Texhoma Energy Inc (Other) (10QSB)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2006

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from to

Commission file number: 000-31987

TEXHOMA ENERGY, INC.

(Name of small business issuer in its charter)

Nevada	20-4858058
(State of organization)	(I.R.S. Employer Identification No.)

100 Highland Park Village

Dallas, Texas 75205

(Address of principal executive offices)

(214) 295-3380

(Registrant's telephone number)

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

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 the 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 [ ].

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

As of September 25, 2007 there were 238,474,724 shares of the issuer's common stock outstanding.

While the Issuer’s Financial Statements and Results of Operations as disclosed in this Report on Form 10-QSB are as of the quarters ended March 31, 2006 and 2005, the other Items disclosed herein have been updated to be current to the best of the Company’s ability (unless otherwise stated) as of the date this Report was filed.

TEXHOMA ENERGY, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

March 31, 2006 and September 30, 2005

ASSETS	March 2006		September 2005
	(unaudited)
Current Assets
Cash and cash equivalents	$	107,121	$	149,805
Restricted cash		2,669,966
Accounts receivable-miscellaneous		6,566
Accounts receivable-net oil and gas production		227,664

Total Current Assets		3,011,317		149,805

Oil and Gas Properties, net of depletion of $299,444 at March 31, 2006		8,973,181

Other Assets		944,585

TOTAL ASSETS	$	12,929,083	$	149,805

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable	$	41,497	$	27,449
Accrued expenses		191,717		122,509
Notes payable related parties		1,085,000		1,045,000
Notes payable		2,500,000

Total Current Liabilities		3,818,214		1,194,958

Long term notes payable		8,500,000


Commitments and Contingencies (Note 9)		-			-

Stockholders’ Equity
Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding		-			-
Common stock, $0.001 par value, 300,000,000 shares authorized, 153,812,252 and 106,812,252 shares issued and outstanding at March 2006 and September 2005, respectively		153,812			106,812
Additional paid-in capital		8,055,794			6,222,794
Retained deficit		(7,598,737	)		(7,374,759	)

Total Stockholders’ Equity		610,869			(1,045,153	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	12,929,083		$	149,805

See accompanying summary of accounting policies and notes to financial statements.

TEXHOMA ENERGY, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended March 31, 2006 and 2005
And for the period from September 28, 1998 (Inception) to March 31, 2006

													For the Period
													from September 28, 1998
	Three Months Ended March 31,						Six Months Ended March 31,						(inception) to
	2006			2005			2006			2005			March 31, 2006
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues:
Oil and gas interests	$	466,137		$	-		$	466,137		$	-		$	497,387

Total revenues		466,137			-			466,137			-			497,387

Operating expenses:
Oil and gas exploration		178,599			2,432,639			178,599			2,708,083			1,888,040

Gross Margin		287,538			(2,432,639	)		287,538			(2,708,083	)		(1,390,653	)


Bad debt expense		-			-			-			-			-
Depletion		299,444			-			299,444			-			299,444
General and administrative expenses		129,490			(14,890	)		200,166			994,400			5,806,891

Operating income (loss)		(141,396	)		(2,417,749	)		212,072	)		3,702,483	)		(7,496,988	)


Other income (expenses):
Research and development														(89,843	)
Interest income		731			-			731			-			731
Interest expense		(12,637	)		-			(12,637	)		-			(12,637	)

Total other income (expense)		(11,906	)		-			(11,906	)		-			(101,749	)

Income (loss) before income taxes		(153,302	)		(2,417,749	)		(223,978	)		(3,702,483	)		(7,598,737	)

Net income (loss)	$	(153,302	)	$	(2,417,749	)	$	(223,978	)	$	(3,702,483	)	$	(7,598,737	)


Weighted average common shares outstanding		115,345,586			101,990,029			111,032,032			90,626,840
Diluted Weighted average common shares outstanding		115,865,030			101,990,029			111,288,900			90,626,840

Basic and diluted earnings (loss) per share:	$	(0.00	)	$	(0.02	)	$	(0.00	)	$	(0.04	)



The accompanying notes are an integral part of these consolidated condensed financial statements

Texhoma Energy, Inc.
And Subsidiary
A Development Stage Company
Statements of Stockholders' Equity (Deficit)
For the period from September 28, 1998 (Date of Inception) to March 31, 2006


																		Accumulated
											Paid-In Capital							Deficit during			Total Stockholders'
	Common Stock				Preferred Stock				Paid-In		Preferred		Contributed		Subscriptions			Development			Equity
	Shares		Amount		Shares		Amount		Capital		Stock		Capital		Received			Stage			[Deficit]
Balance, at inception		-	$	-		-	$	-	$	-	$	-	$	-	$	-		$	-		$	-
Net (loss) for the year		-		-		-		-		-		-		-		-			-			-
Balance, September 30, 1998		-		-		-		-		-		-		-		-			-			-

Issuance of stock at $.1875 per share, October 5, 1998		266,667		267		-		-		49,733		-		-		-			-			50,000
Net (loss) for the year		-		-		-		-		-		-		-		-			(50,485	)		(50,485	)
Balance, September 30, 1999		266,667		267		-		-		49,733		-		-		-			(50,485	)		(485	)

Net (loss) for the year		-		-		-		-		-		-		-		-			(485	)		(485	)
Balance, September 30, 2000		266,667		267		-		-		49,733		-		-		-			(50,970	)		(970	)

Shares issued at $5.625 per share, June 30, 2001:
For compensation		2,667		3		-		-		14,997		-		-		-			-			15,000
For acquisition		53,333		53		-		-		299,947		-		-		(300,000	)		-			-

Contributed capital	-		-		-	-	-		-	193,328	-		-		193,328
Net (loss) for the year	-		-		-	-	-		-	-	-		(218,587	)	(218,587	)
Balance, September 30, 2001	322,667		323				364,677		-	193,328	(300,000	)	(269,557	)	(11,229	)

Shares issued at $5.625 per share for consulting services:
January 7, 2002	160		0		-	-	900		-	-	-		-		900
June 15, 2002	46,176		46		-	-	259,694		-	-	-		-		259,740
July 7, 2002	1,200		1		-	-	6,749		-	-	-		-		6,750
Cancellation of outstanding shares, November 2001	(53,333	)	(53	)	-	-	(299,947	)	-	-	300,000		-		-
Contributed capital	-		-		-	-	-		-	232,418	-		-		232,418
Net (loss) for the year	-		-		-	-	-		-	-	-		(482,114	)	(482,114	)
Balance, September 30, 2002	316,869		317				332,073		-	425,746	-		(751,671	)	6,465

Shares issued for consulting services:
11/19/2002 at $18.75 per share	13,333		13		-	-	249,987		-	-	-		-		250,000
1/1/2003 at $5.625 per share	3,333		3		-	-	18,747		-	-	-		-		18,750
7/1/2003 at $.9375 per share	20,320		20		-	-	19,030		-	-	-		-		19,050
9/22/2003 at $8.625 per share	5,067		5		-	-	43,695		-	-	-		-		43,700
9/22/2003 at $.9375 per share	13,333		13		-	-	12,487		-	-	-		-		12,500
Contributed capital	-		-		-	-			-	194,258	-		-		194,258
Net (loss) for the year	-		-		-	-	-		-	-	-		(567,865	)	(567,865	)
Balance, September 30, 2003	372,256		372		-	-	676,018		-	620,004	-		(1,319,536	)	(23,142	)

Shares issued for consulting services:
at $7.5 per share, October 10, 2003	336,267		336		-	-	2,521,664		-	-	(2,380,000	)	-		142,000
at $.75 per share, October 10, 2003	52,960		53		-	-	39,667		-	-	-		-		39,720
at $1.5 per share, October 10, 2003	3,333		3		-	-	4,997		-	-	-		-		5,000

at $2.625 per share, October 15, 2003	5,333	5	-	-	13,995	-	-	-	-	14,000
at $1.875 per share, November 26, 2003	4,000	4	-	-	7,496	-	-	-	-	7,500
at $1.875 per share, December 5, 2003	4,000	4	-	-	7,496	-	-	-	-	7,500
at $2.625 per share, December 15, 2003	6,667	7	-	-	17,493	-	-	-	-	17,500

Reclassification of contributed capital to accounts payable shareholder, net	-		-		-		-		-		-	(217,614	)	-	-	(217,614	)
Shares cancelled that were issued October 10, 2003	(274,533	)	(275	)	-		-		(2,058,725	)	-	-		2,059,000	-	-
Write off of receivable from shareholder	-		-		-		-		-		-	-		321,000	-	321,000
Shares issued for services:
at $1.5 per share, January 29, 2004	5,333		5		-		-		7,995		-	-		-	-	8,000
at $1.125 per share, January 29, 2004	1,600		2		-		-		1,798		-	-		-	-	1,800
at $4.5 per share, January 29, 2004	22,667		23		-		-		101,977		-	-		-	-	102,000
at $.75 per share, February 29, 2004	112,533		113		-		-		84,287		-	-		-	-	84,400
Issuance of 1,000,000 preferred stock for option exercised, May 5, 2004	-		-		1,000,000		1,000		19,000		180,000	-		-	-	1,200,000
Conversion of 1,000,000 preferred stock into 20,000,000 restricted common shares, May 17, 2004	533,333		533		(1,000,000	)	(1,000	)	467		-	-		-	-	(1,000,000	)
Restricted shares issued for services, at $.75 per share, May 17, 2004	35,200		35		-		-		26,365		-	-		-	-	26,400

Restricted shares issued for services, at $.75 per share, May 17, 2004	118,991		119		-	-	89,124		-	-	-	-		89,243
Restricted shares issued for services, at $.75 per share, May 17, 2004	53,067		53		-	-	39,747		-	-	-	-		39,800
Restricted shares issued for services, at $.75 per share, May 17, 2004	86,076		86		-	-	64,471		-	-	-	-		64,557
Restricted shares issued for acquisition of business, August 16, 2004, Cancelled for non-performance, October 13, 2004	-		-		-	-	-		-	-	-	-		-
Restricted shares issued for acquisition of business, August 26, 2004, Cancelled for non-compliance, October 13, 2004	-		-		-	-	-		-	-	-	-		-
Shares issued for rounding	(126,895	)	(127	)	-	-	127		-	-	-	-		-
Shares issued for services, at $.075 per share, September 9, 2004	10,028,572		10,029		-	-	742,114		-	-	-	-		752,143
Shares issued for services, at $.075 per share, September 20, 2004	10,028,572		10,029		-	-	742,114		-	-	-	-		752,143
Shares issued for services, at $.075 per share, September 29, 2004	10,000,000		10,000		-	-	740,000		-	-	-	-		750,000
Shares cancelled in consideration of third party asset, November 1, 2004	(533,336	)	(533	)	-	-	(132,801	)	-	-	-	-		(133,334	)
Net (loss) for the year	-		-		-	-	-		-	-	-	(3,222,977	)	(3,222,977	)
Balance, September 30, 2004	30,875,996		30,876		-	-	3,756,886		180,000	402,390	-	(4,542,513	)	(172,361	)

Transfer of Paid in Capital Preferred Stock and Contributed Capital to Paid in Capital	-	-	-	-	582,390		(180,000	)	(402,390	)	-	-		-
Shares issued for services, October 5, 2004 at $.075 per share	6,336,256	6,336	-	-	468,883		-		-		-	-		475,219
Shares issued for services, October 5, 2004 at $.075 per share	7,600,000	7,600	-	-	562,400		-		-		-	-		570,000
Restricted shares issued for acquisition of business, November 4, 2004	56,000,000	56,000	-	-	258,441		-		-		-	-		314,441
Shares issued, on March 7, 2005 at $.10 per share	2,000,000	2,000	-	-	198,000		-		-		-	-		200,000
Shares issued, on August 20, 2005 at $.10 per share	2,000,000	2,000	-	-	198,000		-		-		-	-		200,000
Shares issued, on September 18, 2005 at $.10 per Share	2,000,000	2,000	-	-	198,000		-		-		-	-		200,000
Correction for prior years rounding	-	-	-	-	(206	)	-		-		-	-		(206	)
Net (loss) for the year	-	-	-	-	-		-		-		-	(2,832,246	)	(2,832,246	)
Balance, September 30, 2005	106,812,252	106,812	-	-	6,222,794		-		-		-	(7,374,759	)	(1,045,153	)
Shares issued on February 6, 2006 at $.04 per share	2,000,000	2,000			78.,000									80,000
Shares issued on March 15, 2006 at $0.04 per share	37,500,000	37,500			1,462,500									1,500,000
Shares issued on March 24, 2006 at $0.04 per share	7,500,000	7,500			292,500									300,000
Net (loss) at March 31, 2006												(223,978	)	(223,978)
Balance, March 31, 2006	153,812,252	153,812	-	-	8,055,794							(7,598,737)		610,869

The accompanying notes are an integral part of these consolidated condensed financial statements

TEXHOMA ENERGY, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS


													For the Period
													from September 28, 1998
	Three months ended March 31,						Six months ended March 31,						(inception) to
	2006			2005			2006			2005			March 31, 2006
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash flows from operating activities:

Net (loss)	$	(153,302	)	$	(2,417,749	)	$	(223,978	)	$	(3,702,483	)	$	(7,598,737	)
Adjustments to reconcile net (loss) to
net cash provided by (used in) operating activities:
Depletion and amortization		302,873			-			302,873			-			302,873
Stock issued for services		-			(275,445	)		-			1,065,078			4,484,395
Stock based compensation		-			-			-			-			888,042

Oil and gas exploration costs		95,000			2,708,083			95,000			2,708,083			1,804,441
		-												-
Changes in assets and liabilities:					-
Accounts receivable		(227,664	)					(227,664	)					(227,664	)
Accounts payable		2,255			(55,382	)		7,483			(89,490	)		34,932
Accrued liabilities		52,208			2,790			69,208			(18,891	)		202,674
Other		-			-			-						(7,272	)
Net cash provided by (used in) operating activities		71,370			(37,703	)		22,922			(37,703	)		(116,316	)

Cash flows from investing activities:
Investment in Black Swan		-			(1,245,000	)		-			(1,245,000	)		(1,395,000	)
Oil and Gas Property Investments		(10,315,639	)		-			(10,315,639	)		-			(10,315,639	)
Other Assets		-						-			-			(10,957	)
Net cash (used in) investing activities		(10,315,639	)		(1,245,000	)		(10,315,639	)		(1,245,000	)		(11,721,596	)

Cash flows from financing activities:
Loans from affiliate		140,000			945,000			140,000			945,000			1,185,000
Loan repayment to affiliate		-			(50,000	)		(100,000	)		(50,000	)		(100,000	)
Notes payable		11,000,000						11,000,000						11,000,000
Stock issued for asset purchase		1,580,000						1,580,000						1,580,000
Proceeds from issuance of common stock		300,000			400,000			300,000			400,000			950,000
Net cash provided by financing activities		13,020,000			1,295,000			12,920,000			1,295,000			14,615,000

Increase (decrease) in cash and cash equivalents		2,775,731			12,297			2,627,283			12,297			2,777,088
Cash and cash equivalents at beginning of period		1,357			-			149,805			-			-
Cash and cash equivalents at end of period	$	2,777,088		$	12,297		$	2,777,088		$	12,297		$	2,777,088



The accompanying notes are an integral part of these consolidated condensed financial statements

TEXHOMA ENERGY, INC. AND SUBSIDIARY

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three and six months ended March 31, 2006

1. Summary of Significant Accounting Policies

Description of Business - Texhoma Energy, Inc. was originally incorporated as Pacific Sports Enterprises, Inc. in 1998. Texhoma is engaged in the exploration for and the production of hydrocarbons, more commonly known as the exploration and production of crude oil and natural gas.

In November 2004, Texhoma acquired a 40% interest in Black Swan Petroleum Pty. Ltd. and its wholly owned subsidiary, Black Swan Petroleum (Thailand) Ltd. (“BSP”). BSP held a 100% interest in a large offshore petroleum concession located in the Gulf of Thailand, adjacent to the Eastern Thai coastline, in water depths averaging 20 meters. The terms of the acquisition included issuance of Company stock which resulted in a change in control of Texhoma.

The Company has also entered into a 6% participation agreement for the exploration and development of an area in Louisiana in December 2004.

At March 31, 2006 Texhoma was in the development stage as defined by SFAS 7, Accounting and Reporting for Development Stage Companies. As of year end, Texhoma had generated nominal revenues, primarily devoting its efforts to developing its business and raising working capital through equity financing and short-term borrowings.

Organization and Basis of Presentation – Texhoma’s securities are registered with the Securities and Exchange Commission in the United States of America and its securities currently trade under the symbol “TXHE.PC” on the pink sheets.

The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.

Use of Estimates – Texhoma’s financial statement preparation requires that management make estimates and assumptions which affect the reporting of assets and liabilities and the related disclosure of contingent assets and liabilities in order to report these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.

The primary estimates made by management included in these financial statements are the impairment reserves applied to various long-lived assets and the fair value of its stock tendered in various non-monetary transactions.

