Capitalized costs associated with acquisition and evaluation of unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to such properties or until the value of the properties is impaired.   Our policy is consistent with ASC 932 “Extractive Activities – Oil and Gas”.

Income Taxes

Our company accounts for its income taxes in accordance with ASC No. 740, "Income Taxes". Under Statement 740, a liability method is used whereby deferred tax assets and liabilities are determined based on temporary differences between basis used for financial reporting and income tax reporting purposes. Income taxes are provided based on tax rates in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for certain

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deferred tax assets if it is more likely than not, that our company will not realize the tax assets through future operations.

Our company’s federal tax returns for the years ended 2009 through 2013 are open to examination. At July 31, 2014, our company evaluated our open tax years in all known jurisdictions. Based on this evaluation, the Company did not identify any uncertain tax positions. Our company accounts for interest and penalties relating to uncertain tax positions in the current period statement of operations as necessary.

Fair Value of Financial Instruments

US GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. Our company’s financial instruments consist primarily of cash and cash equivalents, accounts receivables and payables, accrued liabilities and notes payable. The carrying values of these financial instruments approximate their respective fair values as they are either short-term in nature or carry interest rates that approximate market rates. Our company evaluates its embedded conversion features contained within their convertible notes for derivative treatment. Our company’s derivative liabilities recognized since August 1, 2012 were considered Level 3 financial instruments. There were no derivatives at July 31, 2014.

Recently adopted and pending accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

In June 2014, the FASB issued ASU No. 2014-10, "Development Stage Entities" (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update removed the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer in a development stage that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that

24

exception simplify GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company adopted ASU No. 2014-10 effective July 31, 2014.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company”, we are not required to provide the information required by this Item.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO AUDITED FINANCIAL STATEMENTS

JULY 31, 2014

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Liberty Energy Corp.

Houston, Texas

We have audited the accompanying balance sheets of Liberty Energy Corp. (the “Company") as of July 31, 2014 and 2013, and the related statements of operations, changes in shareholders' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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 audits included consideration of internal controls 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 controls over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Liberty Energy Corp. as of July 31, 2014 and 2013 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The Company has not presented supplemental information on oil and gas exploration, development and production activities that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has incurred losses, has had negative operating cash flows and minimal revenues. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ McConnell & Jones, LLP

Houston, Texas

April 9, 2015

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

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

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NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Liberty Energy Corp. (f/k/a DMA Minerals Inc., the “Company”) was incorporated on June 6, 2006 under the laws of the State of Nevada. Since inception, the Company has produced only nominal revenues. The Company’s principal activity is the exploration and development of oil and gas properties. Properties are located in the United States of America.

The Company’s success will depend in large part on its ability to obtain funds to explore, acquire and develop oil and gas interests within the United States. There can be no assurance that oil and gas properties obtained by the Company will contain reserves or that properties with reserves will be profitable to extract. The Company will be subject to local and national laws and regulations which could impact the Company’s ability to execute its business plan.

NOTE 2 – GOING CONCERN

The financial statements of the Company have been prepared assuming that future issuances of the Company’s equity or debt securities will be required in order for the Company to continue to finance its operations and continue as a going concern. The Company has no revenues or cash flow to meet operating expenses. The Company has incurred cumulative net losses since its inception and requires capital for its future operational activities. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s plan of operations, and its transition to profitable operations is necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

In May 2014, FASB issued Accounting Standard Update (ASU) 2014-09 – Revenue from Contracts with Customers (Topic) 606.This Statement is a joint collaborative effort between FASB and the International Accounting Standard Board (IASB) to improve and standardized revenue recognition across industries or transactions. Previous revenue recognition guidance in GAAP comprised broad revenue concepts together with numerous requirements for particular industries or transactions, which sometimes resulted in different accounting for economically

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similar transactions. Accordingly, FASB and IASB developed a common revenue standard that would: (a) remove inconsistencies and weaknesses in revenue requirements (b) provide a more robust framework for addressing revenue issues (c) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (d) provide useful information to users of financial statements through improved disclosure requirements (e) simplify the preparation of financial statement by reducing the number of requirements to which an entity must refer. The core principle underlying the provisions of the Statement is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, an entity should apply the following five steps:

-

Identify the contract(s) with a customer

-

Identify the performance obligations in the contract

-

Determine the transaction price

-

Allocate the transaction price to the performance obligations in the contract

-

Recognize revenue when (or as) the entity satisfies a performance obligation

The provisions of this Statement are effective for annual reporting periods beginning after December 15, 2017.  Management is evaluating the impact, if any, upon its financial position, results of operations or cash flow upon adoption.

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update removed the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer in a development stage that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been

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issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company adopted ASU No. 2014-10 effective July 31, 2014.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Net Loss per Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. As the Company is in a net loss position, there are no outstanding potentially dilutive securities that would cause diluted earnings per share to differ from basic earnings per share.

Oil and Gas Properties

The Company follows the full-cost method of accounting for oil and natural gas properties.  Under this method, all costs incurred in the exploration, acquisition and development, including that for the unproductive wells are capitalized in separate cost centers for each country.  Such capitalized costs include contract and concessions acquisition, geological, geophysical, and other exploration work, drilling, completing and equipping oil and gas wells, constructing production facilities and pipelines, and other related costs.

