Tekoil & Gas SB2/A Registration of securities for small business issuer (amended)

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 2007

REGISTRATION NO. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1

FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

TEKOIL & GAS CORPORATION

(Name of small business issuer in its charter)

Delaware		1311		34-2035350
(State or jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

25050 I-45 North

Suite 525

The Woodlands, TX 77380

(281) 364-6950

(Address and telephone number of principal executive offices)

Mark S. Western

President and Chief Executive Officer

25050 I-45 North

Suite 525

The Woodlands, TX 77380

(281) 364-6950

(Name, address and telephone number of agent for service)

Copies to:

Kenneth C. Wright, Esq.

Baker & Hostetler LLP

Suntrust Center

Suite 2300

200 South Orange Avenue

Orlando, FL 32801-3432

(407) 841-0168

APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: From time to time after the effective date of this Registration Statement.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. þ

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ¨

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered		Amount to be registered			Proposed maximum offering price per unit			Proposed maximum aggregate offering price			Amount of registration fee
Common Stock, $0.000001 par value			43,345,375		$	(1	)	$	62,056,408(1	)	$	1,905.12(2	)

(1)

Estimated in accordance with Rule 457(c) solely for the purpose of determining the registration fee, which has been calculated based on the last sale price on April 18, 2007 of $1.39 per unit with respect to original 41,360,390 shares included in this registration statement and May 25, 2007 of $2.30 per unit for the balance in connection with this amendment.

(2)	The registrant has already paid an aggregate of $1,764.97 in connection with the filing of Form SB-2 with the Commission on April 19, 2007 (Commission File No. 333-142224).

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, June __, 2007

PROSPECTUS

TEKOIL & GAS CORPORATION

43,345,375 Shares of Common Stock

This prospectus relates to an aggregate of up to 43,345,375 shares of our common stock which may be sold from time to time by the selling stockholders identified in this prospectus. We will not receive any proceeds from the sale of the shares of our common stock pursuant to this prospectus. We will bear the costs relating to the registration of the shares of our common stock, which we estimate to be approximately $108,905.12.

Our common stock is traded in the over-the-counter market and quoted on the Pink Sheets under the symbol “TKGN.” The closing sales price for our common stock on May 25, 2007 was $2.30 per share, as reported on the Pink Sheets. You are urged to obtain current market quotations of our common stock before purchasing any of the shares being offered for sale pursuant to this prospectus.

The selling stockholders may sell the shares of our common stock through ordinary brokerage transactions or through any other means described in this prospectus under “PLAN OF DISTRIBUTION.” The price at which the selling stockholders may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions.

Investing in the shares being offered pursuant to this prospectus involves a high degree of risk. You should carefully read and consider the information set forth in the section of this prospectus titled “Risk Factors,” beginning on page 4, when determining whether to purchase any of these shares.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with the offer contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by us. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in our affairs since the date hereof. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where such offers and sales are permitted. The information contained in, and incorporated by reference into, this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies.

The date of this Prospectus is June __, 2007.

TABLE OF CONTENTS

PROSPECTUS SUMMARY			2
RISK FACTORS			4
FORWARD-LOOKING STATEMENTS			10
USE OF PROCEEDS			11
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS			12
DESCRIPTION OF BUSINESS			12
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION			21
DESCRIPTION OF PROPERTY			25
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS			26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			28
EXECUTIVE COMPENSATION			30
LEGAL PROCEEDINGS			32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			32
SELLING STOCKHOLDERS			33
PLAN OF DISTRIBUTION			38
DESCRIPTION OF SECURITIES			38
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			39
LEGAL MATTERS			39
EXPERTS			39
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES			39
WHERE YOU CAN FIND MORE INFORMATION			40
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			41

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus . This summary may not contain all of the information that may be important to you in considering an investment in our common stock. You should carefully read the entire prospectus, including the documents that are incorporated by reference into this prospectus, before making an investment decision. Unless the context requires otherwise, references in this prospectus to “Tekoil,” the “company,” “we,” “us,” and “our” refer to Tekoil & Gas Corporation.

THE COMPANY

Tekoil & Gas Corporation was incorporated in Delaware on January 2, 2002, under the name “Trailridge Holdings, Inc.” On April 6, 2004, the Company changed its name to “Glow Bench Systems International, Inc.” and on December 14, 2004, it changed its name to “Pexcon, Inc.” The Company is an exploration stage oil and gas enterprise focused on the acquisition, stimulation, rehabilitation and asset improvement of small to medium sized manageable oil and gas fields throughout North America.

Business Strategy

Our overall goal is to maximize our value through profitable growth by acquiring oil and gas reserves and production, with a firm philosophy of utilizing the latest, state of the art oil and gas technology in our drilling operations. Our current and ongoing strategy is to (a) acquire producing oil and gas properties with significant upside potential at favorable prices, (b) focus on exploration and development activities to maximize production and ultimate reserve recovery on existing properties, (c) explore undeveloped properties, (d) maintain a low cost structure, and (e) maintain financial flexibility.

Masters Acquisition

As of May 11, 2007, a subsidiary owned by the Company and Goldman, Sachs & Co. closed the Masters Acquisition and related loan described in “Business—Recent Developments” hereof in Galveston Bay, Texas, including 34 producing oil and gas wells, 24,261 gross acres as well as related transportation and processing infrastructure. The acquisition was accomplished through an acquisition subsidiary owned 75% by the Company and 25% by Goldman, Sachs & Co., which also arranged the $30 million in funded mortgage debt secured by the properties.

Western Newfoundland Prospect Development

After assembling the technical team in August 2005 and confirming the significant hydrocarbon potential that exists in the area of the Port au Port Peninsula of Western Newfoundland, we set certain objectives for the November 2005 to December 2006 time period. To date, we have achieved the following objectives:

The exploration and development plan is complete.

We have developed a significant network of contacts in Newfoundland and have established a Newfoundland subsidiary and an office in St. John’s, Newfoundland.

We have met with relevant government agencies, such as the Department of Natural Resources, the Canada-Newfoundland and Labrador Offshore Petroleum Board, the Department of Environment and Conservation, Environment Canada, the Department of Fisheries and Oceans, as well as the Fish, Food and Allied Workers Union.

We have made significant progress towards obtaining environmental approvals for an exploration license to conduct the 3D seismic survey over the onshore prospects.

Onshore Rig Construction

High market demand has made it very difficult to contract drill rigs from oil producing centers to undertake drilling in frontier areas. To ensure access to a drilling rig for our Newfoundland exploration activities, we have investigated purchasing one or more older, unused units, and refurbishing them to present-day standards. Refurbishment involves complete rebuilding/replacement of the mechanical, electrical and instrumentation systems.

According to our consultant, given current market conditions and the expectation that high market demand will continue, the resale value of a refurbished unit one year from now would likely be in the range of $18 million to $25 million. That would provide an $8 million to $15 million margin. Because of this significant margin, we could have an opportunity to generate profits from ongoing rig refurbishments, through development of an extended work experience program with a Newfoundland technical college.

The cost and difficulty of procuring a rig is a common problem for all oil companies operating in Atlantic Canada. With a rig in the area, we could contract to drill on non-competitive lands at a cost effective rate, relative to drilling contractors located in Western Canada, the US or international locations.

An existing port with direct access to/from the college fabrication facilities enables freighter transport of rigs. Ready transportation access to/from Newfoundland to oil producing regions around the globe could, in combination with the aforementioned labor cost advantages, enable development of an ongoing commercial operation that supports government development initiatives for the region.

We are currently pursuing the rig refurbishing business opportunity on several levels as follows:

Scouting for suitable rigs and rig components to ship to Newfoundland.

Negotiation with interested oil companies for the pre-purchase of the initial batch of rigs.

Establishment of a wholly-owned subsidiary in Newfoundland, to handle the refurbishment business.

Securing key personnel under long-term contracts.

A site tour to inventory the college facilities and identify any additional equipment that will need to be purchased.

Ongoing negotiations with the technical college to better define the training program and the business relationship with the college.

Employees

As of May 25, 2007, we had six employees, of which five were full time employees.

THE OFFERING

The Company is authorized to issue up to 200,000,000 shares of common stock, par value $0.000001 per share. As of May 25, 2007, 36,894,175 shares of common stock were outstanding. Our common stock is traded in the over-the-counter market and quoted on the Pink Sheets under the symbol “TKGN.” The closing sales price for our common stock on May 25, 2007 was $2.30 per share, as reported on the Pink Sheets.

Investing in shares of our common stock involves a great deal of risk. Therefore, you should carefully consider the information set forth in this prospectus and, in particular, the specific information set forth in the “Risk Factors” section beginning on page 4 of this prospectus before deciding whether or not to invest in shares of our common stock.

RISK FACTORS

An investment in our Common Stock involves a high degree of risk. You should carefully consider the following risk factors and other information contained in or incorporated by reference into this prospectus and any accompanying prospectus supplement before deciding to purchase any shares of our Common Stock.

Tekoil's independent accountants have expressed substantial doubts about Tekoil's ability to continue as a going concern.

The report of Tekoil's independent accountants contains an explanatory paragraph expressing substantial doubts about Tekoil's ability to continue as a going concern due to the fact that Tekoil has incurred losses since inception. There can be no assurance that Tekoil will ever achieve significant revenues or profitable operations.

Tekoil is a development stage company and has no operating history on which to base an evaluation of its current business and future prospects.

Tekoil is a development stage company. As a result, it has no operating history upon which to base an evaluation of its current business and future prospects. We have not generated substantial revenues. Moreover, we do not currently have any contracts in place that will provide any significant revenue. Because of our lack of an operating history, management has limited insight into trends that may emerge and could materially adversely affect our business. Prospective investors should consider the risks and difficulties our Company may encounter, especially given our lack of operating history. These risks include our ability to:

successfully execute our business strategy;

generate revenues;

compete favorably in a highly competitive market;

access sufficient capital to support growth; and

recruit and retain qualified employees.

We have a history of operating losses and an accumulated deficit and we expect to continue to incur losses for the foreseeable future.

Since inception through March 31, 2007, we have incurred cumulative losses of approximately $6,058,000 and have never generated enough funds through our operations to support our business. We expect to continue to incur substantial operating losses at least through April 30, 2007. Our losses to date have resulted principally from legal and accounting fees in connection with securities filings, engineering and consulting expenses related to the 3D seismic survey in western Newfoundland and salaries and related travel expenses.

We are currently unprofitable and may never become profitable. Since inception, we have funded our business activities primarily from private placements of equity and debt securities and short term loans from Mark S. Western, our President and Chief Executive Officer. As a result of our substantial expenditures and absence of revenues, we have incurred substantial net losses. There can be no assurance that Tekoil will ever achieve profitable operations.

The conversion of shares of our Series A Convertible Preferred Stock may adversely affect the market price of the Company’s Common Stock.

As of May 25, 2007, the Company had outstanding 1,962,000 shares of Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible at the option of the holder, or automatically upon the occurrence of certain material corporate events, into three shares of Common Stock. The conversion of the Series A Convertible Preferred Stock and the sale in the public market of the shares of Common Stock received upon such conversion will be dilutive to existing stockholders and could adversely affect the market price of the Company’s Common Stock. The Board of Directors intends to effect the automatic conversion of all outstanding shares of Series A Convertible Preferred Stock.

Our shareholders may suffer significant dilution as a result of contemplated capital raising activities and the failure to raise substantial additional capital to fund operations could force the Company to delay, reduce or eliminate its products and services.

In order to implement our business plan, we will require at least $60 million in additional capital financing and we will not be able to continue our operations without fresh injection of capital within the next nine months. There can be no assurance that the Company will be able to raise additional capital on terms acceptable to it or at all. Failure to obtain necessary financing could delay or force the Company to scale back or discontinue its products and services, which could have a material negative impact on its results of operations. To the extent Tekoil is able to raise additional funds by issuing equity securities, such issuance will be dilutive to existing stockholders and could adversely affect the market price of our Common Stock.

Exploration of oil and gas is highly speculative and involves a great deal of risk.

Companies engaged in oil and gas exploration are often required to perform expensive geological and/or seismic surveys with respect to their properties. Even if the results of such surveys are favorable, only subsequent drilling at substantial cost can determine whether the commercial development of properties is feasible. Oil and gas drilling is frequently marked by unprofitable efforts, not only from unproductive prospects, but also from productive prospects that do not produce sufficient amounts to return a profit on the investment. There can be no assurance that Tekoil will be able to discover, develop or produce sufficient reserves to recover the expenses incurred in connection with the exploration of its properties and achieve profitability.

We will have to expend significant amounts in connection with our evaluation of potential oil reserves and there can be no assurance that these efforts will result the identification of viable resources.

We expect 3D seismic surveys to cost approximately $20.5 million in Newfoundland and approximately $1.5 million for the evaluation of Galveston Bay reserves. We have expended $1.2 million in risk capital for the evaluation of these areas, including the costs for the studies for the projected costs of 3D seismic work and environmental impact studies. However, there can be no assurance that these surveys will successfully identify viable oil reserves or whether these reserves, if identified, can be successfully developed by the Company.

We do not currently own the leases to the Newfoundland properties in which we have an interest in exploring.

Canadian Imperial Venture Corp. was issued a lease for the area in which we are interested, and that lease was due to expire on August 13, 2006. A lease 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. 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. However, we do not know whether or not Canadian Imperial will be able to continue to meet government requirements for its lease extension, so there is a substantial risk that we may not receive approval for application for an exploration license. It is possible that Canadian Imperial will meet all government requirements for continued extension of the lease, preventing us from having access to this specific area. In addition, even if Canadian Imperial’s lease were terminated, there is no guarantee that, if we receive approval of our exploration license for the 3D seismic survey, we will automatically be approved as the new holder/owner of the lease. Failure to obtain the licenses and/or leasehold interests discussed above could have a negative impact on our operations.

Our oil and gas activities are subject to various risks which are beyond our control.

Our operations are subject to many risks and hazards incident to exploring and drilling for, producing, transporting, marketing and selling oil and gas. Although we may take precautionary measures, many of these risks and hazards are beyond our control and unavoidable under the circumstances. Many of these risks or hazards could materially and adversely affect our revenues and expenses, the ability of certain of our wells to produce oil and gas in commercial quantities, the rate of production and the economics of the development of, and our investment in the prospects in which we have or will acquire an interest. Any of these risks and hazards could materially and adversely affect our financial condition, results of operations and cash flows. Such risks and hazards include:

human error, accidents, labor force and other factors beyond our control that may cause personal injuries or death to persons and destruction or damage to equipment and facilities;

blowouts, fires, hurricanes, pollution and equipment failures that may result in damage to or destruction of wells, producing formations, production facilities and equipment;

unavailability of materials and equipment;

engineering and construction delays;

unanticipated transportation costs and delays;

unfavorable weather conditions;

hazards resulting from unusual or unexpected geological or environmental conditions;

environmental regulations and requirements;

accidental leakage of toxic or hazardous materials, such as petroleum liquids or drilling fluids, into the environment;

changes in laws and regulations, including laws and regulations applicable to oil and gas activities or markets for the oil and gas produced;

fluctuations in supply and demand for oil and gas causing variations of the prices we receive for our oil and gas production; and

the internal and political decisions of OPEC and oil and natural gas producing nations and their impact upon oil and gas prices.

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

The Properties recently acquired in the Masters Acquisition, described in “Business—Recent Developments” are located in offshore waters, where operating conditions and maintenance activities are difficult and expensive and the regulatory environment is intense.

The covenants and warranties in the financing transaction pursuant to which such Properties were pledged are complex and extensive. Failure by us or the Acquisition Subsidiary to satisfy any such obligation could jeopardize title to the Properties and related cash flows and result in a demand on the Company of its guarantee of the same.

Our industry is cyclical and, from time to time, there is a shortage of drilling rigs, equipment, supplies or qualified personnel. During these periods, the costs and delivery times of rigs, equipment and supplies are substantially greater. In addition, the demand for, and wage rates of, qualified drilling rig crews rise as the number of active rigs in service increases. As a result of increasing levels of exploration and production in response to strong prices of oil and natural gas, the demand for oilfield services has risen, and the costs of these services are increasing, while the quality of these services may suffer.

We could be adversely affected by fluctuations in oil and gas prices.

Even if our drilling activities achieve commercial quantities of economically attractive reserves and production revenue, our revenue, profitability and future growth will depend substantially on prevailing oil and gas prices. Prices of oil, natural gas and natural gas liquids are subject to wide fluctuations in response to relatively minor changes in circumstances, and there can be no assurance that future prolonged decreases in such prices will not occur. There is no guarantee that price levels, which have recently decreased, will continue to be sustained, and there could be a further sharp drop in market prices from factors such as increased supply, reduced demand, new alternative energy sources, major new exploration successes, political instability, armed conflict or terrorist attacks, whether or not in oil and gas producing regions, labor unrest in oil and gas producing regions, weather conditions and world economic conditions. Any significant decline in oil and gas prices would have a material adverse effect on our liquidity, operations, financial condition and ability to raise additional necessary capital. Lower oil and gas prices may also reduce the amount of oil and gas, if any, that can be produced economically from the Company’s properties.

We could be adversely affected by increased costs of service providers that we utilize.

In accordance with customary industry practice, we rely on independent third-party service providers to provide most of the services necessary to drill new wells, including drilling rigs and related equipment and services, horizontal drilling equipment and services, trucking services, tubulars, fracing and completion services and production equipment. The industry has experienced significant price increases for these services during the last year, and this trend is expected to continue into the future. These cost increases could, in the future, significantly increase our development costs and decrease the return possible from drilling and development activities, and possibly render the development of certain proved undeveloped reserves uneconomical.

We have no experience in the rig building/refurbishment business and are relying on the expertise of third parties.

Since the Company has no experience in the rig building/refurbishment business, we are forced to rely on the expertise of third parties. There can be no guarantee that these third parties will continue to advise the Company with respect to this business and the failure to maintain these relationships could materially impair the Company’s ability to run, maintain and expand this line of business.

We could have difficulty locating candidate rigs for the rig building/refurbishment business or market conditions could change thus rendering our business model unprofitable.

