Edgar Filing: AMERICAN PETRO-HUNTER INC

unexpected drilling conditions;

pressure or irregularities in formations;

equipment failures or accidents;

mechanical difficulties, such as lost or stuck oil field drilling and service tools;

fires, explosions, blowouts and surface cratering;

uncontrollable flows of oil and formation water;

environmental hazards, such as oil spills, pipeline ruptures and discharges of toxic gases;

other adverse weather conditions; and

increase in the cost of, or shortages or delays in the availability of, drilling rigs and equipment.

Certain future drilling activities may not be successful and, if unsuccessful, this failure could have an adverse effect on our future results of operations and financial condition. While all drilling, whether developmental or exploratory, involves these risks, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons.

Our oil and gas operations involve substantial costs and are subject to various economic risks.

Our oil and gas operations are subject to the economic risks typically associated with exploration, development and production activities, including the necessity of significant expenditures to locate and acquire producing properties and to drill exploratory wells. The cost and length of time necessary to produce any reserves may be such that it will not be economically viable. In conducting exploration and development activities, the presence of unanticipated pressure or irregularities in formations, miscalculations or accidents may cause our exploration, development and production activities to be unsuccessful. In addition, the cost and timing of drilling, completing and operating wells is often uncertain. We also face the risk that the oil and gas reserves may be less than anticipated, that we will not have sufficient funds to successfully drill on the property, that we will not be able to market the oil and gas due to a lack of a market and that fluctuations in the prices of oil will make development of those leases uneconomical. This could result in a total loss of our investment.

A substantial or extended decline in oil and gas prices may adversely affect our business, financial condition, cash flow, liquidity or results of operations as well as our ability to meet our capital expenditure obligations and financial commitments to implement our business plan.

Any revenues, cash flow, profitability and future rate of growth we achieve will be greatly dependent upon prevailing prices for oil and gas. Our ability to maintain or increase our borrowing capacity and to obtain additional capital on attractive terms is also expected to be dependent on oil and gas prices. Historically, oil and gas prices and markets have been volatile and are likely to continue to be volatile in the future. Prices for oil and gas are subject to potentially wide fluctuations in response to relatively minor changes in supply of and demand for oil and gas, market uncertainty, and a variety of additional factors beyond our control. Those factors include:

the domestic and foreign supply of oil and natural gas;

the ability of members of the Organization of Petroleum Exporting Countries and other producing countries to agree upon and maintain oil prices and production levels;

political instability, armed conflict or terrorist attacks, whether or not in oil or natural gas producing regions;

the level of consumer product demand;

the growth of consumer product demand in emerging markets, such as China and India;

weather conditions, including hurricanes and other natural occurrences that affect the supply and/or demand of oil and natural gas;

domestic and foreign governmental regulations and other actions;

the price and availability of alternative fuels;

the price of foreign imports;

the availability of liquid natural gas imports; and

worldwide economic conditions.

These external factors and the volatile nature of the energy markets make it difficult to estimate future prices of oil and natural gas. Lower oil and natural gas prices may not only decrease our revenues on a per unit basis, but may also reduce the amount of oil we can produce economically, if any. A substantial or extended decline in oil and natural gas prices may materially affect our future business, financial condition, results of operations, liquidity and borrowing capacity. While our revenues may increase if prevailing oil and gas prices increase significantly, exploration and production costs and acquisition costs for additional properties and reserves may also increase.

Competition in the oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring viable leases.

The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including many major oil and gas companies which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised or that any projected work will be completed.

Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our Company .

Oil and gas operations are subject to country-specific federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to country-specific federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from governmental bodies are required for drilling operations to be conducted and no assurance can be given that such permits will be received. Environmental standards imposed by federal, state, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages. To date, we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in the future and this may affect our ability to expand or maintain our operations.

The unavailability or high cost of drilling rigs, equipment, supplies, personnel and oil field services could adversely affect our ability to execute our exploration and development plans on a timely basis and within our budget.

Our industry is cyclical and, from time to time, there is a shortage of drilling rigs, equipment, supplies or qualified personnel. During these periods, the costs and delivery times of rigs, equipment and supplies are substantially greater. In addition, the demand for, and wage rates of, qualified drilling rig crews rise as the number of active rigs in service increases. As a result of increasing levels of exploration and production in response to strong prices of oil and natural gas, the demand for oilfield services and equipment has risen, and the costs of these services and equipment are increasing. If the unavailability or high cost of drilling rigs, equipment, supplies or qualified personnel were particularly severe in areas where we operate, we could be materially and adversely affected.

We depend on the skill, ability and decisions of third party operators to a significant extent.

The success of the drilling, development and production of the oil properties in which we have or expect to have a working interest is substantially dependent upon the decisions of such third-party operators and their diligence to comply with various laws, rules and regulations affecting such properties. The failure of any third-party operator to make decisions, perform their services, discharge their obligations, deal with regulatory agencies, and comply with laws, rules and regulations, including environmental laws and regulations in a proper manner with respect to properties in which we have an interest could result in material adverse consequences to our interest in such properties, including substantial penalties and compliance costs. Such adverse consequences could result in substantial liabilities to us or reduce the value of our properties, which could negatively affect our results of operations.

Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuation of our operations.

In general, our future exploration and production activities are subject to certain country-specific federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuation of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. Specifically, we will be subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of U.S. state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry. We believe that our current operations comply, in all material respects, with all applicable environmental regulations.

Risks Related to our Common Stock

Our common stock may be subject to the penny stock rules which may make it more difficult to sell our common stock.

The Securities and Exchange Commission has adopted regulations which generally define a “penny stock” to be any equity security that has a market price, as defined, less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors such as, institutions with assets in excess of $5,000,000 or an individual with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with his or her spouse. For transactions covered by this rule, the broker-dealers must make a special suitability determination for the purchase and receive the purchaser’s written agreement of the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also affect the ability of our stockholders to sell their shares in the secondary market.

Our management and stockholders may lose control of the Company as a result of a merger or acquisition.

We may consider an acquisition in which we would issue as consideration for the business opportunity to be acquired an amount of our authorized but unissued common stock that would, upon issuance, represent the great majority of the voting power and equity of the Company. As a result, the acquiring company’s stockholders and management would control the Company, and our current management may be replaced by persons unknown at this time. Such a merger would result in a greatly reduced percentage of ownership of the Company by its current stockholders.

We have historically not paid dividends and do not intend to pay dividends.

We have historically not paid dividends to our stockholders and management does not anticipate paying any cash dividends on our common stock to our stockholders for the foreseeable future. We intend to retain future earnings, if any, for use in the operation and expansion of our business.

A limited public trading market exists for our common stock, which makes it more difficult for our stockholders to sell their common stock in the public markets.

Although our common stock is quoted on the OTCBB under the symbol “AAPH,” there is a limited public market for our common stock. No assurance can be given that an active market will develop or that a stockholder will ever be able to liquidate its shares of common stock without considerable delay, if at all. Many brokerage firms may not be willing to effect transactions in the securities. Even if a purchaser finds a broker willing to effect a transaction in these securities, the combination of brokerage commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Furthermore, our stock price may be impacted by factors that are 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 and liquidity of our common stock.