The capitalized costs of oil and gas properties in each cost center are amortized on a composite unit of production method based on future gross revenues from proved reserves.  Sales or other dispositions of oil and gas properties are normally accounted for as adjustments of capitalized costs.  A gain or loss is not recognized in income unless a significant portion of a cost center’s reserves is involved.  Capitalized costs associated with acquisition and evaluation of unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to such properties or until the value of the properties is impaired.  If the net capitalized costs of oil and gas properties in a cost center exceed an amount equal to the sum of the present value of estimated future net revenues from proved oil and gas reserves in the cost center and the lower of cost or fair value of properties not being amortized, both adjusted for income tax effects, such excess is charged to expense.

Capitalized costs associated with acquisition and evaluation of unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to such properties or until the value of the properties is impaired.  Our policy is consistent with ASC 932.

ASC 932 provides guidance specific to oil and gas producing activities. It contains several Subtopics that interact with other Topics in the Codification. Guidance in these Subtopics rather than the more general guidance in the other Topics shall be applied to the specific issues addressed.

Asset Retirement Obligations

The Company provides for future asset retirement obligations on its resource properties and facilities based on estimates established by current legislation and industry practices.

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The asset retirement obligation is measured at the cost to plug and abandon the wells located on the leasehold properties as of July 31, 2014 at a rate estimated at $3 per measured depth footage of which this rate is obtained from estimated figures published by the Railroad Commission of Texas.  As the total amount of the ARO Calculations is being booked in the present there is no future value to calculate, as such calculations for inflation and accretion are not accounted for at this time.  The asset retirement obligation is initially measured at fair value and capitalized as an asset retirement cost. The obligation is accreted through interest expense until it is expensed and or settled.  The fair value of the obligation is estimated based on figures published by the Railroad Commission of Texas and is then accreted using an expected inflation rate for oil field service costs.

The significant assumptions used to develop the expected liability during the period are as follows:

-

Average cost to remediate individual well sites by Measured Depth: $3 (net to our interest)

-

Average gross salvage value expected from individual well sites remediated: $0 (net)

-

Expected inflation rate for oil field service costs: 5% excluded from calculation Risk weighted cost of credit: 8% excluded from calculation

-

Average time to abandonment: 20 years excluded from calculation

Actual retirement costs will be recorded against the obligation when incurred. Any difference between the recorded asset retirement obligation and the actual retirement costs incurred is recorded as a gain or loss in the settlement period.

Depreciation

The Company recorded depreciation for a total of $10,391 of its oil and gas properties for the fiscal year ending July 31, 2014, based on a 5 year straight line depreciation method.

Depletion

The company did not record depletion for the fiscal year ending July 31, 2014. During the fiscal year subsequent to the acquisition of the Baylor leasehold properties an immaterial amount of oil was produced by C.D. Ayres as operator for Liberty, and a detailed revenue billing statement or load ticket from the Purchaser Gatherer Sunoco was not presented to us from the Operator C.D. Ayres.  

Depletion will be recorded as oil and or gas is produced from the leasehold properties.

Concentrations

Subsequent to the acquisition of oil and gas field interests, the Company also became a party to the operator agreements (“JOA’s”) that define the rights and responsibilities of the third party operator and passive interest holders. Under the JOA, the third party operator is responsible for acquiring customers to sell the oil and gas produced and to either performing or contracting out to other third parties to perform services necessary to continue and maintain acreage. Currently all of the Company’s leasehold interests have as their third party operator BEP Operating LLC which is controlled by a related party managing member.

Revenue and Cost Recognition

The Company uses the sales method of accounting for natural gas and oil revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers.

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The volume sold may differ from the volumes to which the Company is entitled based on our interest in the properties. Costs associated with production are expensed in the period incurred.

Income Taxes

The Company accounts for its income taxes in accordance with ASC No. 740, "Income Taxes". Under ASC 740, a liability method is used whereby deferred tax assets and liabilities are determined based on temporary differences between basis used for financial reporting and income tax reporting purposes. Income taxes are provided based on tax rates in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not, that the Company will not realize the tax assets through future operations.

The Company’s federal tax returns for the years ended 2009 through 2013 are open to examination. At July 31, 2014, the Company evaluated its open tax years in all known jurisdictions. Based on this evaluation, the Company did not identify any uncertain tax positions. The Company accounts for interest and penalties relating to uncertain tax positions in the current period statement of operations as necessary.

Fair Value of Financial Instruments

GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company’s financial instruments consist primarily of cash and cash equivalents, and payables, accrued liabilities and notes payable. The carrying values of these financial instruments approximate their respective fair values as they are either short-term in nature or carry interest rates that approximate market rates. The Company evaluates its embedded conversion features contained within their convertible notes for derivative treatment. The Company’s derivative liabilities recognized since August 1, 2012 were considered Level 3 financial instruments.

NOTE 4 - UNEVALUATED OIL AND GAS PROPERTIES

Trius Acquisition

On October 1, 2009, the Company entered into a lease purchase and sale agreement with Trius Energy LLC, a Texas corporation, to acquire four oil and gas leases in Texas for $125,000. The interests consist of a 100% WI (Working Interest) at a 75% NRI (Net Revenue Interest) in the Dahlstrom Lease, 2% WI at 75% NRI in the Ratliff Lease, and 100% WI at a 70% NRI in the Lockhart Project, consisting of two leases, the Anton Lease (1 tract) and Alexander Lease (3 tracts).

