Gulf Coast Oil & Gas Inc. - Amended Annual Report (Small Business Issuers) (10KSB/A)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB/A

(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, 2007

 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 NUMBER: 000-32747

GULF COAST OIL & GAS, INC.

(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

 NEVADA 98-0128688
 (State or other jurisdiction of (I.R.S. Employer
 incorporation or organization) Identification No.)

 5847 SAN FELIPE, SUITE 1700 77057
 HOUSTON, TX (Zip Code)
(Address of principal executive offices)

Issuer's Telephone Number: (713) 589-4620

Securities registered under Section 12(b) of the Exchange Act: NONE. Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, PAR VALUE $.001
(Title of class)

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]

State issuer's revenues for its most recent fiscal year: $223,462

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 sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days: approximately $285,165 as of April 8, 2008. The aggregate market value was based upon 950,552,788 shares held by non-affiliates and the closing price of $0.0003 per share for common stock on the Over-the-Counter Bulletin Board as of April 8, 2008.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be filed by section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. YES [ ] NO [ ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: 967,052,788 as of April 8, 2008.

(DOCUMENTS INCORPORATED BY REFERENCE)

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part 1, Part II, etc.) into which the document is incorporated: (1) any annual report to security-holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990). NONE

Transitional Small Business Disclosure Format: YES [ ] NO [X]

GULF COAST OIL & GAS, INC.
FORM 10-KSB/A

TABLE OF CONTENTS

 PAGE
PART I
 Item 1. DESCRIPTION OF BUSINESS 1
 Item 2. DESCRIPTION OF PROPERTY 3
 Item 3. LEGAL PROCEEDINGS 4
 Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS 4

PART II
 Item 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
 BUSINESS ISSUER PURCHASES 4 OF EQUITY SECURITIES
 Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 6
 Item 7. FINANCIAL STATEMENTS 14
 Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 14
 ACCOUNTING AND FINANCIAL DISCLOSURE
 Item 8A CONTROLS AND PROCEDURES 14
 Item 8B OTHER INFORMATION 15

PART III
 Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 15
 Item 10. EXECUTIVE COMPENSATION 16
 Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 AND RELATED STOCKHOLDER MATTERS 17
 Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 17
 Item 13. EXHIBITS 18
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 19
 FINANCIAL STATEMENTS F-1

PART I

This report on Form 10-KSB/A contains "forward-looking statements". These statements involve important known and unknown risks, uncertainties and other factors and can be identified by phrases using "estimate," "anticipate," "believe," "project," "expect," "intend," "predict," "potential," "future," "may," "should" and similar expressions or words. Our future results, performance or achievements may differ materially from the results, performance or achievements discussed in the forward-looking statements. There are numerous factors that could cause actual results to differ materially from the results discussed in forward-looking statements, including changes in existing laws or the introduction of new laws, regulations or policies (including environmental regulations) that could increase the cost of oil and gas exploration and extraction, fluctuations in the market price of oil and gas, advances in technology that may reduce dependence on oil and gas as a source of energy, and other risk factors detailed in this report and in our other SEC filings. This list provides examples of factors that could affect the results described by forward-looking statements contained in this Form 10-KSB/A. However, this list is not intended to be exhaustive; many other factors could impact our business and it is impossible to predict with any accuracy which factors could result in which negative impacts. Although we believe that the forward-looking statements contained in this Form 10-KSB/A are reasonable, we cannot provide you with any guarantee that the anticipated results will be achieved. All forward-looking statements in this Form 10-KSB/A are expressly qualified in their entirety by the cautionary statements contained in this section and you are cautioned not to place undue reliance on the forward-looking statements contained in this Form 10-KSB/A. In addition to the risks listed above, other risks may arise in the future, and we disclaim any obligation to update information contained in any forward-looking statement.

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

Gulf Coast Oil & Gas, Inc. ("we" or the "Company") is an exploration stage company engaged in the oil and gas exploration business in the continental United States. We expect that the majority of our initial projects will have a comparatively lower risk profile in order to increase our chances of obtaining positive cash flow in the near term. However, we may also seek to acquire interests in riskier projects that have the potential of developing into major oil or gas fields, and will consider acquiring an interest (working and/or royalty) in proven (based upon offset production and geology reports) but undeveloped drilling locations.

We were originally incorporated in Nevada under the name First Cypress Technologies, Inc. on September 14, 1999. In July 2003, the Company changed its name to First Cypress, Inc. and then in October 2003 the Company changed its name to Otish Mountain Diamond Company. We changed our name to Gulf Coast Oil & Gas, Inc., on January 13, 2005. Our common stock is currently quoted on the NASD Over-the-Counter Bulletin Board ("OTC-BB") under the symbol "GCOG.OB".

We believe potentially profitable oil and gas projects exist in the United States that, because of their relatively small barrel potential, have been neglected by major oil companies. We seek to identify and invest in such opportunities. The Company intends to continue to operate the business with low overhead to maintain a strong cash position, while seeking out relatively lower risk drilling and exploration projects that do not require significant upfront capital investment.

Prior to the first quarter of 2007, we had not produced revenues and have been dependent on debt and equity financings to finance our operations. During the year ended December 31, 2007, we generated total revenues of approximately $223,462. We generated $209,821 in revenues from our working interests in three producing wells located in Corpus Christi, Texas (the "Corpus Christi Project") and $13,641 in interest income.

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OIL AND GAS PROJECTS

SARATOGA PROSPECT

On June 8, 2005, we paid $100,000 to Bourgeois Energy, Inc. to acquire a 75% working interest in the exploration and development of land referred to as the Saratoga Prospect located in the Saratoga Chalk Formation on the outskirts of the Town of Many, in Sabine Parish, Louisiana. The Saratoga prospect is located within the Upper Cretaceous, a historically productive trend whose success is attributable to the presence of cretaceous age fractured chalk. Under the terms of the Agreement with Bourgeois Energy, we had one year from the date of acquisition of leasehold interests to advance to Bourgeois Energy the remaining costs of the project (which may be advanced in stages for drilling and completion activities, respectively), which we estimate at $380,000. In August of 2006, the Company paid $30,000 to renew the leases in Louisiana for two additional years.

At present, the Company intends to renew the leases before they expire and is actively seeking a drilling partner.

CORPUS CHRISTI PROJECT

On May 9, 2006, the Company paid a deposit of $262,500 towards an interest in oil and gas property (the Weil 8-C Well) in Corpus Christi, Texas. Pursuant to the agreements entered into with the operator, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 8-C Well in exchange for a 46.66% billing interest.

On August 1, 2006, the Company paid $108,251.20 to hookup the Weil 8-C Well and prepare it for production.

On August 15, 2006, the Company paid a deposit of $104,533.18 towards an interest in an additional well known as the Weil 3-C Well in Corpus Christi, Texas. Pursuant to the agreements entered into with the operator, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 3-C Well for a 46.66% billing interest.

On August 31, 2006, the Company paid a deposit of $134,520.78 towards an interest in an additional well known as the Weil 7-C Well in Corpus Christi, Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 7-C Well for a 46.66% billing interest.

On September 19, 2006, the Company paid $135,948.57 to bring the Weil 3-C and Weil 7-C Wells into production and convert both the Weil 2-C and Weil 6-C wells on the property to salt water disposal wells. It is the intent of the Company to offer salt water disposal services to neighboring companies as a side revenue generating service.

During 2007, the Company spent approximately $175,212 for work done on the Corpus Christi Project. As of the date hereof, each of the three wells (Weil 8-C, Weil 3-C and Weil 7-C) is in production. In early 2007, we anticipated that revenues from the three producing wells of the Corpus Christi Project would be sufficient to fund our overhead costs for the near term. While the Corpus Christi Project has generated $209,821 in revenues for us, the wells have not recently produced at anticipated levels. As a result, the Company intends to expend additional monies reworking Weil 8-C in an effort to stimulate production

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by entering additional up-hole zones. There can be no assurances that we will be successful in our efforts to stimulate production and production from these wells may continue to be insufficient to fund ongoing expenses.

EMPLOYEES

We currently have one (1) employee, Rahim Rayani, our Chief Executive Officer. We have entered into a consulting agreement with C. Craig Bourgeois, a geologist. Mr. Bourgeois has assisted us in identifying potential oil and gas prospects. Mr. Bourgeois is the sole shareholder of Bourgeois Energy, Inc. We contemplate using other independent contractors from time to time as the need arises.

