other
      income/(expense)interest
      costs
                    
                    
                    (2,548.005
                    )
                    
                    
                    (1,239,606
                    )Gain
      on derivative
                    
                    
                    428,582
                    
                    
                    
                    361,964Loss
      from Operations of discontinued component
                    
                    $
                    (1,960,323
                    )
                    
                    $
                    (1,114,868
                    )




10.
Issuance of Incentive Convertible Debentures




During
the fiscal year ended December 31, 2007, the Company issued a 12% incentive
debenture with a face value of $500,000 to pay an incentive fee to Duchess
issued on December 26, 2007 (reference footnote 11).  The incentive
debenture was recorded as a discount to convertible debenture at fair market
value at the date of issuance to debt discount and will be amortized over the
life of the equity credit line issuance.  The debenture is convertible
into common stock at 75% of the lowest bid price of the common stock for the
fifteen days preceding conversion.  The incentive debenture was to
mature in December 2014.  At issuance, the incentive debenture was
valued using a Black Scholes Option Pricing Model utilizing the following
assumptions:  volatility: 20%, straight bond yield: 5.0%, risk-free
rate: 4.0%, and dividend growth rate: 0%.  The fair market value will
be assessed each balance sheet date over the maturity of the debenture and will
be marked to market with the gain or loss recorded in the Company’s statement of
operations.




During
the fiscal year ended December 31, 2007, the Company issued a non-interest
bearing incentive debenture with a face value of $140,000 to pay an incentive
fee to Duchess.  The incentive debenture was recorded as a discount to
the equity credit line at fair market value at the date of issuance to debt
discount and will be amortized over the life of the equity credit line
issuance.  The debenture is convertible into common stock at 75% of
the lowest bid price of the common stock for the fifteen days preceding
conversion.  The incentive debenture was to mature in March
2012.  At issuance, the incentive debenture was valued using a Black
Scholes Option Pricing Model utilizing the following
assumptions:  volatility: 20%, straight bond yield: 5.0%, risk-free
rate: 4.0%, and dividend growth rate: 0.  The fair market value will
be assessed each balance sheet date over the maturity of the debenture and will
be marked to market with the gain or loss recorded in the Company’s statement of
operations.




11.  Issuance
of Convertible Debentures




On
December 26, 2007, the Company issued a convertible debenture in the face amount
of $2,100,000.  The debenture beared interest at 12% per annum and
originally matured on December 26, 2014.  The note holder had the
right to convert any and all amounts owed into shares of the Company’s common
stock at any time following the closing date.  The conversion price of
the debenture was equal to the lesser of 75% of the lowest closing bid price of
the common stock during the twenty trading days immediately prior to the notice
of conversion, or $0.005.  As an inducement to the holder, the Company
issued 3,500,000 shares of the Company’s common stock and 20,000,000 shares of
the Company’s Series C Preferred Stock.  In addition, the Company also
issued a $500,000 incentive debenture to Duchess (reference footnote
10).  Both the shares of the Company’s securities and the incentive
debenture were recorded as a discount to the debt issuance and are amortized
over the life of the convertible note.  At issuance, the conversion
feature was accounted for under EITF 00-27, “Application of Issue No. 98-5 to
Certain Convertible Instruments”. Although the conversion feature is convertible
into an indeterminate number of shares, the noteholder holds a controlling
interest in the Company.  Net share settlement can
occur.  The conversion feature was calculated using the intrinsic
value method and recorded as a debt discount.




On June
11, 2007, the Company issued a convertible debenture in the face amount of
$2,000,000.  The debenture beared interest at 12% per annum and was to
mature on June 11, 2014.  The note-holder had the right to convert any
and all amounts owed into share of the Company’s common stock at any time
following the closing date.  The conversion price of the debenture was
equal to the lesser of 75% of the lowest closing bid price of the common stock
during the twenty trading days immediately prior to the notice of conversion, or
$0.015.  At issuance, the conversion feature was accounted for as a
derivative liability in accordance with EITF 00-19 “Accounting For Derivative
Instruments Indexed To, and Potentially Settled, In the Company’s Own Stock,”
due to the conversion feature permitting conversion into an indeterminate number
of shares.  At issuance, the conversion feature was valued using a
Black Scholes Option Pricing Model utilizing the following assumptions:
 volatility: 20%, straight bond yield: 5.0%, risk-free rate: 2.0%, and
dividend growth rate: 0%.  The conversion option will be assessed each
balance sheet date over the maturity of the debentures and will be marked to
market with the gain or loss recorded in the Company’s statement of
operations.




As of
December 26, 2007, the conversion feature was no longer accounted for as a
derivative liability.  The noteholder owns a controlling interest in
the Company, and has control to authorize additional shares as
warranted.  The conversion liability was reclassified to additional
paid in capital.


F-13




12.
Income Tax Provision





Restated(Note 18)Provision for income taxes is comprised of the following:
                                
                                31-Dec-08
                                
                                
                                31-Dec-07Net
      loss before provision for income taxes
                                
                                $
                                (1,145,717
                                )
                                
                                $
                                (359,182
                                )Current
      tax expense:Federal
                                
                                
                                0
                                
                                
                                
                                0State
                                
                                
                                0
                                
                                
                                
                                0Total
                                
                                $
                                0
                                
                                
                                $
                                0Less
      deferred tax benefit:Tax
      loss carryforward
                                
                                
                                (1,203,124
                                )
                                
                                
                                (2,750,468
                                )Allowance
      for recoverability
                                
                                
                                1,203,124
                                
                                
                                
                                2,750,468Provision
      for income taxes
                                
                                $
                                0
                                
                                
                                $
                                0A
      reconciliation of provision for income taxes at the statutory rate to
      provision for income taxes at the Company’s effective tax rate is as
      follows:Statutory
      U.S. federal rate
                                
                                
                                34
                                %
                                
                                
                                34
                                %Statutory
      state and local income tax
                                
                                
                                10
                                %
                                
                                
                                10
                                %Less
      allowance for tax recoverability
                                
                                
                                -44
                                %
                                
                                
                                -44
                                %Effective
      rate
                                
                                
                                0
                                %
                                
                                
                                0
                                %Deferred income taxes are comprised of the following:Tax loss carryforward
                                
                                $
                                1,203,124
                                
                                
                                $
                                2,750,468Allowance
      for recoverability
                                
                                
                                (1,203,124
                                )
                                
                                
                                (2,750,468
                                )Deferred
      tax benefit
                                
                                $
                                0
                                
                                
                                $
                                0





Note:  The
deferred tax benefits arising from the timing differences begin to expire in
fiscal years 2027 and 2028 and may not be recoverable upon the purchase of the
Company under current IRS statutes. The tax provision associated with the
discontinued component is $490,657




13.  Gain
on Sale of Asset




In August
2007, the Company sold all of its rights to certain projects in the Ukraine that
had been developed through its subsidiary, Firecreek Petroleum Inc., to Star
Energy Corp. for $100,000 cash and 2.1 million shares of Star’s
stock.  The rights to these projects had previously been 100% impaired
by the Company in 2005 and therefore all the proceeds received from the
transaction have been recorded as a “gain on asset sale” in the consolidated
statement of operations in 2007.  Management has classified the Star
stock as “available for sale” as per SFAS 115, “Accounting for Certain Investments
in Debt and Equity Securities ” and, accordingly, has recorded the loss
in the market value of the stock in other comprehensive income at December 31,
2007. The stock was sold in December 2008.





14.
Non Cash Transactions




Certain
transactions during the years ended December 31, 2007 did not involve the use of
cash and therefore have been excluded from the consolidated statements of cash
flows.




During
the year ended December 31, 2007, the Company issued 393,737 shares of common
stock to pay $280,378 of the equity credit line discussed in Note
9.




F-14




15.
Supplemental Information on Oil & Gas Operations and Property Acquisitions
and Sales




In
November 2005, the Company purchased a 50% working interest in The Ten Mile Draw
Field (TMD), a natural gas field located in Sweetwater County, Wyoming for
$1,089,130.  Of the total acquisition costs $475,000 was used to acquire
the lease, $126,000 was used for well equipment costs, and $488,130 for
development costs. In October 2008, the TMD property was sold f0r
$125,000.  The Company recognized a loss on the disposal of the
asset in its consolidated statement of operations of $581,654.





On July
9, 2007, the Company acquired certain tracts of land and leases located in Knox
County, Texas, known as the Fant Ranch Unit for $1,538,705 which included wells,
leases and equipment and the oil in the tanks owned by the seller at that
time.




In
January 2008, the Company, through it’s wholly owned subsidiary, Firecreek
Petroleum, Inc, purchased a certain 40 acre tract of land and
leases  with first right for an additional 40 acre lease located in
Ward County, Texas, more commonly known as the J.B. Tubb Leasehold
Estate.  The Company paid $1,400,000 for the lease, equipment and a
Participation Agreement which provides for turnkey drilling, re-entry and
includes multiple wells. At December 2, 2008, the Company was in default of the
equity line notes and Duchess foreclosed on all of the assets of the
Company.  As a result of the foreclosure by Duchess, the Company
transferred all of its assets in its Tubb and Fant Ranch oil & gas
properties and $50,000 to retire all the debt to Duchess that was outstanding at
December 2, 2008.  As a result of the foreclosure the Company
recognized a gain on the disposal of these assets of $6,385,123 in its
consolidated statement of operations at December 31, 2008.