The Anton Lease lapsed on January 9, 2011. The tract had 1 shut-in well and based on historical data, discussions with their operators and geologists the Company determined that it would not be cost effective to pursue the well, therefore the lease was allowed to lapse and $3,512 of leasehold cost were written off.

The remaining leases lapsed on July 25, 2012. It was determined by the Company after discussions with their operators, geologists and based on historical data that it would not be cost effective to pursue the leases and existing wells therefore the lease was allowed to lapse.  In connection with the lapse, $690,397 of leasehold cost was written off. The Company also accrued

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payables for $23,280 for the plugging and abandonment of wells associated with these properties which are recorded under accounts payable.

Bulgaria

On September 22, 2009, we entered into a purchase and sales agreement with William C. Athens to acquire a total of 1/16^th of 1% of 8/8ths ORRI (overriding royalty interest) in the A-Lovech exploration block in Bulgaria for a total price of $400,000. This agreement was later terminated, however, the Company retains a 1/64th of the 1% interest in the A-Lovech exploration block and the seller has retained the funds paid by the Company for this acquisition.  These assets were fully written off as of July 31, 2014.

Langold Acquisition

On February 22, 2012, the Company entered into and closed a 3 year lease assignment agreement with Langold Enterprises Limited (an entity with some cross ownership and common principal manager of Asia-Pacific, the Company’s primary source of capital to date)  pertaining to certain interests in oil and gas properties in Bastrop, Caldwell and Eastland Counties, Texas. The interests which were assigned to the Company are three year leases to the following properties:

A 100% working interest in 2 separate properties equaling approximately 300 acres of exploration property located in Bastrop County, Texas. A 100% working interest in 5 separate properties equaling approximately 622 acres of exploration property located in Caldwell County, TX. A 100% working interest in an approximately 5 acre oil and gas property called the Dillon Hall property located in the Gerron Hinds League in Caldwell County, Texas. The Dillon Hall property is not currently producing, and though it holds an existing well, that well requires a work-over to be put back into production. A 100% working interest in a property equaling approximately 112 acres of exploration property located in Eastland County, TX.

In consideration for the above leases the Company issued 24,155,435 restricted shares of our common stock to Langold, a non-US shareholder.  The restricted shares were valued equal to the volume weighted average of the closing price (the “VWAP”) of Common Stock for the ten (10) Banking Days immediately preceding the execution of the assignment, as quoted on Google Finance or other sources of stock quotes as agreed to by the parties. The original value assigned these shares and the leaseholds was $3.3 million. It was determined that due to the relationship between Langold and Asia-Pacific, this transaction was not arms length but rather was related party. The Company corrected the error and the shares issued and the leasehold costs recorded were valued at the price paid by Langold on their original 3 year lease acquisition from the land owners. That price paid was $20,000 cash plus 1,800,000 shares of restricted Liberty Energy stock which was valued at $243,932 for a total consideration of $263,932 which is recorded as oil and gas properties in the prior year balance sheets as of July 31, 2013 and 2012. These assets were fully written off as of July 31, 2014.

Baylor County Leases

In March 2014, the Company entered into a series of agreements to acquire certain oil and gas leases located in Baylor County, Texas from certain non-related third parties.  Specifically, the Company acquired four oil & gas producing leases in a transaction which covers 1,038 acres with 17 oil wells, 4 injection wells and related surface production equipment. Average production of 3-4 Barrels of Oil Per Day (BOPD) from operating wells is anticipated before any additional cleaning or remedial work is performed. The leases provide 100% Working Interest and 70-75% Net Revenue Interest (NRI) for the Company in exchange for seller financing, a carried 5% ORR and $50,000 in restricted preferred stock.

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The operator has advanced field work including replacing mechanical down hole pumps, replacing pump jack motors, upgrading a water injection pump and stabilizing needed pump jack platforms. The Baylor County leases have historically produced from multiple pay zones and these leases have all depth rights. The leases are estimated to contain a minimum of 15 and likely up to 30 infill drilling locations with expectations based on historical IP (initial production) rates of between 15-20 BOPD on new wells.

In connection with the acquisition of the Baylor County leases, the Company entered into several agreements as follows: 

(i)

The Company entered into a non-interest bearing promissory note in the face amount of $65,000 payable in ten equal monthly installments of $6,500 commencing April 15, 2014 with a final maturity date of January 15, 2015 and has not been renewed or repaid as of filing date.  The balance of the outstanding of the promissory note as of July 31, 2014 was $61,934.  The Company has the option of satisfying the installments by payment of certain specifically enumerated obligations of a third party.  The note is secured by a mortgage on the leasehold interest.  

(ii)

The Company entered into a promissory note in the face amount of $316,292 payable in 117 equal monthly installments of $3,715.47 commencing March 1, 2014 with a final maturity date of December 1, 2023.  The note bears interest at a rate of seven percent (7%) per annum. The note is secured by a mortgage on the leasehold interest.

(iii)

The Company further agreed to issue to Dai-Brooks Enterprises, LLC 50,000 shares of newly issued Company Series A Convertible Preferred Stock and Warrants to purchase 500,000 shares of Company Common stock for a period of three (3) years at an exercise price of $.07 per share.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

The Company may from time to time be involved in legal proceedings arising from the normal course of business. There are no pending or threatened legal proceedings as of July 31, 2014.

NOTE 6 – RELATED PARTY TRANSACTIONS

Buchanan Ventures, Inc.