While we have located some candidate rigs and we believe that such rigs will be available for our rig building/refurbishment business, there can be no assurance that we will be able to obtain used rigs on acceptable terms. In addition, market conditions could change, preventing us from acquiring suitable old, inactive rigs, or cheaper alternatives to refurbished rigs could become available thus rendering our product unattractive to potential consumers. The inability to build/refurbish rigs in a cost-effective manner could have a material adverse effect on our operations and a negative impact on the price of our stock.

We anticipate that we will utilize horizontal drilling techniques, which could result in greater mechanical risks and impair our ability to maximize production.

Horizontal drilling will allow us to drill with an onshore rig into offshore bottom-hole locations much less expensively. The rig we plan to use is an onshore 2,000 horsepower triple, which has the ability to drill to a total depth of 20,000 feet with two miles of deviation. Horizontal drilling will also allow us to maximize production efficiency with less wells being drilled. Horizontal drilling activities involve a greater risk of mechanical problems than conventional vertical drilling methods and there can be no assurance that we will achieve expected results from the use of horizontal drilling, or that we will not experience more mechanical problems and other difficulties than we otherwise might experience. If we encounter mechanical risks as a result of our horizontal drilling strategy, this may impair our ability maximize production and could adversely affect our results of operations.

Our insurance policies may not adequately protect us against certain unforeseen risks.

There are currently many known hazards associated with the exploration, discovery and delivery of gas and oil. To protect against possible liability, Tekoil maintains liability insurance with coverage that it believes is consistent with industry practice and appropriate in light of the risks attendant to its business. However, if Tekoil is unable to maintain insurance in the future at acceptable cost or at all, or if its insurance does not fully cover it and a successful claim is made against Tekoil, Tekoil could be exposed to significant liability. Any claim made against Tekoil that is not fully covered by insurance could be costly to defend, result in substantial damage award against Tekoil and divert the attention of management from Tekoil’s operations, all of which could have a material adverse effect on the Company’s financial performance.

Our activities are subject to extensive governmental regulation.

The oil and gas industry is subject to extensive federal, state, provincial and local laws and regulations governing the production, transportation and sale of hydrocarbons as well as the taxation of income resulting there from. Such regulations may be changed from time to time in response to economic or political conditions. From time to time, regulatory agencies have imposed price controls and limitations on production in order to conserve supplies of oil and gas. Numerous federal, state and provincial departments and agencies have their own rules and regulations applicable to the oil and gas industry. In general, these rules and regulations regulate, among other things, the extent to which acreage may be acquired or relinquished, spacing of wells, measures required for preventing waste of oil and gas resources and, in some cases, rates of production. The heavy and increasing regulatory burdens on the oil and gas industry increase the costs of doing business and, consequently, affect profitability.

In addition, the production, handling, storage, transportation and disposal of oil and gas, by-products thereof and other substances and materials produced or used in connection with oil and gas operations are subject to regulation under federal, state, provincial and local laws and regulations primarily relating to protection of human health and the environment. To date, expenditures related to complying with these laws and for remediation of existing environmental contamination have not been significant in relation to the results of our operations. There can be no assurance that the trend of more expansive and stricter environmental legislation and regulations will not continue and that any such expansion will not materially increase our cost of doing business.

We are subject to various environmental risks, and governmental regulation relating to environmental matters.

We are subject to a variety of federal, state, provincial and local governmental laws and regulations related environmental protection, particularly the storage, use, discharge and disposal of toxic, volatile or otherwise hazardous materials. These laws and regulations govern, among other things, the amounts and types of substances and materials that may be released into the environment, the issuance of permits in connection with exploration, drilling and production activities, the release of emissions into the atmosphere, the discharge and disposition of generated waste materials, the reclamation and abandonment of wells and facility sites and the remediation of contaminated sites. These laws and regulations subject us to increased operating costs, and they may impose substantial liability in the event that we fail to comply with them or for any contamination resulting from operations. Although these laws and regulations have not had a material adverse effect on our business, there can be no assurance that we will not be required to make material expenditures in the future that will adversely affect our financial condition or results of operations. Moreover, we anticipate that such laws and regulations will become increasingly stringent in the future, which could lead to material costs for environmental compliance and remediation by the Company. Any failure by us to obtain required permits for, control the use of, or adequately restrict the discharge of hazardous substances under present or future regulations could subject us to substantial liability or could cause our operations to be suspended. Such liability or suspension of operations could have a material adverse effect on our business, financial condition and results of operations.

We are subject to intense competition.

We operate in a highly competitive market and compete with major and independent oil and gas companies for the acquisition of desirable oil and gas properties, as well as for the equipment and labor required to develop and operate such properties. Many of these competitors have longer operating histories, greater name recognition, substantial track records and financial, technological and technical resources substantially greater than ours. This may allow these competitors to devote greater resources to the development and promotion of their oil and gas exploration and production projects. Many of these competitors offer a wider range of oil and gas opportunities not available to Tekoil and may attract business partners consequently resulting in a decrease of Tekoil’s business opportunities. These competitors may also engage in more extensive research and development, adopt more aggressive strategies and make more attractive offers to existing and potential purchasers, and partners. Furthermore, competitors may develop technology and oil and gas exploration strategies that are equal or superior to Tekoil’s and achieve greater market recognition. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to better address the needs of our target market. As a result, it is possible that new competitors may emerge and rapidly acquire significant market share. There can be no assurance that Tekoil will be able to compete successfully against its current or future competitors or that competition will not have a material adverse effect on Tekoil’s business, results of operations and financial condition.

We currently depend on our Chief Executive Officer and may have difficulty attracting qualified personnel as our business grows.

We are dependent on the experience, abilities and continued services of our current Chief Executive Officer and President, Mark S. Western. Mr. Western has played a significant role in our development and management. The loss or reduction of services of Mr. Western could have a material adverse effect on the Company.

Our future success will also depend in large part upon the continued services and performance of other key personnel. If we lose the services of any member of our senior management team, our overall operations could be materially and adversely affected. In addition, our future success will depend on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, marketing, purchasing and customer service personnel when they are needed. Competition for these individuals is intense. We cannot ensure that we will be able to successfully attract, integrate or retain sufficiently qualified personnel when the need arises. Any failure to attract and retain the necessary technical, managerial, marketing, purchasing and customer service personnel could have a negative effect on our financial condition and results of operations.

Our stock trades in a limited public market and is subject to price volatility.

Our Common Stock is traded on the “Pink Sheets.” Stocks that trade on Pink Sheets tend to be less liquid and trade with larger spreads between the bid and ask price than stocks on larger exchanges or automated quotation systems. Information with respect to Pink Sheets quotations reflects inter-dealer prices without retail markup, markdown or commission and may not represent actual transactions, and quotations on the Pink Sheets are sporadic. This means that shares of our Common Stock are less liquid than shares of companies traded on larger exchanges or automated quotation systems and, as a result, holders of our Common Stock may have some difficulty selling their shares in the open market. The trading price of the Common Stock is volatile and could be subject to significant fluctuations in response to variations in quarterly operating results or even mild expressions of interest on a given day.

Certain restricted shares of the Company will be eligible for sale in the future which could affect the prevailing market price of our Common Stock.

Certain of the outstanding shares of our Common Stock are “restricted securities” under Rule 144 of the Securities Act, and (except for shares purchased by “affiliates” of the Company’s as such term is defined in Rule 144) are eligible for sale as the applicable holding periods expire. Currently, these shares may be sold only pursuant to a registration statement under the Securities Act or an applicable exemption, including pursuant to Rule 144. Under Rule 144, a person who has owned Common Stock for at least one year may, under certain circumstances, sell within any three-month period a number of shares of Common Stock that does not exceed the greater of 1% of the then outstanding shares of Common Stock or the average weekly trading volume during the four calendar weeks prior to such sale. A person who is not deemed to have been an affiliate of the Company at any time during the three months preceding a sale, and who has beneficially owned the restricted securities for the last two years is entitled to sell all such shares without regard to the volume limitations, current public information requirements, manner of sale provisions and notice requirements. Moreover, all outstanding shares of our Common Stock, as well as shares of Common Stock into which outstanding shares of our Series A Convertible Preferred Stock are convertible, are being registered for resale pursuant to this registration statement. Sale or the expectation of sales of a substantial number of shares of Common Stock in the public market by selling shareholders could adversely affect the prevailing market price of the Common Stock, possibly having a depressive effect on any trading market for the Common Stock, and may impair our ability to raise capital at that time through additional sale of our equity securities.

We do not expect to declare or pay any dividends in the foreseeable future.

We have not declared or paid any dividends on our Common Stock. We currently intend to retain future earnings to fund the development and growth of our businesses, to repay indebtedness and for general corporate purposes and, therefore, we do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. If the Company does not pay dividends, its stock may be less valuable because a return on your investment will only occur if the stock price appreciates.

Our Common Stock may be subject to secondary trading restrictions related to penny stocks.

Our stock is subject to what are known as the "penny stock" rules. The "penny stock" rules place additional requirements on broker-dealers who sell or make a market in such securities. Consequently, the ability or willingness of broker-dealers to sell or make a market in our Common Stock could be impacted and your ability to resell your shares, and the price at which you could sell your shares, could be adversely affected.

Our directors and executive officers own a substantial amount of Common Stock, which permits them to exercise significant control over material corporate decisions.

Mark S. Western beneficially owns approximately 24.06% of the combined voting securities of the Company. Together with Mr. Western, the executive officers and directors of the Company control approximately 39.51% of the combined voting securities of the Company. As a result, Mr. Western and the other directors and executive officers are able to control the outcome of shareholder votes, including votes concerning the election of directors, the adoption or amendment of provisions in our certificate of incorporation and bylaws and the approval of mergers and other significant corporate transactions. This concentrated ownership makes it unlikely that any other holder or group of holders of the Company’s voting securities will be able to affect the way the Company is managed or the direction of our business. These factors may also precipitate, delay or prevent a change in management.

We cannot be certain that previous equity offerings by the Company were in compliance with securities laws and regulations.

Prior to execution of the Acquisition Agreement pursuant to which our current controlling shareholders took control of the Company, the Company engaged in capital raising efforts through the issuance of common stock. Such restricted securities were purportedly issued pursuant to valid exemptions from U.S. and state securities laws, and the previous controlling shareholder of the Company made representations in the Acquisition Agreement that all shares of common stock theretofore issued by the Company were issued in compliance with all federal and state securities laws and all other applicable laws. In the event that such representations were incorrect, and the Company issued securities in violation of federal or sate securities laws, then the Company could be subject to criminal and civil penalties, which could materially adversely affect its operations, its ability to raise additional capital and its stock price.

FORWARD-LOOKING STATEMENTS

This registration statement and the documents we incorporate by reference include “forward-looking statements.” All statements, other than statements of historical fact, included or incorporated by reference in this registration statement 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, things such 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 or reworked;

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;

production of oil and gas reserves;

planned asset sales or dispositions; and

expansion and growth of our business and operations.

These statements 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:

risk factors discussed in this prospectus;

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 of the forward-looking statements made in this registration statement 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 operations. 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. Unless required by applicable law, we assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

USE OF PROCEEDS

All proceeds from the sale of our common stock will go to the selling stockholders selling common stock under this prospectus. We will not receive any proceeds from the sale of the common stock sold by the selling stockholders.

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The Company’s common stock has been quoted on the Pink Sheets since May 7, 2004, initially under the symbol, PXCN. The Company’s trading symbol was changed to TKGC on July 29, 2005 and to TKGN on October 14, 2005.

The following sets forth the range of the closing bid prices for the Company's common stock for the period starting May 7, 2004 through April 6, 2007. The quotations below, provided by Pink Sheets, LLC, reflect inter-dealer prices without retail markup, mark down or commission, and may not represent actual transactions. The quotations prior to October 14, 2005, have not been adjusted for the 100-to-1 reverse stock split that occurred on that date.

	2004
	High		Low
4 ^th Quarter	$	0.035	$	0.001

	2005
	High		Low
1 ^st Quarter		0.064		0.018
2 ^nd Quarter		0.05		0.001
3 ^rd Quarter		0.0095		0.003
October 3 through
October 13		0.008		0.005
DATE OF 100-to-1 REVERSE SPLIT - OCTOBER 14, 2005
October 14 through December 30		0.64		0.01

	2006
	High		Low
1 ^st Quarter		0.45		0.25
2 ^nd Quarter		0.75		0.20
3 ^rd Quarter		0.50		0.25
4 ^th Quarter		1.25		0.40

	2007
	High		Low
1 ^st Quarter		1.10		0.55
April 1 - May 25, 2007		2.60		1.15

As of May 25, 2007, the Company had approximately 137 shareholders of record of its common stock.

The Company has not previously paid cash dividends on its common stock. The payment of cash dividends from current earnings is not prohibited by any agreements to which the Company is a party, but is subject to the discretion of the Board of Directors and will be dependent upon many factors, including the Company’s earnings, its capital needs and its general financial condition. The Company currently does not intend to pursue a policy of payment of dividends, but rather to utilize any excess proceeds to finance the development and expansion of its business.

DESCRIPTION OF BUSINESS

On May 25, 2005, Pexcon, Inc., entered into an Acquisition Agreement with Tekoil & Gas Corporation, a Florida corporation, the shareholders of Tekoil-FL and Gerald M. Dunne, in which the shareholders of Tekoil-FL received 694,980,000 shares of the common stock, $0.00000001 par value, of Pexcon, Inc., in exchange for the outstanding shares of common stock of Tekoil-FL held by them. Immediately following the closing of the Acquisition Agreement on June 27, 2005, Pexcon, Inc., had a total of 772,200,000 shares of common stock outstanding. In connection with the Acquisition Agreement, Pexcon, Inc., acquired the assets and assumed the liabilities of Tekoil-FL, which became a wholly-owned subsidiary of Pexcon, Inc. For accounting purposes only, the share exchange transaction was treated as a recapitalization of Tekoil-FL as the acquiror. In connection with the transaction, the Board of Directors of Pexcon, Inc. resigned, the Board of Directors of Tekoil-FL became the Board of Directors of the Company, and the Company’s name was formally changed from Pexcon, Inc., to Tekoil & Gas Corporation.

On October 14, 2005, the Company effected a 1 for 100 reverse split of its common stock. As of that date and as a result of the reverse stock split, 7,722,000 shares of common stock were outstanding. In connection with the reverse stock split, the Company changed the par value of the common stock from $0.00000001 per share to $0.000001 per share, and it reduced the number of authorized shares of common stock from 800,000,000 shares to 200,000,000 shares.

The Company currently operates its business directly, and not through its Tekoil-FL subsidiary, which continues to exist but has no assets or operations. For the purpose of pursuing its business strategy in the Province of Newfoundland, Canada, as described in greater detail below, on March 29, 2006 the Company formed a wholly-owned subsidiary, Tekoil Rig and Development Corporation, a Newfoundland corporation, and on April 19, 2006, the Company qualified to do business in Newfoundland. For the purpose of pursuing its business strategy in Galveston Bay, Texas, on January 17, 2007 the Company formed a wholly-owned subsidiary, Tekoil and Gas Gulf Coast, LLC, a Delaware limited liability company qualified to do business in Texas.

The Company is authorized to issue up to 20,000,000 shares of preferred stock, par value $0.00000001 per share. The Company has designated 3,000,000 of those authorized shares of preferred stock as Series A Convertible Preferred Stock, the terms of which are set forth in the 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 on February 22, 2006 and June 12, 2006.

As of May 25, 2007, the Company had outstanding 36,894,175 shares of common stock, par value $0.000001 per share, and 1,962,000 shares of Series A Convertible Preferred Stock, par value $0.00000001 per share.

Business

The Company is an exploration stage oil and gas enterprise focused on the acquisition, stimulation, rehabilitation and asset improvement of small to medium sized manageable oil and gas fields throughout North America.

Business Strategy

Acquisitions of Producing Properties. We have an experienced management and technical team, some of whom are consultants, which makes us more financially flexible. We focus on the acquisition of owner-operated producing properties that meet our selection criteria, which include (a) significant potential for increasing reserves and production through development and further exploration, (b) favorable purchase price, and (c) opportunities for improved operating efficiency. We are continually identifying and evaluating acquisition opportunities. Other than the Masters Acquisition described herein, to date, we have not been successful in this regard and there can be no assurance that any such acquisitions will be successfully consummated in the future.

Development. We have researched several projects that did not meet our criteria and/or did not pass our due diligence process. We continue to use our network of contacts in the industry to explore such opportunities, and with the use of the internet we conduct much of our due diligence before doing in situ evaluations.

Exploration. Our exploration activities for 2005, 2006 and the first quarter of 2007 have been restricted geographically to North America and Canada. Until recently, the main thrust of this initiative, however, was predominantly in Eastern Canada. We have identified a potentially exciting opportunity in an area where exploration and risk capital of in excess of $100 million has been previously expended from the 1990’s to 2005. However, another company holds the lease to this area, so we have no rights to pursue this opportunity unless the current lease is terminated. Our independent consulting engineers, Fekete Associates and Dick Boyce of dB, LLC, have advised us that this area was a failure due to previous operators’ not understanding the complexity of the structures, and the unavailability of modern-day 3D seismic technology. Over the life of the one drilled well in this area, when operating by various operators, the well produced an average of 2,500 barrels of oil per day. We have access to all the previous data and history of these prospects, including mapping information, 2D seismic interpretation, minimal 3D seismic interpretation and extensive drilling information.

We are also 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.

Low Cost Structure. We have only six employees, and we hire subcontractors to provide technical engineering, accounting and legal expertise. We intend to maintain a low cost structure by keeping a small workforce. We have the capabilities of being an efficient operator and can capitalize on our low cost structure in evaluating acquisition opportunities. Our goal is to achieve substantial reductions in labor and other field-level costs from those expended by the previous operators. Our lower cost structure could substantially improve cash flows of targeted companies.

