Tekoil & Gas (TKGN) 10QSB 2007 Q1 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2007

oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ________________ to ____________________

Commission File Number:0-52100

TEKOIL & GAS CORPORATION

(Exact name of small business issuer as specified in its charter)

DELAWARE	34-2035350
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

25050 I-45 NORTH, STE 528, THE WOODLANDS, TEXAS	77380
(Address of principal executive offices)	(Zip Code)

(281) 304-6950

(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o

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

At May 2, 2007, there were 26,874,175 shares of Common Stock, $0.000001 par value, outstanding.

Transitional Small Business Disclosure Format (check one):Yes oNo x

TEKOIL & GAS CORPORATION

An Exploration Stage Company

TABLE OF CONTENTS

PART I		FINANCIAL INFORMATION	Page
	Item 1.	Financial Statements	1
		Consolidated Balance Sheets as of March 31, 2007
		(Unaudited) and December 31, 2006	2
		Consolidated Statements of Operations for the
		Three Months Ended March 31, 2007 and 2006
		(Unaudited) and for the period November 29, 2004
		(Date of Formation through March 31, 2007	3
		Consolidated Statements of Stockholders' Equity
		for the period November 29, 2004 (Date of Formation)
		through March 31, 2007	4
		Consolidated Statements of Cash Flows for the
		Three Months Ended March 31, 2007 and 2006
		(Unaudited) and for the period November 29, 2004
		(Date of Formation) through March 31, 2007	5
		Notes to Unaudited Consolidated Financial
		Statements	6-15
	Item 2.	Management's Discussion and Analysis or
		Plan of Operation	16-21
	Item 3.	Controls and Procedures	22
PART II		OTHER INFORMATION
	Item 1.	Legal Proceedings	23
	Item 2.	Unregistered Sales of Equity Securities and Use
		of Proceeds	23
	Item 6.	Exhibits	26
		Signatures	29

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Form 10-KSB for the year ended December 31, 2006.

The results of operations for the three months ended March 31, 2007 and 2006 are not necessarily indicative of the results for the entire fiscal year or for any other period.

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TEKOIL & GAS CORPORATION

CONSOLIDATED BALANCE SHEETS

(An Exploration Stage Company)

	March 31,			December 31,
	2007			2006
	(Unaudited)
ASSETS
Current Assets:
Cash	$	130,013		$	294,021
Prepaid expenses		177,007			53,475
Total Current Assets		307,020			347,496
Property and Equipment - net		444,677			458,871
Other assets		1,432,013			1,004,394
TOTAL ASSETS	$	2,183,710		$	1,810,761
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued expenses	$	537,218		$	362,147
Note payable - related party		50,000			50,000
Current portion of long-term debt		4,930			4,261
Total Current Liabilities		592,148			416,408
Long-term debt		249,445			255,032
Total Liabilities		841,593			671,440
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $.00000001
par value, authorized
20,000,000 shares
Series A Convertible Preferred Stock
2,842,000 and 2,985,000 shares outstanding
at March 31, 2007 and December 31,
2006, respectively		-			-
Common stock, par value .000001
authorized 200,000,000 shares; 23,994,175 and
21,624,175 shares issued and outstanding at
March 31, 2007 and December 31, 2006, respectively		24			22
Additional paid-in capital		7,405,635			6,758,637
Cumulative other comprehensive loss		(5,483	)		(772	)
Deficit accumulated during the
development stage		(6,058,059	)		(5,618,566	)
Total Stockholders' Equity		1,342,117			1,139,321
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,183,710		$	1,810,761

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(An Exploration Stage Company)

(Unaudited)

							Period
							November 29, 2004
	Three Months Ended						(Date of formation)
	March 31,						through
	2007			2006			March 31, 2007
Revenues	$	-		$	-		$	-
Cost and expenses:
Selling, general and administrative expenses		434,266			421,794			3,644,002
Compensatory element of common
stock issurance		-			-			2,375,850
		434,266			421,794			6,019,852
Loss from operations		(434,266	)		(421,794	)		(6,019,852	)
Loss on investment		-			-			(10,000	)
Interest expense		(5,227	)		(927	)		(28,207	)
Loss before provision for income taxes		(439,493	)		(422,721	)		(6,058,059	)
Provision for income taxes		-			-			-
Net loss	$	(439,493	)	$	(422,721	)	$	(6,058,059	)
Loss per share - basic and diluted	$	(0.02	)	$	(0.02	)
Weighted average number of common shares
outstanding - basic and diluted		23,053,008			17,472,005

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

(AN EXPLORATION STAGE COMPANY)

																						Deficit
											Series A					Additional			Cummulative			Accumulated
							Common Stock				Preferred Stock					Paid			Other			During
				Comprehensive			No of				No of					in			Comprehensive			Development
	Total			(Loss)			shares		Amount		shares			Amount		Capital			Income (Loss)			Stage
Balance, November 29, 2004	$	(30,611	)					772,200	$	-		-		$	-	$	(30,611	)	$	-		$	-
Issuance of common stock for services
(valued at $.001 per share)		5,100						5,997,044		7		-			-		5,093			-			-
Sale of common stock		11,000						323,110		-		-			-		11,000			-			-
Net loss		(15,966	)									-			-					-			(15,966	)
Balance, December 31, 2004		(30,477	)					7,092,354		7		-			-		(14,518	)		-			(15,966	)
Sale of common stock		38,090						412,776		-							38,090			-
Sale of preferred stock		655,000						-		-		655,000			-		655,000			-			-
Issuance of preferred stock for debt		27,876						-		-		5,000			-		27,876			-			-
Issuance of preferred stock for services (valued at $1.00 per share)		7,000						-		-		7,000			-		7,000			-			-
Issuance of common stock for debt		100,000						216,875		-		-			-		100,000			-			-
Compensatory element of common stock issuance (valued at $.20 per share)		1,950,000						9,750,000		10		-			-		1,949,990			-			-
Net loss		(2,636,074	)					-		-		-			-		-			-			(2,636,074	)
Balance, December 31, 2005		111,415						17,472,005		17		667,000			-		2,763,438			-			(2,652,040	)
Sale of common stock		1,050,000						2,205,000		3							1,049,997			-
Sale of preferred stock		2,268,000						-		-		2,268,000			-		2,268,000			-			-
Issuance of preferred stock for services (valued at $1.00 per share)		50,000						-		-		50,000			-		50,000			-			-
Issuance of common stock for services (valued at $0.32 per share)		627,204						1,947,170		2		-			-		627,202			-			-
Net loss		(2,966,526	)	$	(2,966,526	)		-		-		-			-		-			-			(2,966,526	)
Currency translation adjustment - net of taxes		(772	)		(772	)		-		-		-			-		-			(772	)		-
Comprehensive (loss)				$	(2,967,298	)
Balance, December 31, 2006		1,139,321						21,624,175		22		2,985,000			-		6,758,637			(772	)		(5,618,566	)
Sale of preferred stock		647,000						-		-		647,000			-		647,000			-			-
Conversion of preferred stock into common stock		-						2,370,000		2		(790,000	)		-		(2	)		-			-
Net loss		(439,493	)	$	(439,493	)		-		-		-			-		-			-			(439,493	)
Currency translation adjustment - net of taxes		(4,711	)		(4,711	)		-		-		-			-		-			(4,711	)		-
Comprehensive (loss)				$	(444,204	)
Balance, March 31, 2007	$	1,342,117						23,994,175	$	24		2,842,000		$	-	$	7,405,635		$	(5,483	)	$	(6,058,059	)

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(An Exploration Stage Company)

(Unaudited)