Effective October 25, 2013, the Company entered into two separate agreements with Buchanan Ventures, Inc. to engage Carlos Buchanan as a consultant.  Under the first agreement (“Contractor Agreement”), it was agreed that Mr. Buchanan would, among other things, (a) assist with the development of the Company’s business, (b) assist with the financial and investment structuring of the Company and (c) assist with evaluating acquisition prospects.  As consideration for such consulting services, the Company agreed to pay Mr. Buchanan an aggregate of $150,000, payable every 90 days over a term of 24 months, payable in either cash or Company stock at the Company’s discretion. As of July 31, 2014, Company had accrued $56,250 due on account of the Contractor Agreement.  Under the second agreement (“Finder Fee Agreement”) Mr. Buchanan agreed, among other things, to introduce a mezzanine lender to advance to the Company over a period of 12 months up to $7,500,000 to support development and acquisition plans.  In consideration of such services, the Company agreed to issue to Mr. Buchanan a total of 10,000,000 shares of Company common stock, subject to adjustment and clawback of all or a portion of the shares based upon Mr. Buchanan’s performance under the Finder Fee Agreement.  As of July 31, 2014, no part of the consideration payable on account of the second agreement has been earned.  Mr. Buchanan is the brother of Armando Rafael Buchanan, the Company’s Chief Financial Officer.

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BEP Operating, LLC.

In connection with the Baylor County Leases acquired by the Company, on May 30, 2014, the Company entered into an Operating Agreement with BEP Operating, LLC as the successor operator of the properties described in the Baylor County Leases.  Pursuant to this agreement, BEP Operating, LLC will hold the license to operate these leases.  BEP Operating, LLC is licensed by the Texas Railroad Commission and is bonded to undertake these operations.  The Company anticipates that in the future when it has satisfied all requirements of the Texas Railroad Commission and is duly bonded, it will directly operate these leases.  No fees payable to BEP Operating, LLC were paid during fiscal year 2014 as all costs during that period were billed to the then operators of the properties.  The Operating Agreement calls for the Company to reimburse all of BEP Operating, LLC’s operating expenses incurred in connection with the work and to pay an additional amount on account of the operator’s overhead.  BEP Operating, LLC is controlled by Carlos E. Buchanan II, the brother of Armando Rafael Buchanan, the Company’s Chief Financial Officer.

Delta S Energy LLC, which has entered into a farm-in agreement with the Company, and Delta S Ventures, LP, which is an investor in the Company, are related parties.  This agreement provides a positive financial impact for the Company as it provide it with liquidity and ability to conduct operations on the leases as part of the agreement in order to increase oil production from the properties which will have an effect on revenue.

Subsequent to October 31, 2013, the Company received free rent from BEP Operating LLC a related party without a written agreement.  Based on comparable commercial lease space in the current market for office lease space, properties are marketed at various prices but a sample market rate of $15 per Square foot annualized, an approximation of 133 square feet of usable space for the Company would be estimated at $2,000 annually.

At July 31, 2014, the Company owed $114,300 two former officers, one former director and one current director which have been accrued as accounts payable in non-interest bearing notes. We have reported the liability as owing to related parties. All amounts owing to related parties relate to fees for services provided.  In addition, at July 31, 2014, the Company had accrued $36,300 as short-term notes payable for amounts due to two current directors.

In July 2014, the Board of Directors authorized the Company to enter into Stock Purchase Agreements with six (6) of its shareholders to repurchase an aggregate of 11,384,273 shares of its common stock for an aggregate consideration of $11,384, payable within 36 months from the date of execution of each Stock Purchase Agreement, together with interest thereon at a rate of four percent (4%) per annum.  As of April 9, 2015, the Company had not reached agreement with any of these six shareholders.

Also in July 2014, the Board of Directors authorized the Company to enter into Share Exchange Agreements with Daniel Martinez-Atkinson, Ian Spowart and Langold Enterprises whereby the Company would exchange an aggregate of 52,355,435 shares of Company Common Stock for an aggregate of 2,355,995 shares of a newly issued Company Series B Convertible Preferred Stock (which has yet to be designated) which would be convertible by its terms into an aggregate of 47,119,900 shares of Company Common Stock.  As of July 31, 2014, none of these exchanges had been completed.

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NOTE 7 – CONVERTIBLE NOTES PAYABLE

The April 10, 2013 Convertible Note

On April 10, 2013, the Company entered into a Securities Purchase Agreement with Asher.  Pursuant to the Agreement, Asher Enterprises has agreed to purchase an 8% convertible note (the “April Note”) in the aggregate principal amount of $32,500, $30,000 was funded to the Company with the remaining $2,500 recorded as interest expense for financing costs charged by Asher’s legal counsel. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder’s option 180 days from inception at a variable conversion price calculated as 61% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date with no floor stated in the conversion feature. The convertible note, issued on April 16, 2013, was due on January 15, 2014 at an interest rate of 8% per annum.  

On October 16, 2013, Asher converted $15,000 of April Note principal into 898,204 shares of common stock.

On October 28, 2013, the Company settled the note in full for $31,118, which included all accrued interest and prepayment penalties.

NOTE 8 – STOCK AND WARRANT TRANSACTIONS

On May 22, 2012, the Company issued warrants to purchase 5,807,752 shares of Company common stock to Asia-Pacific Capital Ltd. The warrants issued have an exercise price of $1.25 and were fully vested at the date of grant. The warrants have a term of three years and none of these warrants have been exercised.