Financial Flexibility. We are committed to maintaining financial flexibility, which we believe is important for the successful execution of our acquisition, exploration and development strategy. Since October of 2005, we have completed private placements of our Common Stock and Series A Preferred Stock, which have provided us with aggregate net proceeds of approximately $4,022,000.

Western Newfoundland Prospect Development

Progress from November 2005 to March 2007. After assembling the technical team in August 2005 and confirming the significant hydrocarbon potential that exists in the area of the Port au Port Peninsula of Western Newfoundland, we had the following objectives for the November 2005 to March 2007 time period:

Prepare a technically sound exploration and development plan.

Lease the mineral rights over the prospective acreage at reasonable terms for the Company.

Establish our presence in Newfoundland by forming a Newfoundland subsidiary, qualifying to do business in Newfoundland and opening an office there; familiarize ourselves with the applicable regulatory regime(s) for oil and gas activity in the province; and establish good working relations with the regulators, government officials and the local communities in which we will be operating.

Obtain the approvals required to conduct an intense 3D seismic survey over the area’s onshore prospects. The necessity of conducting the seismic survey prior to conducting further drilling had been identified early in the technical evaluations.

In establishing these objectives, we recognized that they would not all be completely achieved by March 2007. Nonetheless, we have achieved the following objectives:

The exploration and development plan is complete.

We have developed a significant network of contacts in Newfoundland and have established a Newfoundland subsidiary and an office in St. John’s, Newfoundland, staffed by two employees, one of whom previously worked for the Newfoundland Department of Natural Resources for eight years.

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.

Onshore Rig Construction

Background. High market demand has made it very difficult to contract drill rigs from oil producing centers to undertake drilling in frontier areas. Larger oil companies are executing long-term exclusive-use contracts in established areas, making rigs unavailable on a well-by-well basis. High demand has simultaneously created 12-18 month wait times to purchase a new rig. Rigs in the 600 to 1000 HP and 1500 to 2000 HP range are particularly in short supply. Industry analysts, such as Rigzone.com (August 24, 2006) and WorldOil.com (October 2005), report that high market demand for rigs is expected to continue for the next few years, and other industry publications, such as Drilling Contractor , appear to concur in that expectation. However, there can be no assurance that market demand will continue to be high.

To ensure access to a 2000 HP drilling rig for our Newfoundland exploration activities, we have investigated purchasing one or more, older, unused units, and refurbishing them to present-day standards. The option is technically viable because the structural components of the rig have a service life in the order of 60 years. Refurbishment involves complete rebuilding/replacement of the mechanical, electrical and instrumentation systems.

The economics of purchasing an older unit and then refurbishing it in Newfoundland are attractive. Order of magnitude costs to secure a 2000 HP unit are as follows:

Two-year, long-term contract - $32 million, with an expected mobilization/demobilization charge of $10 million, according to an estimate by Nabors International. Factors affecting the estimate were limited land market in Newfoundland, higher labor costs in Canada, the fact that there is no rig in the area and the necessity of winterization.

Purchase new - $27 million, with 12 to 18 month delivery, according to an estimate from National Oilwell Varco. Prices for new rigs have been steadily increasing in response to demand.

Refurbish older unit - $10 million with 6 months delivery through our own turnkey operation, as outlined below.

According to our consultant, given current market conditions and the expectation that high market demand will continue, the resale value of a refurbished unit one year from now would likely be in the range of $18 million to $25 million. That would provide an $8 million to $15 million margin. Because of this significant margin, we could have an opportunity to generate healthy profits from ongoing rig refurbishments, through development of an extended work experience program with a Newfoundland technical college. A typical capital cost profile for a refurbished 2000+ HP rig is as follows:

ITEM DESCRIPTION	ESTIMATED PURCHASE PRICE		**ESTIMATED COST TO REFURBISH		TRANSPORT. COSTS		TOTAL
	$US		$US		$US		$US
Substructure 25' clear working height
Mast 152' x 1,300,000 lbs capacity
National 1320 UE Drawwork c/w electric brake
National P275 rotary table
Oilwell P500 swivel
Traveling block / hook B660GA500

Items above to be purchased as part of the original four rig package.		1,500,000.00		600,000.00		200,000.00		2,300,000.00

Engines / generators - Caterpillar or Detroit (3)		600,000.00		100,000.00		60,000.00		760,000.00
SCR system and building		650,000.00				30,000.00		680,000.00
* 3 tank mud system 1800 bbls total volume		750,000.00				20,000.00		770,000.00
1600 hp mud pumps (two pumps)		650,000.00		100,000.00		40,000.00		790,000.00
* Water tank and pumping system		150,000.00				7,000.00		157,000.00
* Dog house and windwall on off drillers side		150,000.00				5,000.00		155,000.00
Blow out preventer 13 5/8" x 5000		200,000.00				15,000		215,000.00
6 station closing unit		80,000.00				10,000.00		90,000.00
Choke manifold and poorboy degasser		120,000.00				10,000.00		130,000.00
Hydraulic catwalk		530,000.00				25,000.00		555,000.00
* Pipe tubs( 7units )		150,000.00				5,000.00		155,000.00
Handling tools (tongs, slips, elevators) Pipe spinner to suit tubulars		200,000.00				5,000.00		205,000.00
Tuggers, air winch and wire line unit		60,000.00		10,000.00		5,000.00		75,000.00
Cold start and air compressors		110,000.00		15,000.00		5,000.00		130,000.00
Instrumentation		75,000.00		15,000.00		1,000.00		91,000.00
Wire rope & bridle line		55,000.00				5,000.00		60,000.00
* Suitcases & grasshopper/rig stairs		70,000.00				5,000.00		75,000.00
15,000' of 5" Grade S-135 (19.5 lbs/ft.)		960,000.00				100,000.00		1,060,000.00
Drill collars 30 ea x 6 ½", 6 ea. X 8"; 3 ea. 9 1/2" drill collars		230,000.00				40,000.00		270,000.00
HWDP 5" x 50 joints		235,000.00				30,000.00		265,000.00
* Double walled fuel tank c/w pump		75,000.00				1,000.00		76,000.00
EZ-Torque hydraulic system		30,000.00		2,000.00		1,000.00		33,000.00
Rig hydraulic pump, tank and hook up		85,000.00		20,000.00		2,000.00		107,000.00
* Sandblasting & paint		78,000.00				1,000.00		79,000.00
Kelly hose, shock hoses & fire proof hoses		62,000.00				5,000.00		67,000.00
Miscellaneous equipment		100,000.00				5,000.00		105,000.00
* Complete electrical		225,000.00						225,000.00
Rig and mechanic tools		15,000.00						15,000.00
Rig up costs (cranes, trucks)		150,000.00						150,000.00
* Labor		630,000.00						630,000.00

Total		8,975,000.00		** 862,000.00		638,000.00		10,475,000.00

Optional Equipment								Cost plus 15	%
a 650 Ton Top Drive								Cost plus 15	%
b Rig Matting								Cost plus 15	%
c Convert rig to AC power								Cost plus 15	%
d Purchase 125 hp boiler and winterize rig								Cost plus 15	%

* 35% of total is for materials and 65% is for labor. Materials - $629,300.00; Labor - $1,168,700.00.

** 60% of total is for materials and 40% is for labor. Materials - $517,200.00; Labor - $344,800.00.

Total cost for labor - $2,143,500.00

Contract Drilling. The cost and difficulty of procuring a rig is a common problem for all oil companies operating in Atlantic Canada. With a rig in the area, we could contract to drill on non-competitive lands at a cost effective rate relative to drilling contractors located in Western Canada, the US or international locations. In addition to our own use, we are already aware of at least two potential uses for a rig in Atlantic Canada: (i) drilling stratigraphic test holes for the province of Newfoundland, and (ii) drilling two commercial wells, preferably commencing the summer of 2007, for Petroworth Resources Inc., onshore Prince Edward Island to a depth of approximately 3,500 meters. Elsewhere, demand for rigs of this size is growing, and we have already established a number of leads.

Status of Rig Refurbishing Plans. The initial assessment of a rig purchase encouraged further investigation through February and March, 2006. During this time period, the purchase concept has evolved and expanded to one of purchasing old, inactive rig(s) and refurbishing them in Stephenville, Newfoundland, as a stand-alone business because market demand has taken up all available manufacturing capability and is creating excessive queue times for new rigs. Given current market conditions, our best option to secure a rig for our internal 2008 drilling program is to rebuild one. However, an ongoing rig refurbishing business could generate cash flow in 2007 and could be used to collateralize and finance our current and future exploration efforts. A refurbishing business is technically viable because the service life on structural components is on the order of 60 years.

The capital cost estimate to acquire and refurbish an older rig is approximately $10.5 million. To control material and shipping costs, we have contracted with Jim Howdle of Full Circle International Oilfield Products Inc., who has over 25 years experience in refurbishing rigs. The contractor has confirmed the tight market situation, the suitability of Port Harmon for freighter transport and the capability of the industrial trades in the Stephenville, Newfoundland, area to refurbish rigs. Mr. Howdle has also located inactive drilling rigs for potential purchase, including four rigs offered by Sun Machinery Corp. at a price of $1.9 million each.

We are currently pursuing the rig refurbishing business opportunity on several levels as follows:

Scouting for suitable rigs and rig components to ship to Newfoundland. Refinement of material lists and cost estimates to procure, ship and refurbish selected rigs.

Negotiation with interested oil companies for the pre-purchase of the initial batch of rigs.

Establishment of a wholly-owned subsidiary in Newfoundland, to handle the refurbishment business.

Securing key personnel under long-term contracts.

A site tour to inventory the college facilities and identify any additional equipment that will need to be purchased.

Ongoing negotiations with the technical college to better define the training program and the business relationship with the college.

Recent Developments

Galveston Bay, Texas. On November 13, 2006, the Company executed a Purchase and Sale Agreement (as amended from time to time, the “Purchase Agreement”) with Masters Resources, LLC and Masters Oil and Gas, LLC (together the “Sellers”), 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 and related assets and operations described therein (the “Properties”).

On December 29, 2006, the Company and the Sellers agreed to a First Amendment to Purchase and Sale Agreement (the “First Amendment”), which was described in the Company’s current report on Form 8-K dated December 29, 2006, and filed on January 8, 2007, and a copy of the First Amendment was attached as Exhibit 10.20 thereto. The First Amendment further provided that shares of the Company’s common stock, $0.000001 par value (the “Common Stock”) would be issued to the Sellers pursuant to a separate Subscription Agreement between the Company and the Sellers, dated December 29, 2006 (the “Subscription Agreement”), a copy of which was attached as Exhibit 10.21 to the same current report on Form 8-K. The Common Stock was to be subject to a Registration Rights Agreement between the Company and the Sellers and the Sellers’ designees, dated December 29, 2006 (the “Registration Rights Agreement”), a copy of which was attached as Exhibit 10.22 to the same current report on Form 8-K. The Company subsequently assigned its rights under the Purchase Agreement, as amended, to its wholly-owned subsidiary, Tekoil and Gas Gulf Coast, LLC, a Delaware limited liability company (the “Acquisition Subsidiary”).

On February 8, 2007, the Company, the Acquisition Subsidiary and the Sellers agreed to a Second Amendment to Purchase and Sale Agreement (the “Second Amendment”), which was described in the Company’s current report on Form 8-K dated February 8, 2007, and filed on February 15, 2007, and a copy of the Second Amendment was attached as Exhibit 10.24 thereto. On March 1, 2007, the Company, the Acquisition Subsidiary and the Sellers agreed to a Third Amendment to Purchase and Sale Agreement (the “Third Amendment”), which was described in the Company’s current report on Form 8-K dated March 22, 2007, and filed on March 26, 2007, and a copy of the Third Amendment was attached as Exhibit 10.1 thereto. On March 22, 2007, the Company, the Acquisition Subsidiary and the Sellers agreed to a Fourth Amendment to Purchase and Sale Agreement (the “Fourth Amendment”), which was described in the Company’s current report on Form 8-K dated March 22, 2007, and filed on March 26, 2007, and a copy of the Fourth Amendment was attached as Exhibit 10.2 thereto. On April 12, 2007, the Company, the Acquisition Subsidiary and the Sellers agreed to a Fifth Amendment to Purchase and Sale Agreement (the “Fifth Amendment”), which was described in the Company’s current report on Form 8-K dated April 12, 2007, and filed on April 18, 2007, and a copy of the Fifth Amendment was attached as Exhibit 10.27 thereto. On April 30, 2007, the Company, the Acquisition Subsidiary and the Sellers agreed to a Sixth Amendment to Purchase and Sale Agreement (the “Sixth Amendment”), which was described in the Company’s current report on Form 8-K dated April 30, 2007, and filed on May 3, 2007, and a copy of the Sixth Amendment (which included an Amended and Restated Subscription Agreement) was attached as Exhibit 10.28 thereto.

On May 11, 2007, the Acquisition Subsidiary, Masters Resources, LLC and Masters Oil and Gas, LLC (together the “Sellers”), closed on the Purchase Agreement to acquire the Properties (the “Masters Acquisition”).

Oil and gas properties subject to the Masters Acquisition include 34 producing wells with 33 PDNP (proved non-producing) opportunities and more than 64 PUD (proved undeveloped) opportunities. There are 24,261 gross acres included in the Properties, as well as transportation and processing infrastructure.

In exchange for conveyance of the Properties to the Acquisition Subsidiary, the Sellers received approximately $30 million dollars in cash (subject to adjustment for an effective date of transfer of October 1, 2006, a $1 million dollar holdback for potential claims and prorations of closing costs), nine million restricted shares of the Company’s common stock, $0.000001 par value (the “Common Stock”), and conveyance of certain overriding royalty interests in the Properties (the “Royalties”). The shares of Common Stock to be issued to the Sellers (pursuant to the Amended and Restated Subscription Agreement described above) will initially be restricted but are subject to the previously executed Registration Rights Agreement between the Company and the Sellers.

The Royalties consist of (i) a declining royalty which is initially 6% on proved undeveloped, proved non-producing Properties, and any present or future well completed in and producing from any zone or formation not presently producing or capable of producing within the Properties, which royalty reduces to 4% and 2%, respectively, after $20 million dollars and $10 million dollars, respectively, are paid on the declining royalty and the fixed royalty described below, together; (ii) a fixed royalty which is initially 3% on currently proved producing Properties, which royalty reduces to 2% when the $30 million threshold described immediately above is achieved; and (iii) an additional royalty of 2% on all Properties for a term of 3 years. The Royalties are subject to a deed of trust in favor of the Company securing an indemnity agreement relating to the potential claims described above.

The cash portion of the consideration to the Sellers was paid with $30 million of a $50 million Senior Secured Credit Facility (the “Loan”) arranged by Goldman Sachs E & P Capital (the “Lender”), a division of Goldman Sachs & Co. The $30 million funded portion of the Loan is guaranteed by the Company and secured by the Properties, has a term of 48 months, bears interest at an initial rate of libor plus 800 basis points, and is amortized by available net cash flow from the Properties (after payment of certain related lease operating and overhead expenses, a portion of which are allowed to the Company under certain circumstances). In addition, the Lender or its affiliates received a 50 basis point funding fee on amounts advanced; a 2% overriding royalty interest in the Properties; a warrant to purchase 900,000 shares of Common Stock at a strike price of $0.50 per share over a five-year term and subject to a registration rights agreement; a 25% ownership interest in the Acquisition Subsidiary (the other 75% being held by the Company), which interest is non-dilutable until the Company contributes $7.5 million in additional capital for expenditures related to the Properties; and certain rights to participate in future debt and equity financings of the Company.

The Company must contribute the $7.5 million dollars detailed above to the Acquisition Subsidiary within 90 days following the closing to cover certain agreed development expenditures and raise an additional $5 million dollars for the Company within 180 days following the closing, in each case in order to avoid a default under the Loan. As a part of the Loan transaction, the Acquisition Subsidiary entered into certain hedging transactions described in Exhibits 10.47 and 10.48 hereof with respect to the pricing of its oil and gas production and certain insurance coverages as described in the Credit Agreement described in Exhibit 10.29 hereof. The Loan documents contain other customary representations, warranties, covenants and events of default.

Newfoundland, Canada. On November 21, 2006, the Company announced that its application for a geographic expansion of its original 3D seismic survey program around the Port au Port Peninsula and Port au Port Bay in western Newfoundland, had been increased from approximately 240 sq km to approximately 500 sq km and released from further environmental assessment by the Newfoundland and Labrador Department of Environment and Conservation. The Company is in the final stages with the Canada-Newfoundland and Labrador Offshore Petroleum Board to complete its approvals for the offshore component of the program, and it is focused on its Galveston, Texas, acquisition and on establishing its rig fabrication center in Stephenville, Newfoundland, with the anticipation of work beginning as early as the second quarter of 2007.

On January 3, 2007, the Company and Ptarmigan Resources Limited, a company based in Newfoundland & Labrador, Canada, executed a Farmout Agreement 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.

Pursuant to the Farmout Agreement, the Company, as the Farmee, has paid $214,000 ($250,000 Canadian) to Ptarmigan, 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 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).

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.

Research and Development Expenses

We do not presently budget or isolate all of our research and development costs. These costs are generally included in overhead, as they are attributed principally to salary and other expenses associated with maintaining personnel who spend varying amounts of time dedicated to both research and development and to ongoing studies on our current projects.

Costs and Effects of Compliance with Environmental Laws

We do not currently budget or isolate all of our compliance costs relating to the environment. These costs are included in our consultant engineer fees.

Employees

As of May 25, 2007, we had six employees, of which five were full time employees. We have never had a work stoppage, and no employees are represented under collective bargaining agreements. We consider our relations with our employees to be good. We believe that our future success will depend in part on our continued ability to attract, integrate, retain and motivate highly qualified technical and managerial personnel, and upon the continued service of our senior management and key technical personnel. Competition for qualified personnel in our industry and geographical location is intense, and there can be no assurance that we will be successful in attracting, integrating, retaining and motivating a sufficient number of qualified personnel to conduct our business in the future.

MANAGEMENTS’ DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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.

Critical Accounting Policies

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.