Cash and Cash Equivalents - Cash includes all highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Restricted Cash – Texaurus maintains the residual cash from the proceeds of the Laurus Fund note in a restricted account for as long as Texaurus shall have any obligations to Laurus. Texaurus may request authorization from Laurus for access to these funds for the consummation of acquisitions of oil and gas assets. In addition, in conjunction with the note repayment terms of the Laurus funding, providing that 80% of the net oil and gas receipts shall be used to repay first interest and next principal on the then outstanding note balance. The Laurus fund is authorized to transfer such funds to its account, where it is held and applied to the accrued interest and note payable at the end of each month.

Foreign Currency Translation - During the relevant periods, Texhoma’s investment in the BSP assets and liabilities were translated from Thailand and Australian currency into U.S. currency by use of exchange rates in effect at the balance sheet date. Revenues and expenses were translated utilizing the exchange rates in effect on the date they were included in income or using weighted-average exchange rates. Capital accounts were translated using the exchange rates in effect when the foreign entity’s capital stock was acquired or issued. Gains or losses on translating the Thailand currency and Australian currency into U.S. currency were reported in Minority Interest in Exploration Costs. Foreign currency transaction gains and losses were included in net income in the period the exchange rate changed. Translation or transaction gains or losses were not material to the financial statements. The currency translations are in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 52 Foreign Currency Translation , (FAS 52). Resulting translation adjustments are reflected in the accumulated other comprehensive items component of shareholders’ equity.

Fair Value of Financial Instruments - SFAS No. 107, Disclosures about Fair Values of Financial Instruments (FAS 107), requires disclosing fair values to the extent practicable for financial instrument, which are recognized or unrecognized in the balance sheet. For certain financial instruments, including cash, accounts payable, and accrued expenses and short term debt, it was assumed that the carrying value does not materially differ from fair value. The fair value of debt was determined based upon current rates at which Texhoma could borrow funds with similar maturities remaining.

Property and Equipment- Property and equipment are recorded at cost less impairment. Depreciation is computed using the straight-line basis over the estimated useful lives of the assets at the rates in the accompanying table.

Asset Category	Depreciation/ Amortization Period

Building	30 Years

Plant & Equipment	7 Years

Production Tooling	$10 per unit

Automotive Equipment	5 Years

Office Equipment	5 to 3 Years

Texhoma’s subsidiary purchased oil and gas property interests on March 28, 2006 with ownership of their portion of the oil and gas production from the Barnes Creek and Edgerly properties effective January 1, 2006. Depletion is computed based upon the estimated remaining proved developed reserves as determined by a third party petroleum and geology consulting firm. Based upon estimated total proven reserves for the Barnes Creek leasehold of 73,405 barrels of oil and a remaining 69,701 barrels of oil at March 31, 2006, the property was depleted at the rate of 5% for this quarter. The Edgerly leasehold had total proven reserves of 63,493 barrels of oil and an estimated remaining 59,596 barrels and depletion of 6.1% was reported for the quarter ended March 31, 2006. The Little White Lakes leasehold was purchased with an effective date for the oil and gas production effective April 1, 2006.

Oil and Natural Gas Exploration and Development - BSP records its exploration operations in accordance with SFAS 19, Financial Accounting and Reporting by Oil and Gas Producing Companies (FAS 19). Exploration involves identifying areas that may warrant inspection and/or examination of specific areas that indicate they may possess the presence of oil and gas reserves, including the drilling of exploration wells and collecting seismic data.

BSP adopted “Successful Efforts” accounting for exploration costs as defined in FAS 19. Under this method, geological and geophysical costs, the costs of carrying and retaining undeveloped properties such as delay rentals, ad valorem taxes on properties, legal costs for the title defense, maintenance of land and lease records, and dry and bottom hole contributions are charged to expense as incurred. The cost of drilling exploratory wells is capitalized, pending determination of whether the well can produce hydrocarbons. If it is determined the well has no commercial potential, the capitalized costs, net of any salvage value are expensed.

If it is determined subsequent to a financial reporting period and prior to the issuance of financial statements for that reporting period, that an exploratory well has not found commercially exploitable hydrocarbons, any costs incurred through the end of that reporting period, net of salvage value, must be written off in that prior period under FASB Interpretation No. 36, Accounting for Exploratory Wells in Progress at the End of the Period (FAS 36).

Equity Method of Accounting for Investments in Common Stock - The equity method of accounting for investments in Common Stock when the ownership is 50 percent or less of the voting stock of the enterprise is governed by APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock (APB 18). It states that use of the equity method of accounting for an investment is required if the investor exercises significant influence over the operating and financial policies of the investee. APB 18 includes presumptions, based on the investor’s percentage of ownership, as to whether the investor has that ability.

In accordance with APB No. 18, Texhoma treated its 40% ownership in BSP under the equity method of accounting and recorded the investment, adjusted by net losses of $1,245,000. In March 2005 Texhoma received a final drilling report and the Board of Directors voted to agree with recommendations to abandon and plug the well. An impairment loss of $464,441 was recorded for the investment (see note 2 Concession).

Long-Lived Assets - The Company's accounting policy regarding the assessment of the recoverability of the carrying value of long-lived assets, including property, equipment and purchased intangible assets with finite lives, is to review the carrying value of the assets if the facts and circumstances suggest that they may be impaired. If this review indicates that the carrying value will not be recoverable, as determined based on the projected undiscounted future cash flows, the carrying value is reduced to its estimated fair value.

Intangible Assets - The Company adopted Statement of Financial Accounting Standard (“SFAS”) No. 142, Goodwill and Other Intangible Assets (FAS 142), effective July 1, 2002. As a result, the Company discontinued amortization of goodwill, and instead annually evaluates the carrying value of goodwill for impairment, in accordance with the provisions of FAS 142.

Income Taxes - Management evaluates the probability of the realization of its deferred income tax assets. The Company has estimated a $900,000 deferred income tax asset at March 31, 2006 relating to net operating loss carryforwards and deductible temporary differences. Of that amount, $76,000 is related to the net operating loss generated for the six months ended March 31, 2006. Management determined that because the Company has not yet generated taxable income, because of the change in control that has occurred in the past and the fact that certain losses have been generated outside of the United States, is more likely than not that a tax benefit will not be realized from these operating loss carryforwards and deductible temporary differences. Accordingly, the deferred income tax asset is offset by a full valuation allowance.

If the Company begins to generate taxable income, management may determine that some or all of the deferred income tax asset may be recognized. Recognition of the asset could increase after tax income in the future. The net operating tax loss carry forward of approximately $2,600,000 expires from 2011 to 2025. The future utilization of the net operating losses is uncertain.

BSP is located in Australia and Thailand, and the Company’s share of those operating losses may not be subject to United States Federal Income Tax.

Earnings Per Share - Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or if equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. Restricted shares and warrants are included in the computation of the weighted average number of shares outstanding during the periods.

Loss Per Share - Per SFAS No. 128, Earnings per Share (FAS 128), earnings per share (or loss per share), is computed by dividing the earnings (loss) for the period by the weighted average number of common stock shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution of securities by including other potential common stock, including stock options and warrants, in the weighted average number of common shares outstanding for the period, if dilutive.

Stock Based Compensation - Statements of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation , (FAS 123) established accounting and disclosure requirements using a fair-value based method of accounting for stock-based employee compensation. In accordance with FAS 123, the Company elected at March 31, 2006 to continue accounting for stock based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25).

Share-Based Payment - In December 2004, the FASB issued SFAS No. 123R, Accounting for Stock-Based Compensation (FAS 123(R)), which supersedes APB 25. Accordingly, Texhoma will be required to measure all stock-based compensation awards using a fair value method and recognize such expense in its financial statements as services are performed. In addition, the adoption of FAS No. 123(R) will require additional accounting related to the income tax effects and additional disclosure regarding the cash flow effects resulting from share-based payment arrangements. FAS No. 123(R) becomes effective for small business issuers as of the first interim or annual reporting period that begins after December 31, 2005.

The effects of the adoption of FAS No. 123(R) on Texhoma’s results of operations and financial position are dependent upon a number of factors, including the number of employee stock options outstanding and unvested, the number of stock-based awards which may be granted in the future, the life and vesting features of stock-based awards which may be granted in the future, the future market value and volatility of Texhoma’s stock, movements in the risk free rate of interest, award exercise and forfeiture patterns, and the valuation model used to estimate the fair value of each award. Texhoma is currently evaluating these variables in the design of its stock-based compensation program as well as the accounting requirements under FAS No. 123(R) and SAB No. 107. In addition, Texhoma intends to utilize restricted stock units as a key component of its ongoing employee stock-based compensation plan. These awards generally are recognized at their fair value, equal to the quoted market price of Texhoma’s common stock on the date of issuance, and this amount is amortized over the vesting period of the shares of restricted stock held by the grantee. Texhoma believes that the adoption of FAS No. 123(R) will have a material impact on its financial statements.

Non-monetary Exchange - In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29 (FAS 153) , The amendments made by FAS 153 eliminate the exception for non-monetary exchanges of similar productive assets and replace it with a general exception for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of this statement became effective for non-monetary asset exchanges occurring in Texhoma’s fourth quarter of 2005. The adoption of FAS 153 did not have a material impact on Texhoma’s financial statements.

Conditional Asset Retirement - In March 2005, the FASB issued FASB Interpretation (FIN) No. 47, Accounting for Conditional Asset Retirement Obligations–an Interpretation of SFAS 143 (FIN 47). FIN 47 clarifies the timing of liability recognition for legal obligations associated with the retirement of a tangible long-lived asset when the timing and/or method of settlement are conditional on a future event. FIN 47 is effective no later than December 31, 2005 and did not impact the Company’s financial statements.

Foreign Earnings Repatriation Provision within the American Jobs - In December 2004, the FASB issued FASB Staff Position (“FSP”) No. FAS 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004 (FSP FAS 109-2) . The American Jobs Creation Act (“AJCA”) introduces a special one-time dividend received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer (“repatriation provision”), provided certain criteria are met. FSP FAS 109-2 provides accounting and disclosure guidance for the repatriation provision. Texhoma completed its evaluation of this FSP and decided not to repatriate foreign earnings under these provisions as it would not be beneficial to Texhoma.

Accounting Changes and Error Corrections - In May 2005, the FASB issued SFAS No. 154 , Accounting Changes and Error Corrections (FAS 154) . This statement replaces APB Opinion No. 20, Accounting Changes , and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting and reporting of a change in accounting principle. This statement applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. FAS 154 requires retrospective application to prior periods’ financial statements of voluntary changes in accounting principles. FAS 154 is effective for accounting changes and corrections of errors made during 2007, beginning on January 1, 2007. Texhoma does not believe the adoption of FAS 154 will have a material impact on its financial statements.

Inventory Cost - In November 2004, the FASB issued SFAS No. 151 , Inventory Costs—an Amendment of ARB No. 43, Chapter 4 (FAS 151) . FAS 151 amends Accounting Research Bulletin (“ARB”) No. 43, Chapter 4, to clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges. In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of this statement are effective for inventory costs incurred beginning in Texhoma’s first quarter of 2006. Texhoma does not believe that the adoption of FAS 151 will have a material impact on its financial statements.

2. CONCESSION

Texhoma had a 40% interest in BSP which owned an exploration concession located in the Gulf of Thailand. The concession was signed on March 3, 1999 and allowed for three exploration periods of three years each (the second and third periods are optional) followed by a possible twenty-year production period to develop commercial hydrocarbons found during the exploration phase.

At the time of the acquisition of Black Swan by Texhoma the shareholder of Black Swan were then comprised of Texhoma (40%), Dormley Pty. Ltd. (36%), Capersia Pte. Ltd. (14%) and Nuenco NL (10%), respectively. In January 2005 Capersia and Dormley acquired Nuenco’s interest. Due to the ownership division, although Texhoma was a minority percentage owner, the Company controlled the majority of the joint venture and as such reported its interest on a consolidated basis. As a result of the unsuccessful outcome the investment was expensed in the third quarter 2005. The acquisition of Black Swan was recorded by Texhoma at $464,441, based upon its 40% ownership interest, which amount was included in the June 30, 2005 write down.

The work program for the First Obligation Period included reprocessing seismic data, acquisition of a 300 sq. km. 3D-seismic program and the drilling of one well. With Thai Government approval, the commitment well was postponed to the 3 ^rd year of the Second Obligation Period (ending March 2, 2005). In accordance with the terms of the Concession, Black Swan Thai was required to drill two wells and expend $400,000 on other work-programs prior to March 2, 2005. The obligations were fulfilled in the first half of 2005 upon the Concession being relinquished to the Thai government after it was determined the exploration efforts and the drilling were unsuccessful.

In March 2005 the board of directors voted to plug and abandon the concession and Thailand oil exploration. The Company still owed $1,115,000 in unpaid past cash calls and contributions to the joint venture. The unpaid cash contribution was forgiven and paid by the remaining joint venture members. The Company has no commitment or contingency for those unpaid cash calls and contributions as represented by prior management. In August 2005 Texhoma’s Board elected to withdraw its support for continued exploration with BSP and write off its investment effective June 30, 2005.

On January 20, 2006 we divested our shareholding in Black Swan Petroleum Pty. Ltd. and Black Swan Petroleum (Thailand) Limited by transferring such shares to Pacific Spinner Limited. Pacific Spinner had, pursuant to a Letter Agreement, agreed to use its best efforts to further sell such shares and to pay us 20% (twenty percent) of any proceeds received from such sale. However, the Company has learned that Black Swan has deregistered itself as an active company in Australia and Black Swan Thai has gone into voluntary receivership with little chance of the Company receiving any further benefit from the divestment

3. PROPERTY AND EQUIPMENT

Texhoma had no Property and Equipment as of March 31, 2006 and its subsidiary, Texaurus Energy, Inc. acquired oil and gas leasehold properties at a cost of $10.228 million effective March 28, 2006.

4. SHARE CAPITAL

Stock for Services Compensation Plan - In accordance with Texhoma’s Stock for Services Compensation Plan, on August 26, 2004, the Company filed a registration statement on Form S-8 with the Securities and Exchange Commission, for registration under the Securities Act of 1933 of Securities to Be Offered to Employees Pursuant to Employee Benefit Plans to register the shares of common stock under Texhoma’s Plan in an amount of up to 11,000,000 pre forward split shares and 44,000,000 post forward split shares at various exercise prices. The Board of Directors is authorized, without further approval; to issue shares of common stock under the plan from time to time of up to an aggregate of 44,000,000 post forward split shares of the Company’s common stock.

Common Stock - On October 5, 2004, Texhoma issued 1,584,064 shares of common stock (6,336,256 shares subsequent to the forward split) in settlement of approximately $161,700 in debt with a former director of the Company. Texhoma recorded $284,500 as an expense. The Company issued 1,900,000 shares of common stock (7,600,000 shares subsequent to the forward split) in settlement of $38,000 in debt with a consultant of the Company; Texhoma recorded $504,800 in expenses.

On November 4, 2004, the Company issued 14,000,000 shares of restricted common stock (56,000,000 post forward split shares) for the acquisition of a 40% shareholding interest in the capital of Black Swan. The acquisition was accounted for using the equity method of accounting, and was the only operation recorded as an investment in Black Swan.

In February, March and August 2005, the Company issued 6,000,000 (post forward split shares) shares of restricted common stock for proceeds of $600,000. These proceeds were used to fund portions of the cash call for the oil and gas operation in Thailand.

Forward Stock Split - On October 14, 2004, Texhoma approved a 4:1 forward stock split of its common stock. The forward stock split, which was effected on November 9, 2004, increased Texhoma’s issued and outstanding shares from 25,203,063 shares to 100,812,252 shares of common stock. The Statements of Stockholders’ Equity was reclassified as of September 30, 2004 to reflect the 4:1 forward stock split.

In March 2006, our Executive Chairman and Director, Frank Jacobs subscribed for 7,500,000 shares of our common stock at $0.04 per share, for aggregate consideration of $300,000, which funds were immediately used by us in connection with the Closing of the Kilrush Property (described below).

On March 28, 2006, Texaurus closed the purchase of certain interests from Structured Capital in exchange for a) two million five hundred thousand dollars ($2,500,000) and b) the issuance of 37,500,000 shares of our common stock at $0.04 per share.

In March 2006, the Company issued 1,062,500 warrants to purchase 1,062,500 shares at $0.04 cents per share and expiring in five years. The warrants were issued to Equity Capital Solutions in consideration for raising capital for the company. In addition, up to 10,625,000 warrants to purchase Texhoma common stock at $0.04 per share, expiring in five years, as well as 961 warrants at $0.001 per share to purchase common shares of Texaurus Energy, Inc., a wholly owned subsidiary of Texhoma, at any time following Texhoma’s repayment of all obligations were issued to Laurus Master Fund Ltd.

5. ACQUISITIONS

On November 5, 2004, the Board of Directors completed the agreement with Capersia Pte. Ltd. to acquire a 40% interest of Black Swan Petroleum Pty. Ltd. (“Black Swan”) for 14,000,000 new investment shares (56,000,000 shares subsequent to the forward split explained above) of Texhoma common stock. As previously described above, Texhoma recorded the value of this acquisition at $464,441.