ITEM 1B — UNRESOLVED STAFF COMMENTS

None.

ITEM 2 — PROPERTIES

Facilities

Our corporate headquarters are located at 17470 North Pacesetter Way, Scottsdale, AZ 85255.

Reserves

As of the end of the 2009 fiscal year, the Company has no proved reserves.

Production, Production Prices and Production Costs

Sales of oil during the 2009 fiscal year amounted to $77,728 for 1,242 barrels at an average price of $62.58 per barrel and at an average production cost per barrel of $10.54. Production costs are expected to increase as production increases. Prior to the 2009 fiscal year we had not had any oil production. We have not had any gas production. All of our oil production has occurred in the United States.

Past and Present Development Activities

During the 2009 fiscal year we drilled seven exploratory wells in the United States, of which two were net productive and five did not contain sufficient volumes to warrant completion for commercial production. We did not drill any development wells during the 2009 fiscal year. As of the end of the 2009 fiscal year, no additional wells were being drilled. We undertook no exploratory or development activity in 2008 or 2007.

Delivery Commitments

As of the end of the 2009 fiscal year, we had no delivery commitments for fixed and determinable quantities of oil or natural gas. On January 4, 2010, we entered into an oil purchase contract with the National Co-op Refinery Association of McPherson Kansas to purchase all production at the Rooney lease at a premium to Kansas common oil prices of $3.85 per barrel above the daily price. This price premium reflects the quality of the 44 degree oil being produced at Rooney.

Properties, Wells, Operations, Acreage and Current Activities

The following table sets forth our interest in wells and acreage as of August 13, 2010.

	Number of Productive Wells				Developed Acreage (3)				Undeveloped Acreage
	Gross (1)		Net (2)		Gross (1)		Net (2)		Gross (1)		Net (2)
Oil		4		1.015		440		230		10,133		3,383
Gas		0		0		0		0		1,040		260

(1) A gross well or acre is a well or acre in which we own an interest.

(2) A net well or acre is deemed to exist when the sum of fractional ownership interests in wells or acres equals 1.

(3) Developed acreage is acreage assignable to productive wells.

As of August 13, 2010, our acreage subject to leases has the minimum remaining lease terms set forth in the following table.

Property	Gross Acreage		Net Acreage		Minimum Remaining Lease Terms
Trego County, KS (Poston Prospect)		750		152.8	Held by production
Clark County, KS (Brinkman Prospect)		1,760		358.6	1 year
Ford County, KS (Rooney Prospect)		7,040		2,868.8	3 months
Thomas County, KS (Colby Prospect)		500		101.9	1 year
Sacramento County, CA (Wurster Gas Project)		1,040		260	6 months
Payne County, OK (Bay Prospect)		523		131	2 years

All of our oil and gas interests and acreage are located in, and all of our drilling and other development activities have occurred in, the United States.

ITEM 3 — LEGAL PROCEEDINGS

ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is traded on the Over the Counter Bulletin Board under the symbol AAPH.

The following is the range of high and low bid prices for our common stock for the periods indicated. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.

Fiscal 2009	High		Low
First Quarter (March 31, 2009)	$	.40	$	.02
Second Quarter (June 30, 2009)	$	.59	$	.25
Third Quarter (September 30, 2009)	$	.55	$	.35
Fourth Quarter (December 31, 2009)	$	.68	$	.22

Fiscal 2008	High		Low
First Quarter (March 31, 2008)	$	.15	$	.06
Second Quarter (June 30, 2008)	$	.06	$	.04
Third Quarter (September 30, 2008)	$	.07	$	.03
Fourth Quarter (December 31, 2008)	$	.08	$	.03

The closing price for our common stock on December 31, 2009 was $0.58.

Stockholders

As of March 23, 2010, there were 27,060,561 shares of common stock issued and outstanding held by 79 stockholders of record (not including street name holders).

Dividends

We have not paid dividends to date and do not anticipate paying any dividends in the foreseeable future. Our Board of Directors intends to follow a policy of retaining earnings, if any, to finance our growth. The declaration and payment of dividends in the future will be determined by our Board of Directors in light of conditions then existing, including our earnings, financial condition, capital requirements and other factors.

ITEM 6 — SELECTED FINANCIAL DATA

Not applicable.

ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Report. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.

Background

We are an oil and natural gas exploration and production (E&P) Company with current projects in Kansas and California. As of December 31, 2009, we had no producing wells in California and one producing wells in Kansas, and rights for the exploration and production of oil and gas on more than an aggregate of 11,100 acres in those states. Typically, our interest in a well arises from a contract with another entity pursuant to which provide financial support for certain costs incurred in the exploration and development of a project, which may include land costs, seismic or other exploration, and test drilling. In exchange, we typically receive an interest in the proceeds from the project’s production.

On April 6, 2009, we entered into a Participation Agreement with Archer Exploration, Inc. (“Archer”) to participate in the drilling for natural gas on a prospect located in Stanislaus County, California. Pursuant to the agreement, we agreed to pay to Archer $200,000 for all costs in connection with the acquisition and operation of the prospect until completion of an initial test well in exchange for a 25% working interest in the prospect. The assignment of the 25% interest will only be made upon the successful completion of the initial test well. The seismic shoot began on August 10, 2009. The results of the seismic indicate the need to reprocess the data and potentially add additional seismic lines to identify the test well locations.

On May 4, 2009, we entered into a binding Letter of Intent with S&W Oil & Gas, LLC (“S&W”) to acquire a 25% working interest and 81.5% net revenue interest in the 750-acre Poston Prospect #1 Lutters oilfield in Southwest Trego County, Kansas, for a purchase price of $64,536. On May 13, 2009, drilling began on the prospect and the #1 Lutters Well was completed on June 16, 2009. Oil production on the #1 Lutters Well began on June 18, 2009 and as of August 2009, we have begun receiving revenue from this oilfield with average production of approximately 70 to 75 barrels per day since August 2009. The next well planned for the Poston Project was designated as the #2 Lutters Well. Preliminary drilling at #2 Lutters Well tested positive for oil. After further drilling, we encountered good oil shows but we did not complete drilling of the well for commercial production because of the oil’s permeability and porosity. However, the project itself remains viable as there are additional offset opportunities for this project.

On June 4, 2009, we entered into a Participation Agreement with Archer to participate in the drilling for natural gas on a 668-acre prospect located in Sacramento County, California. Pursuant to the agreement, we agreed to pay to Archer $142,000 for all costs in connection with the acquisition and operation of the prospect until completion of an initial test well in exchange for a 25% working interest in the prospect. The assignment of the 25% interest will only be made upon the successful completion of the initial test well. In July 2009, a seismic shoot was completed on the prospect. Based on the favorable results of the survey, we began drilling in this well location. However, after drilling, although we encountered good gas shows, the gas volumes were insufficient to warrant completion of the well as a viable producer.