The
following is a summary of the Company’s oil & gas production activities for
the years ending December 31, 2008 and December 31, 2007 representing the
Company’s net revenue interests.




Reserve
Quantity Information


Proved
Developed and Undeveloped Reserves:


(All
United States Based)




2008
                
                
                2007Oil
                
                
                Gas
                
                
                Oil
                
                
                Gas(Barrels)
                
                
                (Mcf)
                
                
                (Barrels)
                
                
                (Mcf)Beginning
      of Year
                
                
                64,709
                
                
                
                1,029,200
                
                
                
                0
                
                
                
                1,050,022Revisions
                
                
                0
                
                
                
                0
                
                
                
                -3,004
                
                
                
                14,216Improvements
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0Purchases
                
                
                785,220
                
                
                
                0
                
                
                
                71,774
                
                
                
                0Disposal
                
                
                (840,708
                )
                
                
                (1,012,732
                )
                
                
                0
                
                
                
                0Production
                
                
                (9,221
                )
                
                
                (16,468
                )
                
                
                -4,061
                
                
                
                -25,238End
      of Year
                
                
                0
                
                
                
                0
                
                
                
                64,709
                
                
                
                1,029,200




Proved
Developed Reserves:




2008
                
                2007Oil
                
                
                Gas
                
                Oil
                
                
                Gas(Barrels)
                
                
                (Mcf)
                
                (Barrels)
                
                
                (Mcf)Beginning
      of Year
                
                
                64,709
                
                
                
                312,189
                
                
                
                0
                
                
                
                344,739End
      of Year
                
                
                0
                
                
                
                0
                
                
                
                64,709
                
                
                
                312,189





Results
of operations (All United States Based):





2008
                  
                  
                  2007Revenues
                  
                  $
                  1,437,437
                  
                  
                  $
                  451,514Production
      costs
                  
                  
                  -771,193
                  
                  
                  
                  -317,343Exploration
      costs
                  
                  
                  0
                  
                  
                  
                  0Development
      costs
                  
                  
                  -325,000
                  
                  
                  
                  -130,551Depreciation
      & amortization
                  
                  
                  -150,498
                  
                  
                  
                  -129,921Provision
      for income tax
                  
                  
                  0
                  
                  
                  
                  0Net
      profit (loss) from oil and gas producing activities:
                  
                  $
                  190,746
                  
                  
                  $
                  (126,301
                  )




F-15




Capitalized
cost of oil and gas producing activities:




2008
                  
                  
                  2007Proved
      oil and gas lease properties
                  
                  $
                  1,928,960
                  
                  
                  $
                  1,068,650Well
      Equipment
                  
                  
                  977,668
                  
                  
                  
                  1,316,710Accumulated
      depreciation
                  
                  
                  300,928
                  
                  
                  
                  -150,430Net
      capitalized costs of natural gas producing activities
                  
                  $
                  2,605,700
                  
                  
                  $
                  2,234,930Transfer
      to Duchess
                  
                  
                  (2,605,700
                  )
                  
                  
                  0Balance
      of capitalized costs
                  
                  
                  0
                  
                  
                  
                  2,234,930





Costs
incurred for property acquisitions, exploration, and development:




2008
                  
                  
                  2007Property
      acquisition
                  
                  $
                  1,400,000
                  
                  
                  $
                  1,506,628Proved
                  
                  
                  0
                  
                  
                  
                  0Unproved
                  
                  
                  0
                  
                  
                  
                  0Exploration
                  
                  
                  0
                  
                  
                  
                  0Development
                  
                  
                  328,746
                  
                  
                  
                  120,736Total
                  
                  $
                  1,728,746
                  
                  
                  $
                  1,627,364




Changes
in discounted future cash flows of proved reserves:




2008
                  
                  
                  2007Future
      cash flows
                  
                  $
                  0
                  
                  
                  $
                  13,978,098Future
      production costs
                  
                  
                  0
                  
                  
                  
                  -8,716,030Future
      income tax expense
                  
                  
                  0
                  
                  
                  
                  -1,15,034Future
      net cash flows
                  
                  
                  0
                  
                  
                  
                  4,157,03410%
      annual discount
                  
                  
                  0
                  
                  
                  
                  -1,323,971Standardized
      measure of discounted future net cash flows
                  
                  $
                  0
                  
                  
                  $
                  2,833,063




16.  Related
Party Transactions




During
fiscal years 2008 and 2007, the chief executive officer and shareholder provided
office space to the Company at no charge.




During
fiscal years 2008 and 2007, three shareholders had unsecured non-interest
bearing advances receivable from the Company. The Company has imputed an
interest rate of 20% on these advances.




The
Company was indebted to Duchess Private Equities Ltd., a stockholder at December
2, 2008, the date of the Duchess foreclosure.  As a result of the
foreclosure by Duchess, the Company transferred all of its assets in its Tubb
and Fant Ranch oil & gas properties and $50,000 to retire all the debt owed
to Duchess.  As a result of the foreclosure the Company recognized a
gain on the disposal of these assets of $5,028,954 in its consolidated statement
of operations at December 31, 2008. See financial statement note 9 for a further
discussion.




17.
Note Payable




In
December 2008, the Company issued a note payable to Duchess for $47,565 in
return for the right to participate with Duchess in any future drilling in a
portion of the Tubb property.  The note is unsecured and carries an
interest rate of 12% and matures in June 2009.  Management considered
the asset received in this purchase to be impaired because future cash flows
from this asset could not be assured and accordingly recognized an impairment
expense in the consolidated statements of operations. The note is convertible
into common stock at an exercise price of 75% of the lowest bid price of the
fifteen days preceding exercise.




F-16




18.  Restatement
of Previously Issued Financial Statements




The
statement of operations for the year ended December 31, 2008, has been
corrected to show the loss on asset disposal of $567,000 and to increase the Net
Loss from Continuing Operations by the same amount. As a result of the change in
the profit and loss for the year it was necessary to recalculate earnings by
share. The new earnings per share amount is $.44 cents per share basic and fully
diluted for the year ended December 31, 2008.




The
balance sheet and statement of stockholders’ equity for the year ended
December 31, 2008 have been corrected to eliminate the Other Comprehensive
Loss of $567,000 and to increase the accumulated deficit by the same
amount.




The
statements of cash flows for the year ended December 31, 2008 has been
corrected to include a decrease in the net income by $567,000 and recording the
loss on asset disposal by the same amount.





19.
Subsequent Events




In
February 2009 and March 2009, 92,500 of the options outstanding discussed in
Note 8 expired.





In
February 2009, the Company issued 2,065,000 shares of common stock to various
consultants for services.





In
February 2009, the Company issued 60,000 shares of common stock to a consultant
to pay an outstanding invoice owed to this consultant.





In
February 2009, the Company issued 340,000 shares of common stock to a debt
holder to pay 50% of the outstanding balance owed on the debt.





In
February 2009, the Company entered into a service agreement with a consultant
for services to be provided.  Upon execution of the agreement, the
Company issued 340,000 shares of common stock to the consultant and a three year
option to purchase 500,000 shares of common stock at an exercise price of $1 per
share. Under the terms of the agreement, the Company is obligated to pay the
consultant $7,500 up front and $5,000 per month for the following eleven
months.




F-17




ITEM 9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE




None




ITEM
9A(T). CONTROLS AND PROCEDURES





Evaluation
of disclosure and controls and procedures:





Our Chief
Executive Officer and Chief Financial Officer have evaluated the effectiveness
of the design and operation of our disclosure controls and procedures as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,as of December 31, 2008.
This evaluation was carried out under the supervision and with the participation
of our management, including our principal executive officer and principal
financial officer. Based on this evaluation, these officers have concluded that
there are material weaknesses in our disclosure controls and procedures andthey
werenot effective for the following reasons:




•
            In
      connection with the preparation of the Original Report, we identified a
      deficiency in our disclosure controls and procedures related to the
      communications the appropriate personnel involved with our 2008
      audit.  We are utilizing additional accounting consultants to
      assist us in improving our controls and procedures. We believe these
      measures will benefit us by reducing the likelihood of a similar event
      occurring in the future.




•
            Subsequent
      to the filing of the Original report, we determined that we needed to
      restate the financial statements contained in the Original Report and
      Quarterly Report on Form 10-QSB that we filed for the quarterly period
      ended September 30, 2009.





•
            Due
      to our relatively small size and not having present operations, we do not
      have segregation of duties which is a deficiency in our disclosure
      controls. We do not presently have the resources to cure this
      deficiency.




28


Management's
Report on Internal Control Over Financial Reporting





Disclosure
controls and procedures are our controls and other procedures that are designed
to ensure that information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported, within the time periods specified
in the SEC’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file under the Securities
Exchange Act of 1934, as amended, is accumulated and communicated to our
management, including principal executive officer and principal financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.





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





* pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
Company;





* provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorization of management and directors of
the Company; and





* 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.