Plan of Operation

Forecasted Activities March 2007 to March 2008

We have identified the following objectives for the 12-month period ending December 31, 2007:

	·	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.

	·	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. Similarly, licenses covering the offshore prospective acreage expired on January 15, 2007, and re-bidding could commence as early as the fall of 2007.

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 Canada-Newfoundland and Labrador Offshore Petroleum Board to complete its approvals for the offshore component of the program.

To further cement our presence in Newfoundland, we have recently established 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 May 11, 2007, the Company’s majority-owned subsidiary, Tekoil and Gas Gulf Coast, LLC completed the Masters Acquisition (described above) in Galveston Bay, Texas.

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 $4.9 million for operating and investing activities, which has been funded by investments of approximately $4.7 million from our shareholders and $0.5 million from borrowings.

Our cash balance as of March 31, 2007, was $130,013, which decreased from $294,071 as of December 31, 2006. The decrease to our cash balance was attributable to approximately $0.6 million raised by the Company through private placements of Series A Convertible Preferred Stock in 2007, offset by increased operating expenses during the three months ended March 31, 2007. Subsequent to March 31, 2007, the Company raised an additional approximately $1.4 million through private placements. Management believes the Company needs to raise additional funds to meet its current operations for the next twelve months.

In May 2007, the Masters Acquisition described in “Business—Recent Developments” closed and the Acquisition Subsidiary acquired the Properties described therein.

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).

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 $25 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 unregistered shares of our Series A Convertible Preferred Stock at the offering price of $1.00 per share and we continue to offer and sell unregistered shares of our Series A Preferred Stock, from time to time, at such price.

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.

DESCRIPTION OF PROPERTY

We lease an office at 25050 I-45 North, Suite 525, The Woodlands, Texas 77380, at the current rental rate of approximately $200 per month. The office is leased on a month-to-month basis. Currently, the facility is adequate for our operations, but management expects that additional facilities will be needed in the future.

In September 2006, we acquired the 6,000 square foot premises located at 25 Mountbatten Drive, St. John’s, Newfoundland A1A 3Y1, which has been serving as the Company’s Canadian headquarters since April 2006. The purchase price was approximately $360,000 and there is a mortgage on the property in the amount of approximately $264,000. In the opinion of management, this property is adequately covered by insurance. We are presently using the entire premises for our Canadian operations and do not lease any portion of the premises to third parties.

Oil and Gas Leases

We do not currently own the leases to the Newfoundland properties that we have an interest in exploring, nor are we certain of the terms of such leases. Canadian Imperial Venture Corp. was issued a lease for the 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 conditions 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. However, we do not know whether or not Canadian Imperial will be able to continue to meet government requirements for its lease extension, so there is a substantial risk that we may not receive approval for application for an exploration license. It is possible that Canadian Imperial will meet all government requirements for continued extension of the lease, preventing us from having access to this specific area. In addition, even if Canadian Imperial’s lease were terminated, there is no guarantee that if we receive approval of our exploration license for the 3D seismic survey we will automatically be approved as the new holder/owner of the lease

As described in “Business—Recent Developments,” the Masters Acquisition was closed in May of 2007 and the Acquisition Subsidiary acquired the Properties described therein.

In May of 2007, the Acquisition Subsidiary completed its first workover, a recompletion of an oil producing zone in well number 18 in the North Point Bolivar Field (one of the Properties acquired in the Masters Acquisition). The well is currently producing on a 13/64^th choke with flow rates of approximately 380 barrels of oil per day and 84,000 standard cubic feet of gas per day. The Acquisition Subsidiary owns an approximate 75% net revenue interest in this well.

Present Activities

The Company and Acquisition Subsidiary are not presently conducting any significant drilling, water flood installation, pressure maintenance, or other material operations with respect to the Properties acquired in the Masters Acquisition, pending commencement of a comprehensive three-dimensional field study over an approximate 70 square mile area of the Red Fish Reef Property. It is anticipated that this study will commence in June 2007, will cost approximately $1.5 million dollars and that substantive results from such study will start becoming available in the first quarter of 2008.

Other

We own or lease various computer equipment, telecommunications equipment, furniture and office machinery at our office locations.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following lists the directors, executive officers, promoters and control persons of the Company as of April 16, 2007:

Name	Age	Position	Director Since
Mark S. Western	44	President	2005
		Chief Executive Officer
		Chairman of the Board (Director)

Francis G. Clear	52	Chief Operating Officer	2005
		Director

Gerald Goodman	59	Chief Financial Officer	2005
		Treasurer
		Director

Richard Creitzman	35	Director	2005

Eric Ottens	57	Executive Vice President	n/a

Donna Parsons	39	Vice President Corporate Relations	n/a

Mark S. Western. Mr. Western has been Chief Executive Officer, a director and Chairman of the Board of the Company since May 31, 2005. He was also President of the Company from May 31, 2005 until June 20, 2005, and from August 17, 2005 until the present. Prior to the Acquisition Agreement with Pexcon, Inc., Mr. Western was the President and Chief Executive Officer of Tekoil-FL since its incorporation in 2004. From August 1984 until he formed Tekoil-FL in 2004, Mr. Western worked as an engineer in oil and gas exploration, initially for Exploration & Production Services in the United Kingdom and Holland, and as a consultant to the industry through his consulting company, Completion and Production Services, Ltd. He later pursued an alternative path in the energy sector, becoming president of Artistic Lighting Systems, a Las Vegas based LED lighting firm, in 1997. In February 1998, Mr. Western formed UNERGI, Inc., an LED lighting company, which he merged in August 1999 with New Millennium Media International. Mr. Western was born and educated in England and graduated with a Mechanical & Production Engineering HNC from Norwich University.

Francis G. Clear. Mr. Clear has been the Chief Operating Officer and a director of the Company since June 20, 2005 and served as President of the Company from June 20, 2005 until August 17, 2005. In 1984, following 14 years in commercial banking, corporate finance and international banking, Mr. Clear co-founded Oemtek, a personal computer manufacturing/assembly plant. The business was sold in 1990. He has since been involved as a consultant in several start-up companies in diverse industries, ranging from golf products, gearing technologies and internet technologies. Mr. Clear has experience in dealing with the World Bank, the Corporate Council of Africa, the U.S. Agency for International Development and rapid prototyping technologies with the University of Central Florida. He has associations with contacts in several oil producing countries in Africa.

Gerald Goodman. Mr. Goodman has been the Treasurer, the Chief Financial Officer and a director of the Company since June 20, 2005. He is also the chairman of the Company’s audit committee. Mr. Goodman has been a partner in the Certified Public Accounting firm of Wiener, Goodman & Company, P.C., since 1984. Mr. Goodman has extensive experience in public accounting, providing audit, tax and management advisory services to clients, and he is the partner-in-charge of his firm’s SEC Practice Section. Mr. Goodman received a Bachelor of Science degree in accounting from The Pennsylvania State University in 1970, and he is a member of the American Institute of Certified Public Accountants.

Richard Creitzman. Mr. Creitzman has been a director of the Company since July 13, 2005. Mr. Creitzman has spent the past 12 years working in Russia and other parts of the former Soviet Union for trading companies and banks in various trade and commodity finance positions in both the metal and the oil and gas industries. From 2001 until 2004, Mr. Creitzman served as Head of Corporate Finance of the Russian oil company, Sibneft. In addition, from July 2003 until August 2004, Mr. Creitzman served as a director of Chelsea Limited in London, as well as a director of Chelsea Limited-owned Chelsea Football Club. Mr. Creitzman was born in England and graduated from Surrey University in 1993 with Bachelor of Science degrees in Business and Geography, in the fields of Economics, Law, Accounting and Statistics.

Eric Ottens. Mr. Ottens has been the Executive Vice President of the Company since June 20, 2005. He is also responsible for overseeing the Company’s South American expansion plans. From 1980 until 1987, Mr. Ottens served as Finance Manager for a division of Baker Hughes International in Rio de Janeiro, Brazil, and for two years thereafter as Controller for Teknoil Corporation, a local oil and gas consulting company in Rio de Janeiro, Brazil. From 1987 until 1992, Mr. Ottens was the Regional Controller for Marriott Corporation in San Juan, Puerto Rico, and from 1993 until 2000, he was the Managing Director for Global Telecom Network. From January 2001 until May 2005, Mr. Ottens was self-employed as an independent contractor/consultant, providing consulting services for South American and European companies operating in the U.S. Mr. Ottens graduated in 1978 from the University of Maryland with a degree in Finance and Accounting.

Donna Parsons. Ms. Parsons was appointed to the position of Vice President of Corporate Relations on June 1, 2006, and she serves as a Director of the Company’s wholly-owned subsidiary, Tekoil Rig and Development Corporation, a Newfoundland corporation. She also serves as a member of the certifying board with the Association of Engineering Technicians and Technologists of Newfoundland and Labrador. Ms. Parsons was born and educated in the Province of Newfoundland and Labrador, and brings a wealth of government related oil & gas experience to the Company. She initially began her career within the Newfoundland government as a Petroleum Engineering Technologist for the Department of Natural Resources in 1998, and more recently as an Industrial Development Officer in their Industrial Benefits Division through May 31, 2006. Both roles involved extensive public relations activities relating to the petroleum industry within the Province. As a result, Ms. Parsons has developed numerous key relationships with strong political and commercial ties in the oil & gas sector.

There are no family relationships among the directors and executive officers. Further, to the knowledge of management, no director, executive officer, promoter or control person has been involved in any legal proceedings during the past five years that are material to an evaluation of the ability or integrity of such director, person nominated to become a director, executive officer, promoter or control person of the Company. None of the individuals listed above as a director or executive officer has had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of such bankruptcy, if any, or within two years prior to that time. No director, executive officer, promoter or control person of the Company was or has been convicted in a criminal proceeding or is subject to a pending criminal proceeding or subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining borrowing, or otherwise limiting his or her involvement in any type of business, securities or banking activities. No director, executive officer, promoter or control person has been found by a court of competent jurisdiction in a civil action to have violated federal or state securities or commodities laws.

Directors are elected each year at the Company’s Annual Meeting of Stockholders and, once elected, serve until their successors are elected and qualified. Mr. Creitzman is the Company’s only independent director. The Company’s Board of Directors has determined that Gerald Goodman is an audit committee financial expert serving on its audit committee. Mr. Goodman is not “independent.”

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of May 25, 2007, the following individuals hold more than five percent (5%) of a class of the outstanding voting stock of the Company. No other individual or any group is known to the Company to be the beneficial owner of more than five percent (5%) of any class of the Company’s outstanding voting securities.

Title of Class	Name and Address of Beneficial Owner	Amount and nature of Beneficial Ownership (1)	Percent of Class (2)
Common Stock, $0.000001 par value	Mark S. Western 5209 Patricia Drive Orlando, FL 32819	10,294,404	27.90% of Common Stock 24.06% of combined

Common Stock, $0.000001 par value	Francis G. Clear 5036 Dr. Phillips Blvd.,#292 Orlando, FL 32819	2,084,470	5.65% of Common Stock 4.87% of combined

Common Stock, $0.000001 par value	Gerald Goodman 7 Briarwood Road Rumson, NJ 07760	3,143,170	8.52% of Common Stock 7.35% of combined

Common Stock, $0.000001 par value	Rich Holdings LLC (3) 9801 Westheimer Suite 1070 Houston, TX 77042	4,000,000	10.84% Common Stock 9.35% of combined

Common Stock, $0.000001 par value	John W. Barton (3) 9801 Westheimer Suite 1070 Houston, TX 77042	4,000,000	10.84% Common Stock 9.35% of combined

Common Stock, $0.000001 par value	Masters Resources, LLC (3) 9801 Westheimer Suite 1070 Houston, TX 77042	1,000,000	2.71% Common Stock 2.34% of combined

(1)

Unless otherwise indicated, each person has sole voting power and sole investment power with respect to all common stock set forth opposite such person’s name, subject to applicable community property and similar laws.

(2)

The “Percent of Class” information includes the percentage of each class of voting securities held by each beneficial owner, as well as the percentage of total shares of common stock held by each beneficial owner assuming conversion of all shares of Series A Preferred Stock. 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 shares of common stock, such conversion rate being three (3) shares of common stock for each share of Series A Preferred Stock. The shares of Series A Preferred Stock may be converted at any time by the holders into the Company’s common stock and are automatically converted into common stock upon the occurrence of certain material events.

(3)

Represents shares issued pursuant to the Masters Acquisition described under “Business—Recent Developments.”

The following table includes beneficial ownership information for all current executive officers and directors, and all who served as directors or executive officers in the fiscal year ended December 31, 2006.

Title of Class	Name and Address of Beneficial Owner	Amount and nature of Beneficial Ownership (1)	Percent of Class (2)
Common Stock, $0.000001 par value	Mark S. Western 5209 Patricia Drive Orlando, FL 32819	10,294,404	27.90% of Common Stock 24.06% of combined

Common Stock, $0.000001 par value	Richard Creitzman Flat 7, 22 Elm Park Gardens London SW10 9NY United Kingdom	1,000,000	2.71% of Common Stock 2.34% combined

Common Stock, $0.000001 par value	Francis G. Clear 5036 Dr. Phillips Blvd.,#292 Orlando, FL 32819	2,084,470	5.65% of Common Stock 4.87% of combined

Common Stock, $0.000001 par value	Gerald Goodman 7 Briarwood Road Rumson, NJ 07760	3,143,170	8.52% of Common Stock 7.35% of combined

Common Stock, $0.000001 par value	Donna Parsons 25 Mountbatten Drive St. John’s, NL A1A 3Y1 Canada	250,000	0.68% of Common Stock 0.58% of combined

Common Stock, $0.000001 par value	Eric Ottens 25050 I-95 North, Suite 525 The Woodlands, TX 77380	130,500	0.41% of Common Stock 0.35% of combined

Common Stock, $0.000001 par value	All Directors and Executive Officers as a Group	16,902,544	45.81% of Common Stock 39.51% of combined

(1)

(2)

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid during the last three fiscal years to the Company’s principal executive officer serving during the last completed fiscal year and to the Company’s two most highly compensated officers other than the principal executive officer who were serving as executive officers at the end of the last completed fiscal year. Due to the change of control of the Company that occurred on June 27, 2005, the information provided below with respect to the principal executive officer reflects compensation paid during the past three fiscal years to the principal executive officer of Tekoil-FL, who has served as the principal executive officer of the Company since said change of control. All of the current executive officers of the Company have served since June 20, 2005, or later.

SUMMARY COMPENSATION TABLE

Name and principal position	Year		Salary ($)		Bonus ($)		Stock Awards ($)			Option Award (s) ($)	Non-Equity Incentive Plan Compen-sation ($)	Nonqual-ified Deferred Compen-sation Earnings ($)	All Other Compen-sation ($)	Total ($)

Mark S. Western,		2006		240,000		0		0							240,000
CEO		2005		111,127		0		1,000,000	(1)						11,111,127
(principal executive officer)		2004		0		0		0

Gerald Goodman,		2006		54,000				338,250	(3)						392,250
CFO		2005		0		0		400,000	(4)(2)						400,000
		2004		0		0		0

Francis G. Clear,		2006		120,000				0							120,000
COO		2005		64,250		0		300,000	(5)						364,250
		2004		0		0		0

(1)

As of December 31, 2005, Mr. Western had received restricted stock awards totaling 5,000,000 shares of Common Stock, valued at $1,000,000 as of October 21, 2005, the date of grant (1,000,000 of such shares are for service as a director). Such valuation is also reflected in the “Stock Based Compensation” section of Note 1 to the Company’s 2006 consolidated financial statements. The shares are subject to the Company’s right to repurchase them under certain circumstances, and the number of such shares to which the Company’s repurchase right applies is reduced by 1/36 ^th for each full month of service as an employee or a director, as the case may be. The Company does not intend to pay dividends on these shares, nor on any shares of its Common Stock.

(2)

As of December 31, 2005, Mr. Goodman had received restricted stock awards totaling 2,000,000 shares of Common Stock, valued at $400,000 as of October 21, 2005, the date of grant (1,000,000 of such shares are for service as a director). Such valuation is also reflected in the “Stock Based Compensation” section of Note 1 to the Company’s 2006 consolidated financial statements. The shares are subject to the Company’s right to repurchase them under certain circumstances, and the number of such shares to which the Company’s repurchase right applies is reduced by 1/36 ^th for each full month of service as an employee or a director, as the case may be. The Company does not intend to pay dividends on these shares, nor on any shares of its Common Stock.

(3)

On November 8, 2006, the Company issued 1,000,000 shares of Common Stock, valued at $330,000, 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 ($264,000), and (iii) a credit line of the Company and its subsidiaries and related entities in the amount of Fifty Thousand Dollars ($50,000).

(4)

On December 15, 2005, the Company 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, PC Profit Sharing Plan FBO Gerald Goodman in the principal amount of $50,000, with principal and interest due at maturity on June 15, 2006. As further consideration for the loan and pursuant to the terms of the promissory note, the Company issued 25,000 shares of Common Stock, valued at $8,250, to Mr. Goodman on November 8, 2006. The maturity date has since been extended until June 20, 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.

(5)

As of December 31, 2005, Mr. Clear had received restricted stock awards totaling 1,500,000 shares of Common Stock, valued at $300,000 as of October 21, 2005, the date of grant (1,000,000 of such shares are for service as a director). Such valuation is also reflected in the “Stock Based Compensation” section of Note 1 to the Company’s 2006 consolidated financial statements. The shares are subject to the Company’s right to repurchase them under certain circumstances, and the number of such shares to which the Company’s repurchase right applies is reduced by 1/36 ^th for each full month of service as an employee or a director, as the case may be. The Company does not intend to pay dividends on these shares, nor on any shares of its Common Stock.

Outstanding Equity Awards at Fiscal Year End

There were no unexercised options, unvested stock or equity incentive plan awards for any person listed in the Summary Compensation Table for the year ended December 31, 2006.

Director Compensation

The Company’s directors received no compensation for their service in the year ended December 31, 2006.