On or about December 10, 2005, the Company entered into a 6% participation agreement with the "Clovelly Joint Venture,". On February 2, 2006, we executed a Sale and Purchase Agreement (the “Clovelly SPA”) with Sterling Grant Capital, Inc. pursuant to which we acquired a further 5% (five percent) working interest in the Clovelly South prospect located in Lafourche Parish, Louisiana. We funded Clovelly SPA through a Joint Operating Agreement, issuance to Sterling Grant of 2 million common shares of Texhoma and payment of $15,000.

On March 15, 2006, Texhoma’s wholly-owned subsidiary, Texaurus Energy, Inc., which was formed in March 2006 as a Delaware corporation ("Texaurus"), entered into a Sales and Purchase Agreement with Structured Capital Corp., a Texas corporation to purchase certain oil and gas leases in Vermillion Parish, Louisiana, which represent a 10% working interest (7.3% net revenue interest) in such leases. The agreed purchase price of the Little White Lake Property was a) two million five hundred thousand dollars ($2,500,000) and b) the issuance of 37,500,000 shares of our common stock. This purchase had an effective date of April 1, 2006.

On March 28, 2006, with an effective date of January 1, 2006, Texaurus closed a Sales & Purchase Agreement to purchase certain interests from Kilrush Petroleum, Inc. in Allen Parish, Louisiana and Calcasieu Parish, Louisiana, for aggregate consideration of $5,225,000. Texaurus paid the $5,225,000 purchase price with proceeds received from its sale of the Secured Term Note with Laurus Master Fund, Ltd. (“Laurus”).

On March 28, 2006 Texaurus entered into a Securities Purchase Agreement and a Registration Rights Agreement and issued a Common Stock Purchase Warrant; entered into a Master Security Agreement with Laurus; and sold Laurus a Secured Term Note in the amount of $8,500,000 as well as various other agreements. Additionally, in connection with the closing, we issued Laurus Common Stock Purchase Warrants to purchase up to 10,625,000 shares of Texhoma common stock and up to 49% of Texaurus’ common stock.

In March 2006, the Company issued 1,062,500 warrants to purchase 1,062,500 shares at 4 cents per share and expiring in five years. The warrants were issued to Equity Capital Solutions for raising capital for the company. Up to 10,625,000 warrants to purchase Texhoma common stock at 4 cents per share, expiring in five years, as well as 961 warrants at $0.001 per share to purchase common shares of Texaurus Energy, Inc., a wholly owned subsidiary of Texhoma, at any time following Texhoma’s repayment of all obligations were also issued to Laurus Master Fund Ltd.

6. RELATED PARTIES

Texhoma, Black Swan, and Black Swan Thai had management and directors in common with its shareholders. At the end of 2004, Mr. Frank Jacobs was a director and the CEO of Black Swan and Black Swan Thai and on January 25, 2005 became a director and the CEO of Texhoma Energy, Inc. Mr. Brian Alexander was the CFO of Black Swan and Black Swan Thai as well as a director and the CFO of Texhoma.

On October 1, 2003 the Company had approximately $7,300 of outstanding advances payable to Henry Rolling, a former officer. On September 30, 2004 the Company received further advances of $431,000 from Mr. Rolling and subsequently issued 5,177,488 shares of its common stock for the settlement of $350,000 of advances payable.

During the three months ended December 31, 2004, $161,700 of debt was settled by the issuance of 6,336,256 post split shares of common stock. There was an $8,000 and $10,000 consulting fee outstanding that is payable to the director of Texhoma.

On December 7, 2004, the Company borrowed $50,000 from a related party, MFS Technology. The loan is evidenced by a convertible promissory note, see note 7 for additional information.

On or about December 10, 2005, the Company entered into a 6% participation agreement with the "Clovelly Joint Venture," of which ORX Resources, Inc. is the Operator. Our former President and Director Max Maxwell served as Vice President of the Operator at the time we entered into the participation agreement. On February 14, 2006 the Company increased its working interest to 11% through the purchase of a further 5% working interest in this property from Sterling Grant. We funded this additional interest through a Joint Operating Agreement, issuance to Sterling Grant of 2,000,000 common shares of Texhoma at $0.04 per share and payment of $15,000.

On March 24, 2006, Mr. Jacobs, the Company’s Chief Executive Officer, subscribed for 7,500,000 shares of the Company's common stock at $0.04 per share, for an aggregate consideration of $300,000, which funds were immediately used by the Company as a portion of the consideration paid by the Company for the purchase of certain oil and gas interests from Kilrush Petroleum, Inc., located in Allen Parish, Louisiana and Calcasieu Parish, Louisiana.

On April 10, 2006, Texhoma entered into a $735,000 Debt Conversion Agreement with Lucayan Oil and Gas Investments, Ltd., a Bahamas corporation ("LOGI"). Texhoma owed $895,000 to LOGI as of the date of the Debt Conversion Agreement in connection with money advanced to the Company in March 2005 for the fulfillment of a portion of the cash call commitments for the drilling by Black Swan Thai. Pursuant to the Debt Conversion Agreement, the Company and LOGI agreed to convert $160,000 of the $895,000 of which LOGI was owed into an aggregate of 4,000,000 shares (or one (1) share for each $0.04 of debt converted) of newly issued shares of the Company's restricted common stock. Mr. Max Maxwell, who is President and was elected a Director of Texhoma on April 10, 2006, is a 50% owner of LOGI.

On June 1, 2006, the Company's Board of Directors approved the issuance of an aggregate of 10,000,000 options to the Company's officers, directors and employees, pursuant to the Company's 2006 Stock Incentive Plan and an additional 2,000,000 options for a consultant. All options expire if unexercised on June 1, 2009, or three (3) months from the date of the termination of employment with the Company.

All options were issued at an exercise price of $0.13 per share, which was equal to the average of the highest ($0.125) and lowest ($0.111) quoted selling prices of the Company’s common stock on June 1, 2006, multiplied by 110%. Options of 4,000,000 were granted to Max Maxwell and Frank Jacobs, and options of 1,000,000 were granted to Brian Alexander, and Terje Reiersen. On June 7, 2006, The Board of Directors approved the issuance of an additional 1,000.000 options to Peter Wilson, which amount was later amended to include 2,000,000 options, which expire if unexercised on June 1, 2009.

On September 19, 2006, Mr. Brian Alexander decided not to seek re-election as a director of the Company due to other business and work commitments. In connection with monies we owed Mr. Alexander in director and consulting fees, 300,000 shares of restricted common stock were issued to Mr. Alexander in lieu of cash. In addition Mr. Alexander’s vesting was accelerated such that his options were fully vested with a new expiration date of June 1, 2007. Mr. Alexander and the Company executed a letter of Mutual Release when Mr. Alexander resigned as an officer and director of the Company on September 27, 2006. Mr. Alexander did not exercise his option rights and those options expired on June 1, 2007.

In March 2007, Capersia Pte. Ltd. transferred 10,000,000 of its shares of Texhoma stock to Pacific Spinner Ltd.

Mr. Maxwell resigned from the Company May 1, 2007, did not exercise any of his option rights and as a result all option grants expired on August 1, 2007. Frank Jacobs resigned on June 14, 2007 and his options, if not exercised by September 14, 2007 will expire.

In June 2007, Valeska Energy Corp. entered into a management agreement with Texhoma for a minimum period of three months. Mr. William Simmons is the Chief Executive Officer of Valeska. In exchange for these services, Valeska was issued 15,200,000 shares of Texhoma’s stock as payment and retainer. On June 8, 2007 a third party transferred 1,000,000 shares of Texhoma stock to Mr. William Simmons and 1,000,000 shares to Valeska Energy Corp.

In July 2007, 500,000 shares were issued to Mr. Ibrohim Nafi Onat in exchange for his entry into a consulting agreement with us.

On or about August 13, 2007, we entered into a Second Amendment to Management Services Agreement with Valeska Energy Corp. (“Valeska” and the “Second Amendment”).

Pursuant to the Second Amendment, we and Valeska agreed to extend the term of the Management Services Agreement until September 30, 2008, and to pay Valeska the following consideration in connection with agreeing to perform the services required by the original Management Services Agreement, and in consideration for allowing Daniel Vesco and William M. Simmons to serve as Directors of the Company, bringing on personnel to assist the Company with the day to day operations of the Company, and helping bring the Company current in its filings (the “Services”):

		1,000 shares of the Company’s Series A Preferred Stock;
		A monthly fee of $20,000 per month during the extended term of the Second Amendment, plus reasonable and actual costs incurred by Valeska (or individuals or designees brought on by Valeska, including lodging, car rental and telephone expenses therewith) in connection with such Services;

		10,000,000 restricted shares of the Company’s common stock; and
		60,000,000 options to purchase shares of the Company’s common stock, which shall have a cashless exercise provision, shall be valid for a period of three years from their grant date, and shall have an exercise price of 110% of the trading price of the Company’s common stock on the Pinksheets on the day of such grant.

All of the above transactions may have been entered into at terms which may not have been available to unrelated parties.

7. NOTES PAYABLE AND CONVERTIBLE LOANS

On December 7, 2004, the Company borrowed $50,000 from a related party. The loan is evidenced by a convertible promissory note. The loan bears interest at 5% per annum calculated 6 months after the advancement of funds. $25,000 was due on June 7, 2005 and the remaining balance, plus interest was due on December 7, 2005. The loan has not been repaid, extended or converted. The lender has the option during the term of the loan, and any extension, to convert the principle and interest into shares of common stock at a conversion price of $0.30 per shares.

As discussed earlier, in March 2005, the Company received $895,000 from LOGI to fund Black Swan Thailand oil and gas exploration. This loan was later converted to 22,375,000 in common stock in accordance with the agreement with the Company and LOGI (See Related Party).

The Laurus Master Fund, Ltd note accrues interest at the Prime Rate plus two percent (2.0%) as published in The Wall Street Journal, but shall not at any time be less than eight percent (8.0%). Payments of accrued interest and principal shall equal eighty (80%) of the Net Revenue paid to Texaurus in respect of oil, gas and/or other hydrocarbon production in which Texaurus has an interest and such payments shall be applied first to accrued interest due and then to the principal balance of the note.

In conjunction with the purchase of the Little White Lake oil and gas property, we executed a short term note payable with Polaris Capital in the amount of $2,500,000 to be repaid through the funding provided by Laurus. The note was repaid in April 2006 from those funds.

8. NET LOSS PER SHARE

Restricted shares and warrants are included in the computation of the weighted average number of shares outstanding during the periods. The net loss per common share is calculated by dividing the consolidated loss by the weighted average number of shares outstanding during the periods.

9. COMMITMENTS AND CONTINGENCIES

As discussed previously, management wound down Black Swan’s operations in Thailand and Australia after unsuccessful drilling in the Concession. A determination has not made as to the financial or legal consequence to Texhoma or its officers or its shareholders, for subsequent obligations, if any, to persons or governmental entities which may arise from doing business or owning or leasing property in Thailand and Australia.

10. SUBSEQUENT EVENTS

On April 10, 2006, Texhoma Energy, Inc. (the "Company") entered into a Debt Conversion Agreement with Lucayan Oil and Gas Investments, Ltd., a Bahamas corporation, formerly Devon Energy Thai Holdings, Ltd. ("LOGI"). The Company owed $895,000 to LOGI as of the date of the Debt Conversion Agreement in connection with money received by the Company for the drilling in Thailand in March 2005, which debt was transferred by Fidelio Business, S.A. and Quick Assets and Cash Corp. (Bank Sal Oppenheim) to LOGI in November 2005. Pursuant to the Debt Conversion Agreement, the Company and LOGI agreed to convert $160,000 of the $895,000 which LOGI was owed into an aggregate of 4,000,000 shares (or one (1) share for each $0.04 of debt converted) of newly issued shares of the Company's restricted common stock. As of the date of this filing, the Company still owes LOGI $735,000. The Director and 50% owner of LOGI is Max Maxwell, who became a Director of the Company on April 10, 2006, President of the Company on April 12, 2006, and Chief Executive Officer of the Company on June 5, 2006, and resigned as President, Chief Executive Officer and Director on May 1, 2007.

On April 10, 2006, the Company entered into a convertible note with LOGI evidencing the $735,000 of debt which remains outstanding. The convertible note provides that LOGI may convert the $735,000 debt into Company common stock at the rate of one share of common stock for each $0.04 of outstanding debt.

A Letter of Intent was executed by Texhoma on April 28, 2006, agreeing to participate in a 25% working interest in the exploration of the Bayou Choctaw oil and gas project, located in Iberville Parish, Louisiana. In July 2006, Texhoma executed a new Letter of Intent increasing its agreement of participation to 41.667% in the project. Texhoma identified that the exposure was in excess of its corporate guidelines and assigned its right to the interest to Morgan Creek Energy Corp. in exchange for $250,000 and 200,000 shares of Morgan Creek Energy.

On May 15, 2006, Lucayan Oil and Gas Investments, Ltd. ("LOGI") provided the Company notice of its desire to convert its $735,000 Promissory Note into 18,375,000 shares of the Company's common stock. The Company's Board of Directors approved such issuance on May 18, 2006.

On May 31, 2006, Texhoma entered into six (6) participation agreements to purchase various oil and gas leases from Sunray Operating Company LLC (“Sunray”). In June and August 2006, Texhoma closed the purchase of three (3) of the participation agreements, entering into Assignments and Bill of Sales for purchase from Sunray the following Leases:



Leases covering approximately 196 acres of land in Brazoria County, Texas. In the purchase,Texhoma acquired an undivided 37.5% interest, subject to existing overriding royalty interests equal to 25% of 8/8. Additionally, Sunray is entitled to a five-eighth of eight-eighths (62.5% of 8/8) working interest, proportionally reduced at payout; and



Leases covering approximately 20 acres of land in Brazoria County, Texas. In the purchase, Texhoma acquired an undivided 35% interest in the leases, subject to existing overriding royalty interests equal to 25% of 8/8.



Leases covering approximately 280 acres of land in Brazoria County, Texas. In the purchase, Texhoma acquired an undivided 72.5% interest in the leases, subject to existing overriding royalty interests equal to 28% of 8/8. Texhoma simultaneously promoted a 42.5% interest leaving a 30% interest.



Texhoma declined to participate in the purchase of the leases covering approximately 80 acres in Brazoria County. In September 2006, this well was a dry hole and participation in subsequent wells was declined. However, Texhoma continues to hold a 12.5% back in Working Interest.



Two leases for another 160 acre site and a 60 acre site which were declined by Texhoma and in which we retained a 12.5% back in Working Interest.

In conjunction with the acquisition of three of the Sunray properties, we issued 375,000 of common stock and granted warrants to purchase 375,000 shares at an exercise price of 15 cents per share expiring in one year. Subsequent to the acquisition of the Sunray properties, we executed an agreement to sell a percentage of our working interest in the properties to Matrix, thereby reducing our cash investment and liability for future cash calls. Additionally, we agreed to pay Sunray $113,161 in cash, of which $49,184 remained outstanding as of September 7, 2007.

In September 2006, drilling on the properties acquired in the Sunray agreement proved to be unsuccessful and the investment was retired.

On June 1, 2006, the Company's Board of Directors approved the issuance of an aggregate of 10,000,000 options to the Company's then officers, Directors and employees, pursuant to the Company's 2006 Stock Incentive Plan (the "Plan"). All the options were at an exercise price of $0.13 per share, which was equal to the average of the highest ($0.125) and lowest ($0.111) quoted selling prices of the Company's common stock on June 1, 2006, multiplied by 110%. The options were granted to the following individuals in the following amounts:

Max Maxwell, our former president and Director was granted 750,000 qualified options and 3,250,000 non-qualified options (for 4,000,000 total options), which options were to vest at the rate of 500,000 options every three months, with the qualified options to vest first, in consideration for services to be rendered to the Company as the Company's president and Director. The options were to expire if unexercised on June 1, 2009, or at the expiration of three months from the date of the termination of his employment with the Company. All of Mr. Maxwell’s options have since expired unexercised;

Frank Jacobs, our former Director was granted 4,000,000 non-qualified options, which options were to vest at the rate of 500,000 options every three months, in consideration for services to be rendered to the Company as the Company's Director. The options were to expire if unexercised on June 1, 2009, or at the expiration of three months from the date of the termination of his employment with the Company. Mr. Jacobs resigned from the Company effective June 14, 2007, and as such all 2,000,000 of his vested options expired unexercised on September 14, 2007;

Brian Alexander, our former Chief Financial Officer and Director was granted 1,000,000 non-qualified options, which options vested upon Mr. Alexander's execution of a deed of release and settlement between Mr. Alexander and the Company in connection with his resignation from his positions as the Company's Chief Financial Officer and Director. The options expired unexercised on July 1, 2007; and

Mr. Terje Reiersen then working as a consultant to the Company was granted 1,000,000 non-qualified options, which options were to vest at the rate of 250,000 options every three months, in consideration for consulting services to be rendered to the Company in connection with corporate advice in relation to a secondary listing amongst other things. The options were to expire if unexercised on June 1, 2009, or at the expiration of three months from the date of the termination of his employment with the Company. All of Mr. Reiersen’s options have since expired unexercised.

Additionally, on June 1, 2006, the Board of Directors approved the issuance of 2,000,000 options to another consultant to the Company in consideration for investor relations services rendered to the Company. The options granted to the consultant were not granted pursuant to the Plan. The options have an exercise price of $0.13 per share, vest at a rate of 250,000 options every three months and expire if unexercised on June 1, 2009.