							Period
							November 29, 2004
	Three Months Ended						(Date of formation)
	March 31,						through
	2007			2006			March 31, 2007
Cash flows from operating activities:
Net loss	$	(439,493	)	$	(422,721	)	$	(6,058,059	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization		10,821			822			35,730
Non cash fair value of stock		-			-			2,639,304
Bad debt		-			-			30,611
Changes in operating assets
and liabilities:
Increase in current assets		(123,532	)		-			(177,007	)
Increase (decrease) in other assets		4,394			-			-
Increase in accrued expenses and accounts payable		175,072			40,935			537,219
Net Cash Used in Operating Activities		(372,738	)		(380,964	)		(2,992,202	)
Cash flows from investing activities:
Purchase of property, plant and
equipment		(3,356	)		(8,191	)		(487,136	)
Payment on investment		(432,014	)		-			(1,432,014	)
Advances to affiliate		-			-			(30,611	)
Net Cash Flows Used in Investing
Activities:		(435,370	)		(8,191	)		(1,949,761	)
Cash flows from financing activities:
Proceeds from issuance of common
stock		-			-			1,099,090
Proceeds from borrowings		-			-			360,318
Proceeds from issuance of preferred
stock		647,000			655,000			3,570,000
Repayment of debt		(4,918	)		-			(8,678	)
Proceeds from related party		-			-			50,000
Net Cash Flows Provided by Financing Activities		642,082			655,000			5,070,730
Effect of exchange rate changes on cash		2,018			-			1,246
Net (decrease) increase in cash		(164,008	)		265,845			130,013
Cash - beginning of period		294,021			167,524			-
Cash - end of period	$	130,013		$	433,369		$	130,013
Supplementary information:
Cash paid during the year for:
Interest	$	4,196		$	-		$	23,213
Income taxes	$	-		$	-		$	-
Non-cash financings activities:
Issuance of preferred stock for services	$	-		$	-		$	57,000
Issuance of preferred stock for debt	$	-		$	-		$	27,876
Issuance of common stock for services	$	-		$	-		$	2,577,204
Issuance of common stock for debt	$	-		$	-		$	127,876

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2007

(AN EXPLORATION STAGE COMPANY)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated balance sheet as of March 31, 2007, and the consolidated statements of operations, stockholders' equity and cash flows for the periods presented herein have been prepared by Tekoil & Gas Corporation (the "Company or "Tekoil") and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows for all periods presented have been made. The information for the consolidated balance sheet as of December 31, 2006 was derived from audited financial statements.

Organization

Tekoil & Gas Corporation (the "Company" or "Tekoil") was incorporated in Delaware. The Company is focused on the acquisition, stimulation, rehabilitation and asset improvement of small to medium sized manageable oil and gas fields throughout North America.

The Company currently operates its business directly, and not through its Tekoil & Gas Corporation Florida subsidiary (“Tekoil-FL”), which continues to exist but has no assets or operations. For the purpose of pursuing its business strategy in the Province of Newfoundland, Canada, on March 29, 2006, the Company formed Tekoil Rig Development Corporation, a wholly-owned Newfoundland Corporation, and on April 19, 2006, the Company qualified to do business in Newfoundland.

The Company is considered an exploration stage enterprise as defined in Financial Accounting Standards Board ("FASB") Statement No. 19, "Financial Accounting and Reporting by Oil and Gas Producing Companies." The Company has no revenue to date, and there is no assurance the exploration, geological, topographical and geophysical studies by the Company will determine whether a well has proven reserves or that the Company will achieve a profitable level of operations.

Basis of Presentation

On June 27, 2005, Pexcon, Inc. ("Pexcon") entered into a share exchange agreement with the shareholders of Tekoil-FL. In connection with the share exchange, Pexcon acquired the assets and assumed the liabilities of Tekoil-FL. For accounting purposes, the share exchange agreement has been treated as a recapitalization of Tekoil-FL (subsidiary) as the acquirer. The financial statements prior to June 27, 2005 are those of Tekoil-FL and reflect the assets and liabilities of Tekoil-FL at historical carrying amounts.

As provided for in the share exchange agreement, the stockholders of Tekoil received 6,949,800 of Pexcon common stock, representing 90% of the outstanding stock after the acquisition, in exchange for the outstanding shares of Tekoil common stock they held, which was accounted for as a recapitalization. Immediately following the share acquisition exchange, Pexcon had a total of 7,722,000 common shares issued and outstanding. The financial statements show a retroactive restatement of Tekoil-FL’s historical stockholders’ equity to reflect the equivalent number of shares of common stock issued in the acquisition.

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In addition, the resignation of the former officers and directors of Pexcon took effect upon the close of the share acquisition exchange. The Tekoil Board of Directors became the Board of Directors of Pexcon and Mark Western became President and Chief Executive Officer.

Going Concern

The Company's consolidated financial statements have been prepared on the basis that the Company is a going concern. Subsequent to the balance sheet date, the Company has raised funds to continue its exploration stage. No adjustments to the financial statements have been made.

SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company transactions and balances have been eliminated.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation

The functional currency for foreign operations is the local currency. Assets and liabilities of foreign operations are translated at exchange rates as of the balance sheet date and income, expense and cash flow items are translated at the average exchange rate for the applicable period. Translation adjustments are recorded in Cumulative Other Comprehensive Income (Loss).

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and accrued expenses.

The Company's cash and cash equivalents are concentrated primarily in one bank in the United States. At times, such deposits could be in excess of insured limits. Management believes that the financial institution that holds the Company financial instrument is financially sound and, accordingly, minimal credit risk is believed to exist with respect to these financial instruments.

Earnings Per Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted loss per common share is computed by dividing net loss by the weighed average number of common shares and potential common shares during the specified period. All potentially dilutive securities, which include preferred stock convertible into 8,526,000 and 3,966,000 common shares at March 31, 2007 and 2006, respectively, have been excluded from the computation, as their effect is antidilutive.

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Evaluation of long-lived Assets

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate the carrying indicate the carrying value may not be recoverable in accordance with guidance in SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” If the carrying value of the long-lived asset exceeds the estimated future undiscounted cash flows to be generated by such asset, the asset would be adjusted to its fair value and an impairment loss would be charged to operations in the period identified.

Depreciation

Property and equipment are stated at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets.

Stock Based Compensation

The Company issues shares of common stock and preferred stock to employees and non-employees as stock-based compensation. The Company accounts for the services using the fair market value of the consideration issued. For the three months ended March 31, 2007 and 2006, the Company issued no shares.

For the period November 29, 2004 (Date of Formation of the Subsidiary) through March 31, 2007, the Company issued 17,694,214 shares of its common stock and recorded compensation expense of $2,582,304 in connection with the issuance of these shares.

Income Taxes

The Company accounts for income taxes using an asset and liability approach under which deferred income taxes are recognized by applying enacted tax rates applicable to future years to the differences between the financial statement carrying amounts and the tax bases of reported assets and liabilities.

The principal items giving rise to deferred taxes are certain expenses which have been deducted for financial reporting purposes which are not currently deductible for income tax purposes and the future tax benefits of certain net operating loss carryforward.

Fair Value of Financial Instruments

For financial instruments including cash, accrued expenses and accounts payable it was assumed that the carrying amount approximated fair value because of the short maturities of such instruments.

New Financial Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which enhances existing guidance for measuring assets and liabilities using fair value. This Standard provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not believe that SFAS No. 157 will have a material impact on its financial statements.

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In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB No. 108”). SAB No. 108 provides guidance on the consideration of effects of the prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. The Company adopted SAB No. 108 in the fourth quarter of 2006 and adoption of SAB No. 108 did not impact Company’s consolidated financial results.

In February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) “The Fair Value Option for Financial Assets and Financial Liabilities”, providing companies with an option to report selected financial assets and liabilities at fair value. The Standard’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. It also requires entities to display the fair value of those assets and liabilities for which the Company has chosen to use fair value on the face of the balance sheet. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of the adoption of this Statement on its financial statements.

2. FARMOUT AGREEMENT

On January 4, 2007, the Company executed a Farmout Agreement (“Agreement”) with Newfoundland and Labrador-based Ptarmigan Resources (“Ptarmigan”), in their offshore exploration license EL-1069 (“License”) just north of the Port au Port Peninsula in western Newfoundland.

The Agreement required the Company to pay approximately $214,000 ($250,000 Canadian) to Ptarmigan which was used as a drilling deposit to secure a one year extension granted by the Canada - Newfoundland and Labrador Offshore Petroleum Board (“C-NLOPB”). The drilling deposit is being expensed during 2007. For the three months ended March 31, 2007, the Company expensed $53,500, and the balance of $160,500 included in prepaid expenses on the Company’s balance sheet at March 31, 2007. The Agreement also requires the Company to drill an onshore-to-offshore exploration test-well in 2007 (“Phase 1”), which will test an offshore structure, and as the validation well, will extend the lease until January 2011. The Company will earn a one-third interest (33.3%) in the license for the completion of Phase 1. The Company will then conduct an offshore 3-D seismic program (“Phase 2”) by late 2008, to map in more detail four offshore features already identified by Ptarmigan using 2-D seismic data, which will earn the Company a further 26.7% of the License, for a total ownership of 60%.