Employment Contracts

The Company has entered into a three-year employment agreement with Mark S. Western, its Chief Executive Officer, which commenced as of October 21, 2005. The agreement provides for base salary at a monthly rate of $20,000, bonuses at the discretion of the Board of Directors, reasonable and customary reimbursement of business expenses and vacation as set by the Board of Directors. The Company has also entered into a three-year director service agreement with Mr. Western, dated as of October 21, 2005. Mr. Western was granted 4,000,000 shares of common stock pursuant to the employment agreement and 1,000,000 shares of common stock pursuant to the director service agreement. The Company maintains, and is the beneficiary of, a key person life insurance policy on Mr. Western in the amount of $2 million.

The Company has entered into a three-year employment agreement with Gerald Goodman, its Chief Financial Officer, which commenced as of October 21, 2005. The agreement provides for base salary at a monthly rate of $6,000, bonuses at the discretion of the Board of Directors, reasonable and customary reimbursement of business expenses and vacation as set by the Board of Directors. The Company has also entered into a three-year director service agreement with Mr. Goodman, dated as of October 21, 2005. Mr. Goodman was granted 1,000,000 shares of common stock pursuant to the employment agreement and 1,000,000 shares of common stock pursuant to the director service agreement.

The Company has entered into a three-year employment agreement with Francis G. Clear, its Chief Operating Officer, which commenced as of October 21, 2005. The agreement provides for base salary at a monthly rate of $10,000, bonuses at the discretion of the Board of Directors, reasonable and customary reimbursement of business expenses and vacation as set by the Board of Directors. The Company has also entered into a three-year director service agreement with Mr. Clear, dated as of October 21, 2005. Mr. Clear was granted 500,000 shares of common stock pursuant to the employment agreement and 1,000,000 shares of common stock pursuant to the director service agreement.

The Company has entered into a three-year employment agreement with Eric Ottens, its Executive Vice President, which commenced as of October 21, 2005. The agreement provides for base salary at a monthly rate of $2,500, bonuses at the discretion of the Board of Directors, reasonable and customary reimbursement of business expenses and vacation as set by the Board of Directors. Mr. Ottens was granted 150,000 shares of common stock in connection with his execution of the employment agreement.

The Company has entered into a three-year Director Service Agreement with Richard Creitzman, dated as of October 21, 2005 pursuant to which Mr. Creitzman was granted 1,000,000 shares of common stock.

Shares of common stock granted pursuant to the employment and director service agreements discussed above are subject to the Company’s right to repurchase them at a price of $0.01 per share if the recipient resigns as employee without “good reason” (as defined in the employment agreement) or if he is terminated, as an employee or as a director, for “cause” (as defined in both of the agreements). The number of such shares to which the Company’s repurchase right applies is reduced by 1/36 ^th for each full month of service as an employee or a director, as the case may be.

LEGAL PROCEEDINGS

To the knowledge of management, the Company is not currently a party to any material legal proceedings.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On November 8, 2006, the Company issued 1,000,000 shares of common stock 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 ($264,000), and (iii) a credit line of the Company and its subsidiaries and related entities in the amount of Fifty Thousand Dollars ($50,000).

On May 1, 2006, the Company entered into a Stock Issuance Agreement with Donna Parsons, an employee of the Company’s wholly-owned Canadian subsidiary. Pursuant to that Stock Issuance Agreement, the Company issued to Ms. Parsons 250,000 unregistered shares of Common Stock as an incentive to her in the performance of her duties to the subsidiary company.

On December 15, 2005, the Company 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, PC Profit Sharing Plan FBO Gerald Goodman in the principal amount of $50,000, with principal and interest due at maturity on June 15, 2006. As further consideration for the loan and pursuant to the terms of the promissory note, the Company issued 25,000 shares of common stock to Mr. Goodman on November 8, 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.

On October 21, 2005, the Company issued 9,650,000 shares of common stock to certain of its officers and directors for services provided, and it recorded compensation expense in the amount of $1,930,000 in connection with the issuance of these shares. Such shares of common stock are subject to the Company’s right to repurchase them at a price of $0.01 per share if the recipient resigns as employee without “good reason” (as defined in the relevant employment agreement) or if he is terminated, as an employee or as a director, for “cause” (as defined in both of the agreements). The number of such shares to which the Company’s repurchase right applies is reduced by 1/36 ^th for each full month of service as an employee or a director, as the case may be.

On November 29, 2004, prior to the Acquisition Agreement, Tekoil-FL granted 5,100,000 shares of its common stock to its promoters and founders for their services in connection with the formation of that company. Such shares were exchanged for shares of our common stock in connection with the Acquisition Agreement as of June 27, 2005. Following are the names of the promoters or founders and the number of shares of common stock resulting from the November 29, 2004, share issuance and the June 27, 2005 share exchange (taking into account the 100:1 reverse stock split):

Name	Number of Shares

Francis G. Clear		584,470 shares
Gerald Goodman		118,170 shares
Mark S. Western		5,294,404 shares
TOTAL		5,997,044 shares

SELLING STOCKHOLDERS

The shares of common stock being offered pursuant to this prospectus by the selling stockholders include (i) shares of common stock owned by the selling stockholders, and (ii) shares of common stock issuable to the selling stockholders upon conversion of the Series A Preferred Stock owned by such selling stockholders.

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 of securities to be received upon conversion of the Series A Preferred Stock are subject to certain anti-dilution adjustments.

The following table provides certain information regarding the selling stockholder's beneficial ownership of our common stock prior to and after the offering. The aggregate number of shares in this offering constitutes 98.95 % of our issued and outstanding shares of common stock. Beneficial ownership is determined under the Securities and Exchange Commission's rules, and generally includes voting or investment power with respect to securities. Except where otherwise indicated, each of the following selling stockholders exercises sole voting and investment control over the shares of our common stock owned by them.

Selling Stockholder	Number of Shares Owned Prior to the Offering			Number of Shares Being Offered for Sale			Number of Shares Owned After the Offering		Percentage of Class
A. Muffi Family Revocable TR UTD		30,000	*		30,000	*		0
Abbot, Bruce		15,000	*		15,000	*		0
Anderson, Stuart, Morgan Stanley DW Inc. Custodian FBO		60,000			60,000			0
Axt, J. Todd		150,000	*		150,000	*		0
Axt, J. Todd, National Financial Services LLC FBO		150,000	*		150,000	*		0
Bahary, Jeffrey		60,000			60,000			0
Bakos, George J.		30,000	*		30,000	*		0
Ballestero, Edward		600,000			600,000			0
Barton, John W.		4,000,000	(1)		4,000,000	(1)		0
Baum, Kevin & Lisa A. Vecchio Baum		15,000	*		15,000	*		0
Beich, Evamarie		3,000			3,000			0
Bennett, Daniel J.		30,000	*		30,000	*		0
Berke, Marvin		60,000	*		60,000	*		0
Bloom, David C.		300,000	*		300,000	*		0
Bloom, Edward		300,000	*		300,000	*		0
Bloom, Edward FBO Bailey Bloom		105,000	*		105,000	*		0
Bloom, Edward FBO Taylor Bloom		105,000	*		105,000	*		0
Bloom, William		150,000	*		150,000	*		0
Blumenfeld, Marvin		30,000	*		30,000	*		0
Boniello, Patricia A.		45,000	*		45,000	*		0
Boniello, Ralph		165,000	*		165,000	*		0
Boyce, Dick		100,000			100,000			0
Bradley, Robert		75,000	*		75,000	*		0
Bradley, Robert T and/or Sharon L.		30,000	*		30,000	*		0
Bradley, Robert T.		15,000	*		15,000	*		0
Branz, Karen S.		15,000	*		15,000	*		0
Brown, Don		15,000	*		15,000	*		0
Bulla, Lenny		15,000	*		15,000	*		0
Bullis, Anthony		584,470			584,470			0
Calvani, Marcus & Padilla, Ana Jt Ten		15,000	*		15,000	*		0
Capricorn Capital Holdings Inc.		15,000			15,000			0
Carbe, Sr., Vincent		30,000	*		30,000	*		0
Casapu, Gheorghe & Mihaela		15,000	*		15,000	*		0
Caseres, Richard J		15,000	*		15,000	*		0
Caterbone, Michael		60,000	*		60,000	*		0
Cede & Co.		1,029,400			1,029,400			0
David & Robin Ciambrone		525,000			525,000			0
Clear, Francis G.		2,084,470			2,084,470			0
Colley, Jane E.		30,000	*		30,000	*		0
Connellan, Sandra		30,000	*		30,000	*		0
First Trust Corp. FBO Connellan IRA, Thomas K.		168,000			168,000			0
Connellan TR, Thomas K.		641,000			641,000			0
Copeland, Todd E.		45,000	*		45,000	*		0
Creitzman, Richard		1,000,000			1,000,000			0
Davies, Max		30,000			30,000			0

Selling Stockholder	Number of Shares Owned Prior to the Offering			Number of Shares Being Offered for Sale			Number of Shares Owned After the Offering		Percentage of Class
Delaney, Michael		90,000			90,000			0
DePierro, Nicholas J.		60,000			60,000			0
Dilascia, Vincent A		15,000	*		15,000	*		0
Dodd, Pamela		33,000	*		33,000	*		0
Donofrio, Carmen V.		45,000	*		45,000	*		0
Dorn, Cassandra L.		15,000	*		15,000	*		0
Dorn, Judith H. & Daniel W.		45,000	*		45,000	*		0
Dorn, Sarah V.		15,000	*		15,000	*		0
Dunne, Donna		500			500			0
Dunne, Gerald M.		320,000			320,000			0
Eastmond, Thomas		30,000	*		30,000	*		0
Economou, Brian		15,000	*		15,000	*		0
Equity Tr Co Cust FBO Gregg		30,000	*		30,000	*		0
Fair, Rodney		15,000	*		15,000	*		0
Fairbrother, Faith		165,000	*		165,000	*		0
Fairbrother, Faith & Simon		150,000	*		150,000	*		0
Fennessy, Jane		30,000	*		30,000	*		0
Fernandez, John		60,000	*		60,000	*		0
Fiserv Iss & Co FBO The Connellan Group, Inc. Roth IRA		60,000	*		60,000	*		0
Fiserv Iss & Co FBO The Connellan Group, Inc. Roth IRA		60,000	*		60,000	*		0
Fiserv Iss & Co TTEE FBO Thomas Connellan		75,000			75,000			0
Flanders, Paul A		30,000	*		30,000	*		0
Fliszar, Avis		9,000			9,000			0
Fliszar, Avis M		16,000	*		16,000	*		0
Frockt, Jerry B		210,000			210,000			0
Gebele, Paula C		15,000	*		15,000	*		0
Genzianelli, Frank		136,573	*		136,573	*		0
Genzianelli, Frank J		120,000	*		120,000	*		0
Gerin, Kiril & Robyn		30,000	*		30,000	*		0
Gerling, Robert		30,000	*		30,000	*		0
Goldman, Sachs & Co.		900,000	(2)		900,000	(2)		0
Gonzales, Benjamin		15,000	*		15,000	*		0
Goodman, Gerald		3,143,170			3,143,170			0
Gorman, Timothy and Catherine		45,000	*		45,000	*		0
Hager, David R		75,000	*		75,000	*		0
Harrison, Steve		105,000	*		105,000	*		0
Harrison, Steven R		17,378			17,378			0
Heckman, Frank		15,000	*		15,000	*		0
Hill, Timothy S.		30,000	*		30,000	*		0
Horne, Merton A.		15,000	*		15,000	*		0
Horton, David		15,000	*		15,000	*		0
Hussein, Khaled		30,000			30,000			0
Iamaio, Mike		15,000	*		15,000	*		0
Indiveri, David		30,000	*		30,000	*		0
Ivanova, Svetlana		6,000			6,000			0
Izzo, Michele		15,000	*		15,000	*		0
Izzo Jr, Salvatore		45,000	*		45,000	*		0
Izzo III, Salvatore		15,000	*		15,000	*		0

Selling Stockholder	Number of Shares Owned Prior to the Offering			Number of Shares Being Offered for Sale			Number of Shares Owned After the Offering		Percentage of Class
Jacobowitz, Shawn		90,000			90,000			0
Janney Montgomery Scott LLC		40,000			40,000			0
Jennings, Bob		15,000	*		15,000	*		0
Jones, Carol Lynn T		60,000	*		60,000	*		0
Kalidas, Amar		120,000			120,000			0
Kalidas, Dinesh		255,000			255,000			0
Kalidas, Kirti		1,446,875			1,446,875			0
Kalidas, Manaklal P		150,000	*		150,000	*		0
Kalidas, Poonam		120,000			120,000			0
Kalidas, Prem		150,000			150,000			0
Kalidas, Vinod		45,000			45,000			0
Kendall Ellis Corp		30,000	*		30,000	*		0
Kenney, Joan M. or Lisa A. Vecchio		30,000	*		30,000	*		0
Kenney, John A. or Joan M. JT		15,000	*		15,000	*		0
Kiernan, Christopher		30,000	*		30,000	*		0
Knight, Robert L.		300,000	*		300,000	*		0
Koch, Peter J. & Cindy Champman-Koch		15,000	*		15,000	*		0
Korenek, Alfred J.		405,000	*		405,000	*		0
Krulik, Ira		30,000	*		30,000	*		0
L&L Sealer & Supplies LLC		60,000			60,000			0
Lasher, Dale		30,000	*		30,000	*		0
Lawrence, Brent		30,000	*		30,000	*		0
Lee, Joe		58,390			58,390			0
Lee, Joseph R		525,000			525,000			0
Lee, Kenna R		150,000	*		150,000	*		0
Lee, Michael F		150,000	*		150,000	*		0
Lehr, Scott		118,170			118,170			0
Lewit, Robert H		15,000	*		15,000	*		0
Licina, Philip		60,000	*		60,000	*		0
Lopez, Kim		45,000	*		45,000	*		0
LoPresti, Thomas J., National Financial Services LLC FBO		150,000	*		150,000	*		0
Lovera, Catherine		15,000			15,000			0
Lowe, Alan		150,000			150,000			0
Lower, Veronica		15,000	*		15,000	*		0
Maglio, Terry		15,000	*		15,000	*		0
Mamone, Christopher		30,000	*		30,000	*		0
Mason, David		11,697			11,697			0
Masters Resources, LLC		1,000,000	(1)		1,000,000	(1)		0
Matthews, Ching J. & Ian		15,000	*		15,000	*		0
Matlack, John C		30,000	*		30,000	*		0
Matlack, John C & Carol JT		8,000			8,000			0
Mauck, Michael		15,000	*		15,000	*		0
McDaniel, Gary		30,000	*		30,000	*		0
McGarigal, Paul J Trust DTD 2/21/1998		15,000	*		15,000	*		0
McGrade, Gregory J		30,000	*		30,000	*		0
Michola, Douglas		45,000	*		45,000	*		0
Misch, Will		15,000	*		15,000	*		0
Mogollon, Carlos A		75,000	*		75,000	*		0
Muffi, Dora F		30,000	*		30,000	*		0

Selling Stockholder	Number of Shares Owned Prior to the Offering			Number of Shares Being Offered for Sale			Number of Shares Owned After the Offering		Percentage of Class
Mui, Yatte		15,000	*		15,000	*		0
Mullins, D.K.		30,000	*		30,000	*		0
Mullins, Donald K		30,000	*		30,000	*		0
Munro, Mark		150,000	*		150,000	*		0
Nagindas, Naresh G		30,000	*		30,000	*		0
Nevins, Michele		15,000	*		15,000	*		0
Nigri, Robert L.		150,000	*		150,000	*		0
O’Neil, Matt		15,000	*		15,000	*		0
Osborne, Robert W.		45,000	*		45,000	*		0
OTS Investments, LLC		30,000	*		30,000	*		0
Ottens, Eric		130,500			130,500			0
Panken, Howard		15,000	*		15,000	*		0
Pappas, James G & Patricia		30,000	*		30,000	*		0
Park, James M.		15,000	*		15,000	*		0
Parent IRA, James (Charles Schwab)		75,000	*		75,000	*		0
Parsons, Don		50,000			50,000			0
Parsons, Donna		250,000			250,000			0
Partyka, Paul P.		22,378	*		22,378	*		0
Piccirillo, Peter		15,000	*		15,000	*		0
Pick, Diane D.		15,000	*		15,000	*		0
Pingitore, Carole		30,000	*		30,000	*		0
Pizzo, Thomas		30,000	*		30,000	*		0
Radolan, Barry		450,000	*		450,000	*		0
Radolan, Xiaoli		15,000	*		15,000	*		0
RBC Dain Rauscher Inc.		300,000	*		300,000	*		0
Revill, Karen		6,000			6,000			0
Reyes, Edwin		15,000	*		15,000	*		0
Rhamstine, Elizabeth		15,000	*		15,000	*		0
Rhamstine, Stephen P		30,000	*		30,000	*		0
Rich Holdings LLC		4,000,000	(1)		4,000,000	(1)		0
Roberti, Gregg		15,000	*		15,000	*		0
Roberti, Gregg & Laurie		60,000	*		60,000	*		0
Rowles, Katherine		30,000	*		30,000	*		0
Ruperto, Francisco, Jr.		30,000	*		30,000	*		0
Saunders, Jan		15,000	*		15,000	*		0
Schafer, Charles E.		105,000			105,000			0
Sciortino Jr., Phillip		30,000			30,000			0
Shea, John		150,000	*		150,000	*		0
Siemash, Walter		60,000	*		60,000	*		0
Smith, Nancy D		15,000	*		15,000	*		0
Stratton, Laird S		30,000	*		30,000	*		0
Studley, Michael		21,000	*		21,000	*		0
Sundheim, Douglas M		3,000	*		3,000	*		0
Sundheim, Scott M		3,000	*		3,000	*		0
Szem, Christopher B		75,000	*		75,000	*		0
Tsing, Wan Enterprises LLC		35,000			35,000			0
Tyler, Stephen		60,000	*		60,000	*		0
Virelles, Alexander D		30,000	*		30,000	*		0
Van Horn, Charles W		30,000	*		30,000	*		0
Vishay Management Group Inc.		15,000	*		15,000	*		0
Walsh, Gregory		30,000	*		30,000	*		0
Warner, Kenneth E		300,000			300,000			0
Wellington, Norma		60,000	*		60,000	*		0
Western, Mark S		10,294,404			10,294,404			0
Whelan, Michael J.		45,000	*		45,000	*		0
Winseck, Fred		45,000	*		45,000	*		0
Ziselman, Carol L		15,000	*		15,000	*		0

* Represents all or a portion of common shares into which Series A Preferred shares are convertible.