COMPETITION

We operate in the highly competitive areas of oil and natural gas exploration, exploitation, acquisition and production. We face intense competition from a large number of independent, technology-driven companies as well as both major and other independent oil and natural gas companies in a number of areas such as:

o seeking to acquire desirable producing properties or new leases for future exploration;

o marketing our oil and natural gas production; and

o seeking to acquire the equipment and expertise necessary to operate and develop those properties.

The oil and gas exploration industry is made up of both large, well organized, well funded competitors and some small start-up companies, many of which have substantially greater financial, technical, marketing and human resource capabilities than we have. Many of our competitors have financial and other resources substantially in excess of those available to us. This highly competitive environment could harm our business.

GOVERNMENT REGULATION AND ENVIRONMENTAL COMPLIANCE

Our oil and natural gas exploration and production activities are subject to extensive laws, rules and regulations promulgated by federal and state legislatures and agencies, including the Federal Energy Regulatory Commission (FERC) and the Environmental Protection Agency.

Although we do not intend to own or operate any pipelines or facilities that are directly regulated by FERC, its regulation of third party pipelines and facilities could indirectly affect our ability to transport or market our production. Moreover, FERC has in the past, and could in the future impose price controls on the sale of natural gas. In addition, we believe we are in substantial compliance with all applicable laws and regulations, however, we are unable to predict the future cost or impact of complying with such laws and regulations because they are frequently amended, interpreted and reinterpreted.

ITEM 2. DESCRIPTION OF PROPERTY

With respect to the Company's interest in the Saratoga Prospect and the Corpus Christi Project, please see "Item 1 - Description of Business".

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The Company currently leases on a month to month basis 250 sq. ft. of office space located at 5847 San Felipe, Suite 1700, Houston, Texas 77057. The current rental is $600.00 per month. This facility has sufficient space to meet our near term needs.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our security holders during the fourth quarter of the fiscal year ended December 31, 2007.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Gulf Coast Oil & Gas, Inc.'s Common Stock trades on the OTC-BB under the symbol GCOG.OB. The high and low closing bid information for our Common Stock is based on information received from Pink Sheets, LLC based on trading information as reported by the NASD Composite Feed or other qualified inter-dealer quotation medium.

QUARTER ENDED HIGH LOW
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March 31, 2006 $ 0.082 $ 0.023
June 30, 2006 $ 0.056 $ 0.025
September 30, 2006 $ 0.034 $ 0.020
December 31, 2006 $ 0.075 $ 0.011
March 31, 2007 $ 0.016 $ 0.006
June 30, 2007 $ 0.008 $ .0025
September 30, 2007 $ .0023 $ .0007
December 31, 2007 $ .0017 $ .0006

The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. As of April 8, 2008, there were 42 shareholders of record of our common stock.

We have never declared or paid any cash dividends on the capital stock and do not anticipate paying any cash dividends on the capital stock in the foreseeable future. We intend to retain the earnings, if any, to finance the expansion of the business. The declaration and payment of dividends in the future, if any, will be determined by the Board of Directors in light of conditions then existing, including our earnings, financial condition, capital requirements and other factors.

SECURITIES ISSUED DURING FISCAL YEAR ENDING DECEMBER 31, 2007

On February 1, 2006, we entered into a Securities Purchase Agreement with Cornell Capital Partners, L.P. ("Cornell Capital"), Certain Wealth, Ltd. and TAIB Bank, B.S.C.(c) (the "Buyers") pursuant to which the Buyers agreed to purchase secured convertible debentures in the principal amount of $2,000,000 (collectively, the "Debentures"). On February 2, 2006 we sold and issued $1,000,000 in principal amount of debentures to the Buyers. On April 5, 2006, we sold and issued an additional $1,000,000 in principal amount of debentures to the Buyers (the "Second Closing").

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Pursuant to the Securities Purchase Agreement, we were obligated to register for resale a total of 514,403,292 shares of common stock for issuance under the Debentures, and 30,000,000 for issuance under the Warrants. As a condition to the receipt of the second $1,000,000, we agreed to pursue an amendment to our Articles of Incorporation to increase the authorized shares to permit the issuance by the Company of the number of shares it was required to register. We filed a Definitive Proxy Statement with the Securities and Exchange Commission on March 15, 2006 and received the consent from a majority of the common shares on April 24, 2006. We filed the Registration Statement with the Securities and Exchange Commission on April 7, 2006 and the Registration Statement was declared effective on September 11, 2006.

The debentures are convertible at the option of the Buyers any time up to maturity into shares of our common stock, par value $0.001 per share, at the price per share equal to the lesser of (a) $.02916 (the "Fixed Price") or (b) an amount equal to eighty percent (80%) of the lowest volume weighted price of our common stock, as quoted by Bloomberg, LP, for the five (5) trading days immediately preceding the conversion date, which may be adjusted pursuant to the other terms of the Debentures (the "Issuance Formula").

If the closing bid price of our common stock is less than the Fixed Price, we can redeem a portion or all amounts outstanding under the debentures prior to February 1, 2009 (or April 5, 2009 for the debentures issued in the Second Closing) for a price equal to the principal amount and accrued interest thereon being redeemed, plus a redemption premium of twenty percent (20%) of the principal amount being redeemed.

We also entered into a Security Agreement pursuant to which we have granted the Buyers a security interest in and to substantially all our assets to secure repayment of the Debentures.

In connection with the Securities Purchase Agreement, we also issued to Cornell Capital five-year warrants to purchase 30,000,000 shares of our common stock at the following exercise prices: 7,500,000 at $0.02 per share, 7,500,000 at $0.03 per share, 5,000,000 at $0.04 per share, 5,000,000 at $0.05 per share, and 5,000,000 at $0.06 per share.

As of December 31, 2007, the Company has issued 551,831,717 shares of common stock to the Buyers of the Debentures in exchange for $1,056,972 of debt.

NOTICE OF DEFAULT

The Company received a letter dated March 17, 2008 from YA Global Investments, L.P. (f/k/a Cornell Capital Partners, L.P.) ("YA") serving as notice that the Company is in default under the terms of the Debentures and related agreements. YA's letter states that the Company is in default for, among other things, the Company's failure to reserve a sufficient number of authorized shares of common stock to allow for full conversion of the Debentures and YA demanded full payment of the YA debenture. Pursuant to the terms of the Debentures, the Company covenanted that it would reserve a sufficient number of authorized common shares to permit the conversion of the Debentures.

As of the date hereof, YA has not taken any further action pursuant to the notice of default. The Company is currently evaluating options for attempting to increase the number of authorized common shares in order to cure the default. The Company has also had oral discussions with representatives of Taib Bank B.S.C. (c) and Certain Wealth, Ltd. concerning the default and potential cure.

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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF GULF COAST OIL & GAS, INC. SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. GULF COAST'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET CONDITIONS.

GENERAL

We are an exploration stage company engaged in the oil and gas exploration business in the continental United States. We expect that the majority of our initial projects will have a comparatively lower risk profile in order to increase our chances of obtaining positive cash flow in the near term. However, we may also seek to acquire interests in riskier projects that have the potential of developing into major oil or gas fields, and will consider acquiring an interest (working and/or royalty) in proven (based upon offset production and geology reports) but undeveloped drilling locations.

LIQUIDITY AND FINANCIAL CONDITION

At December 31, 2007, cash and cash equivalents were $234,383. Current liabilities at December 31, 2007 were $454,523.

At December 31, 2007, other assets included $22,821 in deferred financing and a deposit on interest in unproved oil and gas leases of $928,810.

As of December 31, 2007, we had a working capital deficit of ($43,680) as compared to a working capital surplus of $423,423 at December 31, 2006.

During 2007, the Company spent approximately $175,212 for work done on the Corpus Christi Project. As of the date hereof, each of the three wells (Weil 8-C, Weil 3-C and Weil 7-C) is in production.

In early 2007, we anticipated that revenues from the three producing wells of the Corpus Christi Project would be sufficient to fund our overhead costs for the near term. While the Corpus Christi Project has generated $209,821 in revenues for us, the wells have not recently produced at anticipated levels. As a result, the Company intends to expend additional monies reworking Weil 8-C in an effort to stimulate production by entering additional up-hole zones. There can be no assurances that we will be successful in our efforts to stimulate production and production from these wells may continue to be insufficient to fund ongoing expenses. If the rework is unsuccessful, we will have to seek additional financing to remain in business. The Company does not currently have sufficient liquid assets to engage in any further oil and gas projects unless additional financing is obtained. There can be no assurance that such financing will be available to the Company or on terms acceptable to the Company.

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RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2007 COMPARED TO YEAR ENDED DECEMBER 31, 2006

REVENUES

The Company generated $223,462 in revenues during the year ended December 31, 2007 while the Company did not generate any revenues in the year ended December 31, 2006 (except for interest income).