Management
assessed the effectiveness of the Company's internal control over financial
reporting as of December 31, 2008. In making this assessment, management used
the criteria established in "Internal Control-Integrated Framework," issued by
the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).





Based on
this assessment, management believes that, as of December 31, 2008, the
Company's internal control over financial reporting are in agreement with the
above specified officers assessment.





Management
has not identified any change in our internal control over financial reporting
that occurred during the fourth quarter ended December 31, 2008 (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





ITEM 9B.
            OTHER
      INFORMATION




On
February 1, 2009, the Company entered into an Advisory Service Agreement with
Joseph M. Vazquez pertaining to advising corporate management, strategic
planning, corporate development and forecasting, marketing, structuring investor
relations programs, contract negotiations and performing general administrative
duties. The term of the Agreement is for twelve (12) months ("Initial Term")
which shall automatically be renewed for an additional twelve (12) month period,
unless terminated upon prior notice within thirty (30) days before the end of
initial term. Pursuant to the Agreement, the Company shall pay $7,500 to Mr.
Vazquez for initial set up and travel costs and first months retainer rendered
in connection with engagement, and 340,000 restricted shares of common stock.
Thereafter, the Company shall pay $5,000 per month during the remaining months
of the Initial Term of the Agreement. Further, the Company shall also issue to
Mr. Vasquez three year warrants to purchase 500,000 shares at $1.00 per share.
Per the terms of the Agreement, Beneficial ownership is not to exceed
4.99%.





A copy of
the Advisory Services Agreement is attached hereto as Exhibit
10.33.





Please
also see information in the Section of this Report titled “RECENT SALES OF
UNREGISTERED SECURITIES”.




29




Effective
April 12, 2009 by majority consent of the EGPI Firecreek, Inc. (“EGPI” or the
“Company”) shareholders of record at March 31, 2009 three (3) members were
elected to the Company’s Board of Directors, consisting of three members that
have previously served. The Directors shall hold their respective office until
the Company’s Annual Meeting of Shareholders in 2010 or until their successors
are duly elected and qualified. The members of the Company’s Board of Directors
are as follows:





NAME
                
                AGE
                
                POSITION WITH COMPANYDennis R. Alexander
                
                55
                
                ChairmanLarry W. Trapp
                
                67
                
                DirectorMike Trapp
                
                42
                
                Director




On April
12, 2009 by majority consent of the Board of Directors of EGPI Firecreek, Inc.
(“EGPI” or the “Company”) the following officers were elected as officers of the
Company, consisting of three officers that have previously served. The officers
of the Company are as follows:




NAME
              
              AGE
              
              POSITION WITH COMPANYDennis R. Alexander
              
              55
              
              CEO,
      President and C.F.O.Larry W. Trapp
              
              67
              
              Executive
      Vice President and Co-TreasurerMelvena Alexander
              
              75
              
              Secretary
      and Comptroller and
Co-Treasurer





Board
Meeting





While the
Board of Directors had no regularly scheduled physical or special meetings held
during fiscal 2008, the Board of Directors business was conducted via Consent(s)
to Action in Lieu of Meeting, held Electronically, Telephonically, or In Person,
(the “Consent(s)”)). There were a total of five (5) consents obtained
during fiscal 2008 and all members of the then Board of Directors attended at
least 75% of all meetings held by the above listed Consent(s).





COMMITTEES
OF THE BOARD OF DIRECTORS




The Board
of Directors has decided reconfirming at this time (April 12, 2009) to maintain
its Audit Committee and disbanding all other committees of the Board of
Directors; specifically, its Nominating Committee, Executive Committee, Projects
Committee, Compensation and Stock Option Committee, Administration and Legal
Committee, Finance Committee, and Shareholder and Investor Relations
Committee.





With the
exception of Dennis Alexander, none of the elected members of the Board of
Directors has previously served as a member of the Company’s Compensation
Committee, or any other committee serving similar functions, during the last
completed fiscal year.





Compensation
Committee





The
Company dissolved the Compensation Committee due the Company’s size, financial
restrictions, time constraints, and limitations which together prohibits hiring
of employees. Various compensatory arrangements during Fiscal 2008, including
sub contractors, service providers, advisory and consultation arrangements, will
be contracted for by the general Board of Directors. Compensation will be
determined by type of service, time required, and prevailing rate for service
provider or sub contractor.





Nomination
Committee





The
Company abolished the Nomination Committee due the Company’s size, financial
restrictions, time constraints, and limitations which together prohibits hiring
of employees. The process by which Directors are presently appointed to the
Company consists of obtaining the majority consent of the major shareholders,
and is based on their selection processes.





Audit
Committee





That the
Audit Committee does not have a charter that governs its activities and is
composed of three members: Ms. Joanne Sylvanus, its Chairman, Mr. Dennis
Alexander, member, and Ms. Melvena Alexander, member.


30





The
responsibilities of the Audit Committee include: (1) the recommendation of the
selection and retention of the Company’s independent public accountants; (2) the
review of the independence of such accountants; (3) to review and approve any
material accounting policy changes affecting the Company’s operating results;
(4) the review of the Company’s internal control system; (5) the review of the
Company’s annual financial report to stockholders; and (6) the review of
applicable interested party transactions.




RATIFICATION
OF APPOINTMENT OF AUDITORS





The Board
of Directors has appointed Donahue Associates, L.L.C., as the Company's
independent certified public accountants for the fiscal year ending December 31,
2009. Donahue Associates, L.L.C., was the independent public auditor of the
Company for the fiscal year ended 2008.





There
have been no disagreements between the Company and the Auditors during the term
of its relationship.





PART
III





ITEM 10.
            DIRECTORS,
      EXECUTIVE OFFICERS, CORPORATE
GOVERNANCE




The
directors, executive officers and significant employees of the Company as of
March 31, 2009 are as follows:





NAME
            
            AGE
            
            POSITIONWITHCOMPANYDennis R. Alexander
            
            55
            
            Chairman,
      President, and CFO of the Company, Firecreek Petroleum, Inc., and Director
      of IYSG ltd.Larry W. Trapp
            
            67
            
            Director,
      Executive Vice President, and Co-Treasurer of the Company, and Firecreek
      Petroleum, Inc.Mike Trapp
            
            42
            
            Director
      of the Company and Firecreek Petroleum, Inc.Melvena Alexander
            
            75
            
            Co-Treasurer,
      Secretary and Comptroller of the Company and Firecreek Petroleum,
      Inc.





Term for
Directors: In accordance with Article 9.2 of the Company’s Bylaws: The members
of the Board of Directors shall hold office until the first annual meeting of
Stockholders and until their successors shall have been elected and qualified.
At the first annual meeting of Stockholders and at each annual meeting
thereafter the Stockholders shall elect Directors to hold office until the next
succeeding annual meeting, except in the case of classification of the
Directors. Each Director shall hold office for the term for which he is elected
until his successor shall have been elected and qualified.




Dennis R. Alexander has
served as Chairman, President and CFO of the Company and Firecreek Petroleum,
Inc. since February 10, 2007. He served as Chairman and CFO of the Company and
Firecreek Petroleum, Inc. since July 1, 2004 through February 9, 2007 having
served as the President and Director of the Company from May 18, 1999 to June
30, 2004. In September 1998 he was a founder, and from January 19, 1999 through
its acquisition with the Company served as President and Director of Energy
Producers Group, Inc. From April 1997 through March 1998, served as CEO,
Director, Consultant of Miner Communications, Inc., a media communications
company. From April 26, 1997 through March, 1998 he was a director of Rockline,
Inc., a private mining, resource company, and a founder of World Wide Bio Med,
Inc., a private health-bio care, start up company. Since March 1996 to the
present he has owned Global Media Network USA, Inc., which has included
management consulting, advisory services. Mr. Alexander devotes approximately 60
to 80 hours per week minimum, and more as required, to the business of the
Company.




Larry W. Trapp was appointed
as a Director, Executive Vice President, and Treasurer of the Company on
December 3, 2008. Previously he has served in various capacities as CFO, Vice
President, and Director through January 26, 2004 and is one of the original
founders in 1998 through the acquisition processes with the Company, serving as
Director of Energy Producers Group, Inc. Mr. Trapp earned a BS in Business
Administration with emphasis in Finance from Arizona State University. Prior
business experience includes Vice President of Escrow Administration for a major
Title Insurance Company where he was directly responsible for the Management and
performance of 22 branches and supervised an administration staff of 125
Employees.





Mike Trapp was appointed as a
Director of the Company on December 3, 2008. A graduate of Rice Aviation he
earned honors and honed his skills as a Airframe and Power Plant licensee
working in the airline industry for many years. He recently owned his own
mortgage company and is now a Senior Loan Officer for a multi-state lender in
Mesa, Arizona. His strong technical and analytical skills will be a bonus in
analyzing prospective projects which will enhance the Company’s growth and asset
base.