(1)	Represents shares issued pursuant to the Masters Acquisition, as described under “Business—Recent Developments.”

(2)

These shares are issuable pursuant to a warrant to be issued pursuant to an Engagement Agreement between Goldman Sachs E & P Capital and the Company, dated December 29, 2006, and the related Warrant issued to Goldman, Sachs & Co. on May 11, 2007, referenced in Exhibit 10.37 hereto. Shares covered hereby include any additional shares issuable pursuant to the terms of such warrants.

PLAN OF DISTRIBUTION

The selling stockholders, or their pledgees, donees, transferees or other successors in interest may, from time to time, sell all or a portion of the shares at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to such market prices or at negotiated prices. The selling stockholders may offer their shares at various times in one or more of the following transactions:

on any national securities exchange, or other market on which our common stock may be listed at the time of sale;

in the over-the-counter market;

through block trades in which the broker or dealer so engaged will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

through purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus;

in ordinary brokerage transactions and transactions in which the broker solicits purchasers;

through options, swaps or derivatives;

in privately negotiated transactions;

in transactions to cover short sales; and

through a combination of any such methods of sale.

In addition, the selling stockholders may also sell their shares that qualify for sale pursuant to Rule 144 under the Securities Act of 1933 under the terms of such rule rather than pursuant to this prospectus.

The selling stockholders may sell their shares directly to purchasers or may use brokers, dealers, underwriters or agents to sell their shares upon terms and conditions that will be described in the applicable prospectus supplement. In effecting sales, brokers and dealers engaged by the selling stockholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions, discounts or concessions from a selling stockholder or, if any such broker-dealer acts as agent for the purchaser of such shares, from such purchaser in amounts to be negotiated. Such compensation may, but is not expected to, exceed that which is customary for the types of transactions involved. Broker-dealers may agree with a selling stockholder to sell a specified number of such shares at a stipulated price per share, and, to the extent such broker-dealer is unable to do so acting as agent for a selling stockholder, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer commitment to the selling stockholders. Broker-dealers who acquire shares as principal may thereafter resell such shares from time to time in transactions, which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above, in the over-the-counter market or otherwise at prices and on terms then prevailing at the time of sale, at prices then related to the then-current market price or in negotiated transactions. In connection with such resales, broker-dealers may pay to or receive from the purchasers of such shares commissions as described above.

The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in sales of the shares may be deemed to be "underwriters" within the meaning of the Securities Act of 1933 in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933.

From time to time the selling stockholders may be engaged in short sales, short sales against the box, puts and calls and other hedging transactions in our securities, to the extent permitted by applicable law and exchange regulations, and may sell and deliver the shares in connection with such transactions or in settlement of securities loans. These transactions may be entered into with broker-dealers or other financial institutions. In addition, from time to time, a selling stockholder may pledge its shares pursuant to the margin provisions of its customer agreements with its broker-dealer. Upon delivery of the shares or a default by a selling stockholder, the broker-dealer or financial institution may offer and sell the pledged shares from time to time.

DESCRIPTION OF SECURITIES

The Company is authorized to issue up to 200,000,000 shares of common stock, par value $0.000001 per share. As of May 25, 2007, 36,894,175 shares of common stock were outstanding, held of record by approximately 65 persons. The holders of common stock are entitled to one vote for each share held of record on all matters to be voted on by shareholders. The holders of the Company’s Series A Preferred Stock and the common stock vote together as a single class. There is no cumulative voting with the result that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors.

The holders of common stock are entitled to receive dividends when, as and if declared by the Board of Directors 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 are entitled to share ratably 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. 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.

The Company has never paid any dividends. Future dividends, if any, will be contingent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition subsequent to the consummation of a business combination. The payment of dividends is within the discretion of the Company’s Board of Directors. The Company presently intends to retain all earnings, if any, for use in the Company’s business operations and accordingly, the Board does not anticipate declaring any dividends in the foreseeable future. However, there are no current restrictions on the payment of dividends either by contract or regulation.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

On December 15, 2005, the Company engaged Madsen & Associates, CPA’s Inc. as its independent auditors. Prior to that date, the Company, as Pexcon, Inc., had engaged the services of Harris F. Rattray, C.P.A., as its independent auditor. The Company dismissed Harris F. Rattray, C.P.A. on December 15, 2005. The former principal accountant’s report on the financial statements for neither of the last two years contained an adverse opinion or disclaimer of opinion, or was modified as to uncertainty, audit scope or accounting principles. The decision to change accountants was approved by the Board of Directors/audit committee. To management’s knowledge, there were no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the former accountant’s satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report.

LEGAL MATTERS

An opinion has been rendered by the law firm of Baker & Hostetler LLP to the effect that the shares of our common stock offered by the selling stockholders under this prospectus are legally issued, fully paid and non-assessable.

EXPERTS

The financial statements of Tekoil included in this prospectus for the years ended December 31, 2006 and December 31, 2005 and the period November 29, 2004 (date of formation) to December 31, 2005 have been audited by Madsen & Associates, CPA’s Inc., independent certified public accountants, and have been included herein in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

The Company's articles of incorporation provide that its directors and officers will be indemnified to the fullest extent permitted under the laws of the State of Delaware. Pursuant to the Delaware General Corporation law, a Delaware corporation may, under specified circumstances, indemnify any person who was or is a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise; provided, that such provision shall not eliminate or limit the liability of an individual applying for indemnification if, unless otherwise ordered by a court, a final adjudication establishes that (i) his acts or omissions involved intentional misconduct, fraud, or a knowing violation of the law, and (ii) the act or omission was material to the cause of action.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, or SEC, a registration statement on Form SB-2 under the Securities Act with respect to the common stock offered in this offering. This prospectus does not contain all of the information set forth in the registration statement. For further information with respect to us and the common stock offered in this offering, we refer you to the registration statement and to the attached exhibits. With respect to each such document filed as an exhibit to the registration statement, we refer you to the exhibit for a more complete description of the matters involved.

You may inspect our registration statement and the attached exhibits and schedules without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street, N.E. Room 1580, Washington, DC 20549. You may obtain copies of all or any part of our registration statement from the SEC upon payment of prescribed fees. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330.

Our SEC filings, including the registration statement and the exhibits filed with the registration statement, are also available from the SEC’s website at www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

TEKOIL & GAS CORPORATION AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page

Report of Independent Registered Public Accounting Firm		F-1

Financial Statements

Consolidated Balance Sheets as of December 31, 2006 and 2005		F-2

Consolidated Statements of Operations for the year ended December 31, 2006 and 2005 and for the period November 29, 2004 (Date of Formation) through December 31, 2006		F-3

Consolidated Statements of Stockholders’ Equity (Deficiency) for the period November 29, 2004 (Date of Formation) through December 31, 2006		F-4

Consolidated Statements of Cash Flows for the year ended December 31, 2006 and 2005 and for the period November 29, 2004 (Date of Formation) through December 31, 2006		F-5

Notes to Consolidated Financial Statements		F-6 - F-17

Financial Statements		F-18

Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006		F-19

Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006 and for the period November 29, 2004 (Date of Formation) through March 31, 2007		F-20

Consolidated Statements of Stockholders’ Equity for the period November 29, 2004 (Date of Formation) through March 31, 2007		F-21

Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006 and for the period November 29, 2004 (Date of Formation) through March 31, 2007		F-22

Notes to Unaudited Consolidated Financial Statements		F-23 - F-32

MADSEN & ASSOCIATES, CPA’s Inc.	684 East Vine St, Suite 3
Certified Public Accountants and Business Consultants	Murray, Utah 84107
	Telephone 801 268-2632
	Fax 801-262-3978

Board of Directors

Tekoil & Gas Corporation and Subsidiaries

Orlando, Florida

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of Tekoil & Gas Corporation and Subsidiaries (an exploration stage company) at December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years ended December 31, 2006 and 2005 the period November 29, 2004 (date of formation) to December 31, 2006. 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 audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tekoil & Gas Corporation and Subsidiaries at December 31, 2006 and 2005, and the related statements of operations, stockholders' equity, and cash flows for the years ended December 31, 2006 and 2005 and the period November 29, 2004 to December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company will need additional working capital for its planned activity and to service its debt, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in the notes to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Murray, Utah

March 16, 2007 /s/ Madsen & Associates, CPA’s Inc.

F-1

TEKOIL & GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(An Exploration Stage Company)

ASSETS
	December 31,
	2006			2005

Current Assets:
Cash	$	294,021		$	167,524
Prepaid expenses		53,475		$	-
Total Current Assets		347,496			167,524

Property and Equipment - net		458,871			7,411
Other assets		1,004,394			10,000


TOTAL ASSETS	$	1,810,761		$	184,935

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accrued expenses	$	362,147		$	23,520
Note payable - related party		50,000			50,000
Current portion of long-term debt		4,261			-
Total Current Liabilities		416,408			73,520

Long-term debt		255,032			-
Total Liabilities		671,440			73,520

Commitments and Contingencies:

Stockholders' Equity:

Preferred Stock, $.00000001 par value, authorized
20,000,000 shares

Series A Convertible Preferred Stock, 2,985,000 and
667,000 shares issued and outstanding at
December 31, 2006 and 2005, respectively		-			-

Common stock,par value $.000001 per share
authorized 200,000,000 shares;
21,624,175 and 7,092,354 shares issued and outstanding
at December 31, 2006 and 2005, respectively		22			17

Additional paid-in capital		6,758,637			2,763,438

Cummulative other comprehensive expense		(772	)		-

Deficit accumulated during the
development stage		(5,618,566	)		(2,652,040	)

Total Stockholders' Equity		1,139,321			111,415

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,810,761		$	184,935

See notes to consolidated financial statements

F-2

TEKOIL & GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(An Exploration Stage Company)


							Period
							November 29, 2004
	Year Ended			Year Ended			(Date of formation)
	December 31,			December 31,			through
	2006			2005			December 31, 2006

Revenues	$	-		$	-		$	-

Cost and expenses:
General and administrative expenses		2,526,296			672,574			3,209,736
Compensatory element of common
stock issurance		420,750			1,950,000			2,375,850
		(2,947,046	)		(2,622,574	)		(5,585,586	)

Loss from operations		(2,947,046	)		(2,622,574	)		(5,585,586	)
Loss on investment		(10,000	)		-			(10,000	)
Interest expense		(9,480	)		(13,500	)		(22,980	)

Loss before provision for income taxes		(2,966,526	)		(2,636,074	)		(5,618,566	)

Provision for income taxes		-			-			-

Net loss	$	(2,966,526	)	$	(2,636,074	)	$	(5,618,566	)

Loss per share - basic and diluted	$	(0.16	)	$	(0.28	)

Weighted average number of common shares
outstanding - basic and diluted		18,276,098			9,433,126

See notes to consolidated financial statements

F-3

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(AN EXPLORATION STAGE COMPANY)

							Common Stock				Series A Preferred Stock				Additional Paid			Cummulative Other			Deficit Accumulated During
	Total			Comprehensive (Loss)			No of shares		Amount		No of shares		Amount		in Capital			Comprehensive Expense			Development 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		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	)

See notes to consolidated financial statements

F-4

TEKOIL & GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(A Exploration Stage Company)
							Period
							November 29, 2004
	Year Ended			Year Ended			(Date of formation)
	December 31,			December 31,			through
	2006			2005			December 31, 2006
Cash flows from operating activities:
Net loss	$	(2,966,526	)	$	(2,636,074	)	$	(5,618,566	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization		24,086			823			24,909
Non cash fair value of stock		677,204			1,957,000			2,639,304
Bad debt					-			30,611
Changes in operating assets
and liabilities:		-			-			-
Increase in current assets		(53,475	)					(53,475	)
Increase (decrease) in other assets		5,606			(10,000	)		(4,394	)
Increase in accrued expenses and accounts payable		338,627			23,520			362,147
Net Cash Used in Operating Activities		(1,974,478	)		(664,731	)		(2,619,464	)

Cash flows from investing activities:
Purchase of property, plant and
equipment		(475,546	)		(8,234	)		(483,780	)
Payment on investment		(1,000,000	)		-			(1,000,000	)
Advance to affiliate		-			-			(30,611	)

Net Cash Flows Used in Investing Activities		(1,475,546	)		(8,234	)		(1,514,391	)

Cash flows from financing activities:
Proceeds from issuance of common
stock		1,050,000			38,090			1,099,090
Proceeds from borrowings		260,318			100,000			360,318
Proceeds from issuance of preferred
stock		2,268,000			655,000			2,923,000
Repayment of debt		(1,025	)		(2,735	)		(3,760	)
Proceeds from related party		-			50,000			50,000
Net Cash Flows Provided by Financing Activities		3,577,293			840,355			4,428,648
Effect of exchange rate changes on cash		(772	)		-			(772	)

Net Increase in cash		1,126,497			167,390			294,021

Cash - beginning of period		167,524			134			-

Cash - end of period	$	1,294,021		$	167,524		$	294,021



Supplementary information:
Cash paid during the year for:
Interest	$	5,517		$	13,500		$	19,017
Income taxes	$	-		$	-		$	-

Non-cash financings activities:
Issuance of preferred stock for services	$	50,000		$	7,000		$	57,000
Issuance of preferred stock for debt	$	-		$	27,876		$	27,876
Issuance of common stock for services	$	627,204		$	1,950,000		$	2,577,204
Issuance of common stock for debt	$	-		$	100,000		$	127,876

See notes to consolidated financial statements

F-5

TEKOIL & GAS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006

(AN EXPLORATION STAGE COMPANY)

1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

As provided for in the share acquisition 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’s historical stockholders’ equity to reflect the equivalent number of shares of common stock issued in the acquisition.

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.

F-6

Going Concern

The Company’s 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.

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 balance sheet date rates of exchange and income, expense and cash flow items are translated at the average exchange rate for the period. Translation adjustments are recorded in Cumulative Other Comprehensive Income.

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 8,995,000 and 2,001,000 common shares at December 31, 2006 and December 31, 2005, respectively, have been excluded from the computation, as their effect is antidilutive.

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.

F-7

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 year ended December 31, 2005, the Company issued 9,750,000 shares of its common stock and recorded compensation expense of $1,950,000 in connection with the issuance of these shares, all of which were to related parties. The Company also issued 7,000 shares of its preferred stock and recorded compensation expense of $7,000 in connection with the issuance of these shares.

For the year ended December 31, 2006, the Company issued 1,947,170 shares of its common stock and recorded consulting expense of $627,204 in connection with the issuance of these shares of which 1,275,000 shares ($420,750) were to related parties. The Company also issued 50,000 shares of its preferred stock and recorded consulting expense of $50,000 in connection with the issuance of these shares.

For the period November 29, 2004 (Date of Formation of the subsidiary) through December 31, 2006, the Company issued 11,697,170 shares of its common stock and recorded compensation expense of $2,636,204 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 and accrued expenses, it was assumed that the carrying amount approximated fair value because of the short maturities of such instruments.

F-8

New Financial Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans”, an amendment of FASB Statements No. 87, 88, 106 and 132(R). SAFS 158 requires employers to recognize their defined benefit plans’ overfunded or underfunded status in their balance sheets, requires employers to measure plan assets and plan obligations as of the balance sheet date, immediately recognize any remaining transition obligation currently being deferred, and recognize actuarial gains and losses through other comprehensive income. The statement is effective for fiscal years ending after December 15, 2006. The adoption of SFAS No. 158 did not have a material impact on the Company’s consolidated balance sheet and statement of operations.

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.

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. We adopted SAB No. 108 in the fourth quarter of 2006 and adoption of SAB No. 108 did not impact our consolidated financial results.

In July 2006, the FASB issued Interpretation No. 48 “Accounting for Uncertainty in Income Taxes" ("FIN 48"). The interpretation requires a two step approach for recognizing and measuring tax benefits based on a recognition threshold of “more likely than not”. The FASB also requires explicit disclosures about uncertainties in tax positions including a detailed rollforward of tax benefits that do not qualify for financial statement recognition. The adoption of FIN 48 is effective for fiscal years beginning after December 15, 2006. While the Company’s analysis of the impact of this Interpretation is not yet complete, the Company does not anticipate it will have a material impact on the consolidated financial statements.

In December 2004, FASB issued SFAS No. 123(R), "Share-Based Payment", that requires compensation costs related to stock-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost is measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards are to be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the reward. SFAS No. 123(R) is effective as to the Company as of the beginning of the Company's 2006 fiscal year. The Company accounted for the stock-based compensation costs using the modified prospective method at the time of adoption. The adoption of SFAS 123(R) did not have a material effect on the consolidated balance sheet as of December 31, 2006 or the consolidated statement of cash flows for the year ended December 31, 2006.

F-9

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.

F-10

2.	OTHER ASSETS

	December 31,
	2006		2005
Deposit on investment	$	1,000,000	$	-
Deposits - other		4,396		10,000
	$	1,004,396	$	10,000

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 nine months ended September 30, 2006.

In May 2006, the Company forwarded $4,462 to a real estate agency as a deposit on property in St. John’s, Newfoundland. The transaction was not consummated and the deposit is due from the real estate agency.

3.	PROPERTY AND EQUIPMENT

	December 31,
	2006		2005
Equipment	$	21,229	$	8,234
Building		352,522		-
Furniture and fixtures		69,233		-
Transportation equipment		35,286		-
Leasehold improvements		5,510		-
		483,780		8,234
Less: Accumulated Depreciation		24,909		823
	$	458,871	$	7,411

Depreciation expense for the year ended December 31, 2006 and 2005 and the period November 29, 2004 (Date of Formation) through December 31, 2006, amounted to $24,086, $823 and $24,909, respectively.