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses during the year ended December 31, 2007 decreased to $724,517 from $783,780 in the same period in 2006. This decrease was primarily due to a decrease in professional fees.

NET LOSS TO COMMON SHAREHOLDERS

Net loss to common shareholders was $537,701 or $(0.00) per share for the year ended December 31, 2007 as compared to a net loss of $754,715 or $(0.01) per share for the year ended December 31, 2006. The decrease in net loss for the year was principally due to the receipt of revenues from producing oil and gas wells in 2007.

ACCUMULATED DEFICIT

Since inception, we have incurred substantial operating losses and may incur substantial additional operating losses over the next several years. As of December 31, 2007, our accumulated deficit was $7,588,126.

PLAN OF OPERATION

The Company will need additional capital in order to participate in additional drilling projects. The timing of any additional financing will depend in part on the existing cash flow and the success of the Corpus Christi Project and Saratoga Prospect. We have no commitments for any financing and such financing may not be available when needed.

RISK FACTORS

WE ARE SUBJECT TO VARIOUS RISKS THAT MAY MATERIALLY HARM OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS. IF ANY OF THESE RISKS OR UNCERTAINTIES ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD BE MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.

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RISKS RELATED TO OUR BUSINESS

OUR AUDITORS HAVE EXPRESSED AN OPINION THAT THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

In its report dated April 13, 2008 our auditors, Pollard-Kelley Auditing Services, Inc., expressed an opinion that there is substantial doubt about our ability to continue as a going concern. Our accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. Since inception, we have incurred operating losses and may incur additional operating losses over the next several years. As of December 31, 2007, we had an accumulated deficit of approximately $7,588,126.

We have financed our operations since inception primarily through equity financings, loans from shareholders and other related parties. We may need to raise additional capital to implement our business plan. Such capital is expected to come from the sale of securities. No assurances can be given that such financing will be available in sufficient amounts or at all. Our ability to continue our operating will be dependent upon obtaining such further financing. These conditions raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

WE HAVE AN INSUFFICIENT NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK TO ALLOW FOR THE CONVERSION OF THE DEBENTURES AND THE EXERCISE OF CERTAIN WARRANTS.

The Company's Articles of Incorporation currently authorize the issuance of 1,000,000,000 shares of common stock. As of April 8, 2008, the Company had 967,052,788 shares of common stock issued and outstanding. The Company is currently in default under the Debentures because it has not taken steps to increase its authorized common stock. In addition, without additional authorized shares it will be extremely difficult, if not impossible, for the Company to attract additional investment. The Company needs to increase the number of authorized shares of common stock in order to have an adequate reserve of common stock available for issuance upon exercise of outstanding convertible securities and for future issuance in equity financings.

The Company is currently evaluating options for increasing its authorized shares and plans to attempt to increase its authorized shares in the second quarter of 2008.

WE HAVE A HISTORY OF OPERATING LOSSES AND HAVE BEEN UNPROFITABLE SINCE INCEPTION.

We incurred net losses of approximately $7,394,900 from August 4, 2003 (date of inception) to December 31, 2007, including approximately $537,701 of net loss to common shareholders in the year ended December 31, 2007. Although we will attempt to achieve profitability through our pursuit of our business plan, we have only generated limited revenues to date and cannot assure you that we will obtain significant revenues or achieve profitability.

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THE DEBENTURES CONTAIN CERTAIN COVENANTS PROHIBITING US FROM RAISING CAPITAL AT LESS THAN THE MARKET PRICE.

The Debentures held by the Buyers contain covenants that, subject to certain exceptions, restrict the following activities:

(i) Raising capital from the sale of stock or other securities convertible into stock at a price less than the market price of our common stock on the date of issuance; or

(ii) Granting a security interest in our assets, which security interest may be needed in order to obtain borrowings or capital from a lender.

The existence of these covenants may severely limit our ability to borrow money or raise capital from the sale of stock or convertible securities because any potential purchaser will want to pay a discount to the market price of our stock or because any potential lender will likely require collateral in the form of a security interest on our assets to secure a loan.

FUTURE SALES BY OUR STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.

Sales of our common stock in the public market could lower the market price of our common stock. Sales may also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price that our management deems acceptable or at all. As of April 8, 2008, we had 967,052,788 shares of common stock outstanding, without taking into account additional shares issuable upon exercise of the convertible debentures or warrants.

THE INVESTORS UNDER THE DEBENTURES WILL PAY LESS THAN THE THEN-PREVAILING MARKET PRICE OF OUR COMMON STOCK.

The common stock to be issued under the Debentures is being issued at the lower of (i) a fixed price of $0.029716 or (ii) a 20% discount to the volume weighted average price for the five trading days immediately before the conversion. These discounted sales could cause the price of our common stock to further decline.

THE ISSUANCE OF STOCK UNDER THE DEBENTURES COULD ENCOURAGE SHORT SALES BY THIRD PARTIES, WHICH COULD CONTRIBUTE TO THE FUTURE DECLINE OF OUR STOCK PRICE.

The significant downward pressure on the price of our common stock caused by the issuance of material amounts of common stock under the Debentures could encourage short sales by third parties. In a short sale, a prospective seller borrows stock from a shareholder or broker and sells the borrowed stock. The prospective seller hopes that the stock price will decline, at which time the seller can purchase shares at a lower price to repay the lender. The seller profits when the stock price declines because it is purchasing shares at a price lower than the sale price of the borrowed stock. Such sales could place further downward pressure on the price of our common stock by increasing the number of shares being sold.

OUR BUSINESS AND GROWTH WILL SUFFER IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL.

Our success depends in large part upon the services of a number of key employees and consultants. If we lose the services of one or more of our key employees or consultants, it could have a significant negative impact on our business. In addition, our long term success will in large part be dependent upon our ability to attract and retain qualified geologists, geophysicists, and other personnel.

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WE FACE SIGNIFICANT COMPETITION, AND MANY OF OUR COMPETITORS HAVE RESOURCES IN EXCESS OF OUR AVAILABLE RESOURCES.

We plan to operate in the highly competitive areas of oil and natural gas exploration, exploitation, acquisition and production. We face intense competition from a large number of independent, technology-driven companies as well as both major and other independent oil and natural gas companies in a number of areas such as:

o seeking to acquire desirable producing properties or new leases for future exploration;

o marketing our oil and natural gas production; and

o seeking to acquire the equipment and expertise necessary to operate and develop those properties.

Many of our competitors have financial and other resources substantially in excess of those available to us. This highly competitive environment could harm our business.

OPERATING HAZARD AND UNINSURED RISKS.

Drilling activities are subject to many risks, including the risk that no commercially productive reservoirs will be encountered. There can be no assurance that new wells we drill will be productive or that we will recover all or any portion of our investment. Drilling for oil and natural gas may involve unprofitable efforts, not only from dry wells, but also from wells that are productive, but do not produce sufficient net revenues to return a profit after drilling, operating and other costs. The cost and timing of drilling, completing and operating wells is often uncertain. Our drilling operations may be curtailed, delayed or canceled as a result of numerous factors, many of which are beyond our control, including title problems, weather conditions, delays by project participants, compliance with governmental requirements and shortages or delays in the delivery of equipment and services. Our future drilling activities may not be successful and, if unsuccessful, such failure may have a material adverse effect on our business, financial condition or results of operations.

Our operations are subject to hazards and risks inherent in drilling for and producing and transporting oil and natural gas, such as fires, natural disasters, explosions, encountering formations with abnormal pressures, blowouts, cratering, pipeline ruptures and spills, any of which can result in the loss of hydrocarbons, environmental pollution, personal injury claims and other damage to our properties and those of others. We do not currently maintain insurance against some these risks. The occurrence of an event that is not covered, or not fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations.

REGULATORY RISKS.

Our oil and natural gas exploration and production activities will be subject to extensive laws, rules and regulations promulgated by federal and state legislatures and agencies, including the Federal Energy Regulatory Commission (FERC) and the Environmental Protection Agency. Failure to comply with such laws, rules and regulations can result in substantial penalties. The legislative and regulatory burden on the oil and gas industry will increase our cost of doing business and will affect our profitability.

-10-

Many states (including Louisiana) require permits for drilling operations, drilling bonds and reports concerning operations and impose other requirements relating to the exploration and production of oil and natural gas. These states also have statutes or regulations addressing conservation matters, including provisions for the unitization or pooling of oil and natural gas properties, the establishment of maximum rates of production from wells and the regulation of spacing, plugging and abandonment of such wells.