The Company and Ptarmigan then plan to drill an offshore exploration well (“Phase 3”) and will share the drilling costs; 60% the Company and 40% Ptarmigan. Should the Company carry 100% of the Phase 3 drilling expenses, the Company will earn an additional 20% interest in the License, for a total up to 80%, subject to government royalties. The Company estimates the total cost of Phase 1, 2 and 3 to approximate $6,000,000 in 2007, $10,000,000 in 2008 and $25,000,000 in 2009.

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3. OTHER ASSETS

	March 31,		December 31,
	2007		2006
Deposit on investment	$	1,432,013	$	1,000,000
Deposits-other		-	$	4,396
	$	1,432,013	$	1,004,396

a)   On November 13, 2006, the Company executed a Purchase and Sales Agreement with Masters Resources, LLC, and Masters Oil and Gas, LLC, to acquire four properties, consisting of interests in Trinity Bay, Redfish Reef, Fishers Reef and North Point Bolivar Fields, located in Galveston and Chambers Counties in the Galveston Bay, Texas. Total consideration payable by the Company will exceed $50 million and may be as much as $80 million under the terms of the Purchase and Sale Agreement. The Purchase and Sale Agreement provides that the Company must pay a non-refundable sum of $1 million to Masters Resources and Masters Oil and Gas. The agreement further provides for a closing to occur, as amended, in April 2007, which is subject to a number of conditions, including completion of due diligence and arrangement of financing by the Company. On November 27, 2006, the Company paid the $1 million deposit required by the Purchase and Sale Agreement. In addition, costs and expenses to acquire the four properties have been capitalized. Should the Company not proceed with the acquisition of the properties, the Company will write off the related expenses to operations at that date. As of March 31, 2007, the Company has capitalized $432,013 of costs in connection with the proposed acquisition. The Purchase and Sales Agreement has been amended six times to extend the closing date, most recently to on or before May 11, 2007. Payment terms have also been amended such that the cash required to close the transaction is $30 million, and the sellers will be issued nine million shares of Common Stock.

b)   Tekoil and Gas Corporation had an exclusive option on the acquisition for a mining concession with Calcita Dominicana, a Dominican Republic based company from the date of signing through September 30, 2006. An additional deposit of $90,000 per the agreement was due December 1, 2005. In June 2006, the Company terminated its agreement with Calcita Dominicana and wrote off its investment of $10,000, which is included in the Company's consolidated statement of operations for the year ended December 31, 2006.

c)   In May 2006, the Company forwarded $4,396 to a real estate agency as a deposit on property in St. John's, Newfoundland. The transaction was not consummated and the Company received the return of the deposit in February 2007.

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4. PROPERTY AND EQUIPMENT

	March 31,		December 31,
	2007		2006
Building	$	347,222	$	352,522
Transportation equiment		34,756		35,286
Equipment		24,521		21,229
Furniture and fixtures		68,481		69,233
Leasehold improvements		5,427		5,510
		480,407		483,780
Less: Accumulated depreciation		35,730		24,909
	$	444,677	$	458,871

Depreciation expense for the three months ended March 31, 2007 and 2006 and the period November 10, 2004 (Date of Formation) through March 31, 2007, amounted to $10,821, $822 and $35,730, respectively.

5. NOTE PAYABLE - RELATED RATED

On December 15, 2005 the Company issued an unsecured promissory note at prime plus 1% (8.25% at March 31, 2007) to a related party in the amount of $50,000, with principal and interest due at maturity on June 15, 2006. This note was extended to June 30, 2007. At the option of the lender, any time prior to maturity the lender can convert the loan into 50,000 shares of Tekoil and Gas Corporation convertible preferred stock.

After the principal of this Note becomes due, interest shall be payable on demand and shall accrue at a rate of 12% per annum. As additional consideration for the loan, Tekoil issued to the lender 25,000 shares of the Company’s common stock, valued at $8,250, the fair value at the time of issuance. Interest expense for the three months ended March 31, 2007 and 2006 and for the period November 27, 2004 (Date of Formation of the subsidiary) through March 31, 2007 amounted to $1,031, $927 and $4,994, respectively, and, was accrued as at March 31, 2007.

6. LONG-TERM DEBT

On September 15, 2006, the Company entered into a mortgage agreement with CIBC Mortgages Inc. The Company borrowed $260,318 to purchase a building in St. John's, Newfoundland. The mortgage bears interest equal to the CIBC Prime Rate plus 0.667% (6.667% at March 31, 2007). The mortgage matures September 15, 2011. The mortgage is collateralized by the building in Newfoundland and a personal guarantee by the Company's Chief Financial Officer. The current portion of the mortgage of $4,930 is included in current liabilities on the Company's balance sheet as of March 31, 2007.

The payments now required under the long-term obligations listed above during the years following January 1, 2007, are set below:

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2008	4,553
2009	4,867
2010	5,201
2011	6,327
Thereafter	233,427
	254,375
Less: current portion	4,930
	249,445 $

7. INCOME TAXES

The Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainties in Income Taxes, (“FIN 48”) on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no adjustment in the net liability for unrecognized income tax benefits.

At March 31, 2007, the Company has a net operating loss carry-forward of approximately $6,058,000 million which expires in various years through 2020. Deferred income taxes reflect the impact of the net operating carryforwards. In recognition of the uncertainty regarding the ultimate amount of tax benefits to be derived from the Company’s net operating loss carry-forward, the Company has recorded a valuation allowance for the entire amount of the deferred asset.

8. ACCRUED EXPENSES

Accrued expenses consisted of the following:

	March 31, 2007		December 31, 2006
Professional fees	$	456,743	$	311,660
Payroll expense		44,620		37,421
Interest expense		4,993		3,963
Other		30,862		9,103
	$	537,218	$	362,147

9. STOCKHOLDERS' EQUITY

Common Stock

a)   The Company is authorized to issue 200,000,000 shares of .000001 par value common stock. All the outstanding common stock is fully paid and non-assessable. The total proceeds received for the common stock is valued used for the common stock.

b)   On October 14, 2005, the Company effected a 1 for 100 reverse stock split. As of that date, there were 7,722,000 common shares outstanding. All capital stock transactions in the financial statements have been retroactively restated to effect the reverse stock split.

c)   During the year ended December 31, 2005, the Company sold 3,550 private placement shares of pre-merger common stock and received net proceeds of $38,090.

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d)   During the year ended December 31, 2005, the Company borrowed $100,000 from a third party. In June 2005, the Company issued the third party 1,850 private placement shares of its pre-merger common stock in exchange for this debt. The Company paid the third party $ 13,500 of interest on the debt and the amount is included in the Company's statement of operations for the year ended December 31, 2005.

e)   During the period November 29, 2004 (Date of Formation) of the subsidiary through December 31, 2004, the Company sold 2,750 private placement shares of pre-merger common stock and received net proceeds of $11,000.

f)   On November 20, 2006, the Company sold 2,205,000 shares of its common stock at a purchase price of approximately $0.4762 per share, for an aggregate purchase price of $1,050,000. The Subscription Agreement for this offering provides for each subscriber has the irrevocable right and option to require the Company to purchase from such subscriber up to 95.24% of the shares of common stock issued to such subscriber pursuant to the Subscription Agreement, at the price per share equal to $0.55 per share. The put option is exercisable by each subscriber at any time ninety (90) days subsequent to the date on which the Company accepted such subscriber’s subscription, but no later than one hundred twenty (120) days subsequent to such acceptance date.