In July 2014, the Board of Directors authorized the Company to enter into Stock Purchase Agreements with six (6) of its shareholders to repurchase an aggregate of 11,384,273 shares of its common stock for an aggregate consideration of $11,384.27, payable within 36 months from the date of execution of each Stock Purchase Agreement, together with interest thereon at a rate of four percent (4%) per annum.  As of April 9, 2015, the Company had not reached agreement with any of these six shareholders.

Also in July 2014, the Board of Directors authorized the Company to enter into Share Exchange Agreements with Daniel Martinez-Atkinson, Ian Spowart and Langold Enterprises whereby the Company would exchange an aggregate of 52,355,435 shares of Company Common Stock for an aggregate of 2,355,995 shares of a newly issued Company Series B Convertible Preferred Stock (which has yet to be designated) which would be convertible by its terms into an aggregate of 47,119,900 shares of Company Common Stock.  As of July 31, 2014, none of these exchanges had been completed.

On July 31, 2014, the Company agreed to issue to Dai-Brooks Enterprises, LLC 50,000 shares of newly issued Company Series A Convertible Preferred Stock and Warrants to purchase 500,000 shares of Company Common stock for a period of three (3) years at an exercise price of $.07 per share.  The Company recorded the aggregate value of the Series A Preferred Stock and Warrants as $50,000.

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NOTE 9 – NOTES PAYABLE

The Company entered into a non-interest bearing promissory note in the face amount of $65,000 payable in ten equal monthly installments of $6,500 commencing April 15, 2014 with a final maturity date of January 15, 2015 and has not been renewed or repaid as of the date of filing.  The principal balance of the note as of July 31, 2014 is $ 61,934.  The Company has the option of satisfying the installments by payment of certain specifically enumerated obligations of a third party.  The note is secured by a mortgage on the leasehold interest.  

The Company entered into a promissory note in the face amount of $316,292 payable in 117 equal monthly installments of $3,715.47 commencing March 1, 2014 with a final maturity date of December 1, 2023.  The note bears interest at a rate of seven percent (7%) per annum. The note is secured by a mortgage on the leasehold interest.

The below table represents the schedule of outstanding principal payments for long-term debt due in each of the next 5 years and amounts due after 5 years.

NOTE 10 – OFFICER AND DIRECTOR COMPENSATION

On June 11, 2014, the Company’s Board of Directors approved compensation to the Company’s sole independent director, Richard Webb as follows: (a) $6,300 cash payable on May 1, 2014 for services provided as a director of the Company through May 1, 2014 and (b) additional compensation as an independent director of the Company at a rate of $15,000 per fiscal year, payable in two (2) semi-annual installments of $7,500 each on February 1 and May 1 of each year.  The fees are payable in cash or in shares of the Company’s Common Stock, at the option of the Company.

Also on June 11, 2014, the Company’s Board of Directors approved the vesting of certain restricted stock grants to the following employees of the Company as follows:

NOTE 11 – INCOME TAXES

As of July 31, 2014, the Company had federal net operating loss carryforwards of approximately $2,560,828 which can be used to offset future federal income tax. The federal and state net operating loss carryforwards expire at various dates through 2030. Deferred tax assets resulting from the net operating losses are reduced by a valuation allowance, when, in the opinion of management, utilization is not reasonably assured.

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A summary of the Company’s deferred tax assets as of July 31, 2014 are approximately as follows:

NOTE 12 – SUBSEQUENT EVENTS

In July 2014, the Board of Directors authorized the Company to enter into Stock Purchase Agreements with six (6) of its shareholders to repurchase an aggregate of 11,384,273 shares of its common stock for an aggregate consideration of $11,384, payable within 36 months from the date of execution of each Stock Purchase Agreement, together with interest thereon at a rate of four percent (4%) per annum.  To date, the Company has only reached agreement with one of these six shareholders, ACR Holdings Ltd. (“ACR”). ACR tendered 3,063,512 shares to the Company in October 2014 and these shares were recorded as treasury shares.

Also in July 2014, the Board of Directors authorized the Company to enter into Share Exchange Agreements with Daniel Martinez-Atkinson, Ian Spowart and Langold Enterprises whereby the Company would exchange an aggregate of 52,355,435 shares of Company Common Stock for an aggregate of 2,355,995 shares of a newly issued Company Series B Convertible Preferred Stock (which has yet to be designated) which would be convertible by its terms into an aggregate of 47,119,900 shares of Company Common Stock.  As of the date of this report, none of these exchanges had been completed.

On September 23, 2014, the Company sold 2,000,000 shares of common stock to Delta S Ventures, LP at a price of $.01 per share for proceeds of $20,000.

In September 2014, the Company borrowed $5,000 from Buchanan Ventures, LLC for use as working capital.  The advance is evidenced by a promissory note payable 18 months from the date of the advance and bears interest at a rate of five percent (5%) per annum.

On October 3, 2014, the Company signed an agreement with Delta S Energy whereby the Company sold a 1/3 working interest in the Robert Motil and Otto Ptacek leases in Baylor County for a total consideration of $30,000, allocated $25,000 for the working interest and $5,000 for the first option to participate in a new welling program which expired on December 31, 2014.  The $25,000 was used to improve the equipment and infrastructure on the leased properties.

On November 5, 2014, each of Messrs. Roy and Webb elected to receive 1,500,000 shares of Company common stock valued at $0.01 per share for accrued director fees in the amount of $15,000 due to each such director.