31




Melvena Alexander has served
as Co-Treasurer, Secretary and Comptroller of the Company and Firecreek
Petroleum, Inc. since February 10, 2007 having served as Secretary and
Comptroller of the Company and Firecreek Petroleum, Inc. since July 1, 2004
through February 9, 2007. She served as Secretary since March 15, 2003 to June
30, 2004 having been Secretary and Comptroller of the Company since May 18,
1999. In September 1998 she was a founder, and from January 19, 1999 through the
acquisition processes with the Company served as Secretary of Energy Producers
Group, Inc. She is founder and President of Melvena Alexander CPA since 1982,
which prepares financial statements and tax reports. From October 1998 through
April 16, 2004 she worked in the Department of Patient Finance at Arizona State
Hospital as an Accounting Technician 11. Mrs. Alexander graduated Arizona State
University with a B.S. in Accounting, received CPA Certificate, State of
Arizona. She is a member of AICPA and the American Society of Women Accountants.
Mrs. Alexander devotes a minimum of 40-60 hours per week, and more as required,
to the business of the Company.




Family
Relationships




Dennis R.
Alexander, Chairman, President, and CFO is the son of Melvena Alexander,
Co-Treasurer, Secretary and Comptroller.





Mike
Trapp, Director, is the son of Larry W. Trapp, Director, Executive Vice
President, and Co-Treasurer.





Committees
Of The Board Of Directors





On April
12, 2009 the directors ratified, approved and re-confirmed in their entirety
certain actions taken on June 16th, 2008, by greater than a
majority of the Board of Directors of the Company for the disbanding of the
following committees of the Company: Nominating Committee, Executive Projects
Committee, Compensation and Stock Option Committee, Administration and Legal
Committee, Finance Committee and Shareholder and Investor Relations Committee
(for additional information please see Item 9B. –Other Information above listed
in this report). As a result, the only committee of the Board of Directors is
the Audit Committee. The Audit Committee shall consist of the
following:





(1) That
the Audit Committee is composed initially of three members:  Ms.
Joanne Sylvanus, its Chairman, Dennis Alexander and Melvena Alexander,
members.




The
responsibilities of the Audit Committee include: (1) the recommendation of the
selection and retention of the Company’s independent public accountants; (2) the
review of the independence of such accountants; (3) to review and approve any
material accounting policy changes affecting the Company’s operating results;
(4) the review of the Company’s internal control system; (5) the review of the
Company’s annual financial report to stockholders; and (6) the review of
applicable interested party transactions.





In 2009
we are again in process of evaluating various committee structures, and persons
capable of becoming independent seat(s), and to provide for more independent
committee function ability and standards.




COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934




Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and
directors, and persons who own more than ten percent of the Company’s Common
Stock, to file reports of ownership and changes in ownership with the Securities
and Exchange Commission (“SEC”). Officers, directors and greater than ten
percent stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.




Based
solely on current management’s review of the copies of such forms received by it
from former management, the Company believes that, during the year ended
December 31, 2008, its officers, directors, and greater than ten-percent
beneficial owners complied with all applicable filing requirements.




Code
of Ethics




On
December 31, 2003, the Company adopted its Code of Ethics and Business Conduct
that applies to all of the officers, directors and/or employees of the Company.
The Code of Ethics is included and filed as Exhibit 14 to our Form-10KSB filed
on April 27, 2004 incorporated herein for reference. The Code is posted on our
website (www.egpifirecreek.com) currently in continuous stages of upgrade
development/construction. We will disclose on our completed website any waivers
of, or amendments to, our Code.




32




ITEM
      11.
            EXECUTIVE
      COMPENSATION




The
following tables summarize annual and long-term compensation paid to the
Company’s Chief Executive Officer and the Company’s four other most highly
compensated executive officers whose total annual salary and bonus compensation
exceeded $100,000 who were serving as of December 31, 2008 for all services
rendered to the Company and its subsidiaries during each of the last three
fiscal years. The Company did not retain any employees and payments are made for
services as available. The Company through Firecreek Petroleum, Inc. retained
approximately eight employees during the first quarter of Fiscal Year 2006. All
other tables required to be reported have been omitted, as there has been no
compensation awarded to, earned by or paid to any of the executives of the
Company that is required to be reported other than what is stated
below.




All
shares beneficially owned by the named executives below listed are bound by
terms of a Voting Agreement (please see “Exhibit 99.3” to a Report on Form 8-K
filed April 7, 2005 incorporated herein by reference).




Summary
Compensation Table





Name and
                              Principal Position
                            
                            Year
                            
                            Salary
                              ($)
                            
                            Stock
                              Awards
                              ($)
                            
                            Option
                              Awards
                              ($)
                            
                            All Other
                              Compensation
                              ($)Dennis
      R. Alexander9/
      (*)(**)
                            
                            
                            2008
                            
                            n/a
                            
                            
                            n/a
                            
                            -0-
                            
                            
                            -0-Chairman, CEO, President,
      CFO1/4//7
                            
                            
                            2007
                            
                            n/a
                            
                            
                            n/a
                            
                            -0-
                            
                            
                            -0-2006
                            
                            n/a
                            
                            
                            n/a
                            
                            -0-
                            
                            
                            148,750
                            2/5/Melvena
      Alexander9/
      (*)(**)
                            
                            
                            2008
                            
                            n/a
                            
                            
                            n/a
                            
                            -0-
                            
                            
                            -0-Co Treasurer, Sect. and
      Cmpt.1/6/8
                            
                            
                            2007
                            
                            n/a
                            
                            
                            n/a
                            
                            -0-
                            
                            
                            -0-2006
                            
                            n/a
                            
                            
                            n/a
                            
                            -0-
                            
                            
                            21,250
                            3/6/





1/
            As
      part of an agreement with Firecreek Petroleum, Inc. for the Exchange of
      Common Stock Dated July 29, 2004, all named executives listed in the table
      received provisions and rights for facilitation fees, on completion of
      certain events, and terms to be established, as listed therein Section 9.
      d. of the agreement filed July 16, 2004 on Form 8-K as exhibit 21.1
      thereto and incorporated for reference. Please also see “Certain
      Relationships and Related
Transactions”.





2/
            The
      amounts in this column for 2006 represents the aggregate value of common
      restricted stock issued on December 8, 2006 to the named executive.
      $148,750 of the amount listed in this row for 2006 represents the value of
      the shares issued to D.R. Alexander for services rendered, based on the
      closing market prices on or near such dates of $0.0085 per share (pre
      reverse split).





3/
            The
      amounts in this column for 2006 represents the aggregate value of common
      restricted stock issued on December 8, 2006 to the named executive.
      $21,250 of the amount listed in this row for 2006 represents the value of
      the shares issued to Melvena Alexander for services rendered, based on the
      closing market prices on or near such dates of $0.0085 per share (pre
      reverse split).





4/
            D.R.
      Alexander and Melvena Alexander received (**)87,500 and (**)12,500 shares
      (calculated on the current post reverse split basis) of restricted stock
      on December 8, 2006, respectively.





5/
            Mr.
      Alexander holds a total of (**)87,500 shares of common restricted stock as
      of (**)December 31, 2006 (calculated on the current post reverse split
      basis). The market value of the (**) 87,500 shares on December 31, 2008
      and December 31, 2007 was $5,250 and $35,000, respectively. No dividends
      are paid on the restricted common stock
held.





6/
            Melvena
      Alexander holds a total of (**)12,500 shares of common restricted stock as
      of December 31, 2006 (calculated on the current post reverse split basis).
      The market value of the (**)12,500 shares on December 31, 2008 and
      December 31, 2007 was $750 and $5,000, respectively. No dividends are paid
      on the restricted common stock
held.


33





7/
            Mr.
      Alexander holds a total of (**)15,000 shares of common restricted stock as
      a result of the conversion in the aggregate of C-1, and C-2 of series C
      preferred to common, as of (**)December 31, 2006 (calculated on the
      current post reverse split basis). The market value of these shares on
      December 31, 2008 and December 31, 2007 was $600 and $6,000, respectively.
      No dividends are paid on the restricted common stock
  held.





8/
            Melvena
      Alexander holds a total of (**)5,500 shares of common restricted stock as
      a result of the conversion in the C-2 of series C preferred to common, as
      of December 31, 2006. The market value of these shares on December 31,
      2008 and December 31, 2007 was $330 and $2,200, respectively. No dividends
      are paid on the restricted common stock
held.





9/
            D.R.
      Alexander and Melvena Alexander have been with the Company since
      1999.





(*)
            Please
      see “Certain Relationships and Related Transactions” for additional
      discussion on agreements with individual consulting
  firms.


(**)
            All
      shares are calculated on a post effective one share for two hundred share
      (1:200) reverse split effective on October 8,
  2008.




Options




The
following table provides information related to remaining options held by our
below named executive officer during the fiscal year ended December 31, 2008,
and are calculated on the recent one share for two hundred share (1:200) reverse
stock split effective October 8, 2008. These options however have expired as of
February 9, 2009.