In June 2006, the Company accepted subscriptions for 3,175,000 shares of its common stock at $0.08 share for $254,000 in cash; the Company also issued 3,175,000 warrants at $0.15 per share expiring in one year.

In July 2006 the Company accepted subscriptions for 1,000,000 shares of our common stock at $0.08 per share for $80,000 in cash and the Company also granted warrants to purchase 1,000,000 shares with an exercise price of $0.15 per share expiring in one year.

In September, 2006 the Company accepted subscriptions for 625,000 shares of our common stock at $0.08 per share for $50,000 and the Company also granted warrants to purchase 625,000 shares with an exercise price of 15 cents per share expiring in one year.

On October 10, 2006, ORX Resources, Inc., operator of the Clovelly Prospect well, notified Texhoma that the jointly owned well had been plugged and abandoned on September 23, 2006.

On or about October 19, 2006, we issued a Promissory Note to Mr. Frank Jacobs, our then Director of the Company, in the amount of $493,643.77, which amount represented funds advanced to the Company by Mr. Jacobs during the 2006 calendar year and management fees owed to Mr. Jacobs for his services to the Company during the 2006 calendar year (the “Jacobs' Note”). The Jacobs' Note bears interest at the rate of 6% per annum until paid, and is payable by the Company at any time on demand. The Jacobs' Note may be pre-paid at any time without penalty. Any amounts not paid on the Jacobs' Note when due shall bear interest at the rate of 15% per annum.

On or about June 5, 2007, we entered into an Agreement with Jacobs Oil & Gas Limited (“Jacobs”), pursuant to which Jacobs agreed that no interest would be due from us and/or accrue on the principal or accrued interest to date on his outstanding Promissory Note for the period of one (1) year from the date of the Agreement and that he would not try to collect the principal and/or accrued interest on such note for a period of one (1) year.

The Company also entered into a Security Agreement with Mr. Jacobs under which Agreement the Board of Directors ratified the assignment of 200,000 shares of the common stock of Morgan Creek Energy Corp., which shares were held by the Company, to Mr. Jacobs as security for the money that is owed to Mr. Jacobs under the Jacobs' Note.

In March 2007, Capersia Pte. Ltd. transferred 10,000,000 of its shares of Texhoma stock to Pacific Spinner Ltd.

In May 2007, 4,800,000 shares of our common stock, at $0.0125, were subscribed for in exchange for $60,000.

In May 2007, Valeska Energy Corp. entered into a management agreement with Texhoma for a minimum period of three months. Mr. William Simmons is the Chief Executive Officer of Valeska. In exchange for these services, Valeska was issued 15,200,000 of Texhoma’s stock as payment and retainer. On June 8, 2007 a third party transferred 1,000,000 share of Texhoma stock to Mr. William Simmons and 1,000,000 shares to Valeska Energy Corp.

In June 2007 18,000,000 shares of our common stock, at $0.0125, were subscribed for by Hobart Global Ltd., a British Virgin Islands corporation in exchange for $225,000.

In July 2007 an additional shares of common stock were sold to Camecc A/S, a Norwegian company for $12,500 or $0.0125 per share and another 500,000 shares were issued to Mr. Ibrahim Nafi Onat in exchange for his entry into a Consulting Agreement with us.

On or about August 13, 2007, we entered into a Second Amendment to Management Services Agreement with Valeska Energy Corp. (“Valeska” and the “Second Amendment”).

		1,000 shares of the Company’s Series A Preferred Stock;
		A monthly fee of $20,000 per month during the extended term of the Second Amendment, plus reasonable and actual costs incurred by Valeska (or individuals or designees brought on by Valeska, including lodging, car rental and telephone expenses therewith) in connection with such Services;

		10,000,000 restricted shares of the Company’s common stock; and
		60,000,000 options to purchase shares of the Company’s common stock, which shall have a cashless exercise provision, shall be valid for a period of three years from their grant date, and shall have an exercise price of 110% of the trading price of the Company’s common stock on the Pinksheets on the day of such grant.

11. GOING CONCERN ISSUES

We cannot provide any assurances that the Company will be able to secure sufficient funds to satisfy the cash requirements for the next 12 months. The inability to secure additional funds would have a material adverse effect on the Company.

These financial statements are presented on the basis that the Company will continue as a going concern. Other than the previously disclosed impairments, no adjustments have been made to these financial statements to give effect to valuation adjustments that may be necessary in the event the Company is not able to continue as a going concern. The effect of those adjustments, if any, could be substantial.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. For the six months ended March 31, 2006 the Company incurred net losses from operations of $224,000. As of March 31, 2006 the Company has incurred $7,599,000 in cumulative losses. Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from its stockholders and third party financing.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. There is no assurance that the Company will receive the necessary loans required to funds its exploration plans.

* * * * * * * * *

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

ALL STATEMENTS IN THIS DISCUSSION THAT ARE NOT HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. STATEMENTS PRECEDED BY, FOLLOWED BY OR THAT OTHERWISE INCLUDE THE WORDS "BELIEVES", "EXPECTS", "ANTICIPATES", "INTENDS", "PROJECTS", "ESTIMATES", "PLANS", "MAY INCREASE", "MAY FLUCTUATE" AND SIMILAR EXPRESSIONS OR FUTURE OR CONDITIONAL VERBS SUCH AS "SHOULD", "WOULD", "MAY" AND "COULD" ARE GENERALLY FORWARD-LOOKING IN NATURE AND NOT HISTORICAL FACTS. THESE FORWARD-LOOKING STATEMENTS WERE BASED ON VARIOUS FACTORS AND WERE DERIVED UTILIZING NUMEROUS IMPORTANT ASSUMPTIONS AND OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS INCLUDE THE INFORMATION CONCERNING OUR FUTURE FINANCIAL PERFORMANCE, BUSINESS STRATEGY, PROJECTED PLANS AND OBJECTIVES. THESE FACTORS INCLUDE, AMONG OTHERS, THE FACTORS SET FORTH BELOW UNDER THE HEADING "RISK FACTORS." ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT GUARANTEE FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS. MOST OF THESE FACTORS ARE DIFFICULT TO PREDICT ACCURATELY AND ARE GENERALLY BEYOND OUR CONTROL. WE ARE UNDER NO OBLIGATION TO PUBLICLY UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. FOR A MORE DETAILED DESCRIPTION OF THESE AND OTHER CAUTIONARY FACTORS THAT MAY AFFECT OUR FUTURE RESULTS, PLEASE REFER TO OUR ANNUAL REPORT ON FORM 10-KSB FOR OUR FISCAL YEAR ENDED SEPTEMBER 30, 2005. AS USED HEREIN, THE “COMPANY,” “TEXHOMA,” “WE,” “US,” “OUR” AND WORDS OF SIMILAR MEANING REFER TO TEXHOMA ENERGY, INC. AND ITS WHOLLY OWNED DELAWARE SUBSIDIARY, TEXAURUS ENERGY, INC., UNLESS OTHERWISE STATED.

Texhoma Energy Inc. was originally formed as a Nevada corporation on September 28, 1998.

Effective May 28, 2004, we affected a 1:150 reverse stock split of our issued and outstanding shares of common stock. Effective November 9, 2004, we affected a 4:1 forward split of our issued and outstanding common stock. Unless otherwise stated all share amounts listed throughout this filing retroactively take into account both the May 28, 2004 reverse stock split and the November 9, 2004 forward stock split.

On November 5, 2004, we entered into a Sale and Purchase Agreement with Capersia Pte. Ltd., a Singapore company (“Capersia”), to acquire 40% of an oil and gas exploration license operated by Black Swan Petroleum Pty. Ltd. (“Black Swan”) and its wholly owned subsidiary Black Swan Petroleum (Thailand) Limited (“Black Swan Thai”). Black Swan Thai owned the license, permits and title to a petroleum concession in the Chumphon Basin in the Gulf of Thailand, referred to as “Block B7/38” (the “Concession”).

Black Swan recommenced exploration operations of the Concession and Black Swan drilled two exploration wells in February and March 2005, which proved void of commercially viable hydrocarbons. In June 2005 after completion of the exploration activities, the venturers decided to discontinue the exploration efforts in Thailand and relinquished the Concession back to the government of Thailand.

On January 20, 2006 we divested our shareholding in Black Swan and Black Swan Thai.

After the exploration venture in Thailand the Board of Directors of the Company decided to shift its focus to domestic oil and gas exploration and production, with a particular focus on south Louisiana and east Texas, including near-shore Gulf of Mexico.

On February 2, 2006, we executed a Sale and Purchase Agreement (the “Clovelly SPA”) with Sterling Grant Capital, Inc. pursuant to which we acquired a 5% (five percent) working interest in the Clovelly South prospect (bringing our total working interest to 11%) located in Lafourche Parish, Louisiana.

As a result, the Company agreed to fund the work program for the Clovelly South project in accordance with the Joint Operating Agreement for the property. The Allain-Lebreton No. 2 well was drilled and plugged and abandoned in September 2006.

On March 15, 2006, our wholly-owned subsidiary, Texaurus Energy, Inc., which was formed in March 2006 as a Delaware corporation ("Texaurus"), entered into a Sales and Purchase Agreement with Structured Capital Corp., a Texas corporation to purchase certain oil and gas leases in Vermillion Parish, Louisiana. The 8% working interest (5.38167% net revenue interest) in the Intracoastal City field was acquired for a) two million five hundred thousand dollars ($2,500,000) and b) the issuance of 37,500,000 shares of our common stock.

On March 28, 2006 Texaurus entered into a Securities Purchase Agreement ("Securities Purchase Agreement") with Laurus Master Fund, Ltd. ("Laurus"); a Registration Rights Agreement with Laurus; issued Laurus a Common Stock Purchase Warrant; entered into a Master Security Agreement with Laurus; sold Laurus a Secured Term Note in the amount of $8,500,000, and entered into various other agreements. Additionally, in connection with the closing, we issued Laurus a Common Stock Purchase Warrant to purchase up to 10,625,000 shares of our common stock at an exercise price of $0.04 per share. These warrants will be valued using the Black Scholes valuation method.

In addition Laurus can acquire up to 961 shares of Texaurus’ common stock at an exercise price of $0.001 per share, representing 49% of Texaurus’ outstanding common stock. This will be valued at Fair Market Value as of the date of the transaction.

The Securities Purchase Agreement and Laurus March 2006 funding is described in greater detail in our Annual Report on Form 10-KSB for the period ended September 31, 2005.

On March 28, 2006, with an effective date of January 1, 2006, Texaurus closed a Sales & Purchase Agreement to purchase certain interests in the Barnes Creek gas field and the Edgerly field from Kilrush Petroleum, Inc. Texaurus paid the $5,225,000 purchase price with proceeds received from its sale of the Secured Term Note with Laurus.

Significant Transactions Affected During 2006 and 2007:

Lucayan Oil and Gas Investments, Ltd. Transactions

On April 10, 2006, we entered into a Debt Conversion Agreement with Lucayan Oil and Gas Investments, Ltd., a Bahamas corporation, formerly Devon Energy Thai Holdings, Ltd. ("LOGI"). We had owed $895,000 to LOGI as of the date of the Debt Conversion Agreement in connection with money received by the Company for the drilling in Thailand in February and March 2005. Pursuant to the Debt Conversion Agreement, the Company and LOGI agreed to convert $160,000 of the $895,000 which LOGI was owed into an aggregate of 4,000,000 shares (or one (1) share for each $0.04 of debt converted) of newly issued shares of the Company's restricted common stock. The conversion price used in the Debt Conversion Agreement is based on 80% of the average market price of the shares for the 30 days preceding the conversion agreement. This was considered to be the Fair Market Value at the time of the transaction. The Director and 50% owner of LOGI is Max Maxwell, who became a Director of the Company on April 10, 2006, and President of the Company on April 12, 2006, and resigned as President and Director on May 1, 2007. Mr. Maxwell obtained his 50% ownership in LOGI on April 10, 2006 in consideration for joining LOGI as an officer and director and introducing Texhoma to various oil and gas opportunities.

On April 10, 2006, the Company entered into a convertible note with LOGI evidencing the $735,000 of debt which was still owed to LOGI after the Debt Conversion Agreement. The terms of the convertible note provided for the same conversion price as the previously mentioned Debt Conversion Agreement. On May 15, 2006, LOGI provided the Company notice of its desire to convert its $735,000 Promissory Note into 18,375,000 shares of the Company's common stock which the Company issued in consideration for the debt conversion. This conversion rate was considered Fair Market Value at the date of conversion.

Participation Agreements

On May 31, 2006, Texhoma entered into six (6) participation agreements to purchase various oil and gas leases from Sunray Operating Company LLC.

On June 8, 2006, we entered into a Promissory Note and Security Agreement (the "Promissory Note"), with Polaris Holdings, Inc., which held 12,500,000 shares of our common stock ("Polaris"). Pursuant to the Promissory Note, Polaris gave us a $250,000 loan. The Promissory Note was due and payable on August 10, 2006, with interest at 12% per annum. Although the note has not been paid in full to date, the note had been paid down to $60,000 as of May 2007, and since that date, an additional approximately $35,000 has been repaid leaving a balance of approximately $25,000 as of the filing of this report. We also gave Polaris an Option to participate in our Clovelly Field interests in connection with the Promissory Note (described below). We agreed pursuant to the Promissory Note to repay the amounts owed to Polaris by way of (a) two-thirds of the net proceeds we receive from any stock sales while the Promissory Note is outstanding, and (b) one-third of our share of the production income we receive from our oil and gas interests in Vermillion Parish, Louisiana, which represents a 10% working interest (7.3% net revenue interest) in such leases and our oil and gas interests in the Barnes Creek Field, located in Allen Parish, Louisiana and the Edgerly Field located in Calcasieu Parish, Louisiana from Kilrush Petroleum, Inc., which constitutes a 7.42% working interest (a 5.38% net revenue interest) in the Barnes Creek gas field, and an 11.76% working interest (8.47% net revenue interest) in the Edgerly oil field (the "Texaurus Interests").

We used the proceeds from the Promissory Note to pay for the cost of drilling the Allain-LeBreton No. 2 well in the Clovelly prospect of which we own an 11% working interest. The prospect is located in Lafourche Parish, Louisiana and operated by ORX Resources, Inc. ("ORX"). Our former Director, President and Chief Executive Officer was a Director of ORX at the time of the Company’s entry into the Promissory Note.

In consideration for Polaris agreeing to loan us the money pursuant to and in connection with the Promissory Note, we agreed to provide Polaris an option to participate in Clovelly field for a three percent (3%) working interest, which option Polaris can elect after reviewing the logs of the Allain-LeBreton No. 2 well at target depth, but before the completion of the well (the "Option"). In the event that Polaris elects to exercise its Option and participate in the Allain-LeBreton No. 2 well, we will surrender 3/11ths of our 11% working interest in the well and Polaris will reimburse Texhoma for the drilling costs incurred by us for the three percent (3%) working interest from the commencement of the drilling operations.

In the event that we are unable to repay the Promissory Note to Polaris when due, we agreed pursuant to the Promissory Note to assign one hundred percent (100%) of the cash flow from our portion of the Texaurus Interests to Polaris or its nominee until the Promissory Note is paid in full. Although as described above, we have not repaid the note to date, we are currently working with Polaris to repay the note, and they have not declared an event of default.

On October 10, 2006, ORX Resources, Inc., operator of the Clovelly Prospect well, notified Texhoma that the jointly owned well had been plugged and abandoned on September 23, 2006.

On June and August 2006, Texhoma closed the purchase of three (3) of the participation agreements, entering into Assignments and Bill of Sales for purchase from Sunray Operating Company LLC (“Sunray”) the following Leases:

Leases covering approximately 196 acres of land in Brazoria County, Texas. In the purchase, Texhoma acquired an undivided 37.5% interest, subject to existing overriding royalty interests equal to 25% of 8/8. Additionally, Sunray is entitled to a five-eighths of eight-eighths (62.5% of 8/8) working interest, proportionally reduced at payout; and

Two leases for another 160 acre site and a 60 acre site which were declined by Texhoma and in which we retained a 12.5% back in Working Interest.

We purchased the Leases from Sunray for aggregate consideration of $143,161, of which $113,161 was paid in cash and $30,000 was paid in the form of shares of our common stock, by the issuance of an aggregate of 375,000 units (each a "Unit"), which each includes one (1) share of common stock and one (1) warrant, which entitles the holder of such warrant to purchase one (1) share of our common stock at an exercise price of $0.15 per share, prior to the one (1) year anniversary of such warrant grant, which Units were valued at $0.08 per Unit. Approximately $49,184 remained due to Sunray in connection with the purchase of the Leases outstanding as of September 7, 2007.

Upon the closing of the Purchases we and Sunray agreed to enter into an operating agreement in connection with the development of the leases. Additionally, both we and Sunray agreed that should either party be unable or unwilling, for any reason, to participate in the drilling of the initial well on any of the leases described above, the non-participating party shall, at least 90 days prior to any expiration or any rental date under the leases, assign the participating party all of its right, title and interest in such lease.