On January 14, 2015, the Company filed a Certificate of Designations authorizing the issuance of up to 100,000 shares of its Series C Preferred Stock.  As of the date of this report, none if the series C Preferred stock has been issued.

On January 27, 2015, the Company received notice of litigation filed by the holder of its Baylor County leases related to the Company’s default on its secured promissory note dated as of April 4, 2014.  Subsequently, this matter was settled when Delta S Energy (“Delta”) paid the holder of the outstanding note and assumed the position as the payee.  On February 23, 2015, the Company entered into a series of agreements with Delta pursuant to which the following occurred:

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On February 23, 2015, the Company entered into a series of agreements with Delta pursuant to which the following occurred:

a)

A Promissory Note in the amount of $316,292 payable by the Company to Perry Lynn Ayres was assigned by the holder to Delta and Delta is now the payee under said Promissory Note;

b)

The Company assigned to Delta an Overriding Royalty Interest (ORRI) comprising 20% of 8/8 of hydrocarbon substances derived from certain leases in Baylor County, TX;

c)

Delta assigned to the Company a working interest in certain leases in Baylor County, TX; and

d)

Delta paid the Company $33,000, which was offset by $3,495 which was previously owed by the Company to Delta.

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

None.

ITEM 9A.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective such that the material information required to be included in our Securities and Exchange Commission reports may not be accumulated and communicated to our management, including our principal executive and financial officer so to be recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared. Management is committed to improving its disclosure controls and in the interim will continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and disclosure responsibilities,

MANAGEMENT'S ANNUAL 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 Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.

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Management assessed the effectiveness of the Company's internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:

SIGNIFICANT CHANGES IN MANAGEMENT TEAM AND TURNOVER:  We have suffered a number of changes in the management team and turnover which could affect our internal controls over financial reporting.  

INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.   This had led to the Company’s inability to provide certain supplemental information with respect to the disclosure of its oil and gas interests.

INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to properly implement control procedures.

UNTIMELY ISSUANCE OF SHARES:  The Company has on occasion not issued shares on a timely basis which results in difficulty reconciling outstanding share amounts.

LACK OF RESERVE REPORTS:  The Company’s lack of financial resources has prevented the Company from being able to timely produce reserve reports with respect to its oil and gas interests.

LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS: We do not have a functioning audit committee and outside directors on the Company's Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.

Management, including our Chief Executive Officer and Chief Financial Officer, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in the status of our internal control over financial reporting that occurred during the last fiscal year ended July 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION

None.

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PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

Messrs. Roy, Webb, Williamson and Buchanan currently devote approximately 30 hours per week to company matters. In the future they will devote as much time as the board of directors deems necessary to manage the affairs of our company.

The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person's principal occupation during the period, and the name and principal business of the organization by which he was employed.

Arthur Roy - President, Secretary, Treasurer, CEO and Chairman of the Board of Directors

Mr. Roy has been President, Secretary, Treasurer, CEO and Chairman of the Board of Directors of the Company since July 31, 2013.  He has 28 years experience in commercial and residential real estate investment, acquisitions and development. He started as licensed real estate agent for Hartley Realty Group and continued as a marketing representative for American Real Estate Group. He continued as project manager for Gateway Homes, Inc. focused on financing and building homes.  
In 1995 he formed G. H. Riley Homes, Inc. and in 2000 he formed Owner-Builder Systems, Inc., both located in Houston, Texas.  These entities completed homes and developments valued in excess of $23 million dollars since their inception. In the last ten years his activities have expanded to include small cap investments and raising capital for oil & gas transactions, including the acquisition and redevelopment of distressed properties. Mr. Roy is currently serving as elected president and director of Fort Bend Municipal Utility District # 19. Mr. Roy received a BBA degree in Marketing from The University of Texas, Austin.

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Richard C. Webb--Director

Mr. Webb has been a Director of the Company since February 2013.  Mr. Webb is presently Managing Director of Sequence Financial Specialists, LLC, a FINRA member.  Previously, he had been Managing Director, and was a founding partner of AWDB Capital, LLC, Investment Bankers.  He has an extensive background in the Houston, Texas investment and banking communities. He founded AWDB Capital, LLC, in January, 2005. Prior to the creation of AWDB Capital, he was the Vice-Chairman of Sanders Morris Harris (SMH) in Houston, Texas. SMH was the result of a merger between Harris Webb & Garrison and Sanders Morris Munday in 1999.  Mr. Webb holds licenses with FINRA including being a Registered Securities & Options Principal and Investment Banker. He received a BBA in Finance from the University of Texas and has completed the Wharton Institute of Investment Banking in Philadelphia, Pennsylvania. Mr. Webb currently holds directorships with Bellville General Hospital Foundation and the Houston Museum of Natural Science.

Robert Steven Williamson—Chief Operating Officer

Mr. Williamson has been Chief Operating Officer of the Company since October 2013.  Mr. Williamson received his honorable discharge from the U.S. Navy in 1974 and began his oil and gas career with Petty – Ray Geophysical acquiring and processing geophysical data for evaluation and later with Exxon Company U.S.A. During the late 80′s and early 90′s he was a Principal of Petroleum Listing Service, a major oil and gas acquisition and divestiture company. Through this company, he was a part of a team of professionals that provided land, legal, geological, engineering and marketing services to oil and gas companies resulting in over one billion dollars of transactions.  Currently Mr. Williamson is the President of Domestic Energy Development, where he manages a team of professionals consisting of land, engineers and geologists with a proven track record of finding and producing oil and gas. Mr. Williamson has over 20 years operating experience in the state of Texas and participated in the development of wells in Louisiana, Kentucky, Tennessee and Oklahoma.