Option
Awards




Name
                  
                  Number of
                    Securities
                    Underlying Unexercised
                    Options (#)
                    Exercisable
                  
                  Number of
                    Securities Underlying
                    Unexercised
                    Options (#)
                    Unexercisable
                  
                  Option
                    Exercise
                    Price ($)
                  
                  Option
                    Expiration
                    DateDennis R. Alexander (1)
      (2)Chairman,
      President, CFO
                  
                  
                  10,000
                  
                  N/A
                  
                  
                  140.00
                  
                  2/9/2009




(1)
The date of the option agreement with the named executive listed above in the
table for 10,000 shares underlying unexercised options is August 9, 2004; i) The
option exercise price is (3) $140.00 per share; ii) The expiration date of the
option agreement is four years from the date of Vesting; iii) The Vesting Date
is: For and after the expiration of on hundred eighty (180) days following the
date of the agreement or February 9, 2005; iv) the Expiration Date for the
option agreement 2/9/2009; v) The market price for the underlying restricted
common stock on August 9, 2004, the date of grant, December 31, 2005, December
31, 2006, December 31, 2007 and December 31, 2008 for all grants listed in the
table was $20.00, $6.00, $1.70, and $12.00 (calculated on post reverse split
price) respectively, and vi) The exercise price of the options is equal to or in
excess of the fair market value of the stock on the date of grant.




(2) For
all option grants listed in the table above the following provision applies: If
at any time after the date of this Agreement and prior to the expiration of all
Exercise Period(s), the Company proposes to file a registration statement to
register any Common Stock (other than Common Stock issued with respect to any
acquisition or any employee stock option, stock purchase or similar plan) under
the Securities Act of 1933, as amended (the “Securities Act”) for sale to the
public in an underwritten offering, it will at each such time give prior written
notice to the Optionee of its intention to do so (“Notice of Intent”) and, upon
the written request of the Optionee made within 30 calendar days after the
receipt of any such notice (which request must specify the number of Option
Shares Optionee requests) to be included in the registration, the Company will
use its best efforts to effect the registration under the Securities Act of the
Option Shares which the Company has been so requested to register, provided,
however, that if the managing underwriter shall certify in writing that
inclusion of all or any of the Option Shares would, in such managing
underwriter’s opinion, materially interfere with the proposed distribution and
marketing of the Common Stock in respect of which registration was originally to
be effected (such writing to state the basis of such opinion and the maximum
number of shares which may be distributed without such interference), then the
Company may, upon written notice to the Optionee, have the right to exclude from
such registration such number of Option Shares which it would otherwise be
required to register hereunder as is necessary to reduce the total amount of
Common Stock to be so registered to the maximum amount which can be so
marketed.


34





(3)
Calculated on the recent one share for two hundred share (1:200) reverse stock
split effective October 8, 2008.




Employee
Pension, Profit Sharing or Other Retirement Plans




The
Company does not have a defined benefit, pension plan, profit sharing, or other
retirement plan.




Director
Compensation




As of
February 4, 2000 each member of the Board of Directors, subject to approval of
the Chairman and CEO, may be paid $500.00 per formal meeting plus certain
expenses for out of State Directors incurred in connection with attendance at
Board and Committee meetings. There are no agreements provided to Directors or
individual agreements with any Director other than that presented in this
paragraph, and the understanding that at minimum a traveling Director will be
considered by the Chairman more favorably for reimbursement of expenses for
travel and may, at the election of the Chairman, be paid $500 for attendance at
a formal meeting. This determination by the Chairman to provide for either
reimbursement or compensation for a formal meeting is principally to be based on
the finances of the Company available at the time.




Employment
Agreements




The
Company does not have any employment agreements with its executive
officers.




ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
  MANAGEMENT




The
following table sets forth certain information regarding the beneficial
ownership of the Company’s Securities by each person or group that is known by
the Company to be the beneficial owner of more than five percent of its
outstanding Securities, each director of the Company, each executive officer,
and all directors and executive officers of the Company as a group as of March
31, 2008. Unless otherwise indicated, the company believes that the persons
named in the table below, based on information furnished by such owners, have
sole voting and investment power with respect to the Common Stock beneficially
owned by them, where applicable.




Under
securities laws, a person is considered to be the beneficial owner of securities
owned by him (or certain persons whose ownership is attributed to him) and that
can be acquired by him within 60 days from the date of this Form 10-K filing,
including upon the exercise of options, warrants or convertible securities. The
Company determined a beneficial owner’s percentage ownership by assuming that
options, warrants or convertible securities that are held by him, but not those
held by any other person, and which are exercisable within 60 days of the date
of this Form 10-K filing, have been exercised or converted.




The
information in the following table is based on 9,547,207 shares of common stock
issued and outstanding as of March 31, 2008.




Title of Class
                                  Name and Address
                                    Beneficial Owner
                                  
                                  Beneficial
                                    Ownership
                                  
                                  
                                  Percent
                                    of ClassCommon
                                  Dennis
      R Alexander
                                  
                                  
                                  3,472,278
                                  (1)
                                  
                                  
                                  36.12
                                  %6564
      Smoke Tree LaneScottsdale,
      Arizona 85253Common
                                  Larry
      W. Trapp
                                  
                                  
                                  320,906
                                  (2)
                                  
                                  
                                  3.34
                                  %c/o
      6564 Smoke Tree LaneScottsdale,
      Arizona 85253Common
                                  Mike
      Trapp
                                  
                                  
                                  2,000
                                  (3)
                                  
                                  
                                  0.02
                                  %c/o
      6564 Smoke Tree LaneScottsdale,
      Arizona 85253Common
                                  Melvena
      Alexander**
                                  
                                  
                                  204,075
                                  (4)
                                  
                                  
                                  2.12
                                  %c/o
      6564 Smoke Tree LaneScottsdale,
      Arizona 85253Common
      and
                                    Preferred
                                  All
      Officers and Directors
                                    as
      a Group (**4-Persons)
                                  
                                  
                                  3,999,259
                                  
                                  
                                  
                                  41.60
                                  %


35




The
following table lists beneficial ownership by non directors or executive
officers of the Company, of more than five percent of its outstanding
Securities:





Common
                    Dutchess
      Private Equities Fund, Ltd.
                    
                    
                    1,180,854
                    (5)
                    
                    
                    12.28
                    %50
      Commonwealth Avenue, Suite 2Boston,
      MA 02116.





(a) For
all Persons in the preceding tables, and corresponding footnotes below: i)
Options, warrants, and preferred stock as or if applicable, are included in
calculations as to each person’s beneficial ownership position, and ii) All
amounts are calculated on a post split one share for two hundred shares (1:200)
reverse stock split, effective on October 8, 2008.




(1)
Includes 3,472,278 shares of common stock owned directly by Mr. Dennis
Alexander. Of the common shares 2,500 are held by Mr. Alexander’s wife and
children. Not reflected are 10,000 shares of common restricted stock under
presently exercisable stock options which may be purchased by Mr. Alexander.
These options have expired unexercised on February 9, 2009.


(2)
Includes 320,906 shares of common stock owned directly by Mr. Larry W.
Trapp.





(3)
Includes 2,000 shares of common stock owned directly by Mike Trapp.





(4)
Includes 204,075 shares owned directly by Mrs. Melvena Alexander.





(5)
Includes 1,180,854 shares owned by Dutchess Private Equities Fund, Ltd., a
corporation formed under the laws of the Cayman Islands.  Douglas Leighton
and Michael Novielli are the Directors of Dutchess Private Equities Fund, Ltd.
and are former members of the Company’s Board of Directors and, as such, they
have voting and dispositive power over the securities beneficially owned by such
entity. For further information please see information listed in Form 13-D filed
on December 8, 2008.





ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE.




Transactions
with Executive Management; Fiscal Year Ended December 31, 2008, December 31,
2007, and December 31, 2006.




Please
see “EXECUTIVE COMPENSATION” section of this document related to transactions in
addition to those contained in this section including, rights and provisions,
grants and bonus, additional consideration and other compensation for the
following named executives: Dennis R. Alexander, Chairman, President, and Chief
Financial Officer and Director, and Melvena Alexander, Co Treasurer,
Comptroller, and Secretary.




Transactions
with Former Executive Management, For The Fiscal Years Ended December 31, 2008,
December 31, 2007, and December 31, 2006 respectively.




For
additional information other than that furnished in this section regarding:
Current Officer and Director Dennis R. Alexander, Chairman, President, and CFO,
and former Officers and Directors John R. Taylor, President and Director,
William E. Merritt, Executive Vice President, General Counsel and Director
please see information under Item 10 – “Executive Compensation” and other
information contained in Form 10-KSB filed April 14, 2006, incorporated herein
by reference; For former Officers and Directors George B. Faulder, former Vice
President and Director of the Company and Firecreek Petroleum; and, Gregg
Fryett, former CEO and Director of the Company and Firecreek Petroleum, and
International Yacht Sales Group, LTD., please see information under Item 10 –
“Executive Compensation” and other information contained in Form 10-KSB filed
April 12, 2005, incorporated herein by reference.




Contracts




The
Company has verbal and month to month contracts with various entities (owned by
related parties) to provide accounting, management, and other professional
services. The entities, their owners and their amounts are as follows for the
fiscal year ended December 31, 2008 listed in Table 1 below, and for the fiscal
years ended December 31, 2007, and December 31, 2006 listed in Table 2
below.