On June 11, 2009, we entered into a binding Letter of Intent with S&W to participate in the drilling for oil and natural gas in the 1,760-acre Brinkman Prospect located in Clark County, Kansas. We agreed to pay S&W a total of $22,833.28 for land acquisition, leasing and seismic costs for a 25% working interest in the prospect. In addition, we agreed to pay $56,466.66 to cover dry-hole cased drilling costs associated with the first exploratory oil well and 25% of all further going forward costs such as completion and related infrastructure costs. If a successful commercial well is established, the Company will receive an 81.5% net revenue interest in the prospect. On July 28, 2009, drilling on the Brinkman Prospect commenced and by August 14, 2009, drilling was completed. Several oil and gas shows in the well were tested and deemed not commercially viable. We will work with the engineering team to determine if the prospect has any future potential for commercial hydrocarbon production.

On June 19, 2009, we entered into a binding Letter of Intent with S&W to participate in the drilling for oil and natural gas in the Rooney Prospect located in southwestern Ford County, Kansas. The prospect consists of 8 sections totaling 5,120 acres. We agreed to pay S&W a total of $113,333.12 for land acquisition and leasing costs and up to $216,666.64 for the 3D seismic shoot costs that include processing and interpretation as well as 50% of all further going forward costs such as completion and related infrastructure costs. If a successful commercial well is established, S&W will assign 50% of the working interest and 81.5% net revenue interest in the prospect to us. Drilling at the #24-1 Double H Oil Well site commenced on November 12, 2009 and we successfully discovered both oil and gas. Subsequent to our fiscal year ended December 31, 2009, on January 4, 2010, the #24-1 Double H well at the Rooney Prospect commenced oil production, and we have entered into an oil purchase contract with the National Co-op Refinery Association of McPherson Kansas to purchase all production at the Rooney lease at a premium to Kansas common oil prices of $3.85 per barrel above the daily price. This price premium reflects the quality of the 44 degree oil being produced at Rooney. In February 2010, we began drilling a second well, the Shelor 23-2 Well. We plan to drill one well each month in the Rooney Prospect for the fiscal year 2010.

On August 25, 2009, we entered into a binding Letter of Intent with S&W to participate in the drilling for oil in the Colby Prospect located in Thomas County, Kansas. We agreed to pay S&W cash in an amount to be determined for dry-hole cased drilling costs as well as 25% of all further going forward costs such as completion and related infrastructure costs. If a successful commercial well is established, S&W will assign 25% of the working interest and 81.5% net revenue interest in the Prospect to us. On October 20, 2009, we began drilling operations at the #1 Keck Well with a planned well depth of 5,000 feet, and on November 4, 2009, drilling operations at this well ended. While the well successfully encountered oil and gas in the target horizons, there were no adequate reservoirs in order to complete the well as a commercial producer. The Colby remains a viable prospect, and further work and analysis will be required in order to fully develop the Colby lease.

On September 8, 2009, we entered into a Participation Agreement with Archer to participate in the drilling for natural gas on a prospect located in Sacramento County, California. Pursuant to the Agreement, we agreed to pay to Archer $25,000 for all costs in connection with the acquisition and operation of the prospect up to the drilling of an initial test well in exchange for a 25% working interest in the prospect. Further, we are responsible for its proportionate share of the dry hole costs, which is $125,000. We are also responsible for 25% of all expenditures in connection with the development and operation of the prospect for drilling. We may elect not to participate in additional expenditures in connection with the prospect at which time we will forfeit any interests it has in the prospect. On October 8, 2009, we began drilling operations at the Wurster Gas Prospect – Archer-Tsakopoulos #2 well. We increased our working interest in the Archer-Tsakopoulos #2 well up to 36% by purchasing an additional 11% through the payment of a pro-rata share for the seismic reprocessing and drilling costs in the amount of $66,000. On November 4, 2009, drilling at this well ended. While the well successfully encountered oil and gas in the target horizons, there were no adequate reservoirs in order to complete the well as a commercial producer.

Development

Our future operations are dependent upon the identification and successful completion of additional long-term or permanent equity financings, the support of creditors and shareholders, and, ultimately, the achievement of profitable operations. There can be no assurances that we will be successful, which would in turn significantly affect our ability to meet our business objectives. If not, we will likely be required to reduce operations or liquidate assets. We will continue to evaluate our projected expenditures relative to our available cash and to seek additional means of financing in order to satisfy our acquisition, working capital and other cash requirements.

We continue to operate with very limited administrative support, and our current officers and directors continue to be responsible for many duties to preserve our working capital. We expect no significant changes in the number of employees over the next 12 months.

We have initiated drilling operations on several prospects, and as such we may have some significant ongoing capital expenditures. We believe that, with our current efforts to raise capital, we will have sufficient cash resources to satisfy our needs over the next 12 months. Our ability to satisfy cash requirements thereafter will determine whether we achieve our business objectives. Should we require additional cash in the future, there can be no assurance that we will be successful in raising additional debt or equity financing on terms acceptable to our Company, if at all.

Critical Accounting Policies

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management of our Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. We believe certain critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements. A description of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year ended December 31, 2008. As of, and for the year ended December 31, 2009, there have been no material changes or updates to our critical accounting policies.

Results of Operations

The discussion and financial statements contained herein are for our fiscal year ended December 31, 2009 and December 31, 2008. The following discussion regarding our financial statements should be read in conjunction with our financial statements included herewith.

Financial Condition as of December 31, 2009

We reported total current assets of $58,334 at December 31, 2009, consisting of cash of $38,021, accounts receivable of $5,018, other receivable of $13,184, and taxes recoverable of $2,111. Total current liabilities reported of $914,724 consisted of accounts payable of $184,602, note payable of $35,977, a convertible debenture (net of discount of $384,021) of $599,285, and a loan guarantee of $94,860. The Company had a working capital deficit of $856,390 at December 31, 2009.

Stockholders’ Deficiency decreased from $453,801 at December 31, 2008 to $147,956 at December 31, 2009. This decrease is due primarily to the issuance of shares of our common stock and an increase in additional paid-in capital during the same period.

We are currently a development stage company focused on the oil and gas industry, and evaluating opportunities for expansion within that industry through acquisition or other strategic relationships.

Cash and Cash Equivalents

As of December 31, 2009, we had cash of $38,021 and did not have any cash equivalents. We anticipate that a substantial amount of cash will be used as working capital and to execute our strategy and business plan. As such, we further anticipate that we will have to raise additional capital through debt or equity financings to fund our operations during the next 6 to 12 months.

Results of Operations

For the Fiscal Year Ended December 31, 2009

For the fiscal year ended December 31, 2009, we incurred a net loss of $1,655,978.

General and administration expenses for the fiscal year end December 31, 2009, amounted to $348,045 compared to $121,423 in 2008. Executive compensation for the 2009 fiscal year end is $173,749 compared to $0 in 2008.