Preferred Stock

The Company is authorized to issue 20,000,000 shares of .00000001 par value preferred stock. The Company has designated 3,000,000 of these authorized shares of Preferred Stock as Series A Convertible Preferred Stock. The Board of Directors has the authority, without action by the stockholders, to designate and issue the shares of preferred stock in one or more series and to designate the rights, preferences and each series, any or all of which may be greater than the rights of the Company's common stock. At the time of designation, there was no quoted market price for the Company’s common stock. During the years ended December 31, 2006 and 2005, the Company sold 2,268,000 and 655,000 shares of Series A Preferred Stock and received net proceeds of $2,268,000 and $655,000, respectively. During the three months ended March 31, 2007 the Company sold an additional 647,000 shares and received net proceeds of $647,000. As of March 31, 2007, preferred shareholders converted 790,000 of preferred shares into 2,370,000 shares of common stock. As of March 31, 2007, there were 2,842,000 shares of Series A Preferred Stock outstanding which may be converted into 8,526,000 shares of the Company's common stock.

The following is a summary of the pertinent rights and privileges of each class outstanding:

·   The holders of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. Each outstanding share of Series A Preferred Stock entitles the holder thereof to vote on all matters on which holders of Common Stock are entitled to vote, and the holders of Series A Preferred Stock and of Common Stock vote together as a single class. With respect to any such vote, each share of Series A Preferred Stock entitles the holder to cast the number of votes per share as is equal to the number of votes that such holder would be entitled to cast had such holder converted its shares of Series A Preferred Stock into Share of Common Stock, such conversion rate being three (3) share of Common Stock for each share of Series A Preferred Stock. There is no cumulative voting with the result that the holders of more than 50% if the shares voting for the election of directors can elect all of the directors.

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·   The holders of Common Stock and the holders of Series A Preferred Stock are entitled to receive dividends when, as and if declared by the Board of Directors for each such class of stock out of the funds legally available therefore. In the event of the liquidation, dissolution or winding up of the Company, the holders of Common Stock and the holders of Series A Preferred Stock are entitled to share ratably, after conversion of each share of Series A Preferred Stock into three (3) shares of Common Stock, in all assets remaining available for distribution after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Common Stock and the Series A Preferred Stock.

·   Holders of shares of Common Stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock. Each holder of shares of Series A Preferred Stock has the right, at its option and without further payment, to convert any or all of its shares of Series A Preferred Stock into fully paid and non-assessable shares of Common Stock at the rate of three (3) shares of Common Stock for each share of Series A Preferred Stock. Each share of Series A Preferred Stock will automatically convert into three (3) shares of Common Stock (i) immediately prior to a liquidation of the Company; (ii) immediately prior to an initial public offering by the Company,; (iii) at any time after July 29, 2006, at the sole discretion of the Company’s Board of Directors. The number and type of securities to be received upon conversion of the Series A Preferred Stock are subject to certain antidilution adjustments.

10. BUSINESS SEGMENT INFORMATION

The Company operates in one industry and has two reportable segments. The segments are geographic and include the United States and Canada. The primary criteria by which financial performance is evaluated and resources are allocated are revenues and operating income (loss). The following is a summary of key financial data:

	Three Months Ended
	March 31,
	2007			2006
Revenue from unrelated entity
and country of Company's
domicile:
United States	$	-		$	-
Canada		-			-
	$	-		$	-
Total Revenues:
United States	$	-		$	-
Canada		-			-
	$	-		$	-
Income (loss) from Operations:
United States		(442,613) $		$	(421,794	)
Canada		8,290			-
	$	(434,323	)	$	(421,794	)

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11. RELATED PARTY TRANSACTIONS

On November 8, 2006, the Company issued 1,000,000 shares of Common Stock valued at $.33 per share (the fair value at the time of the issuance) to Gerald Goodman, the Company's Chief Financial Officer, in exchange for Mr. Goodman's personal guarantee of the following obligations of the Company: (i) credit card debts of the Company and/or its subsidiaries and related entities in the amount of fifty thousand dollars ($50,000), (ii) a mortgage and promissory note related to property owned by the Company and/or its subsidiaries and related entities in Newfoundland, Canada, in the amount of Two hundred sixty four thousand three hundred seventy four dollars ($264,374), (iii) a credit line of the Company and/or its subsidiaries and related entities in the amount of fifty thousand dollars ($50,000).

12. SUBSEQUENT EVENTS

a)   During the period subsequent to March 31, 2007, the Company conducted private placements pursuant to it which it sold 450,000 shares of Series A Preferred Stock at a price per share of $1.00, which may be converted into 1,350,000 shares of the Company's common stock.

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Item 2. Management’s Discussion and Analysis or Plan of Operation.

Important Considerations Related to Forward-Looking Statements

This Form 10-QSB includes "forward-looking statements". All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-QSB which address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements. The words "believe", "intend", "expect", "anticipate", "project", "estimate", "predict" and similar expressions are also intended to identify forward-looking statements.

These forward-looking statements include, among others, such things as:

·   plans and objectives of our management for future operations relating to our products and services;

·   plans and objectives of our management for our future economic performance;

·   amounts and nature of future capital expenditures;

·   wells to be drilled and reworked;

·   anticipated oil and gas prices and demand;

·   exploitation and exploration prospects;

·   estimates of proved oil and gas reserves;

·   reserve potential;

·   development and infill drilling potential;

·   expansion and other development trends of the oil and gas industry;

·   business strategy;

·   productions of oil and gas reserves;

·   planned asset sales or disposition;

·   plans for capital raising and financing; and

·   expansion and growth of our business and operations.

FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT. THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE THOSE DISCUSSED IN “PART I, ITEM 1. - DESCRIPTION OF BUSINESS - RISK FACTORS” CONTAINED IN THE COMPANY’S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2006, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 2007. UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. INVESTORS SHOULD REVIEW THIS QUARTERLY REPORT IN COMBINATION WITH THE COMPANY’S ANNUAL REPORT ON FORM 10-KSB IN ORDER TO HAVE A MORE COMPLETE UNDERSTANDING OF THE PRINCIPAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE COMPANY’S STOCK.

Forward-looking statements included or incorporated by reference in this Form 10-QSB are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from our expectations, including, but not limited to, the following:

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·   risk factors discussed in the Company's Form 10-KSB;

·   oil and gas prices;

·   exploitation and exploration successes;

·   continued availability of capital and financing;

·   general economic, market or business conditions;

·   acquisitions and other business opportunities (or lack thereof) that may be presented to and pursued by us;

·   changes in laws or regulations; and

·   other factors, most of which are beyond our control.

Consequently, all the forward-looking statements made in this report and in the documents we incorporate by reference are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operation. In light of the significant uncertainties inherent in such forward-looking statements, their inclusion should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.

Critical Accounting Policies

Our discussion and analysis of our financial condition and plan of operation are based upon the Company’s financial statements, which have been prepared with accounting principles generally accepted in the United States of America. The preparation of the financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to intangible assets, income taxes and contingencies and litigation. The Company bases its estimates on historical expenses and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Stock-Based Compensation. The Company issues shares of its common and preferred stock to employees and non-employees as stock-based compensation. The Company accounts for the services using the fair market value of the consideration issued.

Intangible Assets. The valuation of intangible assets will be determined by management after considering a number of factors. On an annual basis, the Company will test for impairment. If the carrying value of the intangible assets exceeds the present value of estimated future cash flows, the intangible assets would be adjusted to their fair value and an impairment loss would be charged to operations in the period identified. Should the impairment loss be significant, the charge to operations could have a material effect on the Company’s results of operations and financial condition.

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Plan of Operation

Forecasted Activities April 2007 to March 2008

We have identified the following objectives for the 12-month period ending March 31, 2008:

·   Drill an onshore-to-offshore well in Block EL-1069, to a bottom-hole location which has the potential to produce commercial hydrocarbons.

·   Lease the mineral rights over the prospective acreage at reasonable terms for the Company. The area in which we are interested consists of the Garden Hill area encompassing 270 square kilometers located onshore and offshore, and the Shoal Point area encompassing 400 square kilometers located offshore in Port au Port Bay. Both areas are in Newfoundland, Canada.

·  Obtain the exploration license required to conduct an intense 3D seismic survey over the area’s onshore and offshore prospects.

·  Further establish our general presence and enhance our company profile in Newfoundland.

·  Establish an apprenticeship training program for the rig refurbishment business with the provincial technical college.

·  Secure and purchase two used drilling rigs for refurbishment.