F-11

4.	NOTE PAYABLE - RELATED PARTY

On December 15, 2005 the Company issued an unsecured promissory note at prime plus 1%

(8.25% at December 31, 2006) 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 of the time of issuance. Interest expense for the years ended December 31, 2006 and 2005 and for the period November 27, 2004 (Date of Formation of the subsidiary) through December 31, 2006 amounted to $3,963, $-0- and $3,963, respectively, and was accrued as at December 31, 2006.

5.	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 December 31, 2006). 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 payable of $4,261 is included in current liabilities on the Company’s consolidated balance sheet as of December 31, 2006.

The payments now required under the long-term obligations listed above during the years following January 1, 2006 are set below:

2007	$	4,261
2008		4,553
2009		4,867
2010		5,201
Thereafter		240,411
	$	259,293

6.	INCOME TAXES

At December 31, 2006, the Company has a net operating loss carry-forward of approximately $5,618,600 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 carryforward, the Company has recorded a valuation allowance for the entire amount of the deferred asset.

F-12

7.	ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,
	2006		2005

Professional fees	$	311,660	$	20,000
Payroll		37,421	$	-
Interest expense		3,963	$	-
Other		9,103		3,520
	$	362,147	$	23,520

8.	SETTLEMENT OF DEBT

In September 2005, the Company issued 5,000 shares of Series A Preferred Stock and paid $2,735 to settle a debt of $30,611 to a former noteholder of Pexcon.

9.	STOCKHOLDERS' EQUITY

Common Stock

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.

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.

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.

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.

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-13

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. During the years ended December 31, 2006 and December 31, 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. As of December 31, 2006, there were 2,985,000 shares of Series A Preferred Stock outstanding which may be converted into 8,955,000 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.

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.

F-14

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 of 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:

	2006			2005
Revenue from unrelated entity
and country of Company's
domicile:
United States	$	-		$	-
Canada		-			-
	$	-		$	-
Total Revenues:
United States	$	-		$	-
Canada		-			-
	$	-		$	-
Income (loss) from Operations:
United States	$	(2,718,565	)	$	(2,622,574	)
Canada		(228,481	)		-
	$	(2,947,046	)	$	(2,622,574	)
Identifiable Assets:
United States	$	1,369,554		$	184,935
Canada		441,207			-
	$	1,810,761		$	184,935
Capital Expenditures:
United States	$	27,974		$	8,234
Canada		447,572			-
	$	475,546		$	8,234
Depreciation and Amortization:
United States	$	6,903		$	823
Canada		17,183			-
	$	24,086		$	823

F-15

11.	LEGAL PROCEEDINGS

On or about August 15, 2006, a complaint was filed against the Company by Gerald M. Dunne in the Circuit Court of the 17^th Judicial Circuit in and for Broward County, Florida (Case No. 0612299). In the complaint, Mr. Dunne alleged that the Company breached a May 25, 2005 Acquisition Agreement pursuant to which the Company acquired certain shares of Tekoil & Gas Corporation, a Florida corporation, owned by Mr. Dunne in exchange for shares of our common stock. Mr. Dunne alleged that the Company failed to issue shares of our common stock in an amount equal to seven percent (7%) of the Company’s outstanding shares of common stock in breach of the Acquisition Agreement.

The complaint sought the following relief: (i) a temporary injunction preventing the Company from filing an application for a listing on the OTC Bulletin Board, or from selling, assigning or otherwise encumbering the Company’s shares until it has fulfilled its contractual obligations to Mr. Dunne; (ii) a judgment against the Company for breach of contract; (iii) a judgment ordering the Company to specifically perform the Acquisition Agreement and deliver the shares to Mr. Dunne; (iv) as an alternative to the claims for breach of contract and specific performance, a judgment for damages against the Company based upon an allegation of conversion of the shares; and (v) as an alternative to the claims for breach of contract and specific performance, a judgment for damages against the Company based upon an allegation of promissory estoppel.

Contemporaneously with the filing of the complaint, Mr. Dunne filed a verified emergency motion for temporary injunction and incorporated memorandum of law with respect to his request for a temporary injunction in the Complaint.

On December 6, 2006, the Company and Mr. Dunne entered into a Settlement Agreement and Mutual Release that provided that the Company would pay Mr. Dunne $12,500.00 for his attorney’s fees and issue to him 504,000 shares of the Company’s unregistered common stock, which would be released to him by an escrow agent over a 12-month period. A stock certificate representing 64,000 shares of common stock has been delivered to Mr. Dunne, and certificates representing 40,000 shares each are to be released to Mr. Dunne at the beginning of each month through November 1, 2007. The certificates are dated June 27, 2005 (the date of the closing of the Acquisition Agreement) and bear a restrictive legend. The Company expensed the value of the 504,000 shares ($166,320) issued to Mr. Dunne and is included in the consolidated statement of operations for the year ended December 31, 2006.

12.	SUBSEQUENT EVENT

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-NCOPB”). 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%.

F-16

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.

F-17

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.

F-18

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.

F-19

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.

F-20

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.

F-21

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.

F-22

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

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.

F-23

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

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.

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.

F-24

Evaluation of long-lived Assets

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

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

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

F-25

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.

2.	FARMOUT AGREEMENT

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%.

F-26

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

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.

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.

F-27

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:

F-28

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.

F-29

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.

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:

F-30

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

	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	)

F-31

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.

F-32

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Officers and Directors.

Item 25. Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses in connection with the issuance and distribution of the securities being registered, all of which are being borne by the registrant.

Securities and Exchange Commission Registration Fee	$	1,905.12
Accounting Fees and Expenses	$	15,000.00
Legal Fees and Expenses	$	75,000.00
Printing Fees and Expenses	$	15,000.00
Miscellaneous	$	2,000.00
Total	$	108,905.12

Item 26. Recent Sales of Unregistered Securities.

During the past three years, the Company (as Pexcon, Inc., prior to June 27, 2005) has made the following sales of unregistered shares of its common stock, par value $0.000001 per share, or common stock, par value $0.00000001 per share (the numbers of shares shown reflect the 100:1 reverse stock split that occurred on October 14, 2005 and issuances prior to June 27, 2005 are to the knowledge of management of the Company):


Name of Purchaser	No. of Shares		Proceeds of Sale (in Dollars)		Date of Issuance
Boyce, Dick (1)		100,000		20,000		October 21, 2005
Bullis, Anthony (2)		584,470		20,000		November 18, 2005
Clear, Francis G. (3)		1,500,000		300,000		October 21, 2005
Clear, Francis G. (4)		584,470		-0-		November 18, 2005
Creitzman, Richard (3)		1,000,000		200,000		October 21, 2005
Genzianelli, Frank (2)		46,573		20,000		November 18, 2005
Goldman, Sachs & Co. (8)		900,000		-0-		May 11, 2007
Goodman, Gerald (3)		2,000,000		400,000		October 21, 2005
Goodman, Gerald (4)		118,170		-0-		November 18, 2005
Goodman, Gerald (5)		1,025,000		338,250		November 8, 2006
Harrison, Steven R. (2)		17,378		1,015		November 18, 2005
Kalidas, Kirti (2)		216,875		100,000		November 18, 2005
Kalidas, Kiiti		630,000		-0-		November 20, 2006
Lee, Joe (2)		58,390		3,383		November 18, 2005
Mason, David (2)		11,697		677		November 18, 2005
John W. Barton (7)		4,000,000		(7)		May 11, 2007
Rich Holdings LLC (7)		4,000,000		(7)		May 11, 2007
Masters Resources, LLC (7)		1,000,000		(7)		May 11, 2007
Ottens, Eric (3)		150,000		30,000		October 21, 2005
Parsons, Donna (6)		250,000		82,500		September 18, 2006
Partyka, Paul P. (2)		17,378		4,015		November 18, 2005
Western, Mark S. (1)		5,000,000		1,000,000		October 21, 2005
Western, Mark S. (4)		5,294,404		-0-		November 18, 2005

(1) These sales were issuances of stock in exchange for services. Such shares of common stock were valued at $0.20 per share as of October 21, 2005, the date of grant.

II-1

(2) These sales were originally sales of common stock of the Company (then known as Pexcon, Inc.), par value $0.00000001 per share. The numbers of shares of common stock indicated reflect the 100:1 reverse stock split, the proceeds of sale reflect the original sum paid to the Company (then known as Pexcon, Inc.), and the dates of issuance are the original dates of sales by the Company (then known as Pexcon, Inc.)

(3) These sales were issuances of restricted stock to officers and directors as compensation for services provided. Such shares of common stock were valued at $0.20 per share as of October 21, 2005, the date of grant. The shares are subject to the Company’s right to repurchase them under certain circumstances, and the number of such shares to which the Company’s repurchase right applies is reduced by 1/36 ^th for each full month of service as an employee or a director, as the case may be.

(4) On November 29, 2004, Tekoil-FL granted 5,100,000 shares of its common stock to its promoters and founders for their services in connection with the formation of that company. Such shares were exchanged for shares of our common stock in connection with the Acquisition Agreement as of June 27, 2005. The number of shares of common stock indicated is the result of the November 29, 2004, share issuance and the June 27, 2005 share exchange (taking into account the 100:1 reverse stock split).

(5) On November 8, 2006, the Company issued 1,025,000 shares of common stock to Gerald Goodman, 1,000,000 shares of which were 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 Ninety Six Thousand Two Hundred Fifty Dollars ($296,250), and (iii) a credit line of the Company and its subsidiaries and related entities in the amount of Fifty Thousand Dollars ($50,000). The remaining 25,000 shares of common stock were issued as additional consideration for the loan made to the Company on December 15, 2005, by Wiener Goodman & Company, PC Profit Sharing Plan FBO Gerald Goodman, in the principal amount of $50,000. Such shares of common stock were valued at $0.33 per share as on November 8, 2006, the date of issuance.

(6) The sale to Donna Parsons was an issuance of stock as compensation for services provided. Such shares of common stock were valued at $0.33 per share as of September 6, 2006, the date of grant. The shares are subject to the Company’s right to repurchase them under certain circumstances, and the number of such shares to which the Company’s repurchase right applies is reduced by 1/3 on June 1, 2007, 2008 and 2009, provided that Ms. Parsons remains an employee on such dates.

(7) These shares were issued as partial consideration pursuant to the Purchase Agreement with respect to the Masters Acquisition described in “Business—Recent Developments” and a related Subscription Agreement, Registration Rights Agreement, Transfer Acknowledgement and Agreement with Masters Resources, LLC, Masters Oil & Gas, LLC, Rich Holdings LLC and John W. Barton, each as amended and as referenced herein as Exhibits 10.18, 10.20, 10.21, 10.22, 10.24, 10.25, 10.26, 10.27, 10.28 and 10.46.

(8) These shares are issuable pursuant to a warrant to be issued pursuant to an Engagement Agreement between Goldman Sachs E & P Capital and the Company, dated December 29, 2006, and the related Warrant issued to Goldman, Sachs & Co. on May 11, 2007, referenced in Exhibit 10.37 hereto.

With respect to sales of common stock by the Company on or after June 27, 2005, no underwriters took part in these sales of common stock, and no underwriting discounts or commissions were paid. These sales were made in reliance on Section 4(2) of the Securities Act and the safe harbor provided by Rule 506 of Regulation D promulgated under the Securities Act, in that the sales did not involve any public offering. All purchasers of these shares of common 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 shares of common stock by any form of general solicitation or general advertising. Each purchaser of these shares of common 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 Securities 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 Securities 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 Commission and the relevant state securities regulators.

With respect to sales of common stock prior to June 27, 2005 by Pexcon, Inc. (as the Company was known at that time), to the knowledge of the Company’s management, no underwriters took part in these sales of unregistered shares of Pexcon, Inc.’s common stock, and no underwriting discounts or commissions were paid. The Company’s management does not know the section of the Securities Act or the Commission rule under which Pexcon, Inc., claimed exemption from registration. Other than as disclosed above, the Company’s management does not possess any other information concerning sales of unregistered securities of Pexcon, Inc. At the time of the change of control of the Company on June 27, 2005, 772,200,000 shares (pre-reverse split) of Pexcon, Inc., common stock were outstanding, and no shares of preferred stock were outstanding. The Company cannot guarantee that other unregistered securities were not sold by the Company (as Pexcon, Inc.) prior to June 27, 2005, or that sales by the Company (as Pexcon, Inc.) prior to June 27, 2005, were properly made in reliance on an available exemption from the registration requirements of the Securities Act.

II-2

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 $1,050,000.00. The Subscription Agreement for this offering provides that 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 sixty (60) days subsequent to the date on which the Company accepted such Subscriber’s subscription, but no later than ninety (90) days subsequent to such acceptance date. The following Subscribers purchased shares of common stock in accordance with the foregoing terms:

Name of Subscriber	No. of Shares		Proceeds of Sale (in Dollars)		Date of Sale (Acceptance Date)
Ciambrone, David and Robin		525,000		250,000		November 20, 2006
Kalidas, Kirti		630,000		300,000		November 20, 2006
Lee, Joseph R.		525,000		250,000		November 20, 2006
Rodolan, Barry		210,000		100,000		November 20, 2006
Schaefer, Charles		105,000		50,000		November 20, 2006
Thomas K. Connellan IRA		168,000		80,000		November 20, 2006
Thomas K. Connellan Trust		42,000		20,000		November 20, 2006

No underwriters took part in these sales of common stock, and no underwriting discounts or commissions were paid. The Company’s sales of these securities were made in reliance on Section 4(2) of the Securities Act and the safe harbor provided by Rule 506 of Regulation D promulgated under the Securities Act, in that the sales did not involve any public offering. All Subscribers were “accredited investors” as defined in Rule 501 of Regulation D, based upon representations made by such Subscribers to the Company; and, consequently, the Company was not required to provide such Subscribers information of the type described in Rule 502(b)(2) of Regulation D. Nevertheless, the Subscribers had access to the Company’s public reports and other filings with the Commission and an opportunity to ask questions of and receive answers from the officers and directors of the Company. Neither the Company nor any person acting on its behalf offered or sold these shares of common stock by any form of general solicitation or general advertising. Each Subscriber represented to the Company, among other things, (i) that such Subscriber was acquiring such shares for the Subscriber’s own account and not with a view to the sale or distribution thereof, (ii) that such Subscriber understood that such shares had not been registered under the Securities Act and, therefore, could not be resold unless they were subsequently registered under the Securities 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 Securities 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 Commission and the relevant state securities regulators.

On December 6, 2006, the Company and Gerald M. Dunne entered into a Settlement Agreement and Mutual Release pursuant to which the Company agreed to, among other things, issue Mr. Dunne 504,000 shares of the Company’s common stock, which will be released to him over a 12-month period. A stock certificate representing 64,000 shares of common stock has been delivered to Mr. Dunne, and certificates representing 40,000 shares each are to be released to Mr. Dunne at the beginning of each month through November 1, 2007. The certificates are dated June 27, 2005 (the date of the closing of the Acquisition Agreement pursuant to which the dispute with Mr. Dunne arose) and bear a restrictive legend.

On May 1, 2006, the Company issued 50,000 share of common stock to Donna Parsons, an employee of the Company’s wholly-owned Canadian subsidiary. The Company issued these shares as an incentive to Ms. Parsons in the performance of her duties to the subsidiary company.

II-3

No underwriters took part in these issuances of common stock, and no underwriting discounts or commissions were paid. The Company’s sale of securities to Mr. Dunne and its issuance to Ms. Parsons were made in reliance on Section 4(2) of the Securities Act and, in the case of Mr. Dunne, the safe harbor provided by Rule 506 of Regulation D promulgated under the Securities Act, in that the issuances did not involve any public offering. Mr. Dunne represented to the Company that he was an “accredited investor” as defined in Rule 501 of Regulation D; and, consequently, the Company was not required to provide Mr. Dunne information of the type described in Rule 502(b)(2) of Regulation D. Nevertheless, Mr. Dunne had access to the Company’s public reports and other filings with the Commission and an opportunity to ask questions of and receive answers from the officers and directors of the Company. Neither the Company nor any person acting on its behalf offered or sold these shares of common stock by any form of general solicitation or general advertising. Mr. Dunne represented to the Company, among other things, (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 Securities Act and, therefore, could not be resold unless they were subsequently registered under the Securities 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 Securities Act and setting forth the restrictions on transferability and sale of the shares. All stock certificates representing the shares of common stock issued to Mr. Dunne and to Ms. Parsons were issued with a restrictive legend, and the Company has filed notices on Form D, as required, with the Commission and the relevant state securities regulators.

During the past three years, the Company has made the following sales of unregistered shares of its Series A Convertible Preferred Stock, par value $0.00000001 per share, at the offering price of $1.00 per share.