For the Fiscal Year Ended December 31, 2008

For the fiscal year ended December 31, 2008, we incurred a net loss of $123,823.

Administration expenses for the fiscal year end amounted to $121,423 compared to $92,554 in 2007. Executive compensation for the 2008 fiscal year end is $0 compared to $15,000 in 2007.

Period from inception, January 24, 1996 to December 31, 2009

We have incurred losses in each period since inception and have an accumulated deficit, consisting of deficit and accumulated comprehensive losses, of $5,284,172 at December 31, 2009. We expect to continue to incur losses as a result of expenditures for general and administrative activities while we remain in the development stage.

Liquidity and Capital Resources

As of December 31, 2009, we had cash of $38,021, and working capital deficiency of $856,390. During the year ended December 31, 2009, we funded our operations from the proceeds of private sales of equity and/or convertible notes. We are currently seeking further financing and we believe that will provide sufficient working capital to fund our operations for at least the next six months. Changes in our operating plans, increased expenses, acquisitions, or other events, may cause us to seek additional equity or debt financing in the future.

For the year ended December 31, 2009, we used net cash of $446,782 in operations. Net cash from operating activities reflected an increase in impairment expenses, warrants issued and amortization of $765,229, $238,227 and $197,605, respectively.

We raised $1,111,500 during the twelve month period ended December 31, 2009 from the issuance of common stock and convertible notes.

Our current cash requirements are significant due to planned exploration and development of current projects. We anticipate drilling 10 wells in our Rooney prospect in 2010 which will cost approximately $2,500,000. Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve months, as we look to expand our asset base and fund exploration and development of our properties.

Our management believes that we will be able to generate sufficient revenue or raise sufficient amounts of working capital through debt or equity offerings, as may be required to meet our short-term and long-term obligations. In order to execute on our business strategy, we will require additional working capital, commensurate with the operational needs of our planned drilling projects and obligations. Such working capital will most likely be obtained through equity or debt financings until such time as acquired operations are integrated and producing revenue in excess of operating expenses. There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements.

Capital Expenditures

We made capital expenditure investments in nine natural resource projects in the amount of $1,473,663 during the fiscal year ending December 31, 2009. Seven of those investments produced “dry holes” and $765,229 was treated as an impairment expense. At December 31, 2009 the company has two investments valued at cost for a total of $708,434.

Contractual Obligations

The following table outlines payments due under our significant contractual obligations over the periods shown, exclusive of interest:

	Payments Due by Period
Contractual Obligations At December 31, 2009	Total		Less than 1 Year		1-3 years	3-5 years	More than 5 years
Convertible Promissory Note @ 18%	$	1,000,000	$	1,000,000
Total	$	1,000,000	$	1,000,000

The above table outlines our obligations as of December 31, 2009 and does not reflect any changes in our obligations that have occurred after that date.

ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the financial statements, the reports of our independent registered public accounting firm, and the notes thereto of this report, which financial statements, reports, and notes are incorporated herein by reference.

ITEM 9 — CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A(T) — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of December 31, 2009 and have concluded that these disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the framework in Internal Control – Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2009.

This Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit our company to provide only our management’s report in this Report.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth quarter of 2009 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B — OTHER INFORMATION

None.

PART III

ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions held by each person:

Person	Age	Position

John J. Lennon	55	Chairman of the Board; Chief Financial Officer and Secretary
Dan Holladay	50	Director
Robert McIntosh	49	Director; President and Chief Executive Officer

Our board of directors believes that its members encompass a range of talent, skill, and experience sufficient to provide sound and prudent guidance with respect to our operations and interests. The information below with respect to our directors includes each director’s experience, qualifications, attributes, and skills that led our board of directions to the conclusion that he or she should serve as a director.

John J. Lennon. Mr. Lennon became our President, Chairman and Chief Financial Officer in February 2009. On June 2, 2009, Mr. Lennon resigned as President, but remained as our Chief Financial Officer. From May 30, 2008, until July 6, 2009, Mr. Lennon served as a Director, Treasurer and VP of Finance of Brite-Strike Tactical Illumination Products, Inc. Mr. Lennon is currently President and a Director of LED Power Group, Inc., President and a Director of UV Flu Technologies, Inc., and President and a Director of Far East Wind Power Corp. Mr. Lennon has served as President of Chamberlain Capital Partners since 2004, and served as a Director of American Durahomes from 2006 and Treasurer, VP of Finance and a Director of US Starcom from 2005-2007. Chamberlain Capital Partners assists companies in the area of maximizing shareholder value through increased sales, cost reduction and refined business strategy. Mr. Lennon has also assisted companies in obtaining debt financing, private placements or other methods of funding. He is responsible for corporate reporting, press releases, and funding related initiatives for American Durahomes, a private corporation, and previously for US Starcom, a public entity. On December 31, 2007, Mr. Lennon was appointed Chief Executive Officer, President, Chief Financial Officer, Secretary, Treasurer and director of Explortex Energy Inc., a publicly reporting company, which is a natural resource exploration company engaged in the participation in drilling of oil and gas in the United States. From 1987 to 2004, Mr. Lennon served as Senior Vice President of Janney Montgomery Scott, Osterville, MA, Smith Barney and Prudential Bache Securities, managing financial assets for high net worth individuals. Mr. Lennon’s prior executive officer and director experience provides our Board with a perspective of someone with knowledge in multiple facets of public and private company operations and strategy.

Dan Holladay. Mr. Holladay became a Director of the Company in June 2009. Mr. Dan Holladay is oil industry management consultant based in Wichita Kansas. He graduated in 1983 graduate from the University of Eastern New Mexico with an Associate degree in Petroleum Management following extensive studies at the University of Kansas in geology. After a short career in a variety of oil field work, he began a 25 year career as an Investment Adviser for firms such as AG Edwards where he advised high net worth clients. Recently, Mr. Holladay has been working as an independent oil industry management consultant where he has been identifying, evaluating and assisting companies and individuals on a variety of Kansas based oil and gas prospects for both exploration and production projects. On July 30, 2009, Mr. Holladay filed for personal bankruptcy in the United States Bankruptcy Court for the Sedgwick County, Kansas (Case No. 09CV4118) and was discharged under Chapter 7 on January 25, 2010. The Board has considered Mr. Holladay’s bankruptcy filing and determined that it has no bearing on his efforts on behalf f our company. Mr. Holladay’s background as an oil industry management consultant, and his 25 year career as an investment advisor, provides a unique perspective to our Board.