Three instruments govern onshore petroleum activities in Newfoundland:

·  An exploration permit, issued as a result of a Request for Bids, confers the exclusive right to drill and test for petroleum on designated lands. It is valid for a primary term of five (5) years and can be extended for a further secondary term of two (2) years if certain conditions are met.

·  An exploration license does not confer any petroleum rights, but confers the non-exclusive right to conduct an exploration survey (e.g., seismic program) described in the license. An exploration license is valid for 180 days. We have applied for an exploration license with respect to our 3D seismic survey.

·  A lease, issued as a result of a discovery on an exploration permit, confers to the lessee the exclusive right to develop and produce a petroleum pool in the lease area. A lease has an initial term of 10 years, subject to five (5) year renewals for those areas still in production or necessary for production.

Offshore petroleum activities are subject to three different documents:

·  An exploration license, issued as a result of a Request for Bids, confers the right to explore for, and the exclusive right to drill and test for petroleum on designated lands, as well as the exclusive right to develop those portions of the offshore area in order to produce petroleum and the exclusive right, subject to compliance with other requirements, to obtain a production license. An exploration license is valid for a primary term of nine (9) years, consisting of two consecutive periods of five (5) years and four (4) years, with certain milestones that must be completed in the first five years for the license holder to continue to have rights in the latter four years. At the end of nine years, all rights to an area terminate unless the area becomes subject to a significant discovery license or a production license.

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·  A significant discovery license may be granted with respect to an area as a result of an application for a declaration of significant discovery. It grants the same rights as an exploration license, and effectively extends rights to an area for so long as the relevant declaration of significant discovery is in force, or until a production license is issued for the relevant lands. The government retains significant authority over drilling orders and development orders.

·  A production license is issued where a commercial discovery is declared, which is a discovery of petroleum that has been demonstrated to contain reserves that justify the investment of capital and effort to bring the discovery to production. A production license confers the following: the right to explore for, and the exclusive right to drill and test for, petroleum; the exclusive right to develop those portions of the offshore area in order to produce petroleum; the exclusive right to produce petroleum from those portions of the offshore area; and title to the petroleum so produced. A production license is effective from the date it is issued for a term of twenty-five (25) years or for such period thereafter during which commercial production continues. The government retains significant authority over drilling orders and development orders.

Canadian Imperial Venture Corp. was issued a lease for the onshore area in which we are interested, and that lease was due to expire on August 13, 2006. On June 28, 2006, Canadian Imperial issued a press release announcing that the Government of Newfoundland and Labrador had extended the onshore lease for an additional year. We are not aware of the conditions placed upon the lease extension by the Government of Newfoundland and Labrador, but Canadian Imperial announced on August 15, 2006, that it had met certain financial commitments for the lease extension, specifically referencing work plans and work deposits submitted to the Department of Natural Resources. Based upon our discussions with government officials, we believe that the Government of Newfoundland and Labrador is imposing stricter requirements on leaseholders regarding investment in leased areas and progress toward production, as suggested by the speech delivered at the Atlantic Canada Oil and Gas Summit on May 30, 2005, by Premier Danny Williams. In the event that Canadian Imperial’s lease is terminated, re-bidding for the lease would likely then commence.

We are interested in two offshore licenses. One exploration license, EL #1070, which is currently issued to another operator, has been granted an extension from the Canada-Newfoundland and Labrador Offshore Petroleum Board (the “Petroleum Board”) until January 15, 2008. During this extended time period, the operator must drill a validating well. If the operator fails to meet the terms and conditions of the extension, the license will revert back to the Crown (the government), and we will then express an interest in having the land included in the next Request for Bids. If the operator complies with the conditions, the license will be extended for a secondary term of an additional four years.

The second offshore license in which we are interested is EL #1071. This license was previously owned by Canadian Imperial, but it reverted back to the Crown on January 15, 2007. We will express an interest in this area, and we anticipate that it will be available in the Petroleum Board’s next Request for Bids, which usually occurs every March.

We also have one onshore area of interest. Lease 2002-01, presently held by PDI Production (“PDIP”) is set to expire on August 13, 2007. If PDIP fails to meet the terms and conditions of this lease area, it will automatically revert back to the Crown. Unlike the Petroleum Board, the provincial Department of Natural Resources, which manages onshore activities, is sporadic in its Request for Bids process. This is mainly due to less interest in the onshore area, as compared to the already viable offshore area. We have already expressed an interest in this area and are optimistic about the opportunity to bid on this area when presented by the Department.

We are currently in the process of confirming the environmental approval amendment procedures for the applications submitted to date to expand and include prospective offshore acreage surrounding the Port au Port peninsula. We have made significant progress towards obtaining environmental approvals for an exploration license to conduct the 3D seismic survey over the onshore prospects. On May 2, 2006, the Department of Environment and Conservation issued a letter regarding our Port au Port Peninsula 3D seismic survey, along with a summary of comments received from various reviewing agencies during the review period. The letter released our proposed 3D seismic survey from further environmental assessment by the Department, subject to the approval of an Environmental Protection Plan prior to the commencement of the survey. On November 21, 2006, the Company announced that its application for expansion of its original 3D seismic program had been increased from approximately 240 sq km to approximately 500 sq km and released from further environment assessment by the Newfoundland and Labrador Department of Environmental Conservation. The Company is in the final stages with the Petroleum Board to complete its approvals for the offshore component of the program.

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To further cement our presence in Newfoundland, we have formed a wholly-owned Canadian subsidiary, Tekoil Rig Development Corporation, opened our Canadian headquarters in St. John’s and appointed Donna Parsons as Vice-President, Corporate Relations. We are talking to a number of companies and institutions concerning the long-term financing for the Company’s operations, and we will continue to do so. We are engaged in ongoing discussions with the provincial technical college to create training programs for the rig refurbishment business.

Jim Howdle, our contracted rig refurbishment expert, continues to monitor the availability of used, inactive rigs, and he is confident that once we have secured funding for this program, he will be able to act expeditiously to obtain such a rig.

On November 13, 2006, the Company executed a Purchase and Sale Agreement with Masters Resources, LLC, and Masters Oil and Gas, LLC, to acquire four properties, consisting of interests in Trinity Bay, Redfish Reef, Fishers Reef and North Point Bolivar Fields, located in Galveston and Chambers Counties in the Galveston Bay, Texas. The Company is in its final due diligence for completing the acquisition, with the closing extended to May 11, 2007.

In January 2007, the Company executed a Farmout Agreement with Ptarmigan Resources Limited with respect to Ptarmigan’s offshore exploration license EL-1069. The license covers approximately 140,000 hectares, or 346,500 acres of offshore surface area, in the shallow waters of the Gulf of St. Lawrence north of the Port au Port peninsula in western Newfoundland. The Company is required to drill an onshore-to-offshore test well during 2007, which will test an offshore structure and, as the validation well, will extend the lease until January 2011.

Liquidity and Capital Resources

Our operating and capital requirements have exceeded our cash flow from operations as we have been building our business. Since inception through March 31, 2007, we have expended approximately $5.3 million for operating and investing activities, which has been funded by investments of approximately $5.0 million from our shareholders and $0.5 million from borrowings.

Our cash balance as of March 31, 2007, was $130,013, which decreased from $294,021 as of December 31, 2006. The decrease to our cash balance was attributable to approximately $.6 million raised by the Company through private placements of Series A Convertible Preferred Stock in 2006, offset by increased operating expenses during the three months ended Mach 31, 2007. Subsequent to December 31, 2006, the Company raised an additional $275,000 through private placements. Management believes the Company needs to raise additional funds to meet its current operations for the next twelve months. The Company is in its final due diligence of completing its acquisition of Masters Resources, LLC and Masters Oil and Gas, LLC. Total consideration to be paid by Tekoil at closing has been agreed at $50.0 million. The Company authorized a leading New York-based financial institution to proceed with an accelerated due diligence investigation and to seek internal credit approval for a contemplated $50.0 million multiple advance, senior secured four year credit facility, with limited availability of $30.0 million in support of the Masters acquisition. The term sheet contemplates that the credit facility will be conditioned upon the Company completing a minimum $20.0 million equity financing, with standard covenants and conditions including satisfactory due diligence reviews and regulatory approval, and other conditions, which the potential lender may deem appropriate. The Company will accomplish this by issuing the seller nine million shares of the Company’s common stock.