Amendment to Certificate of Incorporation

On September 20, 2006, with an effective date of filing of September 21, 2006, we filed a Certificate of Amendment to our Articles of Incorporation to increase our authorized shares of common stock to three hundred million (300,000,000) shares of common stock, $0.001 par value per share, and to re-authorize one million (1,000,000) shares of preferred stock, $0.001 par value per share (the "Amendment").

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

Promissory Note

On or about October 19, 2006, the Company issued a Promissory Note to Jacobs Oil & Gas Limited, an entity controlled by Mr. Frank Jacobs, our former Director, in the amount of $493,643.77, which amount represented funds advanced to the Company by Mr. Jacobs and management fees owed to Mr. Jacobs (the “Jacobs' Note”). The Jacobs' Note bears interest at the rate of 6% per annum until paid, and is payable by the Company at any time on demand. The Jacobs' Note may be pre-paid at any time without penalty. Any amounts not paid on the Jacobs' Note when due shall bear interest at the rate of 15% per annum. The Company also entered into a Security Agreement with Mr. Jacobs under which Agreement the Board of Directors ratified the transfer of 200,000 shares of the common stock of Morgan Creek Energy Corp., which shares are held by the Company, to Mr. Frank Jacobs as security for the money that is owed pursuant to the Jacobs' Note.

Letter Agreement

On or about May 15, 2007, we entered into a Letter Agreement with Matrixx Resource Holdings Inc. (“Matrixx”) to sell our 11% working interest in the property known as the Clovelly Prospect (the “Clovelly Prospect”) for $150,000. In connection with and pursuant to the Letter Agreement, we expected to receive an earnest money deposit of $25,000 on or about May 25, 2007, with the remainder of the purchase price to be paid on or before June 30, 2007; however, we have not received any funds or any deposit from Matrixx and the Letter Agreement has been terminated.

Management Services Agreement

On or about May 15, 2007, we entered into a Management Services Agreement with Valeska Energy Corp. (“Valeska”), whose Chief Executive Officer is William M. Simmons, who became an officer and Director of us on or about June 4, 2007, as described below, which was subsequently amended on or about June 1, 2007 (collectively the “Management Agreement”).

Pursuant to the Management Agreement, we agreed to enter into a Joint Venture agreement with Valeska (the “Joint Venture”), described below; Valeska agreed to provide us management services and act as a Management Consultant to us, for a monthly fee of $10,000 (plus expenses), or 15% of any revenue we generate, whichever is greater (excluded from this definition however are asset sales and/or income of a capital nature, and included in the definition are 20% of the revenues we receive from our Joint Venture with Laurus Master Fund, Ltd.); and we also agreed to issue Valeska 15,200,000 restricted shares of our common stock. We also agreed pursuant to the Management Agreement, as amended, that we would issue Valeska an additional 18,200,000 shares of our common stock upon such time as we are able to bring our public reporting requirements current with the Commission and seek reinstatement on the Over-The-Counter Bulletin Board. These shares will be valued at Fair Market Value using the most appropriate valuation method. The Management Agreement had a minimum term of three months, beginning on May 1, 2007.

On or about August 13, 2007, we entered into a Second Amendment to Management Services Agreement with Valeska (“Second Amendment”). Pursuant to the Second Amendment, we and Valeska agreed to extend the term of the Management Services Agreement until September 30, 2008, and to pay Valeska the following consideration in connection with agreeing to perform the services required by the original Management Services Agreement, and in consideration for allowing Daniel Vesco and William M. Simmons to serve as Directors of the Company, bringing on personnel to assist the Company with the day to day operations of the Company, and helping bring the Company current in its filings (the “Services”):

	·	1,000 shares of the Company’s Series A Preferred Stock;
	·	A monthly fee of $20,000 per month during the extended term of the Second Amendment, plus reasonable and actual costs incurred by Valeska (or individuals or designees brought on by Valeska, including lodging, car rental and telephone expenses therewith) in connection with such Services;

	·	10,000,000 restricted shares of the Company’s common stock; and
	·	60,000,000 options to purchase shares of the Company’s common stock, which shall have a cashless exercise provision, shall be valid for a period of three years from their grant date, and shall have an exercise price of 110% of the trading price of the Company’s common stock on the Pinksheets on the day of such grant, $0.02 per share.

Joint Venture Agreement

On or about May 15, 2007, we entered into a Joint Venture Relationship Agreement with Valeska (the “Joint Venture Agreement”), pursuant to which we and Valeska agreed to form a new Texas limited partnership (the “Joint Venture”), of which Valeska will serve as general partner. The Joint Venture Agreement contemplates that Valeska will cause funds to be invested, arrange financial and strategic partnerships, and that both parties would bring investment opportunities to the Joint Venture. Pursuant to the Joint Venture Agreement, Valeska has co-investment rights in the Joint Venture. Any distributions from the Joint Venture will be paid first to Valeska and the Company, in an amount equal to 8% to Valeska and 2% to the Company, subject to investor approval; then to any investors as negotiated therewith; and finally Valeska and the Company will share any remaining distributions, with Valeska receiving 80% of such distributions and the Company receiving 20% of such distributions.

The Joint Venture Agreement also provides that Valeska has the right to require us to purchase its interest in the Joint Venture at any time, in exchange for shares of our common stock. In the event that Valeska exercises this right, the valuation of the Joint Venture will be valued in a negotiated manner or at 30% greater than the gross acquisition cost of any property acquired by the Joint Venture, and the number of shares exchangeable for such interest will be equal to the market price of our shares of common stock on the date that such right is exercised by Valeska.

Additionally, we have the right, pursuant to the Joint Venture Agreement, to veto any deal which Valeska proposes to include in the Joint Venture.

Voting Agreement

On or about June 5, 2007, certain of our largest shareholders, including Capersia Pte. Ltd.; Frank A. Jacobs, our former officer and Director; and Valeska Energy Corp., which is controlled by William M. Simmons, the President and Director of the Company, and is majority owned by Daniel Vesco, the Company’s Chief Executive Officer and a Director of the Company, through an entity which he controls (“Valeska” and collectively the “Shareholders”) entered into a Voting Agreement (the “Voting Agreement”). Pursuant to the terms of the Voting Agreement the Shareholders agreed that for the Term of the Voting Agreement, as defined below, no Shareholder would vote any of the shares of common stock (the “Shares”) which they hold for (i.e. in favor of) the removal of William M. Simmons or Daniel Vesco, our Directors (the “New Directors”). The Shareholders also agreed that in the event of any shareholder vote of the Company (either by Board Meeting, a Consent to Action with Meeting, or otherwise) relating to the removal of the New Directors; the re-election of the New Directors; and/or the increase in the number of directors of the Company during the Term of the Voting Agreement, that such Shareholders would vote their Shares against the removal of the New Directors; for the re-election of such New Directors; and/or vote against the increase in the number of directors of the Company, without the unanimous consent of the New Directors, respectively.

The Voting Agreement further provided that in the event that either of the New Directors breaches his fiduciary duty to the Company, including, but not limited to such Director’s conviction of an act or acts constituting a felony or other crime involving moral turpitude, dishonesty, theft or fraud; such Director’s gross negligence in connection with his service to the Company as a Director and/or in any executive capacity which he may hold; and/or if any Shareholder becomes aware of information which would lead a reasonable person to believe that such Director has committed fraud or theft from the Company, or a violation of the Securities laws, the Voting Agreement shall not apply, and the Shareholders may vote their shares as they see fit.

The Term of the Voting Agreement is until June 5, 2009 (the “Term”). The Shareholders agreed to enter into the Voting Agreement in consideration for the New Directors agreeing to serve the Company as Directors of the Company.

On or about July 12, 2007, another one of our significant shareholders, Lucayan Oil and Gas Investments, Ltd. (“LOGI”), which is 50% owned by Max Maxwell, our former President and Director, entered into a Voting Agreement with us, which was amended by a First Amendment to Voting Agreement, which provided that the shares of common stock held by LOGI would be subject to the identical terms of our June 5, 2007 Voting Agreement with the Shareholders.

Cooperation Agreement and Mutual Release

On or about July 12, 2007, LOGI; Mr. Maxwell; Meredith Maxwell, Mr. Maxwell’s daughter and our former employee; and A.E. Buzz Jehle, our former consultant (collectively the “Former Interested Parties”) entered into a Cooperation Agreement and Mutual Release (the “Release”) with us and Texaurus Energy, Inc. (“Texaurus”), our wholly owned Delaware subsidiary (for the purposes of the description of the Release, all references to “we,” “us,” the “Company” or similar words include Texaurus). In connection with the Release, we and the Former Interested Parties agreed to release each other (including employees, officers, directors, representatives, employees and assigns) from any and all claims, rights, causes of action and obligations which were known or unknown at the time of the entry into the Release, subject only to the Assignment by the Former Interested Parties of their rights, causes of actions or demands against any former officers or Directors of us to the Company and the New Directors (the “Assignment”) and the Extension. The release we provided to the Former Interested Parties was against any and all claims, rights, causes of action and obligations which were known at the time of the entry into the Release, or which are not brought to the attention of the New Directors or the Company by 5:00 P.M. Central Standard Time, on September 30, 2007 (the “Extension”).

Additionally, in connection with the Release, Mr. Maxwell personally agreed, to the best of his ability, to cooperate with us in connection with an audit of us and Texaurus; to provide a list of the known liabilities of the Company which Mr. Maxwell was aware of; and to personally certify the accuracy and completeness of any financial statements which the Company prepares covering the time period during which Mr. Maxwell was President of the Company, in a form similar to the Certification Of Chief Executive Officer and Chief Financial Officer Pursuant To Section 302 of The Sarbanes-Oxley Act Of 2002 and Certification of Chief Executive Officer; and (ii) Certification of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, as Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002, which reporting companies are required to file as attachments to each periodic filing with the Commission.

Mr. Maxwell also agreed pursuant to the terms of the Release that any options which he vested pursuant to the June 2006 options which he was granted by us would expire if unexercised on August 1, 2007; and that we owe him no rights to contribution or indemnification in connection with his service to the Company. Mr. Maxwell also certified that the shares of common stock granted to LOGI were issued for valid consideration and fully paid and non-assessable (the “Certification”). Additionally, pursuant to the terms of the Release, we agreed to indemnify Mr. Maxwell and Mr. Jehle against any dispute regarding the shares issued to LOGI, provided that such Certification is valid and correct.

Consulting Agreement

Effective July 1, 2007, we entered into a Consulting Agreement with Ibrahim Nafi Onat, our Director (the “Consulting Agreement”), pursuant to which Mr. Onat agreed to serve as our Director and Vice President of Operations for an initial term of twelve (12) months, which term is renewable month to month thereafter with the mutual consent of the parties. Pursuant to the Consulting Agreement we agreed to pay Mr. Onat $2,500 per month during the term of the Consulting Agreement, to issue him 500,000 restricted shares of common stock valued at the market price on the date of issuance, in connection with his entry into the Consulting Agreement and 500,000 restricted shares of common stock assuming he is still employed under the Consulting Agreement at the expiration of six (6) months from the effective date of the Consulting Agreement (the “Six Month Issuance”).

Material Corporate Events

On July 17, 2007, the Company's Board of Directors unanimously agreed by a written consent to action without a meeting, to adopt a Certificate of Designations for the creation of a Series A preferred stock (the "Series A Preferred Stock").

The Series A Preferred Stock has a par value of $0.001 per share. The Series A Preferred Stock consists of one thousand (1,000) shares, each having no dividend rights, no liquidation preference, and no conversion or redemption rights. However, the one thousand (1,000) shares of Series A Preferred Stock have the right, voting in aggregate, to vote on all shareholder matters equal to fifty-one percent (51%) of the total vote. For example, if there are 10,000,000 shares of the Company's common stock issued and outstanding at the time of a shareholder vote, the holders of Series A Preferred Stock, voting separately as a class, will have the right to vote an aggregate of 10,400,000 shares, out of a total number of 20,400,000 shares voting.

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

On or about July 26, 2007, with an effective date of July 31, 2007, we entered into a Termination of Lease Agreement (the “Termination Agreement”) with our landlord at 2200 Post Oak Blvd., Suite 340, Houston, Texas 77056 (the “Post Oak Office”). Pursuant to the terms of the Termination Agreement, we and the landlord agreed to terminate the lease on the Post Oak Office space, and we agreed to pay the landlord approximately $4,090 as a termination fee, $3,331 as payment of past due rental fees; and we also agreed to forfeit any right to our security deposit of approximately $1,578 held by the landlord pursuant to the terms of our lease in connection with such Termination Agreement.

PLAN OF OPERATIONS

The Company’s current plan of operations for the next twelve (12) months is to bring the Company current in its filings with the Commission, get the Company’s accounting and controls and procedures in order and work to decrease the Company’s current liabilities. Furthermore, funding permitting, of which there can be no assurance, we plan to seek out and acquire additional oil and gas properties.

In connection with our properties, a deal we had in place to sell the Clovelly Field interests fell through, and we are relying on the operators of our other properties regarding the direction of those prospects. To date, all of those operators have indicated that they have no plans to expand their current drilling prospects.

We currently believe that we can continue our operations for approximately the next six months with funds raised in June 2007, and anticipate needing to raise approximately $300,000 in the next twelve months to pay our current liabilities and maintain our current rate of monthly expenditures (not including any amounts which we would need for future acquisitions), of which there can be no assurance.

RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2006 COMPARED TO THE QUARTER ENDED MARCH 31, 2005

We had revenues of $466,000 for the quarter ended March 31, 2006 compared with no revenues for the same quarter in 2005. This revenue was the result of the acquisition of the Little White Lake, Edgerly and Barnes Creek properties (the “Properties”) during the first quarter of 2006 compared with the abandoned Black Swan interest in 2005. The revenue reported for the quarter ended March 31, 2006, was derived from both oil and gas production in the Edgerly and Barnes Creek properties. The revenues represent approximately 2,900 equivalent barrels of gas production and 4,700 barrels of oil production from these two properties.

We had oil and gas exploration expenses of $179,000 for the three months ended March 31, 2006, compared to $2,400,000 for the three months ended March 31, 2005. The oil and gas expenses in 2006 were in connection with the Company’s acquisition of oil and gas Properties detailed above and in 2005, the expenses were related to the Black Swan investment disposition.

Depletion in the amount of $299,000 was reported for the quarter ended March 31, 2006 as compared with none for the same period in 2005.

We had general and administrative expenses of $129,000 for the quarter ended March 31, 2006, compared to general and administrative income of $15,000 for the quarter ended March 31, 2005, an increase of $144,000 from the prior period. The increased general and administrative expenses for the three months ended March 31, 2006 were mainly in connection with the expanded efforts of our management to further our mission to obtain viable production in the southern United States during the three months ended March 31, 2006, and increased salaries of our executive officers for the three months ended March 31, 2006, compared to the prior period in 2005. General and administrative income for the quarter ended March 31, 2005, was due to some expenses being reversed that were included in previous quarter estimates and subsequently were not realized.

We reported net interest expense of $12,000 in connection with the $8,500,000 funding from Laurus Fund Ltd for the purchase of the the Little White Lake, Edgerly and Barnes Creek properties on March 28, 2006 for the three months ended March 31, 2006, compared to no interest expense for the three months ended March 31, 2005.

We sustained a net loss of $153,000 for the three months ended March 31, 2006, compared to a net loss of $2,418,000 for the same period in 2005, a decrease in net loss of approximately $2,265,000, which was mainly due to the write off of Black Swan during the three months ended March 31, 2005..

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2006 COMPARED TO THE SIX MONTHS ENDED MARCH 31, 2005

We had revenues of $466,000 for the year to date ended March 31, 2006 compared with $0for the same period in 2005. This revenue was the result of the acquisition of the Properties during the first quarter of 2006 compared with the abandoned Black Swan interest in 2005.

We had oil and gas exploration expenses of $179,000 for the six months ended March 31, 2006, compared to none for the six months ended March 31, 2005. The oil and gas expenses generated for the period ending March 31, 2006 were in connection with the Company’s acquisition of the Properties.

We reported $299,000 in depletion expense for the newly acquired properties as of March 31, 2006 as compared with none in the prior year’s period.

We had general and administrative expenses of $200,000 for the six months ended March 31, 2006, compared to $994,000 for the same period ended March 31, 2005, a decrease of $794,000. The six months ended March 31, 2005 reflected expenses relating to the Company’s acquisition of a 40% interest in Black Swan, while the expenses for the six months ended March 31, 2006 were in connection with the Company’s efforts to purchase the Properties and salaries and expenses associated with the Company’s executive officers.

We reported net interest expense of $12,000 in connection with the $8,500,000 funding from Laurus Fund Ltd. for the purchase of the the Little White Lake, Edgerly and Barnes Creek properties on March 28, 2006 during the six months ended March 31, 2006 compared with no interest expense for the same six months ended March 31, 2005.

We sustained a net loss of $224,000 for the six months ended March 31, 2006, compared to a net loss of $3,702,000 for in the six months ended March 31, 2005, a decrease in net loss of $3,478,000 due in part to the one time expense of $1,075,000 for the six months ended March 31, 2005, in connection with the Company’s write off of Black Swan .