ENVIRONMENTAL MATTERS.

Our operations and properties will be, like the oil and gas industry in general, subject to extensive and changing federal, state and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to safety and health. The recent trend in environmental legislation and regulation generally is toward stricter standards, and this trend will likely continue. These laws and regulations may require the acquisition of a permit or other authorization before construction or drilling commences and for certain other activities; limit or prohibit seismic acquisition, construction, drilling and other activities on certain lands lying within wilderness and other protected areas; and impose substantial liabilities for pollution resulting from our operations.

The permits required for many of our operations are subject to revocation, modification and renewal by issuing authorities. Governmental authorities have the power to enforce compliance with their regulations, and violations are subject to fines or injunction, or both. Changes in existing environmental laws and regulations or in interpretations thereof could have a significant impact on us, as well as the oil and gas industry in general. The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and comparable state statutes impose strict and arguably joint and several liabilities on owners and operators of certain sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. The Resource Conservation and Recovery Act (RCRA) and comparable state statutes govern the disposal of solid waste and hazardous waste and authorize imposition of substantial fines and penalties for noncompliance. Although CERCLA currently excludes petroleum from its definition of hazardous substance, state laws affecting our operations impose clean-up liability relating to petroleum and petroleum related products. In addition, although RCRA classifies certain oil field wastes as non-hazardous, such exploration and production wastes could be reclassified as hazardous wastes, thereby making such wastes subject to more stringent handling and disposal requirements.

OIL AND NATURAL GAS PRICES FLUCTUATE WIDELY AND LOW PRICES COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS AND FINANCIAL RESULTS BY LIMITING OUR LIQUIDITY AND FLEXIBILITY TO CARRY OUT DRILLING.

Our revenues, operating results and future rate of growth will depend highly upon the prices we receive for our oil and natural gas production. Historically, the markets for oil and natural gas have been volatile and are likely to continue to be volatile in the future. Market prices of oil and natural gas depend on many factors beyond our control, including:

-11-

o worldwide and domestic supplies of oil and natural gas;

o the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;

o political instability or armed conflict in oil-producing regions;

o the price and level of foreign imports;

o the level of consumer demand;

o the price and availability of alternative fuels;

o the availability of pipeline capacity;

o weather conditions;

o domestic and foreign governmental regulations and taxes; and

o the overall economic environment.

We cannot predict future oil and natural gas price movements and prices often vary significantly. Significant declines in oil and natural gas prices for an extended period may have the following effects on our business:

o limit our financial condition, liquidity, ability to finance planned capital expenditures and results of operations;

o reduce the amount of oil and natural gas that we can produce economically;

o cause us to delay or postpone some of our capital projects;

o reduce our revenues, operating income and cash flow; and

o reduce the carrying value of our oil and natural gas properties.

RISKS RELATED TO OUR STOCK

THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE, WHICH COULD CAUSE THE VALUE OF AN INVESTMENT IN OUR STOCK TO DECLINE.

The market price of shares of our common stock has been and is likely to continue to be highly volatile. Factors that may have a significant effect on the market price of our common stock include the following:

o sales of large numbers of shares of our common stocks in the open market, including shares issuable at a fluctuating conversion price at a discount to the market price of our common stock;

o our operating results;

-12-

o our need for additional financing;

o governmental regulation; and

o other factors and events beyond our control.

In addition, our common stock has been relatively thinly traded. Thinly traded common stock can be more volatile than common stock trading in an active public market. We cannot predict the extent to which an active public market for the common stock will develop.

The stock market in general has experienced extreme volatility that often has been unrelated to the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.

As a result of potential stock price volatility, investors may be unable to resell their shares of our common stock at or above the cost of their purchase prices. In addition, companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation. If we were to become the subject of securities class action litigation, this could result in substantial costs, a diversion of our management's attention and resources and harm to our business and financial condition.

FUTURE SALES BY OUR STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.

Sales of our common stock in the public market following this offering could lower the market price of our common stock. Sales may also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price that our management deems acceptable or at all.

As of April 8, 2008, we had 967,052,788 shares of common stock outstanding, without taking into account shares issuable upon exercise of the outstanding debentures and warrants.

OUR COMMON STOCK MAY BE AFFECTED BY LIMITED TRADING VOLUME AND MAY FLUCTUATE SIGNIFICANTLY.

There has been a limited public market for our common stock and there can be no assurance that an active trading market for our common stock will develop. An absence of an active trading market could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially.

OUR COMMON STOCK IS DEEMED TO BE "PENNY STOCK", WHICH MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS.

Our common stock is deemed to be "penny stock" as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult

-13-

for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline. Penny stocks are stock:

o with a price of less than $5.00 per share;

o that are not traded on a "recognized" national exchange;

o whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must still have a price of not less than $5.00 per share); or

o in issuers with net tangible assets less than $2.0 million (if the issuer has been in continuous operation for at least three years) or $5.0 million (if in continuous operation for less than three years), or with average revenues of less than $6.0 million for the last three years.

Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements and supplementary data are attached hereto commencing with Page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 8A. CONTROLS AND PROCEDURES

DISCUSSION OF CONTROLS AND PROCEDURES

As required by Rule 13a-15 or 15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), our Chief Executive Officer/Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) or 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Based on the foregoing evaluation, we have concluded that our disclosure controls and procedures are effective.

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer/Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

-14-

INTERNAL CONTROL

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations.

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.

Management's assessment of the effectiveness of the small business issuer's internal control over financial reporting is as of December 31, 2007. We believe that internal control over financial reporting is effective. We have not identified any, current material weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations.

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have not been any changes in our internal control over financial reporting during the quarter ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 8B. OTHER INFORMATION

None.

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning our directors and executive officers as of the date hereof:

-15-

NAME AGE POSITION
------------------------ --- ------------------------------------
 Rahim Rayani 33 Chairman of the Board, Chief Executive
 Officer and President

RAHIM RAYANI, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

Mr. Rayani has been the Chairman of the Board and Chief Executive Officer of the Company since June of 2005. Since 2003, Mr. Rayani has worked independently, providing management consulting and investment banking services to companies, focusing on the oil and gas and resource mining sectors. From 2001 to 2003, Mr. Rayani was an Investor Relations Executive with Mindshare Communications, Inc., where he managed investor relations services for companies in the mining, oil & gas, and technology sectors.

Our directors hold office until the next annual meeting of our stockholders and until their successors have been duly elected and qualified.

AUDIT COMMITTEE

Since we have only one director, we do not have an audit committee. At such time as we can attract other directors to serve on the Board, we plan to establish an audit committee. Mr. Rayani is not a "financial expert".

CODE OF ETHICS

The Company adopted a Code of Ethics in April of 2004 that applies to its Chief Executive Officer and Principal Accounting and Financial Officer.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors, executive officers and persons who own more than 10% of a class of the Company's equity securities which are registered under the Exchange Act to file with the Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of such registered securities. Such executive officers, directors and greater than 10% beneficial owners are required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms filed by such reporting persons.
To our knowledge, based solely on a review of the copies of such reports furnished to the Company and on representations that no other reports were required, no Forms 3, 4 or 5 relating to our common stock were filed late during 2007.

ITEM 10. EXECUTIVE COMPENSATION

Compensation paid to Officers and Directors is set forth in the Summary Compensation Table below. The Company may reimburse its Officers and Directors for any and all out-of-pocket expenses incurred relating to the business of the Company.

-16-

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the compensation paid by us during the three years ended on December 31, 2007 to our Chief Executive Officer and our other executive officers and executive officers of our subsidiaries, who were serving as executive officers on December 31, 2007 and received total salary and bonus in excess of $100,000 during fiscal year 2007 (the "Named Executive Officers").

 CHANGE IN
 PENSION
 VALUE AND
 NON-EQUITY NONQUALIFIED
 ($) INCENTIVE DEFERRED
 STOCK OPTION PLAN COMPENSATION ALL OTHER
NAME AND PRINCIPAL AWARDS AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL
POSITION YEAR SALARY($) BONUS($) ($) ($) ($) ($) ($) ($)
--------------------------------------------------------------------------------------------------------------------------
Rahim Rayani 2007 $100,000(1) $42,500 -- -- -- -- -- $142,500
Chairman, Chief 2006 $120,000(1) $55,000 -- -- -- -- -- $175,000
Executive Officer and 2005 $ 56,000(2) -- -- -- -- -- -- $56,000
President

(1) A portion of Mr. Rayani's salary was deferred based on the financial condition of the Company.

(2) Represents $8,000 per month for the last seven months of 2005. A portion of this salary was deferred based on the financial condition of the Company.