Robert McIntosh. On June 2, 2010, Mr. McIntosh became our President and Chief Executive Officer. Prior to that, Mr. McIntosh had been our Chief Operating Officer and a Director on our Board since March 2009. Prior to joining our company, Mr. McIntosh served as President of Silver Star Energy, Inc. from September 2003 to May 2008 and as President of Bancroft Uranium, Inc. from July 2008 to December 2008. Mr. McIntosh has been a businessman and consulting geologist for the past 25 years. He is experienced both as a resource exploration geoscientist alongside noteworthy strengths in all facets of corporate development. Since 1983 his career has taken him across the Americas and abroad where he has been instrumental in the design, implementation, execution and management of programs in the oil, gas, precious and base metals segments of the resource sector. His skills encompass virtually every aspect of oil & gas exploration, well completion and production techniques alongside a diverse experience in project acquisition, negotiations, contracts, and project divestitures within the petroleum industry. He has developed significant expertise and industry contacts in his various roles across the publicly traded market sector as well as with private junior E&P companies. Mr. McIntosh has successfully assisted his clients and stakeholders in the U.S.A. and Canada on projects that ultimately became producing properties where he has contributed in full field exploitation programs with additional traditional and secondary forms of drilling and completions, along with ongoing well site supervision aimed at fully optimizing the overall asset. Mr. McIntosh’s business experience, and his 25 year career as a consulting geologist, give him unique insights into our challenges, opportunities, and operations.

Except as set forth above, no officer or director has been involved in any material legal proceeding.

There are no arrangements, understandings, or family relationships pursuant to which our executive officers were selected.

Audit Committee Financial Expert

Our Board of Directors has not established a separate audit committee within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Instead, the entire Board of Directors acts as the audit committee within the meaning of Section 3(a)(58)(B) of the Exchange Act. In addition, John J. Lennon currently meets the definition of an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. Mr. Lennon is not an independent director. We are seeking candidates for outside directors and for a financial expert to serve on a separate audit committee when we establish one. Due to our small size and limited operations and resources, it has been difficult to recruit outside directors and financial experts.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4 and 5 delivered to us as filed with the Securities Exchange Commission, as of December 31, 2009, all of our executive officers and directors, and persons who own more than 10% of our Common Stock timely filed all required reports pursuant to Section 16(a) of the Securities Exchange Act.

Subsequent to our fiscal year ended December 31, 2009, in connection with his acquisition of 50,000 shares of our common stock on February 9, 2010, Dan Holladay was required to file a Form 4 no later than February 11, 2010. Mr. Holladay filed the Form 4 on March 19, 2010.

Subsequent to our fiscal year ended December 31, 2009, in connection with his acquisition of 200,000 shares of our common stock on February 9, 2010, Robert McIntosh was required to file a Form 4 no later than February 11, 2010. Mr. McIntosh instead filed a Form 3 in error with respect to such shares on February 10, 2010, and subsequently filed a Form 4 on March 19, 2010 to correct this error.

Code of Ethics

On July 20, 2009, our Board of Directors adopted a Code of Ethical Conduct that provides an ethical standard for all employees, officers and directors. A copy of the Code of Ethical Conduct is filed as Exhibit 14.1 to the Annual Report on Form 10-K.

ITEM 11 — EXECUTIVE COMPENSATION

Summary Compensation

The summary compensation table below shows certain compensation information for services rendered in all capacities to us by our principal executive officer and principal financial officer and by each other executive officer whose total annual salary and bonus exceeded $100,000 during the fiscal periods ended December 31, 2009 and December 31, 2008. Other than as set forth below, no executive officer’s total annual compensation exceeded $100,000 during our last fiscal period.

Summary Compensation Table

Name and Principal Po sition (a)	Year (b)	Salary ($) (c)		Bonus ($) (d)		Stock Awards ($) (e)		Option Awards ($) (f)		Non Equity Incentive Plan Compensation ($) (g)		Non-qualified Deferred Compensation Earnings ($) (h)		All Other Compensation ($) (i)		Total ($) (j)
John J. Lennon,	2009	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-
Chairman of the Board, Chief Financial Officer (1)	2008	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-
Gregory Leigh Lyons	2009	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-
Former Chairman of the Board, President, and Chief Financial Officer (2)	2008	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	30,000	$	30,000
Robert McIntosh	2009	$	114,000	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	28,500	$	142,500
Director, President and Chief Executive Officer (3)	2008	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-

(1)	Mr. Lennon became our President, Chairman and Chief Financial Officer on February 13, 2009. Mr. Lennon resigned as President on June 2, 2009.

(2)	Mr. Lyons resigned all his positions with us on February 13, 2009.

(3)	Mr. McIntosh became our President and Chief Executive Officer on June 2, 2009.

Mr. Lennon did not incur any compensation for the fiscal year ended December 31, 2008. Mr. Lennon, through his affiliate, Chamberlain Capital Partners, entered into a Management and Governance Consultant Agreement with us on February 13, 2009, whereby he agreed to provide us with management and governance consulting services, including of liaising with our officers and employees concerning matters relating to the management and corporate governance of our day to day operations, accounting, regulatory compliance, marketing and investor relations issues. Our board of directors approved the agreement and transaction on February 13, 2009. In consideration of services rendered, we agreed to pay Chamberlain Capital Partners a fee in the amount of $2,500 per month, together with applicable taxes and out-of-pocket expenses for specialized services. The agreement is for a one year term commencing February 13, 2009 and continuing until February 13, 2010 and is subject to termination upon 30 day prior written notice by either party. This agreement has not continued into 2010.

Mr. Lyons billed a total of $30,000 for the fiscal year ended December 31, 2008 and $2,500 for the fiscal year ended December 31, 2007 in accordance with a consulting agreement approved by the board of directors on December 21, 2007, whereby Mr. Lyons, through his affiliate, Sound Energy Advisors, LLC (“SEA”), agreed to provide us with management and governance consulting services, including of liaising with our officers and employees concerning matters relating to the management and corporate governance of our day to day operations, accounting, regulatory compliance, marketing and investor relations issues. In consideration of services rendered, we agreed to pay SEA a fee in the amount of $2,500 per month, together with applicable taxes and out-of-pocket expenses for specialized services. The agreement is for a two year term commencing December 1, 2007 and continuing until November 30, 2009 and is subject to termination upon 30 day prior written notice by either party. The agreement was terminated on February 13, 2009.

Mr. McIntosh billed a total of $142,500 for the fiscal year ended December 31, 2009 in accordance with a business consultant agreement with Mr. McIntosh dated March 15, 2009 whereby it was agreed that Mr. McIntosh would provide us with corporate management consulting services for a monthly fee of $15,000. The term of the agreement is twelve months and is subject to termination upon 30 days prior written notice by either party. The terms of this agreement continue on a month-by-month basis.

Director Compensation

Our board of directors are reimbursed for actual expenses incurred in attending Board meetings. There are no other compensation arrangements with directors, and the directors did not receive any compensation in the fiscal year ending December 31, 2009, except as indicated below.

Director Compensation

(1)	Mr. Holladay became a Director in June 2009.

ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of March 10, 2010, the number and percentage of outstanding shares of our common stock owned by (i) each person known to us to beneficially own more than 5% of our outstanding common stock, (ii) each director, (iii) each named executive officer, and (iv) all executive officers and directors as a group. Share ownership is deemed to include all shares that may be acquired through the exercise or conversion of any other security immediately or within sixty days of March 10, 2010. Such shares that may be so acquired are also deemed outstanding for purposes of calculating the percentage of ownership for that individual or any group of which that individual is a member. Unless otherwise indicated, the stockholders listed possess sole voting and investment power with respect to the shares shown.