In January 2007, the Company executed a Farmout Agreement with Ptarmigan Resources Limited with respect to Ptarmigan’s offshore exploration license EL-1069. The Company paid Ptarmigan $214,000 USD ($250,000 Canadian), which was used as a drilling deposit to secure a one-year extension of the License from the Canada - Newfoundland and Labrador Offshore Petroleum Board. The Company is also required to drill an onshore-to-offshore test well during 2007, which will test an offshore structure and, as the validation well, will extend the lease until January 2011 (Phase 1). The Company will earn a one-third interest (33.3%) in the License for the completion of Phase 1. The Company may then conduct an offshore 3D seismic program by late 2008, to map in more detail four offshore features already identified by Ptarmigan using 2D seismic data, which will earn the Company a further 26.7% of the License, for a total ownership of 60% (Phase 2).

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The Farmout Agreement further provides that the Company and Ptarmigan will then drill an offshore exploration well and will share the drilling costs; 60% by the Company and 40% by Ptarmigan. Should the Company carry 100% of the cost of drilling, it will earn an additional 20% interest in the License, for a total of up to 80%, subject to government royalties (Phase 3). The Company estimates the total cost of Phases 1, 2, and 3 to be approximately $6,000,000 in 2007, $10,000,000 in 2008 and $25,000,000 in 2009.

We will need to raise additional capital of approximately $35 million to proceed with the 3D seismic program and the drilling of two wells. We will also need to raise an additional $15 million to proceed with our drilling rig refurbishment program. To date, the Company has generated no revenues. We are currently in negotiations with various investors, primarily for debt financing, but there can be no assurance that such funds will be available to us or that adequate funds from debt or equity financing will be available when needed or on terms satisfactory to us. We will continue to sell shares of our Series A Preferred Stock or Common Stock from time to time. Our failure to obtain adequate additional financing may require us to delay or curtail some or all of our business efforts. Additional equity financing may involve substantial dilution to our existing shareholders.

During the past three years, we have sold private placement shares of our Series A Convertible Preferred Stock at the offering price of $1.00 per share. We may continue to sell unregistered securities from time to time.

On December 15, 2005, we issued an unsecured promissory note, bearing interest at the rate of prime plus one percent (1%) per annum (8.25% at December 31, 2005) to Wiener, Goodman & Company, P.C. Profit Sharing Plan FBO Gerald Goodman (the Company's chief financial officer, treasurer and director) in the principal amount of $50,000, with principal and interest due at maturity on June 15, 2006. The maturity date has since been extended until June 30, 2007. At any time prior to maturity, the lender may, at its option, convert the promissory note into 50,000 shares of Series A Preferred Stock. There is no other formal arrangement to advance or loan funds to the Company or repay any such advances or loans.

On September 15, 2006, the Company entered into a mortgage agreement with CIBC Mortgages Inc. The Company borrowed $264,373 to purchase a building in St. John's, Newfoundland. The mortgage bears interest equal to the CIBC Prime Rate plus 0.667% (6.667% at December 31, 2006). The mortgage matures on September 15, 2011. The mortgage is collateralized by the building in Newfoundland and a personal guarantee by the Company's Chief Financial Officer.

Item 3. Controls and Procedures.

a.   Disclosure controls and procedures. As of the end of the Company’s most recently completed fiscal quarter covered by this report, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s chief executive officer and chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures are effective, at the reasonable assurance level, in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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b.   Changes in internal controls over financial reporting: There have been no changes in the Company's internal controls over financial reporting that occurred during the Company's last fiscal quarter to which this report relates that have materially affected, or are reasonable likely to materially affect, the Company’s internal controls over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

As of April 17, 2007, the Company issued 90,000 unregistered shares of its Common Stock, par value $0.000001 per share (“Common Stock”), to Barry Radolan, in exchange for his waiver of his put rights with respect the 210,000 unregistered shares of Common Stock that were sold to him on November 20, 2006, as reported in the Company’s current report on Form 8-K dated November 20, 2006, and filed on November 27, 2006. No underwriters took part in these sales of unregistered shares of Common Stock, and no underwriting discounts or commissions were paid. The Company’s sales of these unregistered shares of Common Stock were made in reliance on Section 4(2) of the Securities Act of 1933, as amended (the “Act”), and the safe harbor provided by Rule 506 of Regulation D promulgated under the Act, in that the sales did not involve any public offering. Mr. Radolan is an “accredited investor” as defined in Rule 501 of Regulation D; and, consequently, the Company did not provide him information of the type described in Rule 502(b)(2) of Regulation D. Neither the Company nor any person acting on its behalf offered or sold these unregistered shares of Common Stock by any form of general solicitation or general advertising. Mr. Radolan represented to the Company (i) that he was acquiring such shares for his own account and not with a view to the sale or distribution thereof, (ii) that he understood that such shares had not been registered under the Act and, therefore, could not be resold unless they were subsequently registered under the Act or unless an exemption from registration was available; and (iii) that a legend would be placed on the certificate evidencing such shares stating that the shares had not been registered under the Act and setting forth the restrictions on transferability and sale of the shares. All stock certificates representing such shares were issued with a restrictive legend, and the Company filed notices on Form D with the SEC.

During the period covered by this report and through the date of this report, the Company made the following sales of unregistered shares of its Series A Convertible Preferred Stock, par value $0.00000001 per share (“Series A Preferred Stock”), at the offering price of $1.00 per share:

Name of Purchaser	No. of Shares	Proceeds of Sale (in Dollars)	Date of Issuance
A. Muffi Family Revocable Trust UTD 02/27/03	10,000	10,000	January 2, 2007
Ballestero, Edward	20,000	20,000	January 2, 2007
Ballestero, Edward	50,000	50,000	February 26, 2007
Ballestero, Edward	50,000	50,000	March 30, 2007
Ballestero, Edward	70,000	70,000	April 4, 2007
Baum, Kevin and Lisa A. Vecchio, as tenants by the entirety	5,000	5,000	February 22, 2007
Bennett, Daniel J.	5,000	5,000	January 16, 2007
Boniello, Ralph W.	5,000	5,000	January 2, 2007
Bradley, Robert	5,000	5,000	January 2, 2007

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Bradley, Robert T.	5,000	5,000	January 2, 2007
Branz, Karen S.	5,000	5,000	January 2, 2007
Bulla, Lenny	5,000	5,000	March 30, 2007
Connellan, Thomas K. (issued as Fiserv ISS & Co. FBO The Connellan Group Inc. Roth 401K Acct. 007901520002)	20,000	20,000	January 2, 2007
Copeland, Todd E.	15,000	15,000	January 9, 2007
DiLascia, Vincent A.	5,000	5,000	January 2, 2007
Eastmond, Thomas	10,000	10,000	January 2, 2007
Economou, Brian	5,000	5,000	January 2, 2007
Fair, Rodney	5,000	5,000	March 30, 2007
Fairbrother, Faith	5,000	5,000	January 2, 2007
Genzianelli, Frank J.	50,000	50,000	February 26, 2007
Harrison, Steve	20,000	20,000	January 9, 2007
Hussein, Khaled	10,000	10,000	February 26, 2007
Iamaio, Mike	5,000	5,000	March 30, 2007
Indiveri, David	10,000	10,000	March 30, 2007
Jennings, Bob	5,000	5,000	January 2, 2007
Kalidas, Amar	20,000	20,000	February 26, 2007
Kalidas, Dinesh	85,000	85,000	February 26, 2007
Kalidas, Poonam	20,000	20,000	February 26, 2007
Kalidas, Vinod	15,000	15,000	February 26, 2007
Kenney, Joan M. or Lisa A. Vecchio	10,000	10,000	February 13, 2007
Kenney, John A. or Joan M. JT	5,000	5,000	February 22, 2007
Knight, Robert L.	30,000	30,000	March 30, 2007
Knight, Robert L.	60,000	60,000	April 14, 2007
Knight, Robert L.	10,000	10,000	January 16, 2007
Korenek, Alfred J.	10,000	10,000	January 17, 2007
Korenek, Alfred J.	15,000	15,000	March 30, 2007
Korenek, Alfred J.	60,000	60,000	April 4, 2007
Lasher, Dale	10,000	10,000	January 12, 2007
Lawrence, Brent	10,000	10,000	January 2, 2007
Licina, Philip	20,000	20,000	March 30, 2007
Lovera, Catherine	5,000	5,000	January 2, 2007
Matthews, Ching J. & Ian	5,000	5,000	April 4, 2007
McDaniel, Gary	10,000	10,000	January 2, 2007
Michola, Doulgas	10,000	10,000	March 30, 2007
Michola, Doulgas	5,000	5,000	April 4, 2007
Misch, Will	5,000	5,000	March 30, 2007
Mogollon, Carlos A.	10,000	10,000	January 2, 2007
Mongollon, Carlos	5,000	5,000	January 10, 2007
Muffi, Dora F.	10,000	10,000	January 2, 2007
Mui, Yatte	5,000	5,000	January 2, 2007
Mullins, D.K.	10,000	10,000	January 2, 2007
Nigri, Robert L.	25,000	25,000	March 30, 2007
Nigri, Robert L.	25,000	25,000	April 4, 2007
Nevins, Michelle	5,000	5,000	January 2, 2007