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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth as of December 31, 2007, the number and percentage of outstanding shares of our common stock beneficially owned by our Named Executive Officers, directors and stockholders owning more than 5% of our common stock and our executive officers and directors as a group:

 SHARES
 BENEFICIALLY PERCENTAGE OF
NAME OF OWNER OWNED(1) CLASS(2)
--------------------------------------------------------------------------------
 Rahim Rayani, Chairman of the Board and CEO 16,500,000 1.7%

 All Named Executive Officers and
 Directors as a Group (1 person) 16,500,000 1.7%

---------------------------

(1) All of the shares are owned directly by Mr. Rayani.
(2) Based on 967,052,788 shares of common stock outstanding as of April 8, 2008

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

-17-

DIRECTOR INDEPENDENCE

Our common stock is quoted on the OTC Bulletin Board interdealer quotation system, which does not have director independence requirements. Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation, or if he or she has accepted any compensation from the company in excess of $100,000 during any 12-month period in the prior three years. Rahim Rayani is the President and Chief Executive Officer of the Corporation and is not deemed to be an independent director under this definition.

ITEM 13. EXHIBITS

INDEX TO EXHIBITS

 EXHIBIT NO. DOCUMENT DESCRIPTION LOCATION
 ----------- -------------------- --------
3.1 Articles of Incorporation filed September 14, 1999 (1)
3.2 Certificate of Designation filed October 7, 2003 (2)
3.3 Articles of Amendment to Articles of Incorporation filed October 15, 2003 (3)
3.4 Certificate of Amendment to Articles of Incorporation filed January 13, 2005 (4)
3.6 Amended and Restated Bylaws (5)
4.1 Specimen of Common Stock Certificate (1)
4.2 Form of Common Stock Purchase Warrant (2)
10.1 Securities Purchase Agreement dated as of February 1, 2006 between the Company and (5)
 Cornell Capital Partners, LP, Certain Wealth, Ltd. and Taib Bank, B.S.C.(c)
10.2 Investor Registration Rights Agreement dated as of February 1, 2006 between the Company (5)
 and Cornell Capital Partners, LP, Certain Wealth, Ltd. and Taib Bank, B.S.C.(c)
10.3 Security Agreement dated as of February 1, 2006 between the Company and Cornell Capital (5)
 Partners, LP, Certain Wealth, Ltd. and Taib Bank, B.S.C.(c)
10.4 First Amendment to Investor Registration Rights Agreement dated as of March, 2006 between (5)
 the Company and Cornell Capital Partners, LP, Certain Wealth, Ltd. and Taib Bank,
 B.S.C.(c)
10.5 Agreement between the Company and Bourgeois Energy, Inc. dated June 17, 2005 relating to (5)
 the Saratoga Prospect
10.6 Business Consulting Services Agreement between the Company and Bourgeois Energy, Inc. (5)
 dated August 15, 2005
31.1 Certification of Chief Executive Officer and Principal Accounting and Financial Officer (6)
 Pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1 Certification of Chief Executive Officer and Principal Accounting and Financial Officer (6)
 Pursuant to Section 906 of the Sarbanes-Oxley Act.

 -18-

99.1 Secured Convertible Debenture issued February 1, 2006 in the amount of $500,000 to (5)
 Cornell Capital Partners, LP (CCP-001)
99.2 Secured Convertible Debenture issued February 1, 2006 in the amount of $250,000 to (5)
 Certain Wealth, Ltd. (CCP-002)
99.3 Secured Convertible Debenture issued February 1, 2006 in the amount of $250,000 to Taib (5)
 Bank, B.S.C.(c)(CCP-003)
99.4 Warrant dated as of February 1, 2006 issued to Cornell Capital Partners, LP (7,500,000 (5)
 shares)
99.5 Warrant dated as of February 1, 2006 issued to Cornell Capital Partners, LP (7,500,000 (5)
 shares)
99.6 Warrant dated as of February 1, 2006 issued to Cornell Capital Partners, LP (5,000,000 (5)
 shares)
99.7 Warrant dated as of February 1, 2006 issued to Cornell Capital Partners, LP (5,000,000 (5)
 shares)
99.8 Warrant dated as of February 1, 2006 issued to Cornell Capital Partners, LP (5,000,000 (5)
 shares)

(1) Filed as an exhibit to Registration Statement on Form SB-2, as amended, filed on April 22, 2001 and
 incorporated herein by reference.
(2) Filed as Exhibit 3.1 to Report on Form 8-K filed on October 20, 2003 and incorporated herein by
 reference.
(3) Filed as Exhibit 3.1 to Report on Form 8-K filed October 23, 2003 and incorporated herein by reference.
(4) Filed as Exhibit 3 to Report on Form 8-K filed January 19, 2005 and incorporated herein by reference.
(5) Filed as an Exhibit to the Company's Annual Report on Form 10-KSB for the year ended December 31, 2005
 and incorporated herein by reference.
(6) Filed herewith.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

The aggregate fees billed for fiscal 2007 for professional services rendered by Pollard-Kelley Auditing Services, Inc. as our principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-QSB and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal year 2007 were $23,500.

The aggregate fees billed for fiscal 2006 for professional services rendered by Pollard-Kelley Auditing Services as our principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-QSB for fiscal year 2006 were $17,000.00.

AUDIT-RELATED FEES

The aggregate fees billed in each of fiscal 2007 and 2006 for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A) were $0 and $0, respectively.

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TAX FEES

The aggregate fees billed in each of fiscal 2007 and 2006 for professional services rendered by our principal accountant tax compliance, tax advice and tax planning were $0 and $0, respectively.

ALL OTHER FEES

The aggregate fees billed in each of fiscal 2007 and 2006 for products and services provided by our principal accountant (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A) were $0 and $0, respectively.

PRE-APPROVAL POLICIES AND PROCEDURES

The decision to retain our principal accountant was approved by the Board of Directors in 2003 before current management was involved with the Company. We do not have a separate audit committee.

-20-

SIGNATURES

In accordance with the requirements of the Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GULF COAST OIL & GAS, INC.

By: /S/ RAHIM RAYANI
 -------------------------------------
 Rahim Rayani
 Chief Executive Officer and President
 (Principal Executive Officer)



By: /S/ RAHIM RAYANI
 ---------------------------------------------
 Rahim Rayani
 Chief Financial Officer
 (Principal Financial Officer and
 Principal Accounting Officer)

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INDEX TO FINANCIAL STATEMENTS

PAGE(S)

FINANCIAL STATEMENTS -- AUDITED

Report of Independent Registered Public Accounting Firm. F-2

Balance Sheet as of December 31, 2007 F-3

Statements of Operations for the years ended
December 31, 2007 and 2006 F-4

Statements of Cash Flows for the years ended
December 31, 2007 and 2006 F-5

Statements of Stockholders' (Deficit) for the years ended
December 31, 2007 and 2006 F-6

Notes to Financial Statements for the years ended

December 31, 2007 and 2006 F-7

F-1

Pollard-Kelley Auditing Services, Inc...........................................

Auditing Services 3250 West Market St, Suite 307, Fairlawn, OH 44333
 330-836-2558

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Gulf Coast Oil and Gas, Inc. and Subsidiary

We have audited the accompanying balance sheets of Gulf Coast Oil and Gas, Inc. and Subsidiary as of December 31, 2007 and 2006, and the related statements of income, changes in stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2007 and the period from August 4, 2003 through December 31, 2007 (since inception). 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.

We conduct our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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.

The Company has not generated significant revenues or profits to date as discussed in Note 8 to the financial statements. This factor among others may indicate the Company will be unable to continue as a going concern. The Company's continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing. Management's plans in relation to these items are also discussed in Note 8 to the financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2007 and the period from August 4, 2003 through December 31, 2007 (since inception), in conformity with U.S. generally accepted accounting standards.

Pollard-Kelley Auditing Services, Inc.