36




Table
1





Paid
                    
                    
                    AccruedEntity
                    
                    Related Party
                    
                    2008
                    
                    
                    2008Global
      Media Network USA, Inc. * **
                    
                    Dennis
      R. Alexander (1)
                    
                    $
                    195,250
                    
                    
                    $
                    50,000Tirion
      Group, Inc.
                    
                    Rupert
      C. Johnson (2)
                    
                    $
                    -0-
                    
                    
                    $
                    43,000Melvena
      Alexander, CPA * ***
                    
                    Melvena
      Alexander (3)
                    
                    $
                    108,875
                    
                    
                    $
                    -0-DLM
      Asset Management, Inc.
                    
                    Dermot
      McAtamney (4)
                    
                    $
                    33,535
                    
                    
                    $
                    -0-




*Part of
the amounts paid in 2008 for each of the above named Executives were for the
unpaid accrual amounts due from 2007.


** For
2008, the contract amounts paid to Global Media Network USA, Inc. were in the
aggregate $112,500. An additional $82,750 was paid against prior year
accruals.


*** For
2008, the contract amounts paid to Melvena Alexander CPA were in the aggregate
$65,000. An additional $43,875 was paid against prior year
accruals.





(1)
            Dennis
      R. Alexander, Chairman, CEO, and CFO, and is a shareholder of the
      Company.





(2)
            Rupert
      C. Johnson, a Director through June 9, 2008, and a Co- shareholder of the
      Company.





(3)
            Melvena
      Alexander, Secretary, Co Treasurer, Secretary and Comptroller, and is a
      shareholder of the Company.





(4)
            Dermot
      McAtamney, a Director, Executive Vice President, Co Treasurer through June
      9, 2008, and is a shareholder of the
Company.




Table
2




Paid
                    
                    AccruedEntity
                    
                    Related Party
                    2007
                    
                    2006
                    
                    2007
                    
                    2006Global
      Media Network USA, Inc.
                    
                    Dennis
      R. Alexander (1)
                    
                    $
                    89,750
                    
                    
                    $
                    138,000
                    
                    
                    $
                    120,250
                    
                    
                    $
                    30,000Tirion
      Group, Inc.
                    
                    Rupert
      C. Johnson (2)
                    
                    
                    7,000
                    
                    
                    
                    50,000
                    
                    
                    
                    43,000
                    
                    
                    
                    20,000Melvena
      Alexander, CPA
                    
                    Melvena
      Alexander (3)
                    
                    $
                    59,250
                    
                    
                    $
                    86,750
                    
                    
                    $
                    43,875
                    
                    
                    $
                    13,250DLM
      Asset Management, Inc.
                    
                    Dermot
      McAtamney (4)
                    
                    
                    55,200
                    
                    
                    
                    80,800
                    
                    
                    
                    3,300
                    
                    
                    
                    22,500





(1)
            Dennis
      R. Alexander, Chairman and CFO, and is a shareholder of the
      Company.





(2)
            Rupert
      C. Johnson, a Director through June 9, 2008, and a Co- shareholder of the
      Company.





(3)
            Melvena
      Alexander, Secretary and Comptroller, and is a shareholder of the
      Company.





(4)
            Dermot
      McAtamney, a Director, Executive Vice President, Co Treasurer through June
      9, 2008, and is a shareholder of the
Company.




Related
Party Transaction(s) Involving Acquisition and Issuances of Shares both
preferred and common to Dennis R. Alexander, c/o the Company’s address at 6564
Smoke Tree Lane, Scottsdale Arizona 85253.


37





Related Party Transaction(s)
Involving Issuance of Shares both preferred and common, promissory notes, and
convertible debentures as of December 31, 2007, December 31, 2006, and December
31, 2005 with  Dutchess Private Equities Fund, Ltd. (“DPEF”),
Douglas Leighton (“Leighton”) and Michael Novielli (“Novielli”, together with
DPEF and Leighton, “Dutchess”) each with a business address of 50 Commonwealth
Avenue, Suite #2, Boston, MA 02116. Messrs. Leighton and Novielli are the
Directors of DPEF.




Information
required under this section can be found in previously filed
documents:




Note: As
reported by Mr. Alexander, the Company’s Chairman, Principle Executive Officer,
and CFO, please see information contained in Form 13-D filed December 5, 2008,
and in a Current Report on Form 8-K filed December 3, 2008.





Note: As
reported by Dutchess please also see information contained in Form 13-D filed
December 8, 2008, in a Current Report on Form 8-K filed December 3, 2008, and
including information prior contained in Form 13-D filed on January 29,
2008.




1.
Current Report on form 8-K filed on January 7, 2008, incorporated herein by
reference.




2.
Current Report on Form 8-K filed on June 19, 2007, incorporated herein by
reference.




3.
Current Report on Form 8-K filed on March 29, 2007, incorporated herein by
reference.




4.
Current Report on Form 8-K filed on July 7, 2006, incorporated herein by
reference.




5.
Current Report on Form 8-K filed on April 27, 2006, incorporated herein by
reference.




6.
Current Report on Form 8-K filed on December 16, 2005, incorporated herein by
reference.




7.
Current Report on Form 8-K filed on November 16, 2005, incorporated herein by
reference.




8.
Current Report on Form 8-K filed on September 13, 2005, incorporated herein by
reference.




Shares,
Options, and Warrants Issued During The Fiscal Year Ended December 31, 2006 to
Officers, Directors, and Consultants.




Information
required under this section can be found in previously filed
documents:




1.
Current Report on Form 8-K filed on January 12, 2006




2.
Current Report on Form 8-K filed on February 3, 2006




3.
Current Report on Amended 8-K/A filed on March 17, 2006




4. Post
Effective amendments for registration statement filed on April 26,
2006




5.
Current Report on Form 8-K filed on December 12, 2006 for earliest date of event
on December 7, 2006




6.
Current Report on Form 8-K filed on December 13, 2006 for earliest date of event
on December 8, 2006





Share
Issuance to Current Officer Of The Company





On
February 8, 2009, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following named officer for services rendered (see also
additional information under the heading “Recent Sales of Unregistered
Securities” earlier in this report).





Larry
      W. Trapp
                    c/o
      6564 Smoke Tree Lane
                    Scottsdale,
      Arizona 85253
                  2/8/09
                  
                  
                  300,000
                  
                  For
      services rendered to the Company or FPI
                  
                  $
                  18,000Melvena
      Alexander
                    c/o
      6564 Smoke Tree Lane
                    Scottsdale,
      Arizona 85253
                  2/8/09
                  
                  
                  180,000
                  
                  For
      services rendered to the Company or FPI
                  
                  $
                  10,800


38





(*)
Issuances are approved, subject to such persons being entirely responsible for
their own personal, Federal, State, and or relevant single or multi
jurisdictional income taxes, as applicable.





(**)
$28,800 of the financing proceeds in the immediately preceding table were used
primarily in consideration of services rendered to the Company and/or Firecreek
Petroleum, Inc. (“FPI”).





(1)
            Mr.
      Larry W. Trapp, for business and consulting and advisory services; He is a
      shareholder, an officer, (Executive Vice President, and Co-Treasurer) and
      director of the Company and Firecreek Petroleum,
  Inc.





(2)
            Melvena
      Alexander, for day to day operational services and business provisions;
      Mrs. Alexander is a shareholder, and an officer (Secretary, Comptroller,
      and Co Treasurer) of the Company.





(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.




Salary
to Former Officers and Directors




Former
Officers and Directors John R. Taylor, President and Director of the Company and
Firecreek Petroleum, William E. Merritt, Executive Vice President, General
Counsel and Director of the Company and Firecreek Petroleum, and George B.
Faulder, a Vice President and Director of the Company and Firecreek Petroleum,
all of which are Shareholders of the Company, received salaries in the amount of
USD $25,000, USD $ 25,000, and USD $20,000 respectfully, during 2006  (see
other related compensation and non compensation stock issuances to John R.
Taylor, William E. Merritt, and George B. Faulder listed in this
section).




Option
Issuances




The
following table provides information related to options granted, vesting to our
former named executive officers during the fiscal year ended December 31, 2004,
in behalf of and exchange agreement with Firecreek Petroleum, Inc effective July
1, 2004. These options have expired as of February 9, 2009. The following table
provides information calculated on the recent one share for two hundred share
(1:200) reverse stock split effective October 8, 2008. These options however
have expired as of February 9, 2009.




Name
                      
                      Number of
                        Securities
                        Underlying
                        Options
                        Granted (#)a/b/
                      
                      % of Total
                        Options Granted
                        in Fiscal Year
                      
                      
                      Exercise
                        or Base
                        Price ($/sh)
                      
                      Expiration
                        DateJohn
      R. Taylor
                      
                      
                      10,000
                      
                      11.76
                      %
                      
                      $
                      140.00
                      
                      2/9/09William
      E. Merritt
                      
                      
                      10,000
                      
                      11.76
                      %
                      
                      $
                      140.00
                      
                      2/9/09Gregg
      Fryett
                      
                      
                      10,000
                      
                      11.76
                      %
                      
                      $
                      140.00
                      
                      2/9/09George
      B. Faulder
                      
                      
                      10,000
                      
                      11.76
                      %
                      
                      $
                      140.00
                      
                      2/9/09





a/ The
market price for the underlying restricted common stock on August 9, 2004, the
date of grant, December 31, 2005, December 31, 2006, December 31, 2007 and
December 31, 2008 for all grants listed in the table was $20.00, $6.00, $1.70,
and $12.00 (calculated on post reverse split price)
respectively.