Name and Address of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership of Common Stock(1)		Percentage of Common Stock Outstanding(1)

John J. Lennon 104 Swallow Hill Drive Barnstable, Massachusetts	Common		-		-

Robert B. McIntosh 17470 N Pacesetter ‘Way Scottsdale, AZ 85255	Common		200,000		0.7391	%

Dan Holladay 5813 E 17 Wichita, KS 67208	Common		50,000		0.1848	%

All Executive Officers and Directors as a Group (3 persons)	Common		250,000		0.9239	%

(1)

Consists of the aggregate total of shares of common stock held by the named individual directly. Based upon information furnished to us by the directors and executive officers or obtained from our stock transfer books showing 27,060,561 shares of common stock outstanding as of March 23, 2010. We are informed that these persons hold the sole voting and dispositive power with respect to the common stock except as noted herein. For purposes of computing “beneficial ownership” and the percentage of outstanding common stock held by each person or group of persons named above as of March 23, 2010, any security which such person or group of persons has the right to acquire within 60 days after such date is deemed to be outstanding for the purpose of computing beneficial ownership and the percentage ownership of such person or persons, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

Equity Compensation Plan Information

The company has no active equity compensation plans and there are currently no outstanding options from prior plans.

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

Related Party Transactions

On March 15, 2009 we entered into a business consultant agreement with Robert McIntosh, our President, Chief Executive Officer and director, whereby it was agreed that Mr. McIntosh will provide us with corporate management consulting services for a monthly fee of $15,000. The term of the agreement is twelve months and is subject to termination upon 30 days prior written notice by either party. This agreement will continue into 2010 on a month-by-month basis until further notice.

Review, Approval or Ratification of Transactions with Related Persons

Although we adopted a Code of Ethical Conduct on July 20, 2009, we still rely on our board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions are presented to our board for approval before they are entered into or, if this is not possible, for ratification after the transaction has occurred. If our board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if any. Our board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company. For the above transaction, the board approved and ratified the transaction, finding it in the best interest of the Company.

Director Independence

During fiscal 2009, we had one independent director on our board, Mr. Holladay. We evaluate independence by the standards for director independence established by applicable laws, rules, and listing standards including, without limitation, the standards for independent directors established by The New York Stock Exchange, Inc., The NASDAQ National Market, and the Securities and Exchange Commission.

Subject to some exceptions, these standards generally provide that a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b) a member of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (c) the director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member of the director’s immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves on the compensation committee; or (f) the director or a member of the director’s immediate family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past three years, exceeds the greater of $1,000,000 or two percent of that other company’s consolidated gross revenues.

ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows the fees paid or accrued by us for the audit and other services provided by Berkovits & Company, LLP for the fiscal periods shown.

	December 31, 2009		December 31, 2008
Audit Fees	$	0	$	16,950
Audit — Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	0	$	16,950

The following table shows the fees paid or accrued by us for the audit and other services provided by Weaver & Martin, LLC for the fiscal periods shown.

	December 31, 2009		December 31, 2008
Audit Fees	$	11,000	$	6,000
Audit — Related Fees		7,250		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	18,250	$	6,000

Audit fees consist of fees billed for professional services rendered for the audit of our financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by the above auditors in connection with statutory and regulatory fillings or engagements.

In the absence of a formal audit committee, the full Board of Directors pre-approves all audit and non-audit services to be performed by the independent registered public accounting firm in accordance with the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended. The Board of Directors pre-approved 100% of the audit, audit-related and tax services performed by the independent registered public accounting firm in fiscal 2009. The percentage of hours expended on the principal accountant’s engagement to audit the Company’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

PART IV

ITEM 15 — EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Financial Statement Schedules

(1) Financial Statements are listed in the Index to Financial Statements of this report.

(b) Exhibits

Exhibit Number			Name
3.1(1)			Amended and Restated Articles of Incorporation

3.2(1)			Bylaws

10.10(2)			Management and Governance Consultant Agreement with Sound Energy Advisors, LLC

10.11(3)			Management and Governance Consultant Agreement with Chamberlain Capital Partners

10.12(3)			Business Consultant Agreement with Bakerview Investor Relations, Inc.

10.13(5)			Management and Governance Consultant Agreement with Robert McIntosh

10.14(6)			Participation Agreement with Archer Exploration, Inc.

10.15(7)			Letter of Intent with S&W Oil & Gas, LLC dated May 4, 2009.

10.16(8)			Participation Agreement with Archer Exploration, Inc. dated June 4, 2009.

10.17(9)			Letter of Intent with S&W Oil & Gas, LLC dated June 11, 2009.

10.18(10)			Letter of Intent with S&W Oil & Gas, LLC dated June 23, 2009.

10.19(11)			Note Purchase Agreement dated August 13, 2009.

10.20(12)			Letter of Intent with S&W Oil & Gas, LLC dated August 25, 2009.

10.21(13)			Participation Agreement with Archer Exploration, Inc. dated September 8, 2009.

10.22(14)			Secured Convertible Promissory Note dated September 15, 2009

14.1			Code of Ethical Conduct

16(4)			Letter from Berkovits & Company, LLP

21			List of Subsidiaries (None)

31.1			Rule 13(a) — 14(a)/15(d) — 14(a) Certification (Principal Executive Officer)

31.2			Rule 13(a) — 14(a)/15(d) — 14(a) Certification (Principal Financial Officer)

32			Section 1350 Certifications

Footnotes to Exhibits Index

(1)	Incorporated by reference to Form 10-SB12G dated June 19, 1997.

(2)	Incorporated by reference to Form 10-KSB for the year ended December 31, 2007.

(3)	Incorporated by reference to Form 10-K for the year ended December 31, 2008.

(4)	Incorporated by reference to Form 8-K dated March 23, 2009.

(5)	Incorporated by reference to Form 8-K dated March 27, 2009.

(6)	Incorporated by reference to Form 8-K dated April 10, 2009.

(7)	Incorporated by reference to Form 8-K dated May 6, 2009.

(8)	Incorporated by reference to Form 8-K dated June 5, 2009.

(9)	Incorporated by reference to Form 8-K dated June 11, 2009.

(10)	Incorporated by reference to Form 8-K dated June 23, 2009.

(11)	Incorporated by reference to Form 10-QSB for the period ended June 30, 2009.

(12)	Incorporated by reference to Form 8-K dated August 27, 2009.

(13)	Incorporated by reference to Form 8-K dated September 14, 2009.

(14)	Incorporated by reference to Form 8-K dated September 24, 2009.

SIGNATURES

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

AMERICAN PETRO-HUNTER, INC.