/S/ Pollard-Kelley Auditing Services, Inc.
------------------------------------------
Independence, Ohio
April 13, 2008

F-2

 GULF COAST OIL & GAS, INC.
 (An Exploration Stage Company)
 BALANCE SHEETS

December 31, 2007 and December 31, 2006 December 31, December 31,
 ASSETS 2007 2006
 ----------- -----------
Current Assets
 Cash in banks $ 234,383 $ 573,438
 Accounts receivable -other -- --
 Deferred financing 176,460 176,460
 ----------- -----------
 Total Current Assets 410,843 749,898
Fixed Assets
 Office equipment 7,537 7,537
 Oil equipment 49,897 --
 Less accumulated depreciation (12,342) (4,254)
 ----------- -----------
 45,092 3,283
Other Assets
 Website costs less accumulated
 amortization of $500 and $0 314 450
 Deferred financing - Non-current 22,821 199,281
 Deposit on interest in unproved oil and gas leases 928,810 912,822
 ----------- -----------
 951,945 1,112,553
 ----------- -----------
 Total Assets $ 1,407,880 $ 1,865,734
 =========== ===========

 LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
 Accounts payable $ 62,198 $ 76,812
 Due to shareholder 43,619 47,119
 Accrued interest 313,075 166,912
 Accrued expenses 35,631 35,631
 ----------- -----------
 Total Current Liabilities 454,523 326,474
Long-Term Debt
 Notes payable 943,028 1,965,551
Derivative Liability Arising From Warrants -- 8,333
Stockholders' Equity
 Series A Preferred stock, 1,000,000 shares
 authorized, 0 shares outstanding,
 par value $.001 per share -- --
 Common stock, 1,000,000,000 shares authorized,
 673,639,728 and 134,878,634 shares
 outstanding at respective period ends,
 par value $.001 per share 673,640 134,879
 Additional contributed capital 6,643,063 6,157,601
 Deficit accumulated during exploration stage (7,588,126) (7,050,425)
 Accumulated other comprehensive income 281,752 273,419
 Stock subscription advances -- 49,902
 ----------- -----------
 10,329 (434,624)
 ----------- -----------
 Total Liabilities and Stockholders' Equity $ 1,407,880 $ 1,865,734
 =========== ===========

 See accompanying notes to financial statements.

F-3

 GULF COAST OIL & GAS, INC.
 (An Exploration Stage Company)
 STATEMENT OF OPERATIONS
 For the Years Ending December 31, 2007 and 2006, and for the
 period beginning August 4, 2003 (Inception) through December 31, 2007

 December 31, December 31, Since
 2007 2006 INCEPTION
 ------------- ------------- -------------
Revenues
 Sales $ 209,821 $ -- 209,821
 Interest income 13,641 29,065 42,706
 ------------- ------------- -------------
 223,462 29,065 252,527
Cost of sales
 Exploration costs 36,646 -- 196,271
 Gross Profit 186,816 29,065 56,256
Expenses
 Administrative 724,517 783,780 7,501,476
 ------------- ------------- -------------
 (537,701) (754,715) (7,445,220)

Other income and expenses
 Loss on sale of fixed assets -- -- (684)
 Gain on settlement of debt -- -- 67,693
 Foreign exchange (loss) gain -- -- (16,689)
 ------------- ------------- -------------
 -- -- 50,320
 ------------- ------------- -------------
Loss from continuing operations (537,701) (754,715) (7,394,900)
 ------------- ------------- -------------
Discontinued operations
 Mineral rights abandoned -- -- (193,226)
 ------------- ------------- -------------

Net Loss (537,701) (754,715) (7,588,126)
Other Comprehensive Income
 Decrease in fair value of derivatives 8,333 273,419 273,419
 ------------- ------------- -------------
Net Comprehensive Income / (Loss) $ (529,368) $ (481,296) $ (7,314,707)
 ============= ============= =============

Net loss per share $ (0.00) $ (0.01)
Other comprehensive income per share $ 0.00 $ 0.00
Average shares outstanding 538,761,084 121,728,453


 See accompanying notes to financial statements.

F-4

 GULF COAST OIL & GAS, INC.
 (An Exploration Stage Company)
 STATEMENT OF CASH FLOWS
 For the Years Ending December 31, 2007 and 2006, and for the
 period beginning August 4, 2003 (Inception) through December 31, 2007

 December 31, December 31, Since
 2007 2006 INCEPTION
 ----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss for the period $ (537,702) $ (754,715) $(7,588,127)
 Adjustments to reconcile net earnings to net
 cash provided (used) by operating activities:
 Depreciation 8,088 1,694 23,399
 Amortization 176,596 39,561 221,001
 Services paid by stock 1,700 2,000 5,447,795
 Mineral rights abandoned -- -- 195,226
 Changes in Current assets and liabilities:
 (Increase) decrease in Accounts receivable - other -- 5,248 --
 (Increase) in Deferred financing -- (135,000) (135,000)
 (Decrease) Increase in Accounts payable (14,614) 6,140 62,198
 Increase in Due to shareholder (3,500) 23,983 20,483
 Increase in Accrued interest 146,163 166,912 313,075
 (Decrease) Increase in Accrued expenses -- -- 58,767
 ----------- ----------- -----------
 NET CASH (USED) BY
 OPERATING ACTIVITIES (223,269) (644,177) (1,381,183)
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of Mineral rights -- -- (91,534)
 Purchase of Interest in unproved oil and gas
 leases (15,988) (812,822) (928,810)
 Purchase of Website costs -- -- (27,519)
 Purchase of Fixed assets (49,896) (3,987) (74,163)
 ----------- ----------- -----------
 NET CASH (USED) BY
 INVESTING ACTIVITIES (65,884) (816,809) (1,122,026)
CASH FLOWS FROM FINANCING ACTIVITIES
 Redemption of Preferred stock -- -- --
 Proceeds from Notes payable -- 2,000,000 2,000,000
 Sale of Common stock -- -- 737,400
 Stock subscription advances (49,902) -- 49,902
 ----------- ----------- -----------
 NET CASH PROVIDED BY
 FINANCING ACTIVITIES (49,902) 2,000,000 2,787,302
 ----------- ----------- -----------

NET INCREASE IN CASH (339,055) 539,014 284,093
CASH FROM OTISH DIAMOND MERGER -- -- 192
CASH AT BEGINNING OF PERIOD 573,438 34,424 --
 ----------- ----------- -----------
CASH AT END OF PERIOD $ 234,383 $ 573,438 $ 284,285
 =========== =========== ===========

 See accompanying notes to financial statements.

F-5

 GULF COAST OIL & GAS, INC.
 (An Exploration Stage Company)
 STATEMENT OF STOCKHOLDERS EQUITY
 For the period beginning August 4, 2003 (Inception) through December 31, 2007

 SERIES A
 ADDITIONAL
 PREFERRED STOCK COMMON STOCK CONTRIBUTED RETAINED
 SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
 ----------------------------------------------------------------------------------------
Balance August 4, 2003 -- $ -- -- $ -- $ -- $ --
 Shares issued for services -- -- 24,300,000 24,300 (16,200) --
 Shares issued for cash -- -- 11,700,000 11,700 162,300 --
 Shares issued for mineral rights -- -- 9,000,000 9,000 62,250 --
 Merger with Otish Mountain Company 1,000,000 1,000 323,283 324 (216) (1,167)
 Net loss for the period -- -- -- -- -- (94,138)
 ----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 2003 1,000,000 1,000 45,323,283 45,324 208,134 (95,305)
 Shares issued for services -- -- 60,900,000 60,900 5,119,100 --
 Shares issued for mineral rights -- -- 150 -- 53 --
 Shares issued for cash -- -- 7,902,000 7,902 255,498 --
 Redemption of Preferred Shares (1,000,000) (1,000) -- -- -- --
 Net loss for the period -- -- -- -- -- (6,013,462)
 ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 2004 -- -- 114,125,433 114,126 5,582,785 (6,108,767)
 Shares issued for Debt -- -- 996,360 996 236,124 --
 Shares sold -- -- 4,115,000 4,115 295,885 --
 Shares issued for services -- -- 300,000 300 23,700 --
 Stock subscription advance -- -- -- -- -- --
 Net loss for the period -- -- -- -- -- (186,943)
 ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 2005 -- -- 119,536,793 119,537 6,138,494 (6,295,710)
 Shares issued for debt -- -- 13,341,841 13,342 19,107 --
 Shares issued for services -- -- 2,000,000 2,000 -- --
 Net (loss) income for the period -- -- -- -- -- (754,715)
 ----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 2006 -- -- 134,878,634 134,879 6,157,601 (7,050,425)
 Shares issued for debt -- -- 537,061,084 537,061 485,462 --
 Shares issued for services -- -- 1,700,000 1,700 -- --
 Repayment of advanced funds -- -- -- -- -- --
 Net (loss) income for the period -- -- -- -- -- (537,701)
 ----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 2007 -- $ -- 673,639,718 $ 673,640 $ 6,643,063 $(7,588,126)
 =========== =========== =========== =========== =========== ===========