39





b/
Including those executives listed in the above table, the total number of
options vesting in the Fiscal Year 2005 to all officers, consultants, directors,
and advisors, either affiliated or non affiliated, was 17,000,000 pre reverse or
calculated as 85,000 post reverse split.




The
following are excerpts from certain provisions contained in the option agreement
with the persons listed above, and include but are not limited to the
following:




(1) The
date of all agreements set forth in the table above is August 9, 2004, (2) The
exercise price for all option agreements is $140.00 per share, calculated on the
post reverse split basis, one share for two hundred shares, effective October 8,
2008, (3) The expiration of each of the agreements is four (4) years from the
date of Vesting, (4) The Vesting Date is: For and after the expiration of on
hundred eighty (180) days following the date of the agreement or February 9,
2005, (5) The Expiration Date for all option agreements is 2/9/2009, and (6) The
exercise price of the options is equal to or in excess of the fair market value
of the stock on the date of grant.





(7) For
all option grants listed in the table above the following provision is provided:
If at any time after the date of this Agreement and prior to the expiration of
all Exercise Period(s), the Company proposes to file a registration statement to
register any Common Stock (other than Common Stock issued with respect to any
acquisition or any employee stock option, stock purchase or similar plan) under
the Securities Act of 1933, as amended (the “Securities Act”) for sale to the
public in an underwritten offering, it will at each such time give prior written
notice to the Optionee of its intention to do so (“Notice of Intent”) and, upon
the written request of the Optionee made within 30 calendar days after the
receipt of any such notice (which request must specify the number of Option
Shares Optionee requests) to be included in the registration, the Company will
use its best efforts to effect the registration under the Securities Act of the
Option Shares which the Company has been  so requested to register,
provided, however, that if the managing underwriter shall certify in writing
that inclusion of all or any of the Option Shares would, in such managing
underwriter’s opinion, materially interfere with the proposed distribution and
marketing of the Common Stock in respect of which registration was originally to
be effected (such writing to state the basis of such opinion and the maximum
number of shares which may be distributed without such interference), then the
Company may, upon written notice to the Optionee, have the right to exclude from
such registration such number of Option Shares which it would otherwise be
required to register hereunder as is necessary to reduce the total amount of
Common Stock to be so registered to the maximum amount which can be so
marketed.




Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Value





Name
                    
                    Shares
                      Acquired
                      On
                      Exercise
                    
                    Value
                      Realized
                    
                    Number of
                      Securities
                      Underlying
                      Unexercised
                      Options
                    
                    Value of
                      Unexercised
                      In-the-money
                      OptionsJohn
      R. Taylor
                    
                    
                    —
                    
                    —
                    
                    
                    10,000
                    
                    —William
      E. Merritt
                    
                    
                    —
                    
                    —
                    
                    
                    10,000
                    
                    —Gregg
      Fryett
                    
                    
                    —
                    
                    —
                    
                    
                    10,000
                    
                    —George
      B. Faulder
                    
                    
                    —
                    
                    —
                    
                    
                    10,000
                    
                    —




Unsecured,
Demand Note Payable to John R. Taylor, President and Director, for loans made to
Firecreek Petroleum, Inc. Total for the note is $316,483 at December 31, 2004.
The note is current at March 31, 2005, and thereafter reduced to $59,531 at
December 31, 2005. Additional loans were incurred in Q1 2006 totaling $15,162,
and in Q2 2006 totaling $15,934. The additional loans carry 6% interest rates.
Total balance owed including interest at the rate of 6% is $108,027 at December
31, 2006. The note is current at March 31, 2007, 2008, and as of February 5,
2009 has been paid down $51,750. The balance of the note is due on
demand.




Unsecured,
Demand Note Payable to George B. Faulder IV, former Vice-President and Director,
for loans made to Firecreek Petroleum. Total for the note is $59,389 at December
31, 2005. Additional loans were incurred in Q1 2006 totaling $19,189, and in Q2
2006 $3,862. The additional loans carry 6% interest rates. Total balance owed
including interest at the rate of 6% is $68,084 at December 31, 2006. The note
is current at March 31, 2007, 2008, and 2009. The note is due on
demand.




In May
2005, the Company’s wholly-owned subsidiary, Firecreek Petroleum headquartered
at 6777 Camp Bowie Blvd S-215, Ft. Worth, TX 76116, became the lessee of office
space in Fort Worth, Texas. The lease is for 24 months from June 1, 2005 through
May 31, 2007. The offices were closed by Firecreek Petroleum, Inc. approximately
March 31, 2006 and were then moved to the Parent Company offices in Scottsdale
Arizona. On July 9, 2008, the Company and Firecreek Petroleum, having legally
disputed the lease with Hickman Investments, Ltd., entered a Settlement
Agreement with Hickman, effective July 1, 2008, to resolve all disputes relating
to the Lawsuit (the “Settlement”), which concluded the disputed litigation. For
further information please see Current Report on Form 8-K, as amended, filed on
July 10, 2008, incorporated herein by reference.


40





The Chief
Executive Officer and shareholder of the Company provided corporate office space
through 2007 and 2008 at no charge. There is no further agreement in place to
pay for the premises. At December 31, 2008 through March 31, 2009 the premises
continue to be provided free of charge.





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES




The Audit
Committee has adopted a policy regarding the retention of the independent
auditors that requires pre-approval of all services by the Audit Committee or
the Chairman of the Audit Committee. When services are pre-approved by the
Chairman of the Audit Committee, notice of such approvals is given
simultaneously to the other members of the Audit Committee or board of directors
if Audit Committee is represented by only one member.




The Audit
Committee has reviewed and discussed the fees paid to Donahue Associates for the
reports covering fiscal 2008 and 2007 for audit, audit-related, tax and other
services.




The Audit
Committee has reviewed and discussed the audited financial statements with the
Company’s management; and discussed with Donahue Associates, L.L.C. independent
auditors for the Company, the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as
amended.




The
aggregate fees billed for the fiscal year ended December 31, 2008 for
professional services rendered by Donahue Associates, L.L.C. for the audit of
the Company’s financial statements were $11,000 paid for in fiscal
2009.





The fees
for the fiscal year ended December 31, 2007 were $22,500 paid for in fiscal
2008. For quarterly review of interim financial statements filed on Form 10-QSB
for fiscal 2008 and 2007, $6,000 and, $6,500 respectively, were
paid.




Audit-Related
Fees




Donahue
Associates, L.L.C. did not bill us for any assurance or related services that
were related to the performance of the audit of the financial
statements.




Tax
Fees




Since
December 22, 2003 Donahue Associates has not provided any professional services
for tax compliance, tax advice and tax planning with the exception of
consolidated tax returns for 2008 and 2007which were $450 and $450,
respectively.




Other
Fees




No other
fees were paid to Donahue Associates, L.L.C.





PART
IV




ITEM
15. Exhibits, Financial Statement Schedules





Exhibit
                  No.
                
                Description2.1
                
                Agreement
      for the Exchange of Common Stock, dated December 12, 2003 (relating to the
      acquisition of International Group Holdings, Inc.) (filed as exhibit 2.1
      to the Current Report on Form 8-K dated December 1, 2003, filed December
      15, 2003 and incorporated herein by reference).2.2
                
                Agreement
      for the Exchange of Common Stock, dated June 29, 2004 (relating to
      acquisition of Firecreek Petroleum, Inc.) (filed as exhibit 2.1 to Current
      Report on form 8-K dated June 24, 2004, filed July 15, 2004 and
      incorporated herein by
reference).