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2006, we had total assets of approximately $12,929,000 which included oil and gas properties of approximately $8,973,000, accounts receivable, net of oil and gas production expenses of approximately $228,000, cash of approximately $107,000 and restricted cash received from Laurus to be used solely to pay expenses associated with the Properties of approximately $2,670,000, and accounts receivable of $6,566.

Liabilities totaled $12,318,000 as of March 31, 2006, and were comprised of current liabilities of approximately $3,818,000 which included accounts payable for properties of approximately $2,500,000, notes payable due to affiliates of approximately $1,085,000, which notes were payable to, LOGI, MFS Technology, Capersia, Clover Capital, Sterling Grant Capital and Buzz Jehle as well as accrued interest due to Laurus of $9,000.

We had total long term liabilities of $8,500,000 as of March 31, 2006, which represented our note payable to Laurus, as described above.

We had negative working capital of approximately $807,000 and a retained deficit of approximately $7,599,000 at March 31, 2006.

For the quarter ended March 31, 2006, operating activities provided approximately $71,000.

Cash used in investing activities was approximately $10,316,000 for the quarter ended March 31, 2006 and cash provided by financing activities was approximately $12,900,000.

We repaid $100,000 due Capersia, an affiliate, which amount was the final cash payment due for the purchase of our 40% interest in Black Swan during the six months ended March 31, 2006. We were also funded $140,000 by various affiliates and $11,000,000 from Laurus and Polaris Holdings for the purchase of Little White Lake, Edgerly and Barnes Creek properties during the six months ended March 31, 2006.

FUNDING TRANSACTIONS

In March 2006, our wholly owned Subsidiary Texaurus entered into a Securities Purchase Agreement with Laurus Master Fund, Ltd. (“Laurus”), whereby Texaurus sold a Secured Term Note in the amount of $8,500,000 to Laurus.

Texaurus subsequently used all but approximately $218,000 to fund the acquisition of Little White Lake Property and Kilrush Properties, with the remaining amount going into a restricted account for use only by Texaurus in connection with further development of the properties held by Texaurus.

In March 2006, we raised $300,000 from the sale of 7,500,000 shares of our common stock, which shares were sold at $0.04 per share, to our former Chief Executive Officer and former Director, Frank Jacobs.

We raised an aggregate of $297,500 through the sale of 23,800,000 shares of common stock at $0.0125 per share between May and July 2007.

We have subsequently used the majority of this funding to pay our general and administrative expenses and certain acquisitions including the purchase of the Leases from Sunray and the Management Agreement with Valeska, as described above.

We believe that we have sufficient funds to repay the interest and principal payments on amortizing payment required on the Secured Term Note with Laurus, through the payment of production payments on the properties owned by Texaurus, as such amortizing payments do not have any minimum payment amount, and as such, the required payment of such amortizing payment on the Secured Term Note will not adversely impact our future current assets or cash on hand. However we will need to repay $8,500,000 (minus any payment of principal on the Note which we are able to make through our 80% production payments to Laurus) on March 27, 2009, which funds we do not currently have and which we can provide no assurances will be available when such Note is due.

Additionally, to continue our planned oil and gas operations the Company remains reliant on raising further equity funds and our growth and continued operations could be impaired by limitations on our access to the capital markets. In the event that we do not generate the amount of revenues from our oil and gas properties which we anticipate, and/or we decide to purchase additional oil and gas properties and are required to raise additional financing, we may have to raise additional capital and/or scale back our operations which would have a material adverse impact upon our ability to pursue our business plan. There can be no assurance that capital from outside sources will be available, or if such financing is available, it may involve issuing securities senior to our common stock or equity financings which are dilutive to holders of our common stock. In addition, in the event we do not raise additional capital from conventional sources, it is likely that our growth will be restricted and we may need to scale back or curtail implementing our business plan.

We have no current commitments from our officers and Directors or any of our shareholders to supplement our operations or provide us with financing in the future. If we are unable to raise additional capital from conventional sources and/or additional sales of stock in the future, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the failure to obtain financing could have a substantial adverse effect on our business and financial results.

RISK FACTORS

You should carefully consider the following risk factors and other information in this annual report on Form 10-QSB before deciding to become a holder of our Common Stock. If any of the following risks actually occur, our business and financial results could be negatively affected to a significant extent.

WE WILL NEED ADDITIONAL FINANCING TO CONTINUE OUR BUSINESS PLAN AND DRILL AND STUDY ADDITIONAL WELLS, WHICH FINANCING, IF WE ARE UNABLE TO RAISE MAY FORCE US TO SCALE BACK OR ABANDON OUR BUSINESS PLAN.

We raised $8,500,000 from the sale of a Secured Term Note to Laurus Master Fund, Ltd. ("Laurus") in March 2006. However, approximately $7,894,235 of the amount borrowed from Laurus was subsequently used to purchase the Intracoastal City property, the interests in the Barnes Creek gas field and the Edgerly field and to pay closing costs and fees in connection with the various funding transactions, and the remaining amount of such note has since been used for working capital and general corporate expenses.

We raised an aggregate of $384,000 through the sale of 4,800,000 units at a price of $0.08 per unit during June through December 2006, which units each included one (1) share of common stock and one (1) one-year warrant to purchase one (1) share of our common stock at an exercise price of $0.15 per share. We raised an aggregate of $297,500 through the sale of 23,800,000 shares of common stock at $0.0125 per share between May and July 2007.

We believe that the funds remaining from the sale of the Note to Laurus, the funds raised through the placement of new equity, and revenue received from the sale of oil and gas production will allow us to pay our outstanding liabilities and continue our business operations for at least the next six months. However, as described below, we cannot be sure that we will find any oil and/or gas on our properties in the future, our current properties will continue to produce, nor can we provide any assurances that if found, that the oil and/or gas will be in commercial quantities, that we will be able to extract it from the ground, that we will not face liability in connection with our extraction efforts, and/or that we will be able to generate the revenues we expect from the future sale of any oil and gas we may discover in the future.

Additionally, we may choose to spend additional monies on the purchases of oil and gas properties in the future. Depending on the decisions of our management, the volatility of the prices of oil and/or gas, our exploration activities, and/or potential liability, and the amount of money we receive from the sale of oil and gas, if any, we may need to raise additional capital substantially faster than six months, which we currently estimate such previously borrowed monies will last. We do not currently have any additional commitments or identified sources of additional capital from third parties or from our officers, directors or majority shareholders. We can provide no assurance that additional financing will be available on favorable terms, if at all. If we are not able to raise the capital necessary to continue our business operations, we may be forced to abandon or curtail our business plan and/or suspend our exploration activities.

WE OWE LAURUS MASTER FUND, LTD., A SUBSTANTIAL AMOUNT OF MONEY WHICH WE DO NOT HAVE.

In connection with the Securities Purchase Agreement, Laurus Master Fund, Ltd. ("Laurus"), purchased a $8,500,000 Secured Term Note from Texaurus, which we have guaranteed, and which bears interest at the rate of 9.75% per year (as of September 26, 2007), which is due and payable on March 27, 2009, and which principal is repayable by way of a production payments equal to 80% of the gross production revenue received by Texaurus in connection with the Intracoastal City Field, the Edgerly and the Barnes Creek Properties.

There can be no assurance that we will have sufficient funds to pay any principal or interest on the Note when due on March 27, 2009, if such repayment amount is not sufficiently covered by the payment of production proceeds to Laurus, as described above, and we do not currently believe that such production payments will be sufficient to repay such Note as of the date of this filing. If we do not have sufficient funds to pay the total remaining amount of the Note (after taking into account payments of principal, which we may not have sufficient funds to pay) when due, we will be in default and Laurus may take control of substantially all of our assets (as described in more detail under "Risks Relating to the Company's Securities"). As a result, we will need to raise or otherwise generate approximately $8,500,000 to repay the Note (not including any adjustments for payment of principal in connection with production payments paid by Texaurus) by March 27, 2009. If we fail to raise this money, we could be forced to abandon or curtail our business operations, which could cause any investment in the Company to become worthless.

WE RELY HEAVILY ON WILLIAM M. SIMMONS AND DANIEL VESCO, OUR OFFICERS AND DIRECTORS, AND IF THEY WERE TO LEAVE, WE COULD FACE SUBSTANTIAL COSTS IN SECURING SIMILARLY QUALIFIED OFFICERS AND DIRECTORS.

Our success depends upon the personal efforts and abilities of William M. Simmons, our President and Director and Daniel Vesco, our Chief Executive Officer and Director. Our ability to operate and implement our exploration activities is heavily dependent on the continued service of Mr. Simmons and Mr. Vesco and our ability to attract qualified contractors and consultants on an as-needed basis.

We face continued competition for such contractors and consultants, and may face competition for the services of Mr. Simmons and/or Mr. Vesco in the future. We do not have any employment contracts with Mr. Simmons or Mr. Vesco, nor do we currently have any key man insurance on Mr. Simmons or Mr. Vesco. Mr. Simmons and Mr. Vesco are our driving forces and are responsible for maintaining our relationships and operations. We cannot be certain that we will be able to retain Mr. Simmons and Mr. Vesco and/or attract and retain such contractors and consultants in the future. The loss of either Mr. Simmons and Mr. Vesco, or both and/or our inability to attract and retain qualified contractors and consultants on an as-needed basis could have a material adverse effect on our business and operations.

WE HAVE BECOME AWARE THAT SPAM EMAILS REFERENCING THE COMPANY HAVE BEEN DISSEMINATED IN THE PAST, WHICH COULD AFFECT THE MARKET FOR AND/OR THE VALUE OF OUR COMMON STOCK.

It has come to our attention that during the month of October 2006 certain spam-emails, containing false and misleading information about our company, were disseminated over the internet. The spam-emails distributed by third parties that are not associated with the Company or its Officers or Directors have not been authorized, sanctioned or paid for by the Company. We caution investors to review our most recent filings with the Commission, our official press releases and our periodic filings, which we anticipate filing and amending in the future, before making any investment in us.

While we are not responsible for the dissemination of the spam-emails and are not aware of who was responsible, we were contacted by the Commission and were requested to voluntarily provide shareholder information and disclosures in connection with the origins of the dissemination of such spam emails. The Company cooperated fully with the Commission.

The fact that someone disseminated spam emails about our company and the fact that the Commission previously looked into such emails may be perceived by potential investors as a negative factor which could adversely affect the market for and/or the value of our stock.

BECAUSE OF THE SPECULATIVE NATURE OF OIL AND GAS EXPLORATION, THERE IS SUBSTANTIAL RISK THAT NO ADDITIONAL COMMERCIALLY EXPLOITABLE OIL OR GAS WILL BE FOUND AND THAT OUR BUSINESS WILL FAIL.

The search for commercial quantities of oil as a business is extremely risky. We cannot provide investors with any assurance that our properties contain commercially exploitable quantities of oil and/or gas.

The exploration expenditures to be made by us may not result in the discovery of commercial quantities of oil and/or gas and problems such as unusual or unexpected formations and other conditions involved in oil and gas exploration, and often result in unsuccessful exploration efforts. If we are unable to find commercially exploitable quantities of oil and gas, and/or we are unable to commercially extract such quantities, we may be forced to abandon or curtail our business plan, and as a result, any investment in us may become worthless.

OUR TOTAL AMOUNT OF ISSUED AND OUTSTANDING SHARE AMOUNTS MAY BE INCORRECT, AND WE MAY HAVE OUTSTANDING SHARES WHICH ARE UNACCOUNTED FOR.

We recently became aware of a subscription agreement relating to the sale of certain shares of our common stock in February 2005, which shares have not been issued to date, and which subscription agreement we have been unable to verify as of the date of this filing. As a result of the subscription agreement, and our previous failure to issue shares in connection with such subscription agreement, we may have potential liability for such shareholders loss of liquidity and/or the decline in the value of our common stock. Additionally, there may be other subscription agreements which we are not aware of relating to the sale of our common stock, which sales and issuances are not currently reflected with our Transfer Agent and/or in the number of outstanding shares of common stock disclosed throughout this report. As a result, we may have a larger number of shares outstanding than we currently show on our shareholders list. This difference, if present, may force us to revise our filings and/or may mean that the ownership percentage of certain shares of common stock disclosed throughout this report is incorrect. If we are required to issue additional shares of common stock in the future relating to previous subscription agreements which our current management was and/or is not aware, it could cause substantial dilution to our existing shareholders and/or we could face potential liability in connection with our failure to issue such shares when originally subscribed.

BECAUSE OF THE INHERENT DANGERS INVOLVED IN OIL AND GAS EXPLORATION, THERE IS A RISK THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS OPERATIONS, WHICH COULD FORCE US TO EXPEND A SUBSTANTIAL AMOUNT OF MONEY IN CONNECTION WITH LITIGATION AND/OR A SETTLEMENT.

The oil and natural gas business involves a variety of operating hazards and risks such as well blowouts, pipe failures, casing collapse, explosions, uncontrollable flows of oil, natural gas or well fluids, fires, spills, pollution, releases of toxic gas and other environmental hazards and risks. These hazards and risks could result in substantial losses to us from, among other things, injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation and penalties and suspension of operations. In addition, we may be liable for environmental damages caused by previous owners of property purchased and leased by us. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce or eliminate the funds available for exploration, development or acquisitions or result in the loss of our properties and/or force us to expend substantial monies in connection with litigation or settlements. As such, there can be no assurance that any insurance obtained by us will be adequate to cover any losses or liabilities. We cannot predict the availability of insurance or the availability of insurance at premium levels that justify our purchase. The occurrence of a significant event not fully insured or indemnified against could materially and adversely affect our financial condition and operations. We may elect to self-insure if management believes that the cost of insurance, although available, is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. The occurrence of an event not fully covered by insurance could have a material adverse effect on our financial condition and results of operations, which could lead to any investment in us becoming worthless.

WE REQUIRE SUBSTANTIAL ADDITIONAL FINANCING TO CONTINUE OUR EXPLORATION AND DRILLING ACTIVITIES, WHICH FINANCING IS OFTEN HEAVILY DEPENDENT ON THE CURRENT MARKET PRICE FOR OIL AND GAS, WHICH WE ARE UNABLE TO PREDICT.

Our growth and continued operations could be impaired by limitations on our access to capital markets. If the market for oil and/or gas were to weaken for an extended period of time, our ability to raise capital would be substantially reduced. There can be no assurance that capital from outside sources will be available, or that if such financing is available, that it will not involve issuing securities senior to the common stock or equity financings which will be dilutive to holders of common stock. Such issuances, if made, would likely cause a decrease in the value of our common stock.

THE MARKET FOR OIL AND GAS IS INTENSELY COMPETITIVE, AND AS SUCH, COMPETITIVE PRESSURES COULD FORCE US TO ABANDON OR CURTAIL OUR BUSINESS PLAN.

The market for oil and gas exploration services is highly competitive, and we only expect competition to intensify in the future. Numerous well-established companies are focusing significant resources on exploration and are currently competing with us for oil and gas opportunities. Additionally, there are numerous companies focusing their resources on creating fuels and/or materials which serve the same purpose as oil and gas, but are manufactured from renewable resources. As a result, there can be no assurance that we will be able to compete successfully or that competitive pressures will not adversely affect our business, results of operations and financial condition. If we are not able to successfully compete in the marketplace, we could be forced to curtail or even abandon our current business plan, which could cause any investment in us to become worthless.

WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH, WHICH COULD LEAD TO OUR INABILITY TO IMPLEMENT OUR BUSINESS PLAN.

Our growth is expected to place a significant strain on our managerial, operational and financial resources, especially considering that we currently only have three (3) Directors and a small number of executive officers and employees. Further, as we enter into additional contracts, we will be required to manage multiple relationships with various consultants, businesses and other third parties. These requirements will be exacerbated in the event of our further growth or in the event that the number of our drilling and/or extraction operations increases. There can be no assurance that our systems, procedures and/or controls will be adequate to support our operations or that our management will be able to achieve the rapid execution necessary to successfully implement our business plan. If we are unable to manage our growth effectively, our business, results of operations and financial condition will be adversely affected, which could lead to us being forced to abandon or curtail our business plan and operations.

THE PRICE OF OIL AND NATURAL GAS HAS HISTORICALLY BEEN VOLATILE AND IF IT WERE TO DECREASE SUBSTANTIALLY, OUR PROJECTIONS, BUDGETS, AND REVENUES WOULD BE ADVERSELY EFFECTED, AND WE WOULD LIKELY BE FORCED TO MAKE MAJOR CHANGES IN OUR OPERATIONS.

Our future financial condition, results of operations and the carrying value of our oil and natural gas properties depend primarily upon the prices we receive for our oil and natural gas production. Oil and natural gas prices historically have been volatile and likely will continue to be volatile in the future, especially given current world geopolitical conditions. Our cash flows from operations are highly dependent on the prices that we receive for oil and natural gas. This price volatility also affects the amount of our cash flows available for capital expenditures and our ability to borrow money or raise additional capital. The prices for oil and natural gas are subject to a variety of additional factors that are beyond our control. These factors include:

o the level of consumer demand for oil and natural gas;

o the domestic and foreign supply of oil and natural gas;

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

o the price of foreign oil and natural gas;

o domestic governmental regulations and taxes;

o the price and availability of alternative fuel sources;

o weather conditions;

o market uncertainty due to political conditions in oil and natural gas producing regions, including the Middle East; and

o worldwide economic conditions.