Armando Rafael Buchanan—Chief Financial Officer

Mr. Buchanan has been Chief Financial Officer of the Company since November 2013. He is a seasoned financial executive with nearly 14 years combined experience in Corporate Finance, Oil & Gas Accounting, Investment Management, and Business Development.  He has a diverse professional background inclusive of Upstream Energy Operations, Public Securities, and Information Technology Management.

Mr. Buchanan is also serving as Chief Financial Officer for Eagle Ford Oil Co., Inc. a Houston based Oil & Gas operating company. Eagle Ford’s operations are primarily focused in the Eagle Ford Shale trend, with shallow production in the Luling Branyon and Salt Flat Fields.  His duties there include policy making and governance of the company’s financial activities.  In addition he has direct operations oversight responsibility.  His efforts have brought continuous improvement to field cost control, resource planning, and executive reporting.

Mr. Buchanan has served in the office of Vice President of Investments with JP Morgan Chase and as a Wealth Manager at UBS. Mr. Buchanan held several consulting executive positions as a project manager for Buchanan Ventures, Inc.  In that role he served as interim CFO for Environmental Packaging Technologies, a global manufacturer of disposable tanks used in food, oil, and mineral transportation.  He also acted as Vice President for Fortune Exploration an Upstream Exploration company.

Mr. Buchanan is a graduate of the University of Houston, Bauer College of Business class of 2002 with a Bachelor’s of Business Administration in Entrepreneurship & Finance from the

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renowned Wolff Center for Entrepreneurship which is nationally ranked by the Princeton Review.

CODE OF ETHICS

Our board of directors adopted our code of ethical conduct that applies to all of our employees and directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.

We believe the adoption of our Code of Ethical Conduct is consistent with the requirements of the Sarbanes-Oxley Act of 2002.

Our Code of Ethical Conduct is designed to deter wrongdoing and to promote:

·  Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

·  Full, fair, accurate, timely and understandable disclosure in reports and documents that we file or submit to the Securities & Exchange Commission and in other public communications made by us;

·  Compliance with applicable governmental laws, rules and regulations;

·  The prompt internal reporting to an appropriate person or persons identified in the code of violations of our Code of Ethical Conduct; and

·  Accountability for adherence to the Code.

FAMILY RELATIONSHIPS

There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

1.  been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

2.  had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

3.  been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

4.  been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

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5.  been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

6.  been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

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

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended July 31, 2014, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with, with the exception of the following:

Arthur Roy (officer and director), Richard C. Webb (director), Robert Steven Williamson (officer), Armando Rafael Buchanan (officer) and Langold Enterprises (10% holder) have not timely filed Form 3 –Initial Statement of Beneficial Ownership of Securities.  It is anticipated that these reports will be filed in the near term.

BOARD AND COMMITTEE MEETINGS

Our board of directors held several telephonic meetings during the year ended July 31, 2014. All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

Our company currently does not have standing nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by our directors.

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DIRECTOR INDEPENDENCE

None of our directors are deemed independent. Our directors also hold positions as officers.

AUDIT COMMITTEE

Currently our audit committee consists of our entire board of directors. During the next six to twelve months, we hope to establish a formal audit committee, which will be responsible for: (1) selecting and overseeing our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the independent accountant and any outside advisors engaged by the audit committee. We will adopt an audit committee charter when we establish the audit committee.

AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that none of the members of our audit committee qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nomination, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors.

ITEM 11.  EXECUTIVE COMPENSATION

The following table reflects the compensation paid to the following persons:

(a) our principal executive officer;

(b) each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended July 31, 2014 and 2013; and

(c) up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended July 31, 2014 and 2013, who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:

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Other than as disclosed below, there are no compensatory plans or arrangements with respect to our executive officers resulting from their resignation, retirement or other termination of employment or from a change of control.

Our company had entered into Consulting Agreements with Daniel Martinez-Atkinson and Ian Spowart on an ongoing basis, dated February 12, 2010, and effective as of February 1, 2010, whereby our company agreed to retain Daniel Martinez-Atkinson to the position of Chief Financial Officer and Ian Spowart to the position of Chief Executive Officer of our company, subject to termination on 30 days notice. As compensation, the agreements provided for monthly payments of US$5,000 to Daniel Martinez-Atkinson and US$6,500 to Ian Spowart. On July 1, 2011 the directors thought it to be in the best interest of the Company to enter into an Amended Consulting Agreement with Daniel Martinez-Atkinson to increase the consulting fee to $5,500 from July 1, 2011. On June 1, 2012 the directors thought it to be in the best interest of the Company to enter into an Amended Consulting Agreement with Ian Spowart to decrease the consulting fee to $3,500 from June 1, 2012. The contracts were both cancelled by mutual agreement on May 31, 2013.

On August 1, 2013, the Company agreed to issue an aggregate of 1,500,000 shares of common stock to Arthur Roy as compensation for his services as President, Secretary, Treasurer Chief Executive Officer and Chairman of the Board and 1,000,000 shares of common stock to each of Armando Rafael Buchanan and Robert Steven Williamson, the Chief Financial officer and Chief Operating Officer, respectively.  It was further agreed that all stock grants would vest in equal monthly installments over a twelve-month period and that the recipients would have the option of deferring all or any portion of said compensation.