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Osborne, Robert W.	15,000	15,000	April 6, 2007
O’Neil, Matt	5,000	5,000	January 2, 2007
OTS Investments, LLC	10,000	10,000	April 4, 2007
Panken, Howard	5,000	5,000	January 2, 2007
Park, James M.	5,000	5,000	March 30, 2007
Piccirollo, Peter	5,000	5,000	March 30, 2007
Radolan, Barry	50,000	50,000	January 2, 2007
Radolan, Xiaoli	5,000	5,000	April 4, 2007
Roberti, Gregg & Laurie	10,000	10,000	January 2, 2007
Ruperto, Francisco, Jr.	10,000	10,000	January 9, 2007
Saunders, Jan	5,000	5,000	March 30, 2007
Shea, John	23,000	23,000	January 2, 2007
Shea, John	27,000	27,000	March 7, 2007
Siemash, Walter E.	10,000	10,000	January 10, 2007
Siemash, Walter E.	5,000	5,000	March 30, 2007
Siemash, Walter E.	5,000	5,000	April 4, 2007
Virelles, Alexander D.	10,000	10,000	January 2, 2007
Vishay Management Group, Inc.	5,000	5,000	January 2, 2007
Walsh, Gregory J.	10,000	10,000	January 9, 2007
Whelan, Michael J.	15,000	15,000	April 4, 2007

No underwriters took part in these sales of unregistered shares of Series A Preferred Stock, and no underwriting discounts or commissions were paid. The Company’s sales of these unregistered securities were made in reliance on Section 4(2) of the Act and the safe harbor provided by Rule 506 of Regulation D promulgated under the Act, in that the sales did not involve any public offering. All purchasers of these unregistered shares of Series A Convertible Preferred Stock were “accredited investors” as defined in Rule 501 of Regulation D, based upon representations made by such purchasers to the Company; and, consequently, the Company did not provide such purchasers information of the type described in Rule 502(b)(2) of Regulation D. Neither the Company nor any person acting on its behalf offered or sold these unregistered shares of Series A Preferred Stock by any form of general solicitation or general advertising. Each purchaser of these unregistered shares of Series A Preferred Stock represented to the Company (i) that such purchaser was acquiring such shares for the purchaser’s own account and not with a view to the sale or distribution thereof, (ii) that such purchaser understood that such shares had not been registered under the Act and, therefore, could be resold unless they were subsequently registered under the Act or unless an exemption from registration was available; and (iii) that a legend would be placed on the certificate evidencing such shares stating that the shares had not been registered under the Act and setting forth the restrictions on transferability and sale of the shares. All stock certificates representing such shares were issued with a restrictive legend, and the Company filed notices on Form D with the SEC and the relevant state securities regulators.

Each holder of shares of Series A Preferred Stock has the right, at its option and without further payment, to convert any or all of its shares of Series A Preferred Stock into fully paid and non-assessable shares of Common Stock at the rate of three (3) shares of Common Stock for each share of Series A Preferred Stock. Each share of Series A Preferred Stock will automatically convert into three (3) shares of Common Stock (i) immediately prior to a liquidation of the Company; (ii) immediately prior to an initial public offering by the Company; or (iii) at any time after July 29, 2006, at the sole discretion of the Company’s Board of Directors. The number and type of securities to be received upon conversion of the Series A Preferred Stock are subject to certain anti-dilution adjustments. The terms of the Series A Preferred Stock are fully set forth in a Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock, filed with the Secretary of State of Delaware on August 2, 2005, as amended by an Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock, filed with the Secretary of State of Delaware on February 22, 2006, and as further amended by a Second Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock, filed with the Secretary of State of Delaware on June 12, 2006.

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Item 6. Exhibits.

Exhibit Number		Description
3.1	-	Certificate of Incorporation of the Company and all Amendments thereto (filed as Exhibit 2.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
3.2	-	Bylaws of the Company (filed as Exhibit 2.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.1	-	Article Fourth of the Certificate of Incorporation of the Company, as amended (filed as part of Exhibit 2.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.2	-	Articles II, III, VIII and XI of the Bylaws of the Company (filed as part of Exhibit 2.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.3	-	Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.3 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.4	-	Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.4 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.5	-	Second Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.5 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.1	-	Acquisition Agreement dated May 25, 2005, among Pexcon, Inc., Tekoil-FL, the shareholders of Tekoil-FL and Gerald M. Dunne (filed as Exhibit 99.6.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.2	-	Unsecured Promissory Note dated December 15, 2005, from the Company to Wiener Goodman & Company PC Profit Sharing Plan FBO Gerald Goodman (filed as Exhibit 99.6.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.3	-	Employment Agreement dated as of October 21, 2005, between the Company and Mark S. Western (filed as Exhibit 99.6.3 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.4	-	Employment Agreement dated as of October 21, 2005, between the Company and Gerald Goodman (filed as Exhibit 99.6.4 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.5	-	Employment Agreement dated as of October 21, 2005, between the Company and Francis G. Clear (filed as Exhibit 99.6.5 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.6	-	Employment Agreement dated as of October 21, 2005, between the Company and Eric Ottens (filed as Exhibit 99.6.6 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*

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10.7	-	Director Service Agreement dated as of October 21, 2005, between the Company and Mark S. Western (filed as Exhibit 99.6.7 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.8	-	Director Service Agreement dated as of October 21, 2005, between the Company and Gerald Goodman (filed as Exhibit 99.6.8 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.9	-	Director Service Agreement dated as of October 21, 2005, between the Company and Francis G. Clear (filed as Exhibit 99.6.9 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.10	-	Director Service Agreement dated as of October 21, 2005, between the Company and Richard Creitzman (filed as Exhibit 99.6.10 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.11	-	Employment Agreement dated as of June 1, 2006, between Tekoil Rig Development Corporation and Donna Parsons (filed as Exhibit 99.6.11 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006)*
10.12	-	Stock Grant and Repurchase Agreement dated as of June 1, 2006, between the Company and Donna Parsons (filed as Exhibit 99.6.12 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006)*
10.13	-	Form of Tender dated August 14, 2006, and Indenture dated August 31, 2006, for the purchase of Newfoundland facility (filed as Exhibit 99.6.13 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006)*
10.14	-	Mortgage dated September 12, 2006, between the Company and CIBC Mortgage Inc. (filed as Exhibit 99.6.14 to the Company's Form 10-SB/A (Amendment No. 2) filed with the SEC on November 13, 2006)*
10.15	-	Settlement Agreement and Mutual Release dated December 6, 2006, between the Company and Gerald M. Dunne (filed as Exhibit 10.15 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006)*
10.16	-	Stock Issuance Agreement dated May 1, 2006, between the Company and Don Parsons (filed as Exhibit 10.16 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006)*
10.17	-	Form of Securities Purchase Agreement for the purchase of the Company’s Series A Convertible Preferred Stock (filed as Exhibit 10.17 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006)*
10.18	-	Purchase and Sale Agreement dated November 13, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.18 to the Company's Form 8-K dated December 11, 2006, and filed with the SEC on December 14, 2006)*
10.19	-	Form of Subscription Agreement (with Put Option) dated November 20, 2006, between the Company and the subscribers thereto (filed as Exhibit 10.19 to the Company's Form 8-K dated December 11, 2006, and filed with the SEC on December 14, 2006)*
10.20	-	First Amendment to Purchase and Sale Agreement executed on December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.20 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007)*
10.21	-	Subscription Agreement dated December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.21 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007)*