 ACCUMULATED
 OTHER STOCK
 COMPREHENSIVE SUBSCRIPTION
 INCOME ADVANCES TOTAL
 ------------------------------------------


Balance August 4, 2003 $ -- $ -- $ --
 Shares issued for services -- -- 8,100
 Shares issued for cash -- -- 174,000
 Shares issued for mineral rights -- -- 71,250
 Merger with Otish Mountain Company -- -- (59)
 Net loss for the period -- -- (94,138)
 ----------- ----------- -----------
Balance December 31, 2003 -- -- 159,153
 Shares issued for services -- -- 5,180,000
 Shares issued for mineral rights -- -- 53
 Shares issued for cash -- -- 263,400
 Redemption of Preferred Shares -- -- (1,000)
 Net loss for the period -- -- (6,013,462)
 ----------- ----------- -----------
Balance at December 31, 2004 -- -- (411,856)
 Shares issued for Debt -- -- 237,120
 Shares sold -- -- 300,000
 Shares issued for services -- -- 24,000
 Stock subscription advance -- 49,902 49,902
 Net loss for the period -- -- (186,943)
 ----------- ----------- -----------
Balance at December 31, 2005 -- 49,902 12,223
 Shares issued for debt -- -- 32,449
 Shares issued for services -- -- 2,000
 Net (loss) income for the period 273,419 -- (481,296)
 ----------- ----------- -----------
Balance December 31, 2006 273,419 49,902 (434,624)
 Shares issued for debt -- -- 1,022,523
 Shares issued for services -- -- 1,700
 Repayment of advanced funds -- (49,902) (49,902)
 Net (loss) income for the period 8,333 -- (529,368)
 ----------- ----------- -----------
Balance December 31, 2007 $ 281,752 $ -- $ 10,329
 =========== =========== ===========


 See accompanying notes to financial statements.

F-6

GULF COAST OIL & GAS, INC.
(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS
December 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

HISTORY

Otish Mountain Diamond Company (formerly First Cypress, Inc.), a Nevada corporation, was organized on September 14, 1999. From inception to September 30, 2003, the Company had not generated any revenues and was considered a development stage enterprise, as defined in Financial Accounting Standards Board No. 7. The Company was in the process of developing an internet computer software program known as EngineMax. Essentially, software development was suspended in November 2002 due to cash flow constraints. In October 2002, the Company acquired certain items constituting the "Money Club Financial" business concept and business plan. Due to the Company's inability to raise the necessary equity capital to further the Money Club Financial business concept, no monies were spent furthering the business concept from the date of acquisition to September 30, 2003. The Company discontinued its involvement in these operations in the third quarter of 2003.

On November 30, 2003, the Company successfully acquired 100% of Otish Mountain Diamond Corp. ("Otish Corp."). The business activities of Otish Corp. became the business activities of the Company. In connection with the merger the capitalization of the Company was amended to reflect a 220:1 reverse stock split and to increase the authorized capital to 600,000,000 shares, consisting of 500,000,000 common shares with a par value of $0.001, and 100,000,000 preferred shares with a par value of $0.001. Also, 1,000,000 shares of a Serial A Preferred were issued for services rendered. Finally, the then president of the Company entered into two agreements with the Company; one, assumed all the known liabilities of the company, and the second, agreed to convert debt owed the president of $236,000 into 236,000 shares of Company common stock.

The Company's income statement at the date of merger was as follows:

Revenues $ -0-
Expenses:
Exploration costs $ 36,293
Administrative $136,284
Net Loss $172,577

Otish Mountain Diamond Corp. was incorporated in the state of Nevada on August 4, 2003. The Company was formerly engaged in the mining and exploration business and had mineral rights in the Otish Mountain and Superior Craton regions of Canada.

On November 30, 2003, the Company declared a 1 for 220 reverse stock split. On July 13, 2005, the Company declared a 3 for 1 forward stock split. All shares amount referenced in these footnotes represent the share equivalents after taking into account, to the extent applicable, the effect of the reverse stock split and the forward stock split. All share amounts in the financial statements have also been adjusted retroactively for the reverse and forward stock split.

In August and November 2003, the Company issued 40,909 shares of its common stock and paid $77,745 for mineral rights in the Otish Mountain and Superior Craton regions of Quebec, Canada.

F-7

GULF COAST OIL & GAS, INC.
(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS
December 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

In the first quarter of 2004 the Company issued 60,900,150 shares of common stock for services valued at $5,180,053. Valuation was based on the approximate trading value of the Company's shares on the date issued.

During the third quarter of 2004 the Company issued 7,902,000 shares of common stock to liquidate $263,400 of advances.

On January 13, 2005, the Company changed its name to Gulf Coast Oil & Gas, Inc.

On April 15, 2005, the Company settled an accounts payable debt of $232,120 for 696,360 shares of common stock.

On May 2, 2005, the Company received $100,000 for 1,665,000 shares of common stock.

On May 26, 2005, the Company settled a current period debt of $5,000 for 300,000 of common stock.

On June 17, 2005, the Company received $100,000 for 1,200,000 shares of common stock.

On July 17, 2005, the Company received $50,000 for 625,000 shares of common stock.

On August 15, 2005, the Company issued 300,000 shares of common stock for consulting services valued at $24,000.

On September 26, 2005, the Company received $50,000 for 625,000 shares of common stock.

On November 14, 2006, the Company issued 1,500,000 shares of common stock for consulting services valued at $24,000.

On December 31, 2006, the Company issued 500,000 shares of common stock for consulting services valued at $11,000.

On January 1, 2007, the Company issued 1,700,000 shares of common stock for consulting services valued at $1,700.

FINANCIAL STATEMENT PRESENTATION
The Company was a shell at the time of the acquisition having only $192 in assets; the acquisition was treated as a reverse merger whereby the acquired company is treated as the acquiring company for accounting purposes.

AN EXPLORATION STAGE COMPANY
The Company is an Exploration Stage Company since it is engaged in the search for mineral deposits, which are not in the development or productions stage. As an exploration stage company the Company will present, Since Inception, results on its statements of operations, stockholders' equity and cash flows.

F-8

GULF COAST OIL & GAS, INC.
(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS
December 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There was no cash paid during the periods for interest or taxes.

PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Maintenance, repairs and renewals are expensed as incurred. Depreciation of property and equipment is provided for over their estimated useful lives, which range from three to five years, using the straight-lined method.

WEBSITE DEVELOPMENT COSTS
The Company has expended $1,500 in Website Development Costs, for internal use software. These costs are being amortized over a three year estimated life.

MINERAL RIGHTS
The Company uses the "full costs method" of accounting for its mineral reserves. Under this method of accounting, properties are divided into cost centers. The Company presently has two cost centers. All acquisition, exploration, and development costs for properties within each cost center are capitalized when incurred. The Company intends to deplete these costs equally over the estimated units to be recovered from the properties. These costs were written off at December 31, 2004 as part of the cost of mineral rights abandoned.

DEPOSIT ON INTEREST IN UNPROVED OIL AND GAS LEASES
On June 8, 2005, the Company paid $100,000 to acquire, subject to lease availability, a 75% working interest in oil and gas leases in Louisiana. Under the terms of the agreement the Company will pay 100% of the costs of acquisition, exploration and development of the leases, the lease are subject to overriding royalties, and has one year to submit the remaining portion of the total costs. In the event the leases are unavailable, the funds advanced, less expense incurred will be returned to the Company.

On August, 2006, the Company paid $30,000 to renew the lease in Louisiana for two additional years.

On May 9, 2006, the Company paid a deposit of $262,500 on oil and gas property (the Weil 8-C) in Corpus Christi Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 8-C well for a 46.66% billing interest.

On August 1, 2006, the Company paid $104,533 to hookup the 8-C to bring the well production ready. The facility had not been placed into service at December 31, 2006. When placed into service the asset will be moved from investments to fixed assets and depreciated on a straight-line basis over a seven year life.

On August 15, 2006, the Company paid a deposit of $108,251 on oil & gas property, namely, the Weil 3-C, in Corpus Christi Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 3-C well for a 46.66% billing interest.

F-9

GULF COAST OIL & GAS, INC.
(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS
December 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

On August 31, 2006, The Company paid a deposit of $134,520.78 on oil & gas property, namely, the Weil 7-C, in Corpus Christi Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Well 7-C well for a 46.66% billing interest.

On September 19, 2006, the Company paid $135,948.57 to bring the 3-C and 7-C wells into production as well as convert both the 2-C and 6-C wells on property to Salt Water disposal wells. It is the intent of the Company to offer Salt Water disposal services to neighboring companies as a side revenue generating service. The facility had not been placed into service at December 31, 2006. When placed into service the assets will be moved from investments to fixed assets and depreciated on a straight-line basis over a seven year life.

USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

NOTE 2 - MINERAL RIGHTS

Otish Mountain Diamond Corporation

On August 19, 2003 the Company purchased the mineral rights for 60,933 acres in the Otish Mountain and Superior Craton regions of Quebec, Canada. The claims were purchased for $42,506 and 17,045 shares of common stock. The Company is required to spend a minimum of $135 CDN per mining claim on exploration before the expiration date of each claim. The Company is required to spend $105 CDN per claim maintenance/renewal fee to the appropriate governmental authority before the expiration date of the mining claim. If the Company fails to meet its obligations under this agreement the seller has the option to make the expenditures and to reassume title to the mining claims.

On November 4, 2003 the Company purchased the mineral rights for 775 acres in the Otish Mountain region of Quebec, Canada. The Claims were purchased for $1,855 and 3409 shares of common stock. The Company is required to pay a 2% royalty of the net smelter returns and a 2% royalty on the gross overriding royalty as defined in the agreement. The Company shall also pay to the seller $5,000 CDN minimum annual advance royalty beginning on November 1, 2004 and each year thereafter. The Company is also required to keep the property in good standing for 1 year or the seller shall be entitled to reacquire the claims.

On November 4, 2003 the Company entered into a joint venture agreement for the mineral rights for 15,361 acres in the Otish Mountain region of Quebec, Canada. The investment was $33,383 and 20454 shares of common stock. The Company paid the required claim tax/renewal fees of $12,495 CDN by the due date of November 27, 2003. The Company was required to make a minimum advanced royalty payment of $15,000 CDN once mining stage began. Royalties were subject to underlying royalties of 2% of the net smelter returns and 2% of the gross overriding royalty as defined in the agreement. The Company's total outlay for the joint venture was not to exceed $375,000 CDN. The Company owned 45% of the joint venture.

F-10

GULF COAST OIL & GAS, INC.
(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS
December 31, 2007

NOTE 2 - MINERAL RIGHTS - CONTINUED

At December 31, 2004 the Company decided to abandon the above mineral rights. The balance of the rights and the net book value of the website development costs were expensed. The total amount written off was $195,226.

NOTE 3 - DEPOSIT ON INTEREST IN UNPROVED OIL AND GAS LEASES

On June 8, 2005, the Company paid $100,000 to acquire, subject to lease availability, a 75% working interest in oil and gas leases in Louisiana. Under the terms of the agreement the Company will pay 100% of the costs of acquisition, exploration and development of the leases, the leases are subject to overriding royalties, and has one year

to submit the remaining portion of the total costs. In the event the leases are unavailable, the funds advanced, less expenses incurred will be returned to the Company.

On August, 2006, the Company paid $30,000 to renew the lease in Louisiana for two additional years.

On August 1, 2006, The Company paid $104,533 to hookup the 3-C to bring the well production ready. The facility had not been placed into service at December 31, 2006. When placed into service the asset will be moved from investments to fixed assets and depreciated on a straight-line basis over a seven year life.

On August 31, 2006, The Company paid a deposit of $134,520.78 on oil & gas property, namely, the 7-C in Corpus Christi Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Well 7-C well for a 46.66% billing interest.

On September 19, 2006, the Company paid $135,948.57 to bring the 3-C and 7-C wells into production as well as convert both the 2-C and 6-C wells on property to Salt Water disposal wells. It is the intent of the Company to offer Salt Water disposal services to neighboring companies as a side revenue generating service. The facility had not been placed into service at December 31, 2006. When placed into service the asset will be moved from investments to fixed assets and depreciated on a straight-line basis over a seven year life.

During the second quarter 2007 the Company invested $15,988 on the Corpus Christi Project. In the first quarter of 2007, all the wells, except the Louisiana wells generated revenues. Accordingly $49,897 was transferred to depreciable assets and $732,926 to Oil reserves.

F-11

GULF COAST OIL & GAS, INC.
(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS
December 31, 2007

NOTE 4 - NOTES PAYABLE

On February 1, 2006, the Company entered into a Securities Purchase Agreement with Cornell Capital Partners, L.P., Certain Wealth, Ltd., and TAIB Bank, B.S.C. pursuant to which the Buyers agreed to purchase secured convertible debentures in the principal amount of $2,000,000. On February 2, 2006 the Company sold and issued $1,000,000 in principal amount of Debentures to the Buyers. In connection with the Securities Purchase Agreement, the Company issued Cornell Capital five-year warrants to purchase 30,000,000 shares of our common stock at the following exercise prices: 7,500,000 at $0.02 per share, 7,500,000 at $0.03 per share, 5,000,000 at $0.04 per share, 5,000,000 at $0.05 per share, and 5,000,000 at $0.06 per share.

The debentures are convertible at the option of the Buyers any time up to maturity into shares of the Company's common stock. The debentures have a three-year term and accrue interest at 10% per year. All unpaid interest and principal are due on or before February 1, 2009.

On April 5, 2006, the Company sold the balance, $1,000,000, of the secured convertible debentures. The terms and conditions are the same. The debentures have a three-year term and accrue interest at 10% per year. All unpaid interest and principal are due on or before April 5, 2009.

On September 14, 2006, the Company exchanged 892,857 shares of common stock for the retirement of $20,000 of convertible notes payable.

In the fourth quarter of 2006, the Company exchanged 12,448,984 shares of common stock for the retirement of $12,449 of convertible notes payable.

In the first quarter of 2007, the Company exchanged 22,730,158 shares of common stock for the retirement of $170,000 of convertible notes payable.

In the second quarter of 2007, the Company exchanged 88,728,878 shares of common stock for the retirement of $277,049 of convertible notes payable.

In the Third quarter of 2007, the Company exchanged 291,837,000 shares of common stock for the retirement of $440,280 of convertible notes payable/

In the Fourth quarter of 2007, the Company exchanged 135,193,840 shares of common stock for the retirement of $135,194 of convertible notes payable.

At year end, the Company no longer had the necessary shares of common stock in treasury to effect the conversion of the notes to common stock as required under the convertible loan agreements. The Company is now in default on the balance of the Debentures.

Maturities of long term debt:

2006 $ -0-
2007 $ -0-
2008 $ -0-
2009 $ 943,028

F-12

GULF COAST OIL & GAS, INC.
(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS
December 31, 2007

NOTE 5 - DERIVATIVE LIABILITY ARISING FROM WARRANTS

The Company accounts for debt with embedded conversion features and warrant issues in accordance with EITF 98-5: ACCOUNTING FOR CONVERTIBLE SECURITIES WITH BENEFICIAL CONVERSION FEATURES OR CONTINGENCY ADJUSTABLE CONVERSION and EITF No. 00-27: APPLICATION OF ISSUE NO 98-5 TO CERTAIN CONVERTIBLE INSTRUMENTS. Conversion features determined to be beneficial to the holder are valued at fair value and recorded to additional paid in capital. The Company determines the fair value to be ascribed to the detachable warrants issued with the convertible debentures utilizing the BLACK-SCHOLES method. Any discount derived from determining the fair value to the debenture conversion features and warrants is amortized to financing cost over the life of the debenture. The unamortized discount, if any, upon the conversion of the debentures is expensed to financing cost on a pro rata basis.

Debt issue with the variable conversion features are considered to be embedded derivatives and are accountable in accordance with FASB 133; ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The fare value of the embedded derivative is recorded to derivative liability. This liability is required to be marked each reporting period. The resulting discount on the debt is amortized to interest expense over the life of the related debt.

NOTE 6 - SERIES A PREFERRED STOCK

Each share of preferred has 15 votes compared to each share of common, which has only one vote. In the second quarter 2004 all outstanding shares of Preferred Stock were redeemed for $1,000.

NOTE 7 - RELATED PARTIES

The Company owes its present President $43,619 and $47,119 for compensation and expense reimbursement at December 31, 2007 and December 31, 2006 respectively.

NOTE 8 - GOING CONCERN

The Company has not generated significant revenues or profits to date. This factor among others may indicate the Company will be unable to continue as a going concern. The Company's continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing.

In early 2007, the Company anticipated that revenues from the three producing wells of the Corpus Christi Project would be sufficient to fund its overhead costs for the near term. While the Corpus Christi Project has generated $209,821 in revenues, the wells have not recently produced at anticipated levels. As a result, the Company intends to expend additional monies reworking Weil 8-C in an effort to stimulate production by entering additional up-hole zones. There can be no assurances that we will be successful in our efforts to stimulate production and production from these wells may continue to be insufficient to fund ongoing expenses. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

F-13

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