Name of Purchaser	No. of Shares		Proceeds of Sale (in Dollars)		Date of Issuance

Abbot, Bruce		5,000		5,000		March 10, 2006
A. Muffi Family Revocable Trust UTD 02/27/03		10,000		10,000		January 2, 2007
Anderson, Stuart, Morgan Stanley custodian FBO		20,000		20,000		June 28, 2005
Axt, James Todd (National Financial Services, LLC FBO)		50,000		50,000		May 10, 2006
Axt, J. Todd		50,000		50,000		December 11, 2006
Bahary, Jeffrey A.		10,000		10,000		January 10, 2006
Bahary, Jeffrey A.		10,000		10,000		December 28, 2006
Bakos, George J.		10,000		10,000		December 12, 2006
Ballestero, Edward		10,000		10,000		October 8, 2006
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 22, 2006
Bennett, Daniel J.		5,000		5,000		January 16, 2007
Berke, Marvin		20,000		20,000		July 6, 2006
Bloom, Bailey (Edward Bloom FBO Bailey Bloom)		35,000		35,000		May 1, 2006
Bloom, David C.		100,000		100,000		April 20, 2006
Bloom, Edward		100,000		100,000		April 1, 2006
Bloom, Taylor (Edward Bloom FBO Taylor Bloom)		35,000		35,000		May 1, 2006
Bloom, William		50,000		50,000		April 25, 2006
Blumenfeld, Marvin A.		10,000		10,000		October 23, 2006
Boniello, Patricia A.		10,000		10,000		September 13, 2006
Boniello, Ralph W.		50,000		50,000		January 25, 2006
Boniello, Ralph W.		5,000		5,000		January 2, 2007
Bradley, Robert		5,000		5,000		January 2, 2007
Bradley, Robert T.		5,000		5,000		January 2, 2007
Bradley, Robert		10,000		10,000		November 9, 2006
Bradley, Robert		10,000		10,000		September 1, 2006
Bradley, Robert T. or Sharon L., JTWROS		10,000		10,000		November 10, 2006
Branz, Karen S.		5,000		5,000		January 2, 2007
Brown, Don		5,000		5,000		October 10, 2006
Bulla, Lenny		5,000		5,000		March 30, 2007
Calvani, Marcus and Padilla, Ana		5,000		5,000		November 20, 2006

II-4

Carbe, Vincent, Sr.	10,000	10,000	October 13, 2006
Casapu, Gheorghe and Mihaela	5,000	5,000	November 20, 2006
Casres, Richard J.	5,000	5,000	November 10, 2006
Caterbone, Michael	20,000	20,000	November 26, 2006
Colley, Jane	10,000	10,000	November 26, 2006
Connellan, Sandra S.	10,000	10,000	June 27, 2006
Connellan, Thomas K. TR	200,000	200,000	August 30, 2005
Connellan, Thomas K. Trust	3,000	3,000	November 16, 2006
Connellan, Thomas K. IRA (Fiserv ISS & Co. TTEE FBO Acct. 0600000014340)	25,000	25,000	January 25, 2006
Connellan, Thomas K. (issued as Fiserv ISS & Co. FBO The Connellan Group Inc.	20,000	20,000	June 28, 2006
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
Davies, Max	10,000	10,000	June 30, 2006
Delaney, Michael	30,000	30,000	January 10, 2006
DePierro, Nicholas J.	20,000	20,000	January 10, 2006
DiLascia, Vincent A.	5,000	5,000	January 2, 2007
Dodd, Pamela	10,000	10,000	January 25, 2006
Dodd, Pamela	1,000	1,000	January 17, 2006
Donofrio, Carmen V.	15,000	15,000	December 12, 2006
Dorn, Cassandra	5,000	5,000	October 10, 2006
Dorn, Judith H. and Daniel W.	15,000	15,000	October 10, 2006
Dorn, Sarah V.	5,000	5,000	October 10, 2006
Eastmond, Thomas	10,000	10,000	January 2, 2007
Economou, Brian	5,000	5,000	January 2, 2007
Equity Trust Co. FBO Gregg Roberti IRA	10,000	10,000	November 13, 2006
Fair, Rodney	5,000	5,000	March 30, 2007
Fairbrother, Faith and Simon	50,000	50,000	November 26, 2006
Fairbrother, Faith	50,000	50,000	August 10, 2006
Fairbrother, Faith	5,000	5,000	January 2, 2007
Fennessy, Jane	10,000	10,000	November 11, 2006
Fernandez, John	10,000	10,000	December 11, 2006
Fernandez, John	10,000	10,000	December 12, 2006
Flanders, Paul	10,000	10,000	August 14, 2006
Fliszar, Avis M.	2,000	2,000	January 17, 2006
Fliszar, Avis M.	3,000	3,000	October 7, 2006
Frockt, Jerry B.	50,000	50,000	January 6, 2006
Frockt, Jerry B.	20,000	20,000	September 7, 2005
Gebele, Paula C.	5,000	5,000	May 1, 2006
Genzianelli, Frank	30,000	30,000	August 20, 2005
Genzianelli, Frank J.	10,000	10,000	October 5, 2006
Genzianelli, Frank J.	50,000	50,000	February 26, 2007
Gerin, Kiril and Robyn	10,000	10,000	April 22, 2006
Gerling, Robert	10,000	10,000	March 3, 2006
Gonzalez, Benjamin	5,000	5,000	December 6, 2006
Gorman, Timothy and Catherine	15,000	15,000	July 17, 2006
Hager, David R.	25,000	25,000	October 9, 2006
Harrison, Steve	5,000	5,000	October 10, 2005
Harrison, Steve	10,000	10,000	November 21, 2006
Harrison, Steve	20,000	20,000	January 9, 2007
Heckman, Frank	5,000	5,000	November 20, 2006
Hill, Timothy S.	10,000	10,000	April 3, 2006
Horne, Merton	5,000	5,000	October 23, 2006
Horton, David	5,000	5,000	October 8, 2006
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
Ivanova, Svetlana	2,000	2,000	October 7, 2006
Izzo, Michele	5,000	5,000	November 10, 2006
Izzo, Salvatore, Jr.	15,000	15,000	October 13, 2006

II-5

Izzo, Salvatore, III	5,000	5,000	November 10, 2006
Jacobowitz, Shawn	30,000	30,000	March 3, 2006
Jennings, Bob	5,000	5,000	January 2, 2007
Jones, Carol Lynn T.	10,000	10,000	November 26, 2006
Jones, Carol Lynn T.	10,000	10,000	July 1, 2006
Kalidas, Amar	20,000	20,000	November 9, 2006
Kalidas, Amar	20,000	20,000	February 26, 2007
Kalidas, Dinesh	85,000	85,000	February 26, 2007
Kalidas, Kirti	100,000	100,000	December 20, 2005
Kalidas, Kirti	30,000	30,000	July 28, 2005
Kalidas, Kirti	70,000	70,000	August 14, 2005
Kalidas, Manaklal P.	50,000	50,000	October 14, 2006
Kalidas, Poonam	20,000	20,000	November 9, 2006
Kalidas, Poonam	20,000	20,000	February 26, 2007
Kalidas, Prem	50,000	50,000	September 24, 2005
Kalidas, Vinod	15,000	15,000	February 26, 2007
Kendall Ellis Corporation	10,000	10,000	December 6, 2006
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
Kiernan, Christopher	10,000	10,000	April 16, 2006
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
Koch, Peter J. & Cindy Chapman-	5,000	5,000	April 5, 2006
Korenek, Alfred J.	10,000	10,000	August 3, 2005
Korenek, Alfred J.	25,000	25,000	December 21, 2005
Korenek, Alfred J.	15,000	15,000	October 12, 2006
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
Krulik, Ira	10,000	10,000	October 9, 2006
L&L Sealer & Supplies, L.L.C.	20,000	20,000	March 9, 2006
Lasher, Dale	10,000	10,000	January 12, 2007
Lawrence, Brent	10,000	10,000	January 2, 2007
Lee, Keena R.	50,000	50,000	January 10, 2006
Lee, Michael F.	50,000	50,000	January 10, 2006
Lewit, Robert H.	5,000	5,000	March 10, 2006
Licina, Philip	20,000	20,000	March 30, 2007
Lopez, Kim	15,000	15,000	October 2, 2006
LoPresti, Thomas IRA (National Financial Services, LLC/FMTC FBO)	50,000	50,000	November 26, 2006
Lovera, Catherine	5,000	5,000	January 2, 2007
Lowe, Alan	50,000	50,000	May 10, 2006
Lower, Veronica	5,000	5,000	December 6, 2006
Maglio, Terry	5,000	5,000	April 18, 2006
Mamone, Christopher	10,000	10,000	December 28, 2006
Matlack, John C.	10,000	10,000	March 12, 2006
Matthews, Ching J. & Ian	5,000	5,000	April 4, 2007
Mauck, Michael	5,000	5,000	December 6, 2006
McDaniel, Gary	10,000	10,000	January 2, 2007
McGarigal, Paul J., Trust DTD 2/21/1998	5,000	5,000	January 3, 2006
McGrade, Gregory J.	10,000	10,000	July 31, 2006
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
Munro, Mark	20,000	20,000	January 17, 2006
Munro, Mark	30,000	30,000	February 6, 2006
Mullins, Donald K.	10,000	10,000	September 20, 2006
Nagindas, Naresh G.	10,000	10,000	October 7, 2005
Nigri, Robert L.	25,000	25,000	March 30, 2007
Nigri, Robert L.	25,000	25,000	April 4, 2007

II-6

Nevins, Michelle	5,000	5,000	January 2, 2007
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
Pappas, James G. and Patricia	10,000	10,000	March 15, 2006
Park, James M.	5,000	5,000	March 30, 2007
Parent, James IRA (Charles Schwab & Co., Inc., Custodian FBO)	25,000	25,000	November 20, 2006
Partyka, Paul P.	5,000	5,000	December 1, 2005
Piccirollo, Peter	5,000	5,000	March 30, 2007
Pick, Diane	5,000	5,000	February 24, 2006
Pingitore, Carole	10,000	10,000	March 15, 2006
Pizzo, Thomas	10,000	10,000	March 13, 2006
Radolan, Barry	50,000	50,000	January 2, 2007
Radolan, Xiaoli	5,000	5,000	April 4, 2007
Revill, Karen	2,000	2,000	November 14, 2006
Reyes, Edwin	5,000	5,000	October 14, 2006
Rhamstine, Elizabeth	5,000	5,000	December 6, 2006
Rhamstine, Stephen P.	10,000	10,000	August 17, 2006
Roberti, Gregg	5,000	5,000	October 8, 2006
Roberti, Gregg & Laurie	10,000	10,000	October 14, 2006
Roberti, Gregg & Laurie	10,000	10,000	January 2, 2007
Rowles, Katherine	10,000	10,000	November 26, 2006
Ruperto, Francisco, Jr.	10,000	10,000	January 9, 2007
Saunders, Jan	5,000	5,000	March 30, 2007
Schafer, Charles E. (RBC Dan Rauscher, Inc. FBO)	50,000	50,000	April 1, 2006
Schafer, Violet (RBC Dan Rauscher, Inc. FBO)	50,000	50,000	April 5, 2006
Sciortino, Phillip, Jr.	10,000	10,000	March 30, 2006
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
Smith, Nancy D.	5,000	5,000	October 10, 2006
Stratton, Laird S.	10,000	10,000	May 1, 2005
Studley, Michael	7,000	7,000	December 20, 2005
Sundheim, Douglas M.	1,000	1,000	January 17, 2006
Sundheim, Scott M.	1,000	1,000	January 17, 2006
Szem, Christopher B.	25,000	25,000	April 28, 2006
Tyer, Stephen J.	20,000	20,000	November 19, 2006
Van Horn, Charles W.	10,000	10,000	September 12, 2006
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
Warner, Kenneth E.	100,000	100,000	December 4, 2005
Wellington, Norma	20,000	20,000	March 30, 2007
Whelan, Michael J.	15,000	15,000	April 4, 2007
Winseck, Fred	15,000	15,000	April 18, 2006
Ziselman, Carol L.	5,000	5,000	November 14, 2006

No underwriters took part in these sales of Series A Preferred Stock, and no underwriting discounts or commissions were paid. The Company’s sales of these securities were made in reliance on Section 4(2) of the Securities Act and the safe harbor provided by Rule 506 of Regulation D promulgated under the Securities Act, in that the sales did not involve any public offering. All purchasers of these 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 shares of Series A Preferred Stock by any form of general solicitation or general advertising. Each purchaser of these 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 Securities Act and, therefore, could be resold unless they were subsequently registered under the Securities 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 Securities 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 Commission and the relevant state securities regulators.

II-7

Item 27. 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 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 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 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)*

Opinion of Baker & Hostetler LLP as to the validity of the issuance of the common stock of Tekoil & Gas Corporation being registered (filed herewith)


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) *

II-8

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) *

II-9

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, dated effective as of April 30, 2007, by and 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) *


10.29		Credit and Guaranty Agreement dated as of May 11, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, and the other Guarantors (defined therein), the Lenders (defined therein), and J. Aron & Company, as Syndication Agent and Administrative Agent for the Lenders. (filed as Exhibit 10.29 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.30		Note dated May 11, 2007, in the principal amount of $50 million, made by Tekoil and Gas Gulf Coast, LLC to J. Aron & Company. (filed as Exhibit 10.30 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.31		Pledge and Security Agreement dated as of May 11, 2007, by and among Tekoil and Gas Gulf Coast, LLC, each of the affiliates of the Company signatory thereto, whether as an original signatory thereto or as an Additional Grantor (defined therein), and J. Aron & Company, as administrative agent for the Beneficiaries (defined therein). (filed as Exhibit 10.31 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.32		Pledge Agreement dated as of May 11, 2007, by and between the Company and J. Aron & Company, as administrative agent for the Beneficiaries (defined therein). (filed as Exhibit 10.32 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.33		Deed of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing and Financing Statement dated May 11, 2007, from Tekoil and Gas Gulf Coast, LLC to John Howie, as Trustee, and J. Aron & Company, as Agent. (filed as Exhibit 10.33 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.34		Blocked Deposit Account Control Agreement dated as of May 11, 2007, among Tekoil and Gas Gulf Coast, LLC, J. Aron & Company and Amegy Bank National Association. (filed as Exhibit 10.34 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.35		Default Deposit Account Control Agreement dated as of May 11, 2007, among Tekoil and Gas Gulf Coast, LLC, J. Aron & Company and Amegy Bank National Association. (filed as Exhibit 10.35 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.36		Conveyance of Overriding Royalty Interest dated as of May 11, 2007, but effective as of October 1, 2006, at 12:00 a.m. local time at the location of the property described therein, made by Tekoil and Gas Gulf Coast, LLC and its Affiliates, to and in favor of MTGLQ Investors, L.P. (filed as Exhibit 10.34 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.37		Warrant to purchase 900,000 shares of the Company’s Common Stock, dated May 11, 2007, issued to Goldman, Sachs & Co. by the Company. (filed as Exhibit 10.37 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

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10.38		Amended and Restated Operating Agreement of Tekoil and Gas Gulf Coast, LLC (formerly known as Masters Acquisition Co., LLC), dated May 11, 2007. (filed as Exhibit 10.38 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.39		Registration Rights Agreement dated as of May 11, 2007, by and between the Company and Goldman, Sachs & Co. (filed as Exhibit 10.39 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.40		Assignment and Bill of Sale executed May 11, 2007, and effective October 1, 2006, at 12:00 midnight Central Standard Time, from Masters Resources, LLC and Masters Oil & Gas, LLC to Tekoil and Gas Gulf Coast, LLC. (filed as Exhibit 10.40 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.41		Assignment of Overriding Royalty executed May 11, 2007, and effective as of October 1, 2006, at 7:00 a.m. Central Daylight Savings Time, from Masters Resources, LLC and Masters Oil & Gas, LLC to Masters Pipeline, LLC. (filed as Exhibit 10.41 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.42		Indemnity Agreement dated as of May 11, 2007, among Masters Resources, LLC, Masters Oil & Gas, LLC and Masters Pipeline, LLC and Tekoil and Gas Gulf Coast, LLC. (filed as Exhibit 10.42 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.43		Management Services Agreement, dated as of May 11, 2007, by and between the Company and Tekoil and Gas Gulf Coast, LLC. (filed as Exhibit 10.43 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.44		ISDA Master Agreement dated as of May 11, 2007, between J. Aron & Company and Tekoil and Gas Gulf Coast, LLC. (filed as Exhibit 10.44 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.45		Schedule to the ISDA Master Agreement dated as of May 11, 2007, between J. Aron & Company and Tekoil and Gas Gulf Coast, LLC. (filed as Exhibit 10.45 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.46		Transfer Acknowledgement and Agreement dated May 11, 2007, among the Company and Masters Resources, LLC, Masters Oil & Gas, LLC, Rich Holdings LLC and John W. Barton. (filed as Exhibit 10.46 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.47		Transaction Confirmation, dated May 11, 2007, from J. Aron & Company to Tekoil and Gas Gulf Coast, LLC, effective May 1,2007 — Contract Reference 897282314 1 1. (filed as Exhibit 10.47 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.48

Transaction Confirmation, dated May 11, 2007, from J. Aron & Company to Tekoil and Gas Gulf Coast, LLC, effective June 1, 2007 — Contract Reference 897282306 1 1. (filed as Exhibit 10.48 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

Statement regarding the computation of earnings per share is omitted because such computation can be clearly determined from the material contained in this Registration Statement on Form SB-2.

Letter on change in certifying accountant (filed herewith; previously filed erroneously as Exhibit 23.2 to the Company’s Form SB-2 dated April 19, 2007, and filed with the SEC on April 19, 2007)

21		Subsidiaries of the small business issuer (filed as Exhibit 21.1 to the Company's Form 10-KSB dated March 27, 2007, and filed with the SEC on March 28, 2007) *

23.1		Consent of Madsen & Associates, CPA’s Inc., dated June 5, 2007 (filed herewith)

23.2

Consent of Baker & Hostetler LLP (included in Exhibit 5)

Power of Attorney (included on signature page)

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

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Item 28. Undertakings.

The undersigned registrant hereby undertakes to:

(1) File, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by section 10(a)(3) of the Securities Act;

(ii) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

(iii) include any additional or changed material information on the plan of distribution.

(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

(4) For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424;

(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv) any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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That for the purpose of determining any liability under the Securities Act to any purchaser:

(1) Each prospectus filed by the undersigned small business issuer pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(2) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

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SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the city of Orlando, State of Florida, on June 7, 2007.


	TEKOIL & GAS CORPORATION

	By:	/s/ Mark S. Western
		Mark S. Western
		Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark S. Western his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all post-effective amendments to this registration statement, and to file the same with all exhibits hereto, and other documents in connection herewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date


/s/ Mark S. Western	Chief Executive Officer	June 7, 2007
Mark S. Western	Chairman of the Board


/s/ Francis G. Clear	Chief Operating Officer	June 7, 2007
Francis G. Clear	Director


/s/ Gerald Goodman	Chief Financial Officer	June 7, 2007
Gerald Goodman	Director Principal Accounting Officer


/s/ Richard Creitzman	Director	June 7, 2007
Richard Creitzman

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Tekoil & Gas (TKGN) Inactive SB-2/ARegistration of securities for small business issuer (amended)