These factors as well as the volatility of the energy markets generally make it extremely difficult to predict future oil and natural gas price movements with any certainty. Declines in oil and natural gas prices would not only reduce our revenue, but could reduce the amount of oil and natural gas that we can produce economically and, as a result, could have a material adverse effect upon our financial condition, results of operations, oil and natural gas reserves and the carrying values of our oil and natural gas properties. If the oil and natural gas industry experiences significant price declines, we may be unable to make planned expenditures, among other things. If this were to happen, we may be forced to abandon or curtail our business operations, which would cause the value of an investment in us to decline in value, or become worthless.

OUR ESTIMATES OF RESERVES COULD HAVE FLAWS, OR MAY NOT ULTIMATELY TURN OUT TO BE CORRECT OR COMMERCIALLY EXTRACTABLE AND AS A RESULT, OUR FUTURE REVENUES AND PROJECTIONS COULD BE INCORRECT.

Estimates of reserves and of future net revenues prepared by different petroleum engineers may vary substantially depending, in part, on the assumptions made and may be subject to adjustment either up or down in the future. Our actual amounts of production, revenue, taxes, development expenditures, operating expenses, and quantities of recoverable oil and gas reserves may vary substantially from the estimates. Oil and gas reserve estimates are necessarily inexact and involve matters of subjective engineering judgment. In addition, any estimates of our future net revenues and the present value thereof are based on assumptions derived in part from historical price and cost information, which may not reflect current and future values, and/or other assumptions made by us that only represent our best estimates. If these estimates of quantities, prices and costs prove inaccurate, we may be unsuccessful in expanding our oil and gas reserves base with our acquisitions. Additionally, if declines in and instability of oil and gas prices occur, then write downs in the capitalized costs associated with our oil and gas assets may be required. Because of the nature of the estimates of our reserves and estimates in general, we can provide no assurance that additional or further reductions to our estimated proved oil and gas reserves and estimated future net revenues will not be required in the future, and/or that our estimated reserves will be present and/or commercially extractable. If our reserve estimates are incorrect, the value of our common stock could decrease and we may be forced to write down the capitalized costs of our oil and gas properties.

OUR OPERATIONS ARE HEAVILY DEPENDENT ON CURRENT ENVIRONMENTAL REGULATIONS, WHICH WE ARE UNABLE TO PREDICT, AND WHICH MAY CHANGE IN THE FUTURE, CAUSING US TO EXPEND SUBSTANTIAL ADDITIONAL CAPITAL.

Public interest in the protection of the environment has increased dramatically in recent years. Our oil and natural gas production and our processing, handling and disposal of hazardous materials, such as hydrocarbons and naturally occurring radioactive materials (if any) are subject to stringent regulation. We could incur significant costs, including cleanup costs resulting from a release of hazardous material, third-party claims for property damage and personal injuries fines and sanctions, as a result of any violations or liabilities under environmental or other laws. Changes in or more stringent enforcement of environmental laws could force us to expend additional operating costs and capital expenditures to stay in compliance.

Various federal, state and local laws regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, directly impact oil and gas exploration, development and production operations, and consequently may impact our operations and costs. These regulations include, among others, (i) regulations by the Environmental Protection Agency and various state agencies regarding approved methods of disposal for certain hazardous and non-hazardous wastes; (ii) the Comprehensive Environmental Response, Compensation, and Liability Act, Federal Resource Conservation and Recovery Act and analogous state laws which regulate the removal or remediation of previously disposed wastes (including wastes disposed of or released by prior owners or operators), property contamination (including groundwater contamination), and remedial plugging operations to prevent future contamination; (iii) the Clean Air Act and comparable state and local requirements which may result in the gradual imposition of certain pollution control requirements with respect to air emissions from our operations; (iv) the Oil Pollution Act of 1990 which contains numerous requirements relating to the prevention of and response to oil spills into waters of the United States; (v) the Resource Conservation and Recovery Act which is the principal federal statute governing the treatment, storage and disposal of hazardous wastes; and (vi) state regulations and statutes governing the handling, treatment, storage and disposal of naturally occurring radioactive material.

Management believes that we are in substantial compliance with applicable environmental laws and regulations. To date, we have not expended any material amounts to comply with such regulations, and management does not currently anticipate that future compliance will have a materially adverse effect on our consolidated financial position, results of operations or cash flows. However, if we are deemed to not be in compliance with applicable environmental laws, we could be forced to expend substantial amounts to be in compliance, which would have a materially adverse effect on our financial condition. If this were to happen, any investment in us could be lost.

THE COMPANY HAS ESTABLISHED PREFERRED STOCK WHICH CAN BE DESIGNATED BY THE COMPANY'S BOARD OF DIRECTORS WITHOUT SHAREHOLDER APPROVAL AND HAS ESTABLISHED SERIES A PREFERRED STOCK, WHICH GIVES THE HOLDERS MAJORITY VOTING POWER OVER THE COMPANY.

The Company has 1,000,000 shares of preferred stock authorized, and 1,000 shares of Series A Preferred Stock authorized. Shares of preferred stock of the Company may be issued from time to time in one or more series, each of which shall have distinctive designation or title as shall be determined by the Board of Directors of the Company ("Board of Directors") prior to the issuance of any shares thereof. The preferred stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the Board of Directors. Because the Board of Directors is able to designate the powers and preferences of the preferred stock without the vote of a majority of the Company's shareholders, shareholders of the Company will have no control over what designations and preferences the Company's preferred stock will have. As a result of this, the Company's shareholders may have less control over the designations and preferences of the preferred stock and as a result the operations of the Company.

THE COMPANY HAS ESTABLISHED SERIES A PREFERRED STOCK, WHICH GIVES THE HOLDERS MAJORITY VOTING POWER OVER THE COMPANY.

The Company has 1,000 shares of Series A Preferred Stock authorized. All outstanding shares of Series A Preferred stock, which are all currently held by Valeska Energy Corp., the beneficial owner of which is William M. Simmons, the President and Director of the Company, can vote in aggregate on all shareholder matters equal to fifty-one percent (51%) of the total vote. For example, if there are 10,000,000 shares of the Company's common stock issued and outstanding at the time of a shareholder vote, the holders of Series A Preferred Stock, voting separately as a class, will have the right to vote an aggregate of approximately 10,400,000 shares, out of a total number of approximately 20,400,000 shares voting. Because of the shares of Series A Preferred Stock, Valeska Energy Corp., will effectively exercise voting control over the Company. As a result of this, the Company's shareholders will have less control over the operations of the Company.

WILLIAM M. SIMMONS, OUR PRESIDENT CAN EXERCISE VOTING CONTROL OVER CORPORATE DECISIONS.

William M. Simmons (through his personal beneficial ownership and through his voting control over Valeska Energy Corp. (“Valeska”)) beneficially owns 27,200,000 shares of common stock, additionally; Valeska holds all 1,000 shares of our outstanding shares of Series A Preferred Stock, which vote 239,881,856 voting shares. As a result, Mr. Simmons is able to vote 275,408,387 voting shares based on 486,683,111 voting shares outstanding (representing 238,474,724 shares of common stock outstanding and 248,208,387 shares of stock which the Series A Preferred Stock are able to vote) representing 56.6% of our outstanding voting shares. Additionally, Valeska holds options to purchase 60,000,000 shares of our common stock at an exercise price of $0.02 per share, which if exercised would give Mr. Simmons voting control over an even greater percentage of our voting stock. As a result, Mr. Simmons will exercise control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Simmons may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other shareholders.

THE REMOVAL OF MR. VESCO AND MR. SIMMONS AS DIRECTORS OF THE COMPANY IS PROTECTED BY VOTING AGREEMENTS ENTERED INTO WITH THE COMPANY’S MAJORITY SHAREHOLDERS.

Certain of the Company’s majority shareholders, including Capersia Pte. Ltd., Lucayan Oil and Gas Investments, Ltd., Frank A. Jacobs (the Company’s former Chief Executive Officer and Director) and Valeska Energy Corp. (the “Voting Shareholders”) entered into Voting Agreements whereby they agreed that they would not vote the aggregate of 71,874,000 shares of common stock which they hold for (i.e. in favor of) the removal of Mr. Simmons or Mr. Vesco (the “New Directors”) until the expiration of the agreements on June 5, 2009. The Voting Shareholders also agreed that in the event of any shareholder vote of the Company (either by Board Meeting, a Consent to Action without Meeting, or otherwise) relating to the removal of the New Directors; the re-election of the New Directors; and/or the increase in the number of directors of the Company during the term of the Voting Agreements, that such Voting Shareholders would vote their shares against the removal of the New Directors; for the re-election of such New Directors; and/or vote against the increase in the number of directors of the Company, without the unanimous consent of the New Directors, respectively. The Voting Agreements also included a provisions whereby in the event that either of the New Directors breaches his fiduciary duty to the Company, including, but not limited to such New Director’s conviction of an act or acts constituting a felony or other crime involving moral turpitude, dishonesty, theft or fraud; such New Director’s gross negligence in connection with his service to the Company as a Director and/or in any executive capacity which he may hold; and/or if any Voting Shareholder becomes aware of information which would lead a reasonable person to believe that such New Director has committed fraud or theft from the Company, or a violation of the Securities laws (each a “Breach of Fiduciary Duty”), this voting requirement set forth above shall not apply. As a result of the Voting Agreements, it will likely be impossible for the shareholders of the Company to remove Mr. Simmons or Mr. Vesco as Directors of the Company, unless a Breach of Fiduciary Duty occurs, and even then, due to Valeska’s ownership of the Series A Preferred Stock (as described above), it will likely be impossible for such New Directors to be removed as Directors of the Company.

THE INTERESTS OF MR. SIMMONS AND MR. VESCO, OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER, RESPECTIVELY, MAY DIFFER FROM THE INTERESTS OF OUR OTHER SHAREHOLDERS, AND THEY MAY ALSO COMPETE WITH THE COMPANY OR ENTER INTO TRANSACTIONS SEPARATE FROM THE COMPANY.

Mr. Simmons and Mr. Vesco, our President and Chief Executive Officer, respectively, are involved in business interests separate from their involvement with the Company, including but not limited to Valeska Energy Corp., which business and/or companies may also operate in the oil and gas industry similar to and/or in competition with the Company. Mr. Simmons and Mr. Vesco are under no obligation to include us in any transactions which they undertake. As a result, we may not benefit from connections they make and/or agreements they enter into while employed by us, and they, or companies they are associated with, including, but not limited to Valeska, may profit from transactions which they undertake while we do not. As a result, they may find it more lucrative or beneficial to cease serving as officers or Directors of the Company in the future and may resign from the Company at that time. Furthermore, while employed by us, shareholders should keep in mind that they are under no obligation to share their contacts and/or enter into favorable contracts and/or agreements they may come across with the Company, and as a result may choose to enter into such contracts or agreements through companies which they own, which are not affiliated with us, and from which we will receive no benefit. Finally, certain of the agreements they may enter into on our behalf may benefit them more than us, including, but not limited to the Management Agreement, as amended, which currently pays Valeska $20,000 per month.

RISKS RELATING TO THE COMPANY'S SECURITIES

A DEFAULT BY US UNDER THE SECURED TERM NOTE, TEXHOMA WARRANT OR TEXAURUS WARRANT, WOULD ENABLE LAURUS MASTER FUND, LTD., TO TAKE CONTROL OF SUBSTANTIALLY ALL OF OUR ASSETS.

The Secured Term Note, Texhoma Warrant and Texaurus Warrant, are secured by Laurus by a continuing security interest in all of our assets, including without limitation, our cash, cash equivalents, accounts receivable, deposit accounts, inventory, equipment, goods, fixtures and other tangible and intangible assets, which we own or at any time in the future may acquire rights, title or interest to. As a result, if we default under any provision of the Note, Texhoma Warrant or Texaurus Warrant or we fail to pay any amounts due to Laurus, Laurus may take control of substantially all of our assets. If this were to happen, we could be left with no revenue producing assets, and the value of our common stock could become worthless.

WE MAY BE REQUIRED TO PAY PENALTIES TO LAURUS MASTER FUND, LTD. UNDER THE REGISTRATION RIGHTS AGREEMENT, WHICH COULD FORCE US TO EXPEND A SUBSTANTIAL AMOUNT OF THE MONEY WE HAVE PREVIOUSLY RAISED.

We granted Laurus Master Fund, Ltd., registration rights to the shares issuable to Laurus in connection with the Texhoma Warrant, pursuant to a Registration Rights Agreement, and we plan to register such shares pursuant to a Form SB-2 Registration Statement, once we become current in our filings with the Commission. We agreed pursuant to the Registration Rights Agreement to use our best efforts to file the Registration Statement by May 29, 2006 (60 days after the Closing) and to obtain effectiveness of such registration statement by September 25, 2006 (180 days after the Closing), neither of which deadlines we have met. To date, Laurus has not contacted us regarding any potential defaults under the Registration Rights Agreement, but if they contact us in the future, and our failure to file and obtain effectiveness of the registration statement is found to create a default under the Note, we could be forced to pay penalties to Laurus. As a result, we could be forced to abandon or scale back our current planned operations and/or raise additional capital, which could cause substantial dilution to our existing shareholders.

THE TEXHOMA WARRANT CONTAINS PROVISIONS WHEREBY LAURUS MASTER FUND, LTD. MAY HOLD MORE THAN 4.99% OF OUR COMMON STOCK, PROVIDED THEY PROVIDE US SEVENTY-FIVE (75) DAYS NOTICE OR AN EVENT OF DEFAULT OCCURS.

Although Laurus may not exercise its Texhoma Warrant if such exercise would cause it to own more than 4.99% of our outstanding common stock, the Texhoma Warrant also contains provisions which provide for the 4.99% limit to be waived provided that Laurus provides us with 75 days notice of its intent to hold more than 4.99% of our common stock or upon the occurrence of an event of default (as defined under the Note). As a result, if we receive 75 days notice from Laurus and/or an event of default occurs, Laurus may fully exercise the Texhoma Warrant and fully convert the Texhoma Warrant into shares of our common stock. If this were to happen, it would cause immediate and substantial dilution to our existing shareholders and if it were to happen when our Registration Statement covering Laurus' securities has been declared effective, the subsequent sale of such shares in the marketplace, if affected, could cause the trading value of our common stock, if any, to decrease substantially.

IF AN EVENT OF DEFAULT OCCURS UNDER THE NOTE, TEXHOMA WARRANT OR TEXAURUS WARRANT OR ANY OF THE RELATED AGREEMENTS, WE COULD BE FORCED TO IMMEDIATELY PAY THE AMOUNTS DUE UNDER THE NOTE.

The Secured Term Note, Texhoma Warrant and Texaurus Warrant include provisions whereby Laurus Master Fund, Ltd., may make the amounts outstanding under the Note due and payable if an event of default occurs under the Note, which events of default include:

our failure to pay amounts due under the Note;

breach of any covenants under the Note, if not cured in the time periods provided;

breach of any warranties found in the Note;

the occurrence of any default under any agreement, which causes any contingent obligation to become due prior to its stated maturity or to become payable;

any change or occurrence likely to have a material adverse effect on the business, assets, liabilities, financial condition, our operations or prospects;

an indictment or other proceedings against us or any executive officer; or

a breach by us of any provision of the Securities Purchase Agreement, or any other Related Agreement entered into in connection with the sale of the Notes.

If any event of default were to occur under the Note and Laurus was to make the entire amount of the Note immediately due and payable, and we did not have sufficient funds on hand to pay such amounts, we could be forced to sell some or all of our assets at less than fair market value, and/or abandon or curtail our business plan and operations.

THE ISSUANCE OF COMMON STOCK IN CONNECTION WITH THE EXERCISE OF THE TEXHOMA WARRANT WILL CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION.

Once we are able to file a registration statement covering the shares of common stock issuable in connection with the exercise of the Texhoma Warrant, which we do not anticipate being able to file until such time as we are current in our filings, the issuance of common stock upon exercise of the Texhoma Warrant will result in immediate and substantial dilution to the interests of other stockholders since Laurus Master Fund, Ltd., may ultimately receive and sell the full amount issuable on exercise of the Texhoma Warrant, which has an exercise price of $0.04 per share, currently more than the average trading value of our common stock during the past thirty days. Although Laurus may not exercise its warrant if such conversion or exercise would cause it to own more than 4.99% of our outstanding common stock (unless Laurus provides us 75 days notice and/or an event of default occurs, this restriction does not prevent Laurus from exercising some of its holdings, selling those shares, and then converting the rest of its holdings, while still staying below the 4.99% limit. In this way, Laurus could sell more than this limit while never actually holding more shares than this limit prohibits. If Laurus chooses to do this, it will likely cause the value of our common stock to decline in value (if such common stock is trading at more than $0.04 per share prior to such sales) and will likely also cause substantial dilution to our common stock.

THE MARKET FOR OUR COMMON STOCK MAY CONTINUE TO BE VOLATILE, ILLIQUID AND SPORADIC, IF WE HAVE A MARKET AT ALL.