41





3.1
              
              Articles
      of Amendment to Articles of Incorporation of EGPI Firecreek, Inc. (filed
      as Exhibit 99.1 to Current Report on Form 8-K dated Feb. 15, 2005, filed
      February 22, 2005 and incorporated herein by reference).
  *3.2
              
              Correction
      of Articles of Amendment to Articles of Incorporation of EGPI Firecreek
      Inc., filed with the Nevada Secretary of State on May 12,
      2005.3.3
              
              Amended
      By-Laws of Registrant, dated July 1, 2004 (filed as exhibit 2.2 to Current
      Report on Form 8-K dated June 4, 2004, filed July 15, 2004, and
      incorporated herein by reference).5.1
              
              Consent
      of Gersten, Savage, LLP (filed as Exhibit 5.1 to Registration Statement on
      Form SB-2/A filed on September 2, 2005 and incorporated herein by
      reference).10.1
              
              Securities
      Purchase Agreement dated May 18, 2005, between the Company and Tirion
      Group, Inc. (filed as an Exhibit to Current Report on Form 8-K dated May
      26, 2005 and incorporated herein by reference).10.2
              
              Registration
      Rights Agreement dated May 18, 2005, between the Company and Tirion Group,
      Inc. (filed as an Exhibit to Current Report on Form 8-K dated May 26, 2005
      and incorporated by reference).10.3
              
              Intellectual
      Property Security Agreement dated May 2, 2005, by and between the Company
      and AJW Partners and its affiliates (filed as an Exhibit on Form 10-QSB
      for the quarter ended March 31, 2005 and incorporated herein by
      reference).10.4
              
              Guaranty
      and Pledge Agreement dated May 2, 2005, between the Company, Greg Fryett,
      CEO of the Company, and AJW Partners and its affiliates (filed as an
      Exhibit to Form 10-QSB for the quarter ended March 31, 2005 and
      incorporated herein by reference).10.5
              
              Security
      Agreement dated May 2, 2005, between the Company and AJW Partners and its
      affiliates (filed as an Exhibit to Form 10-QSB for the quarter ended March
      31, 2005 and incorporated herein by reference).10.6
              
              Form
      of Callable Secured Convertible Note to AJW Partners LLC, dated May 2,
      2005 (filed as an Exhibit to Form 10-QSB for the quarter ended March 31,
      2005 and incorporated herein by reference).10.7
              
              Form
      of Callable Secured Convertible Note to AJW Offshore Limited, dated May 2,
      2005 (filed as an Exhibit to Form 10-QSB for the quarter ended March 31,
      2005 and incorporated herein by reference).10.8
              
              Form
      of Callable Secured Convertible Note to AJW Qualified Partners, LLC, dated
      May 2, 2005 (filed as an Exhibit to Form 10-QSB for quarter ended March
      31, 2005 and incorporated herein by reference).10.9
              
              Form
      of Callable Secured Convertible Note to New Millenium Capital Partners II,
      LLC, dated May 2, 2005, (filed as an Exhibit to Form 10-QSB for quarter
      ended March 31, 2005 and incorporated herein by
  reference).10.10
              
              Final
      Voting Agreement of EGPI Firecreek (filed as exhibit 99.3 to Current
      Report on Form 8-K dated April 5, 2005, filed April 7, 2005 and
      incorporated herein by reference).10.11
              
              Form
      of Stock Purchase Warrant issued to AJW Partners LLC, effective May 2,
      2005, Form 10-QSB for the quarter ended March 31, 2005 and incorporated
      herein by reference).10.12
              
              Form
      of Stock Purchase Warrant issued to AJW Offshore Limited, effective May 2,
      2005, Form 10-QSB for the quarter ended March 31, 2005 and incorporated
      herein by reference).10.13
              
              Form
      of Stock Purchase Warrant issued to AJW Qualified Partners, LLC, effective
      May 2, 2005, Form 10-QSB for the quarter ended March 31, 2005 and
      incorporated herein by reference).10.14
              
              Form
      of Stock Purchase Warrant to New Millenium Capital Partners II, LLC,
      effective May 2, 2005, Form 10-QSB for the quarter ended March 31, 2005
      and incorporated herein by
reference).


42





10.15
              
              Fee
      Protector Agreement, dated June 14, 2005, by and between the Company and
      DLM Asset Management, Inc. (filed as an Exhibit to the Current Report on
      Form 8-K/A dated June 20, 2005 and incorporated herein by
      reference).10.16
              
              Repurchase
      Agreement dated May 31, 2005, by and between the Company and AJW Partners
      (filed as an Exhibit to the Current Report on Form 8-K/A dated June 2,
      2005 and incorporated herein by reference).10.17
              
              Callable
      Secured Convertible Note, dated May 18, 2005 issued to Tirion Group (filed
      as an Exhibit to Current Report on Form 8-K dated May 26, 2005 and
      incorporated herein by reference).10.18
              
              Stock
      Purchase Warrant, dated May 18, 2005 issued to Tirion Group (filed as an
      Exhibit to Current Report on Form 8-K dated May 26, 2005 and incorporated
      herein by reference).10.19
              
              Standard
      Office Lease between the Company and Camp Bowie Centre (filed as an
      Exhibit to Current Report on Form 8-K dated May 26, 2005 and incorporated
      herein by reference).10.20
              
              Securities
      Purchase Agreement, dated May 2, 2005, between the Company and AJW
      Partners and its affiliates (filed as an Exhibit to Form 10-QSB for the
      quarter ended March 31, 2005 and incorporated herein by
      reference).10.21
              
              Registration
      Rights Agreement, dated May 2, 2005, between the Company and AJW Partners
      and Affiliates (filed as an Exhibit to Form 10-QSB for the quarter ended
      March 31, 2005 and incorporated herein by reference).10.22
              
              Investment
      Agreement, dated as of June 28, 2005, by and between the Company and
      Dutchess Private Equities Fund, II, LP (filed as Exhibit 10.22 to
      Registration Statement on Form SB-2/A filed on September 2, 2005 and
      incorporated herein by reference).10.23
              
              Registration
      Rights Agreement, dated as of June 28, 2005, by and between the Company
      and Dutchess Private Equities Fund, II, L.P. (filed as Exhibit 10.23 to
      Registration Statement on Form SB-2/A filed on September 2, 2005 and
      incorporated herein by reference).10.24
              
              Placement
      Agent Agreement, dated June 28, 2005, by and between the Company, U.S.
      Euro Securities and Dutchess Equities Fund II L.P. (filed as Exhibit 10.24
      to Registration Statement on Form SB-2/A filed on September 2, 2005 and
      incorporated herein by reference).10.25
              
              Extension
      and Amendment of Corporate Advisory Agreement between the Company and
      Steven Antebi; dated June 13, 2005 (Replaces incorrect exhibit previously
      filed.) (filed as Exhibit 10.25 to Registration Statement on Form SB-2/A
      filed on September 2, 2005 and incorporated herein by
      reference).10.26
              
              Amendment
      to Investment Agreement, dated August 23, 2005 by and between the Company
      and Dutchess Private Equities Fund, II, LP (filed as Exhibit 10.26 to
      Registration Statement on Form SB-2/A filed on September 2, 2005 and
      incorporated herein by reference).10.27
              
              Amendment
      to Registration Rights Agreement, dated as of August 23, 2005, by and
      between the Company and Dutchess Private Equities Fund, II, L.P. (filed as
      Exhibit 10.27 to Registration Statement on Form SB-2/A filed on September
      2, 2005 and incorporated herein by reference).10.28
              
              Extension
      and Amendment of Certain Provisions of Corporate Advisory Agreement
      between the Company and Steven Antebi, dated January 30, 2006 (filed as
      Exhibit 10.1 to Current Report on Form 8-K filed February 3, 2006 and
      incorporated herein by reference).10.29
              
              Warrant
      Certificate containing revised terms of previously issued warrant issued
      to Steven Antebi, dated July 12, 2005 (filed as Exhibit 10.4 to Current
      Report on Form 8-K filed on February 3, 2006 and incorporated herein by
      reference).10.30
              
              Business
      Relationship Letter Agreement between the Company, Firecreek, and The
      Sahara Group (filed on Exhibit 10.30 with the Report on Form 10-KSB filed
      on April 14, 2006 and incorporated herein by
  reference).


43




10.31
              
              Annual
      Report on Form 10-KSB, filed on April 12, 2005, and incorporated herein by
      reference.10.32
              
              Oil
      and Gas Participation and Rights Agreement (the ”Participation Agreement”)
      between the Company and Dutchess Private Equities Fund, Ltd. dated
      December 3, 2008 (filed on Exhibit 10.32 with the Report on Form 10-K
      filed on April 14, 2009 and incorporated herein by
    reference).10.33
              
              Advisory
      Services Agreement between EGPI Firecreek, Inc. and Joseph M. Vasquez,
      dated February 1, 2009 (filed on Exhibit 10.33 with the Report on Form
      10-K filed on April 14, 2009 and incorporated herein by
      reference).10.34
              
              Promissory
      Note Agreement between EGPI Firecreek, Inc. and Dutchess Private Equities
      Fund, Ltd., (filed on Exhibit 10.34 with the Report on Form 10-K filed on
      April 14, 2009 and incorporated herein by reference).10.35
              
              Current
      Report on Form 8-K, filed on December 3, 2008, incorporated herein by
      reference21
              
              Updated
      List of Subsidiaries31.1
              
              Certification
      Pursuant to Section 30232.1
              
              Certification
      Pursuant to Section 906




PART
F/S FINANCIAL STATEMENTS





The
financial statements of the Company as required by Item 310 of Regulation S-B
are included in Part II, Item 7 of this report.




SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on April 15, 2008
on its behalf by the undersigned, thereunto duly authorized.





EGPI
      FIRECREEK, INC.(Registrant)By:
                /s/ Dennis R. AlexanderDennis
      R. AlexanderChairman,
      CEO, CFO, and Director




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.





Signature
                
                Title
                
                Date/s/ Dennis R. Alexander
                
                Chairman,
      CEO, and CFO
                
                April
      15, 2009Dennis
      R. Alexander
                
                (Chief
      Financial Officer)/s/ Larry W. Trapp
                
                Executive
      Vice President, Co-Treasurer,
                
                April
      15, 2009Larry
      W. Trapp
                
                and
      Director/s/ Mike Trapp
                
                Director
                
                April
      15, 2009Mike
      Trapp




44