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10.22	-	Registration Rights Agreement dated December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC, Rich Holdings, LLC, and John W. Barton (filed as Exhibit 10.22 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007)*
10.23	-	Farmout Agreement executed on January 3, 2007, and dated as of December 19, 2006, between the Company and Ptarmigan Resources Limited (filed as Exhibit 10.23 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007)*
10.24	-	Second Amendment to Purchase and Sale Agreement dated effective February 8, 2007, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.24 to the Company's Form 8-K dated February 8, 2007, and filed with the SEC on February 15, 2007)*
10.25	-	Third Amendment to Purchase and Sale Agreement dated effective March 1, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.1 to the Company's Form 8-K dated March 22, 2007, and filed with the SEC on March 26, 2007)*
10.26	-	Fourth Amendment to Purchase and Sale Agreement dated effective March 22, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.2 to the Company's Form 8-K dated March 22, 2007, and filed with the SEC on March 26, 2007)*
10.27	-	Fifth Amendment to Purchase and Sale Agreement dated effective April 12, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.27 to the Company's Form 8-K dated April 12, 2007, and filed with the SEC on April 18, 2007)*
10.28	-	Sixth Amendment to Purchase and Sale Agreement executed on April 30, 2007, and dated effective April 24, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.28 to the Company's Form 8-K dated April 30, 2007, and filed with the SEC on May 3, 2007)*
11.1	-	Statement regarding the computation of earnings per share is omitted because such computation can be clearly determined from the material contained in this Report on Form 10-KSB.
31.1	-	Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) (filed herewith)
31.2	-	Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) (filed herewith)
32.1	-	Certifications of Chief Executive Officer pursuant to Section 1350 (furnished herewith)
32.2	-	Certifications of Chief Executive Officer pursuant to Section 1350 (furnished herewith)

*Incorporated herein by reference. SEC File No. 0-52100

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SIGNATURES

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

	TEKOIL & GAS CORPORATION
Date: May 7, 2007	By:	/s/ Mark S. Western
		Mark Western President and Chief Executive Officer

Date: May 7, 2007	By:	/s/ Gerald Goodman
		Gerald Goodman Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number		Description
3.1	-	Certificate of Incorporation of the Company and all Amendments thereto (filed as Exhibit 2.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
3.2	-	Bylaws of the Company (filed as Exhibit 2.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.1	-	Article Fourth of the Certificate of Incorporation of the Company, as amended (filed as part of Exhibit 2.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.2	-	Articles II, III, VIII and XI of the Bylaws of the Company (filed as part of Exhibit 2.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.3	-	Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.3 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.4	-	Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.4 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
4.5	-	Second Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.5 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.1	-	Acquisition Agreement dated May 25, 2005, among Pexcon, Inc., Tekoil-FL, the shareholders of Tekoil-FL and Gerald M. Dunne (filed as Exhibit 99.6.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.2	-	Unsecured Promissory Note dated December 15, 2005, from the Company to Wiener Goodman & Company PC Profit Sharing Plan FBO Gerald Goodman (filed as Exhibit 99.6.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.3	-	Employment Agreement dated as of October 21, 2005, between the Company and Mark S. Western (filed as Exhibit 99.6.3 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.4	-	Employment Agreement dated as of October 21, 2005, between the Company and Gerald Goodman (filed as Exhibit 99.6.4 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.5	-	Employment Agreement dated as of October 21, 2005, between the Company and Francis G. Clear (filed as Exhibit 99.6.5 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.6	-	Employment Agreement dated as of October 21, 2005, between the Company and Eric Ottens (filed as Exhibit 99.6.6 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.7	-	Director Service Agreement dated as of October 21, 2005, between the Company and Mark S. Western (filed as Exhibit 99.6.7 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.8	-	Director Service Agreement dated as of October 21, 2005, between the Company and Gerald Goodman (filed as Exhibit 99.6.8 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*

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10.9	-	Director Service Agreement dated as of October 21, 2005, between the Company and Francis G. Clear (filed as Exhibit 99.6.9 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.10	-	Director Service Agreement dated as of October 21, 2005, between the Company and Richard Creitzman (filed as Exhibit 99.6.10 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006)*
10.11	-	Employment Agreement dated as of June 1, 2006, between Tekoil Rig Development Corporation and Donna Parsons (filed as Exhibit 99.6.11 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006)*
10.12	-	Stock Grant and Repurchase Agreement dated as of June 1, 2006, between the Company and Donna Parsons (filed as Exhibit 99.6.12 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006)*
10.13	-	Form of Tender dated August 14, 2006, and Indenture dated August 31, 2006, for the purchase of Newfoundland facility (filed as Exhibit 99.6.13 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006)*
10.14	-	Mortgage dated September 12, 2006, between the Company and CIBC Mortgage Inc. (filed as Exhibit 99.6.14 to the Company's Form 10-SB/A (Amendment No. 2) filed with the SEC on November 13, 2006)*
10.15	-	Settlement Agreement and Mutual Release dated December 6, 2006, between the Company and Gerald M. Dunne (filed as Exhibit 10.15 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006)*
10.16	-	Stock Issuance Agreement dated May 1, 2006, between the Company and Don Parsons (filed as Exhibit 10.16 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006)*
10.17	-	Form of Securities Purchase Agreement for the purchase of the Company’s Series A Convertible Preferred Stock (filed as Exhibit 10.17 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006)*
10.18	-	Purchase and Sale Agreement dated November 13, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.18 to the Company's Form 8-K dated December 11, 2006, and filed with the SEC on December 14, 2006)*
10.19	-	Form of Subscription Agreement (with Put Option) dated November 20, 2006, between the Company and the subscribers thereto (filed as Exhibit 10.19 to the Company's Form 8-K dated December 11, 2006, and filed with the SEC on December 14, 2006)*
10.20	-	First Amendment to Purchase and Sale Agreement executed on December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.20 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007)*
10.21	-	Subscription Agreement dated December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.21 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007)*
10.22	-	Registration Rights Agreement dated December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC, Rich Holdings, LLC, and John W. Barton (filed as Exhibit 10.22 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007)*
10.23	-	Farmout Agreement executed on January 3, 2007, and dated as of December 19, 2006, between the Company and Ptarmigan Resources Limited (filed as Exhibit 10.23 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007)*

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10.24	-	Second Amendment to Purchase and Sale Agreement dated effective February 8, 2007, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.24 to the Company's Form 8-K dated February 8, 2007, and filed with the SEC on February 15, 2007)*
10.25	-	Third Amendment to Purchase and Sale Agreement dated effective March 1, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.1 to the Company's Form 8-K dated March 22, 2007, and filed with the SEC on March 26, 2007)*
10.26	-	Fourth Amendment to Purchase and Sale Agreement dated effective March 22, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.2 to the Company's Form 8-K dated March 22, 2007, and filed with the SEC on March 26, 2007)*
10.27	-	Fifth Amendment to Purchase and Sale Agreement dated effective April 12, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.27 to the Company's Form 8-K dated April 12, 2007, and filed with the SEC on April 18, 2007)*
10.28	-	Sixth Amendment to Purchase and Sale Agreement executed on April 30, 2007, and dated effective April 24, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.28 to the Company's Form 8-K dated April 30, 2007, and filed with the SEC on May 3, 2007)*

11.1	-	Statement regarding the computation of earnings per share is omitted because such computation can be clearly determined from the material contained in this Report on Form 10-KSB.
31.1	-	Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) (filed herewith)
31.2	-	Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) (filed herewith)
32.1	-	Certifications of Chief Executive Officer pursuant to Section 1350 (furnished herewith)
32.2	-	Certifications of Chief Executive Officer pursuant to Section 1350 (furnished herewith)

*Incorporated herein by reference. SEC File No. 0-52100

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