The market for our common stock on the Pinksheets has historically been volatile, illiquid and sporadic and we anticipate that such market, and the market for our common stock on the Over-The-Counter Bulletin Board (which we plan to trade our shares once we become current in our filings, of which there can be no assurance) will continue to be subject to wide fluctuations in response to several factors, including, but not limited to:

	(1)	actual or anticipated variations in our results of operations;
	(2)	our ability or inability to generate new revenues;
	(3)	increased competition; and
	(4)	conditions and trends in the oil and gas exploration industry and the market for oil and gas and petroleum based products.

Our common stock is traded on the Pinksheets under the symbol "TXHE." In recent years, the stock market in general has experienced extreme price fluctuations that have oftentimes been unrelated to the operating performance of the affected companies. Similarly, the market price of our common stock may fluctuate significantly based upon factors unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock.

INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO FEDERAL REGULATIONS OF PENNY STOCKS.

Our common stock will be subject to the requirements of Rule 15(g)9, promulgated under the Securities Exchange Act as long as the price of our common stock is below $4.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $4.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired.

Other Considerations

There are numerous factors that affect our business and the results of its operations. Sources of these factors include general economic and business conditions, federal and state regulation of business activities, the level of demand for the Company’s product or services, the level and intensity of competition in the industry and the pricing pressures that may result, the Company’s ability to develop new services based on new or evolving technology and the market’s acceptance of those new services, the Company’s ability to timely and effectively manage periodic product transitions, and geographic sales mix of any particular period, and the ability to continue to improve infrastructure including personnel and systems, to keep pace with the growth in its overall business activities.

ITEM 3. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. Our Chief Executive and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-QSB (the "Evaluation Date"), have concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our controls were not effective because we failed to complete the required audit of Black Swan in compliance with GAAP, and failed to file our 2005, 2006 and 2007 quarterly and annual reports.

Moving forward, our current management intends to allocate sufficient resources to bring us current in our reporting obligations with the Commission and to timely file our periodic and current reports with the Commission. We believe that once our reports are current, we will be able to timely file all required reports on an ongoing basis.

(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during the fiscal quarter reported by this Form 10-QSB, that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

In February 2006, 2,000,000 shares of common stock were issued to Sterling Grant Capital, Inc., in connection with the acquisition of a 5% working interest in the Clovelly South field. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the shares for investment and not resale and we took appropriate measures to restrict transfer.

On March 24, 2006, Mr. Jacobs, the Company’s then Chief Executive Officer, subscribed for 7,500,000 shares of the Company's common stock at $0.04 per share, for aggregate consideration of $300,000, which amount was paid from his personal funds, which funds were immediately used by the Company as a portion of the consideration paid by the Company for the purchase of certain oil and gas interests. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the shares for investment and not resale and we took appropriate measures to restrict transfer.

On March 28, 2006, we granted Laurus a common stock Purchase Warrant to purchase up to 10,625,000 shares of our common stock at an exercise price of $0.04 per share, which warrants expire if unexercised at 5:00 P.M. C.S.T. on March 28, 2011. We claim an exemption from registration afforded by Rule 506 of Regulation D under the Securities Act of 1933 (the "Act"), for the issuance of the Common Stock Purchase Warrant and Note.

On March 28, 2006, in connection with the Closing, Texaurus granted Laurus a Common Stock Purchase Warrant, which provides Laurus the right to purchase up to 961 shares of Texaurus' common stock, representing 49% of Texaurus' outstanding common stock at an exercise price of $0.001 per share. Texaurus claims an exemption from registration afforded by Rule 506 of Regulation D under the Act, for the grant of the Common Stock Purchase Warrant.

On March 28, 2006, in consideration for advisory services rendered in connection with the Closing, we granted Energy Capital Solutions, LLC, warrants to purchase up to 1,062,500 shares of our common stock at an exercise price of $0.04 per share, which warrants expire if unexercised at 5:00 P.M. C.S.T. on March 28, 2011. We claim an exemption from registration afforded by Rule 506 of Regulation D under the Act, for the issuance of the warrants.

On April 10, 2006, we issued 37,500,000 shares to Structured Capital Corporation (which was later distributed among several entities) in connection with our purchase of certain oil and gas interests in Louisiana. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient(s) took the shares for investment and not resale and we took appropriate measures to restrict transfer.

On April 10, 2006, Texhoma entered into a Debt Conversion Agreement with Lucayan Oil and Gas Investments, Ltd., a Bahamas corporation ("LOGI"). Texhoma owed $895,000 to LOGI as of the date of the Debt Conversion Agreement in connection with money received by the Company for the drilling in Thailand in March 2005. Pursuant to the Debt Conversion Agreement, the Company and LOGI agreed to convert $160,000 of the $895,000 which LOGI was owed into an aggregate of 4,000,000 shares (or one (1) share for each $0.04 of debt converted) of newly issued shares of the Company's restricted common stock. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the shares for investment and not resale and we took appropriate measures to restrict transfer.

On May 15, 2006, LOGI provided the Company notice of its desire to convert its $735,000 Promissory Note, which amount remained from LOGI’s Debt Conversion Agreement entered into with Texhoma in April 2006, into 18,375,000 shares of the Company's common stock and as a result of such conversion, LOGI now owns an aggregate of 22,375,000 shares of Company common stock. The Director and 50% owner of LOGI is Max Maxwell, who became a Director of the Company on April 10, 2006, and President of the Company on April 12, 2006. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the shares for investment and not resale and we took appropriate measures to restrict transfer.

On June 1, 2006, the Company's Board of Directors approved the grant of an aggregate of 10,000,000 options to the Company's officers, Directors and employees, pursuant to the Company's 2006 Stock Incentive Plan. All the options were at an exercise price of $0.13 per share, which was equal to the average of the highest ($0.125) and lowest ($0.111) quoted selling prices of the Company’s common stock on June 1, 2006, multiplied by 110%. Options were granted to Max Maxwell, Frank Jacobs, Brian Alexander, and Terje Reiersen. These options will be valued using the Black Scholes valuation method. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuances did not involve a public offering, the recipients took the securities for investment and not resale and we took appropriate measures to restrict transfer.

Additionally, on June 1, 2006, the Board of Directors approved the grant of 2,000,000 options to another consultant to the Company in consideration for investor relations services rendered to the Company. The options have an exercise price of $0.13 per share, vest at a rate of 250,000 options every three months and expire if unexercised on June 1, 2009, or as provided in an Option Agreement to be drafted subsequent to the grant, to evidence such options. These options will be valued using the Black Scholes valuation method. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing grant did not involve a public offering, the recipient took the securities for investment and not resale and we took appropriate measures to restrict transfer.

On June 3, 2006, Texhoma entered into a Subscription Agreement with an individual, pursuant to which such individual purchased 1,925,000 units (each consisting of one restricted share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $0.15 per share), which warrant expires if unexercised on June 3, 2007, for aggregate consideration of $154,000. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the securities for investment and not resale and we took appropriate measures to restrict transfer.

On June 3, 2006, Texhoma entered into a Subscription Agreement with an individual, pursuant to which such individual purchased 1,000,000 units (each consisting of one restricted share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $0.15 per share), which warrant expires if unexercised on June 3, 2007, for aggregate consideration of $80,000. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the securities for investment and not resale and we took appropriate measures to restrict transfer.

On June 29, 2006, in connection with our entry into a Bill of Sales, in connection with the purchase of two (2) oil and gas leases from Sunray Operating Company, LLC, we agreed to issue an aggregate of 375,000 shares of common stock and an aggregate of 375,000 warrants, which entitle the holder of such warrant to purchase one (1) share of our common stock at an exercise price of $0.15 per share, prior to the one (1) year anniversary of such warrant grant. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuances did not involve a public offering, the recipients took the securities for investment and not resale and we took appropriate measures to restrict transfer.

In June 2006, Texhoma entered into a Subscription Agreement with an individual, pursuant to which such individual purchased 250,000 units (each consisting of one restricted share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $0.15 per share), which warrant expires if unexercised on or about June 12, 2007, for aggregate consideration of $20,000. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the securities for investment and not resale and we took appropriate measures to restrict transfer.

On July 1, 2006, Texhoma entered into a Subscription Agreement with an individual, pursuant to which such individual purchased 1,000,000 units (each consisting of one restricted share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $0.15 per share), which warrant expires if unexercised on July 1, 2007, for aggregate consideration of $80,000. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the securities for investment and not resale and we took appropriate measures to restrict transfer.

On September 15, 2006, we entered into a Subscription Agreement with an entity, pursuant to which such entity purchased 625,000 units for aggregate consideration of $50,000 (each consisting of one restricted share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $0.15 per share), which warrant expires if unexercised on September 15, 2007. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, for the above issuance, since the issuance did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. A 6% commission was paid by the Company in connection with the sale of the 625,000 units.

On September 19, 2006, Mr. Brian Alexander decided not to seek re-election as a director of the Company due to other business and work commitments. In connection with monies we owed Mr. Alexander in directors and consulting fees, 300,000 shares of restricted common stock were issued to Mr. Alexander in lieu of cash in connection with Mr. Alexander’s resignation as an officer of the Company and in connection with his entry into a Mutual Release with us entered into on September 27, 2006. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, since the foregoing issuance did not involve a public offering, the recipient took the securities for investment and not resale and we took appropriate measures to restrict transfer.

On or about May 15, 2007, we issued Valeska 15,200,000 restricted shares of our common stock in consideration for and in connection with its entry into the Management Agreement, described above. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended for the above issuance, since the issuance did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. No underwriters or agents will be involved in the issuance and no underwriting discounts or commissions will be paid by the Company.

On or about May 31, 2007 we sold 4,800,000 shares of our restricted common stock pursuant to a subscription agreement to an individual for aggregate consideration of $60,000 or $0.0125 per share. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, for the above issuance, since the issuance did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. No underwriters or agents were involved in the issuance and no underwriting discounts or commissions were paid by the Company.

On or about June 5, 2007, we sold 18,000,000 shares of our common stock to Hobart Global Limited, a British Virgin Islands company, in consideration for $225,000 or $0.0125 per share. We also agreed to provide Hobart piggy-back registration rights in connection with the sale. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, for the above issuance, since the issuance did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. No underwriters or agents were involved in the issuance and no underwriting discounts or commissions were paid by the Company.

On or about July 9, 2007, we sold 1,000,000 shares of our common stock to Camecc A/S, a Norwegian company, in consideration for $12,500 or $0.0125 per share. We also agreed to provide Camecc A/S piggy-back registration rights in connection with the sale. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, for the above issuance, since the issuance did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. No underwriters or agents were involved in the issuance and no underwriting discounts or commissions were paid by the Company.

In July 2007, we issued Mr. Ibrahim Nafi Onat an aggregate of 500,000 restricted shares of our common stock in connection with his entry into the Consulting Agreement (described above). We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, for the above issuance, since the issuance did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. No underwriters or agents were involved in the issuance and no underwriting discounts or commissions were paid by the Company.

In August 2007, we issued 1,000 shares of our Series A Preferred Stock to Valeska in connection with the Second Amendment to Management Services Agreement with Valeska (described above). We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, for the above issuance, since the issuance did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. No underwriters or agents were involved in the issuance and no underwriting discounts or commissions were paid by the Company.

In August 2007, in connection with the Second Amendment to Management Services Agreement with Valeska, we issued Valeska 10,000,000 shares of our restricted common stock and options to purchase 60,000,000 shares of our common stock at an exercise price of 110% of the trading value of our common stock on the grant date of such options. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, for the above issuances, since the issuances did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. No underwriters or agents were involved in the issuance and no underwriting discounts or commissions were paid by the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) EXHIBITS

Exhibit Number	Description of Exhibit

3.1(t)	Certificate of Amendment to Articles of Incorporation increasing the authorized shares of common stock to 300,000,000 shares

3.2(13)	Series A Preferred Stock Designation

10.1(1)	Sale and Purchase Agreement, dated as of January 20, 2006, by and between Sterling Grant Capital Inc. and Texhoma Energy, Inc.


10.2(1)	Letter Agreement, dated as of December 31, 2005 by and between Pacific Spinner Limited and Texhoma Energy, Inc.


10.3(2)		Sales and Purchase Agreement with Structured Capital Corp.

10.4(2)		Sales & Purchase Agreement with Kilrush Petroleum

10.5(2)		Securities Purchase Agreement

10.6(2)	Secured Term Note

10.7(2)	Warrant Agreement (Texaurus)

10.8(2)	Warrant Agreement (Texhoma)

10.9(2)	Registration Rights Agreement

10.10(2)	Stock Pledge Agreement

10.11(2)	Side Letter Agreement

10.12(2)	Guaranty of Texaurus

10.13(2)	Personal Guaranty of Frank Jacobs

10.14(2)	Warrant with Energy Capital Solutions, LLC

10.15(2)	Frank Jacobs Subscription Agreement

10.16(5)	Sales and Purchase Agreement with Structured Capital Corp.
10.17(6)	First Amendment to Sales and Purchase Agreement

10.18(6)	Mortgage, Security Agreement, Finance Statement and Assignment of Production

10.19(6)	Collateral Assignment

10.16(7)	Debt Conversion Agreement with Lucayan Oil and Gas Investments, Ltd.

10.17(7)	Note with Lucayan Oil and Gas Investments, Ltd.

10.18(8)	Promissory Note to Frank Jacobs

10.19(8)	Security Agreement with Frank Jacobs

10.20(10)	Letter Agreement with Matrixx Resource Holdings Inc. regarding the sale of the Clovelly Prospect

10.21(11)	Agreement Regarding Frank A. Jacobs’ Note

10.22(11)	Joint Venture Relationship Agreement

10.23(11)	Management Services Agreement with Valeska and Amendment thereto

10.24(12)	Jacobs Oil & Gas Limited Promissory Note

10.25(13)	Voting Agreement

10.26(13)	Voting Agreement with LOGI

10.27(13)	First Amendment to Voting Agreement with LOGI

10.28(13)	Cooperation Agreement and Mutual Release

10.28(13)		Consulting Agreement with Ibrahim Nafi Onat

10.29(14)		Promissory Note and Security Agreement with Polaris

10.30(16)		Second Amendment to Management Services Agreement

10.31(17)		Option Agreement with Valeska

16.1(15)		Letter from Braverman & Company, PC

16.2(3)		Letter from Chisholm, Bierwolf & Nilson, LLC

16.3(4)		Letter from Chisholm, Bierwolf & Nilson, LLC

16.4(9)		Letter from Jewett, Schwartz, Wolfe & Associates


31.1*		Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Filed herewith.

(t)	Filed as an exhibit to our Form 8-K, filed with the Commission on September 22, 2006, and incorporated herein by reference.

(1)	Filed as exhibits to the Company’s Form 8-K filed with the Commission on February 14, 2006, and incorporated herein by reference.

(2)	Filed as exhibits to the Company’s Form 8-K filed with the Commission on April 4, 2006, and incorporated herein by reference.

(3)	Filed as an exhibit to our Form 8-K filing, filed with the Commission on April 5, 2006, and incorporated herein by reference.

(4)	Filed as an exhibit to our Form 8-K filed with the Commission on April 13, 2006, and incorporated herein by reference.

(5)	Filed as an exhibit to our Form 8-K, filed with the Commission on April 4, 2006, and incorporated herein by reference.

(6)	Filed as exhibits to our Form 8-K, filed with the Commission on April 26, 2006, and incorporated herein by reference.

(7)	Filed as exhibits to our Form 8-K, filed with the Commission on May 24, 2006, and incorporated herein by reference.

(8)	Filed as exhibits to our Form 8-K, filed with the Commission on February 13, 2007, and incorporated herein by reference.

(9)	Filed as an exhibit to our Form 8-K, filed with the Commission on June 21, 2007, and incorporated herein by reference.

(10)	Filed as an exhibit to our Form 8-K, filed with the Commission on May 25, 2007, and incorporated herein by reference.

(11)	Filed as an exhibit to our Form 8-K, filed with the Commission on June 8, 2007, and incorporated herein by reference.

(12)	Filed as an exhibit to our Form 8-K, filed with the Commission on October 20, 2006, and incorporated herein by reference.

(13)	Filed as an exhibit to our Form 8-K, filed with the Commission on July 30, 2007, and incorporated herein by reference.

(14)	Filed as an exhibit to our Form 8-K, filed with the Commission on June 13, 2007, and incorporated herein by reference.

(15)	Filed as an exhibit to our Form 8-K, filed with the Commission on May 17, 2004, and incorporated herein by reference.

(16)	Filed as an exhibit to our Form 10-KSB, filed with the Commission on August 21, 2007, and incorporated herein by reference.

(17)	Filed as an exhibit to our Form 10-QSB, filed with the Commission on September 11, 2007, and incorporated herein by reference.

b) REPORTS ON FORM 8-K

We filed a report on Form 8-K on February 14, 2006, to report our acquisition of an additional 5% of the Clovelly South prospect in Louisiana, the completion of the divestment of our shares of Black Swan, and transactions related with the above.

SIGNATURES

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

TEXHOMA ENERGY, INC.

/s/ Daniel Vesco

Daniel Vesco

Chief Executive Officer

(Principal Executive Officer)

Date October 1, 2007

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