GRANTS OF PLAN-BASED AWARDS

There were no equity or non-equity awards granted to the named executive officers during the year ended July 31, 2014.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

There were no unexercised options, stock that has not vested or equity incentive plan awards for our named executive officers as at July 31, 2014.

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OPTION EXERCISES

During our Fiscal year ended July 31, 2014 there were no options exercised by our named officers.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

We do not have any outstanding equity awards.

STOCK OPTIONS/SAR GRANTS

During the period from inception (June 6, 2006) to July 31, 2014, we did not grant any stock options to our executive officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES

There were no options exercised during our fiscal year ended July 31, 2014 or July 31, 2013 by any officer or director of our company.

Outstanding Equity Awards at Fiscal Year End

No equity awards were outstanding as of the year ended July 31, 2014.

COMPENSATION OF DIRECTORS

On June 11, 2014, the Company’s Board of Directors approved compensation to the Company’s sole independent director, Richard Webb as follows: (a) $6,300 cash payable on May 1, 2014 for services provided as a director of the Company through May 1, 2014 and (b) additional compensation as an independent director of the Company at a rate of $15,000 per fiscal year, payable in two (2) semi-annual installments of $7,500 each on February 1 and May 1 of each year.  The same compensation was thereafter agreed for non-independent directors.  The fees are payable in cash or in shares of the Company’s Common Stock, at the option of the Company.  On November 5, 2014, each of Messrs. Roy and Webb elected to receive 1,500,000 shares of Company common stock valued at $0.01 per share for accrued director fees accrued during the fiscal year ended July 31, 2014 in the amount of $15,000 due to each such director.

We also reimburse our directors for expenses incurred in connection with attending board meetings. In addition, our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

None.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.  Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

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We have no plans or arrangements with respect to remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

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

The following table sets forth, as of April 9, 2015, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated:

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CHANGES IN CONTROL

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.

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

Buchanan Ventures, Inc.

Effective October 25, 2013, the Company entered into two separate agreements with Buchanan Ventures, Inc. to engage Carlos Buchanan as a consultant.  Under the first agreement (“Contractor Agreement”), it was agreed that Mr. Buchanan would, among other things, (a) assist with the development of the Company’s business, (b) assist with the financial and investment structuring of the Company and (c) assist with evaluating acquisition prospects.  As consideration for such consulting services, the Company agreed to pay Mr. Buchanan an aggregate of $150,000, payable every 90 days over a term of 24 months, payable in either cash or Company stock at the Company’s discretion. As of July 31, 2014, Company had accrued $56,250 due on account of the Contractor Agreement.  Under the second agreement (“Finder Fee Agreement”) Mr. Buchanan agreed, among other things, to introduce a mezzanine lender to advance to the Company over a period of 12 months up to $7,500,000 to support development and acquisition plans.  In consideration of such services, the Company agreed to issue to Mr. Buchanan a total of 10,000,000 shares of Company common stock, subject to adjustment and clawback of all or a portion of the shares based upon Mr. Buchanan’s performance under the Finder Fee Agreement.  As of July 31, 2014, no part of the consideration payable on account of either of the agreements has been earned.  Mr. Buchanan is the brother of Armando Rafael Buchanan, the Company’s Chief Financial Officer.

BEP Operating, LLC.

In connection with the Baylor County Leases acquired by the Company, on May 30, 2014, the Company entered into an Operating Agreement with BEP Operating, LLC as the successor operator of the properties described in the Baylor County Leases.  Pursuant to this agreement, BEP Operating, LLC will hold the license to operate these leases.  BEP Operating, LLC is licensed by the Texas Railroad Commission and is bonded to undertake these operations.  The Company anticipates that in the future when it has satisfied all requirements of the Texas Railroad Commission and is duly bonded, it will directly operate these leases.  The Operating Agreement calls for the Company to reimburse all of BEP Operating, LLC’s operating expenses incurred in connection with the work and to pay an additional amount on account of the operator’s overhead.  BEP Operating, LLC is controlled by Carlos E. Buchanan II, the brother of Armando Rafael Buchanan, the Company’s Chief Financial Officer.

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Delta S Energy LLC, which has entered into a farm-in agreement with the Company, and Delta S Ventures, LP, which is an investor in the Company, are related parties.

Except as disclosed herein, there have been no transactions or proposed transactions in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years in which any of our directors, executive officers or beneficial holders of more than 5% of the outstanding shares of our common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest.

The promoters of our company are our directors and officers.

DIRECTOR INDEPENDENCE

We currently act with two (2) directors. We have determined that none of our directors is an "independent director" as defined in NASDAQ Marketplace Rule 4200(a)(15).  Currently our audit committee consists of our entire board of directors. We currently do not have nominating, compensation committees or committees performing similar functions. There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors.

Our board of directors has determined that it does not have a member of its audit committee who qualifies as an "audit committee financial expert" as defined in as defined in Item 407(d)(5)(ii) of Regulation S-K.

From inception to present date, we believe that the members of our audit committee and the board of directors have been and are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The aggregate fees billed for the most recently completed fiscal year ended July 31, 2014 and for fiscal year ended July 31, 2013 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.  Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.

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PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibits required by Item 601 of Regulation S-K

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SIGNATURES

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

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

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