Dated: January 28, 2011	/s/ Robert B. McIntosh
	By: Robert B. McIntosh
	Its: President and Chief Executive Officer
	(Principal Executive Officer)

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

Signature	Capacity	Date

/s/ Robert B. McIntosh	President, Chief Executive Officer and Director	January 28, 2011
Robert B. McIntosh	(Principal Executive Officer)

/s/ John J. Lennon	Chief Financial Officer, Secretary and Chairman of the Board	January 28, 2011
John J. Lennon	(Principal Financial Officer and Principal Accounting Officer)

/s/ Dan Holladay	Director	January 28, 2011
Dan Holladay

AMERICAN PETRO-HUNTER INC.

(A Development Stage Company)

FINANCIAL STATEMENTS

DECEMBER 31, 2009 AND 2008

(Stated in U.S. Dollars)

American Petro-Hunter Inc.

Index to Financial Statements

December 31, 2009

INDEX

		Page
Independent Registered Public Accounting Firms’ Reports		F-2
Financial Statements
Balance Sheets as of December 31, 2009 and 2008		F-3
Statements of Operations for the years ended December 31, 2009 and 2008 and for the period from January 24, 1996 (inception) to December 31, 2009		F-4
Statements of Cash Flows for the years ended December 31, 2009 and 2008 and for the period from January 24, 1996 (inception) to December 31, 2009		F-5
Statements of Changes in Stockholders’ Deficit for the period from January 24, 1996 (inception) through December 31, 2009		F-6
Notes to Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

We have audited the accompanying balance sheet of American Petro-Hunter, Inc. (A Development Stage Company) as of December 31, 2009 and 2008 and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended. American Petro-Hunter, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Petro-Hunter, Inc. as of December 31, 2009 and 2008 and the results of its operations, stockholders’ deficit, and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and is dependent upon the continued sale of its securities or obtaining debt financing for funds to meet its cash requirements. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Weaver & Martin, LLC

Weaver & Martin, LLC

Kansas City, Missouri

March 26, 2010

F-2

Balance Sheets

The accompanying notes are an integral part of these financial statements.

	December 31,
	2009			2008
Assets

Current assets:
Cash	$	38,021		$	136
Accounts receivable		5,018			-
Other receivable		13,184			-
Taxes recoverable		2,111			2,003
Total current assets		58,334			2,139

Investments in mineral properties		708,434			-

Total assets	$	766,768		$	2,139

Liabilities and Stockholders' (Deficit)

Liabilities:
Accounts payable and other liabilities	$	184,602		$	223,770
Due to related party		-			123,877
Note payable		35,977			25,000
Convertible debenture, net of discount of $384,021		599,285			-
Loan guarantee		94,860			83,293
Total liabilities		914,724			455,940

Stockholders' equity
Common stock, $0.001 par value, 200,000,000 shares authorized, 23,748,561 and 10,065,019 shares issued and outstanding as of December 31, 2009 and 2008, respectively		23,749			10,065
Common stock to be issued; 1,830,825 and 800,000 as of December 31, 2009 and 2008, respectively		1,831			40,000
Additional paid-in capital		5,110,636			3,124,328
Accumulated comprehensive gain (loss)		(8,114	)		(8,114	)
(Deficit) accumulated during development stage		(5,276,058	)		(3,620,080	)
Total stockholders' (deficit)		(147,956	)		(453,801	)

Total liabilities and stockholders' (deficit)	$	766,768		$	2,139

F-3

Statements of Operations

The accompanying notes are an integral part of these financial statements.

	For the						For the Period
	Year Ended						from January 24,
	December 31,						1996 (inception) to
	2009			2008			December 31, 2009
							(unaudited)

Revenue	$	77,728		$	-		$	77,728

Cost of Good sold
Production Expenses		13,090			-			13,090

Gross profit		64,638			-			64,638

Expenses:
General and administrative		348,045			121,423			2,152,336
Executive compensation		173,749			-			573,237
Rent		915			2,400			60,213
Impairment expense		765,229			-			1,100,180
Total expenses		1,287,938			123,823			3,885,966

Net loss before other income (expense)		(1,223,300	)		(123,823	)		(3,821,328	)

Other income and (expense):
Interest expense		(265,440	)		-			(265,440	)
Loan placement fee		(238,227	)		-			(238,227	)

Loss from loan guarantee		-			-			(84,858	)
Loss from settlement of debt		(14,971	)		-			(14,971	)

Income from debt forgiveness		85,960			-			85,960
Total other income (expenses)		(432,678	)		-			(517,536	)

Net loss from continuing operations		(1,655,978	)		(123,823	)		(4,338,864	)

Net loss from discontinued operations		-			-			(937,194	)

Net loss		(1,655,978	)		(123,823	)		(5,276,058	)

Other comprehensive gain (loss) Foreign currency translation gain		-			81,146			(8,114	)

Comprehensive loss	$	(1,655,978	)	$	(42,677	)	$	(5,284,172	)

Weighted average number of common shares outstanding - basic and fully diluted		20,348,579			9,327,295

Net (loss) per share - basic and fully diluted	$	(0.08	)	$	(0.005	)

F-4

Statement of Cash Flows

The accompanying notes are an integral part of these financial statements.

							For the Period
	For the			For the			from January 24,
	Year ended			Year ended			1996 (inception) to
	December 31, 2009			December 31, 2008			December 31, 2009
							(unaudited)
Cash flows from operating activities
Net (loss)	$	(1,655,978	)	$	(123,823	)	$	(5,276,058	)
Adjustments to reconcile net (loss) to net cash used in operating activities:
Accrued interest on note payable		12,841			2,959			16,400
(Gain) loss from loan guarantee		11,567			(19,931	)		94,860
Warrants issued for services		238,227			-			366,227
Shares issued for services		-			-			992,558
Amortization of discount		197,605			-			197,605
Impairment expense		765,229			-			772,729
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(5,018	)		-			(5,018	)
(Increase) decrease in other receivable		(13,184	)		-			(13,184	)
(Increase) decrease in taxes recoverable		(108	)		481			(2,111	)
Increase (decrease) in accounts payable and other liabilities		125,914			(1,880	)		1,962,962
Increase (decrease) in due to related parties		(123,877	)		(15,023	)		(107,170	)
Net cash (used) by operating activities		(446,782	)		(157,217	)		(1,000,200	)

Cash flows from investing activities
Acquisition of investments in mineral properties		(1,473,663	)		-			(1,473,663	)
Net cash provided by investing activities		(1,473,663	)		-			(1,473,663	)

Cash flows from financing activities
Proceeds from sale of common stock, net of share issuance costs		111,500			70,000			648,168
Proceeds from warrant exercise		645,524			-			645,524
Proceeds from note payable		218,000			-			243,000
Proceeds from convertible debenture		1,000,000			-			1,000,000
Payments for convertible debenture		(16,694	)		-			(16,694	)
Net cash provided by financing activities		1,958,330			70,000			2,519,998

Foreign currency translation effect on cash		-			81,146			(8,114	)

Net increase (decrease) in cash		37,885			(6,071	)		38,021
Cash - beginning		136			6,207			-
Cash - ending	$	38,021		$	136		$	38,021

Supplemental disclosures:
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-

Non-cash transactions:
Warrants issued for services	$	238,227					$	366,227
Shares issued for services	$	-					$	992,558
Note payable converted to common stock	$	219,864					$	219,864
Accounts payable converted to common stock	$	165,082					$	165,082

F-5

Statement of Stockholders’ Equity (Deficit)

* All information presentedfor periods prior to January 1, 2008 is unaudited.

																Deficit
																accumulated						Total
	Common Stock						Additional			Deferred			Common			during the			Accumulated			Stockholder's
							Paid-in			Comp			Stock to			development			Comp.			Equity
	Shares			Amount			Capital						be issued			stage			gain(loss)			(Deficit)

Shares issued for cash, net of issue costs		10,497,300		$	10,497		$	296,833		$	-		$	-		$	-		$	-		$	307,330
Net income		-			-			-			-			-			4,856			-			4,856
Balance at December 31, 1996*		10,497,300			10,497			296,833			-			-			4,856			-			312,186

Shares issued for cash, net of issue costs		187,416			187			46,850			-			-			-			-			47,037
Net loss		-			-			-			-			-			(96,386	)		-			(96,386	)
Unrealized foreign exchange gain		-			-			-			-			-			-			8,258			8,258
Balance at December 31, 1997*		10,684,716			10,684			343,683			-			-			(91,530	)		8,258			271,095

Stock reverse split 3:1		(7,123,094	)		(7,123	)		7,123			-			-			-			-			-
Shares issued		7,773,026			7,773			1,980,833			-			-			-			-			1,988,606
Unrealized foreign exchange loss		-			-			-			-			-			-			(8,258	)		(8,258	)
Net loss		-			-			-			-			-			(1,798,830	)		-			(1,798,830	)
Balance at December 31, 1998*		11,334,648			11,334			2,331,639			-			-			(1,890,360	)		-			452,613

1998 issuance cancelled		(4,800,000	)		(4,800	)		(1,339,200	)		-			-			-			-			(1,344,000	)
Share issue costs		500,000			500			85,000			-			-			-			-			85,500
Net loss		-			-			-			-			-			(307,331	)		-			(307,331	)
Balance at December 31, 1999*		7,034,648			7,034			1,077,439			-			-			(2,197,691	)		-			(1,113,218	)

Shares issued		4,435,570			-			1,083,791			-			-			-			-			1,083,791
Finders’' fees		-			-			48,000			-			-			-			-			48,000
Share purchase warrants		-			-			80,000			-			-			-			-			80,000
Net loss		-			-			-			-			-			(547,097	)		-			(547,097	)
Balance at December 31, 2000*		11,470,218			7,034			2,289,230			-			-			(2,744,788	)		-			(448,524	)

Stock reverse split 10:1		(10,323,196	)		(5,887	)		5,887			-			-			-			-			-
Shares issued		4,253,617			4,254			552,106			-			-			-			-			556,360
Net loss		-			-			-			-			-			(297,352	)		-			(297,352	)
Balance at December 31, 2001*		5,400,639			5,401			2,847,223			-			-			(3,042,140	)		-			(189,516	)

Shares issued		220,000			220			21,780			-			-			-			-			22,000
Net loss		-			-			-			-			-			(29,664	)		-			(29,664	)
Balance at December 31, 2002*		5,620,639			5,621			2,869,003			-			-			(3,071,804	)		-			(197,180	)

Shares issued		430,000			430			25,370			-			-			-			-			25,800
Other comprehensive loss		-			-			-			-			-			17,920			(17,920	)		-
Net loss		-			-			-			-			-			(57,652	)		-			(57,652	)
Balance at December 31, 2003*		6,050,639			6,051			2,894,373			-			-			(3,111,536	)		(17,920	)		(229,032	)

Shares issued for services rendered		475,000			475			56,525			(3,226	)		-			-			-			53,774
Other comprehensive loss		-			-			-			-			-			-			(9,773	)		(9,773	)
Net loss		-			-			-			-			-			(134,058	)		-			(134,058	)
Balance at December 31, 2004*		6,525,639			6,526			2,950,898			(3,226	)		-			(3,245,594	)		(27,693	)		(319,089	)

Shares issued for services rendered		-			-			-			3,226			-			-			-			3,226
Shares issued for cash		1,739,380			1,739			85,230			-			-			-			-			86,969
Other comprehensive loss		-			-			-			-			-			-			(6,156	)		(6,156	)
Net loss		-			-			-			-			-			(70,711	)		-			(70,711	)
Balance at December 31, 2005*		8,265,019			8,265			3,036,128			-			-			(3,316,305	)		(33,849	)		(305,761	)

Other comprehensive loss		-			-			-			-			-			-			(6,380	)		(6,380	)
Net loss		-			-			-			-			-			(72,398	)		-			(72,398	)
Balance at December 31, 2006*		8,265,019			8,265			3,036,128			-			-			(3,388,703	)		(40,229	)		(384,539	)

Other comprehensive loss		-			-			-			-			-			-			(49,031	)		(49,031	)
Share subscription received in advance		-			-			-			-			60,000			-			-			60,000
Net loss		-			-			-			-			-			(107,554	)		-			(107,554	)
Balance at December 31, 2007*		8,265,019			8,265			3,036,128			-			60,000			(3,496,257	)		(89,260	)		(481,124	)

Share issued for subscription recd in 07		1,200,000			1,200			58,800			-			(60,000	)		-			-			-
Common stock sold at $0.05 per share		600,000			600			29,400			-			-			-			-			30,000
Share subscription received in 2008		-			-			-			-			40,000			-			-			40,000
Other comprehensive gain		-			-			-			-			-			-			81,146			81,146
Net loss		-			-			-			-			-			(123,823	)		-			(123,823	)
Balance at December 31, 2008		10,065,019			10,065			3,124,328			-			40,000			(3,620,080	)		(8,114	)		(453,801	)

Shares owed at December 31, 2008 issued		800,000			800			39,200			-			(40,000	)		-			-			-
Shares issued for cash		2,250,000			2,250			42,750			-			-			-			-			45,000
Shares issued for accts payable conversion		8,254,088			8,254			156,828			-			-						-			165,082
Shares issued for notes payable conversion		879,454			880			218,984			-			-			-			-			219,864
Warrants issued for services		-			-			238,227			-			-			-			-			238,227
Warrant exercise		1,500,000			1,500			223,500			-			-			-			-			225,000
Shares sold for cash, not issued at year-end		-			-			66,310			-			190			-			-			66,500
Warrant exercise, not issued yet at year-end		-			-			418,883			-			1,641			-			-			420,524
Warrants issued with debt		-			-			581,626			-			-			-			-			581,626
Net loss		-			-			-			-			-			(1,655,978	)		-			(1,655,978	)
Balance at December 31, 2009		23,748,561		$	23,749		$	5,110,636		$	-		$	1,831		$	(5,276,058	)	$	(8,114	)	$	(147,956	)

The accompanying notes are an integral part of these financial statements.

F-6

American Petro-Hunter Inc.

Notes to Financial Statements