Hero Technologies Inc. - Annual Report: 2008 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________

FORM 10-K

______________

þ  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008.

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____.

Commission File Number: 000-52419

———————

HOLLOMAN ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

———————

333 North Sam Houston Parkway East, Suite 600, Houston, Texas, 77060

(Address of Issuer's Principal Executive Offices, Zip Code)

Issuer’s telephone number, including area code:   (281) 260-0193

Securities registered under section 12(g) of the Exchange Act: Common Stock, ($0.001 Par Value)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨  No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act  Yes ¨  No þ

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ  No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer  ¨                                                                                           Accelerated filer  ¨

Non-accelerated filer  ¨ (Do not check if a smaller reporting company)                 Smaller reporting company  þ

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

Yes ¨  No þ

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2008 was approximately $20,124,072

As of March 15, 2009 the Company had 95,159,065 outstanding shares of common stock.

PART I

ITEM 1.

BUSINESS.

Cautionary Statement Concerning Forward-Looking Statements

This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management and information currently available to management. The use of words such as "believes," "expects," "anticipates," "intends," "plans," "estimates," "should," "likely" or similar expressions, indicates a forward-looking statement.

Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Many of the factors that will determine these results are beyond our ability to control or predict. Do not place undue reliance on any forward-looking statements, which speak only to the date made. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to:

·

The impact of the current economic recession and changes in consumer and business consumption habits;

·

our ability to finance our business plan;

·

our ability to deal effectively with competition and manage our growth;

·

the success or commercial viability of our exploration and drilling plans;

·

our ability to effectively judge acquisition opportunities and integrate acquired assets.

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this filing are based on information available to us on the date of the filing. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this filing.

Business

We were incorporated on May 14, 2004 in Nevada. Between May 2004 and May 2007 we were relatively inactive. During July 2007, we changed our name from Dujour Products, Inc. to Endeavor Energy Corporation. On September 25, 2007 we changed our name to Holloman Energy Corporation.

We are currently controlled by Holloman Corporation, a Texas corporation involved in the engineering and construction of pipelines and mid-stream gas processing facilities.

We originally intended to be a brand licensing and promotional merchandiser. However, we were unable to identify a sufficient number of suitable products for redistribution. Accordingly, we determined to focus on the acquisition, exploration, and development of oil and gas properties. All of our exploration and development efforts are currently concentrated in Australia. Our management believes that Australia provides a stable regulatory, tax and business environment.

1

In May 2007 we acquired a 62.5% working interest in an Australian oil and gas exploration permit area known as Victoria Permit 60 (“Vic P60”). We paid a purchase price for the interest of $639,487 plus a 4.00% overriding royalty interest. In addition, we granted a contingent back-in working interest of 6.20% effective in the event certain performance criteria are achieved. The closing of this transaction is subject to the approval of the title transfer on the permit by the Commonwealth of Australia. In connection with our acquisition of Holloman Petroleum Pty, Ltd. (see below), we also acquired the remaining 37.5% working interest in Vic P60. We currently have a net revenue interest of a 96% in the Vic P60 permit, which comprises 1,375 square kilometers (339,769 acres) in the Bass Strait of the Gippsland Basin in Victoria, Australia. As the holder of the permit we committed to complete the work program required for Vic P60. During February 2008, a shareholder paid $660,000 on our behalf to reserve 3-D seismic participation related to the Vic P60 permit. That contract was not completed. We project that seismic work and interpretation of data will require an investment of $4 to $7 million. The Permit also requires us to drill at least one well before November 2010. We estimate the cost to drill and complete that well will approximate $20 to $30 million. Our plan is to joint venture this prospect with third parties which will pay a substantial portion of the costs required to explore for oil and gas in the area covered by the permit.

On August 3, 2007 we acquired Endeavor Canada Corporation (“Endeavor Canada”), an Alberta corporation involved in the exploration and development of oil and gas, for 9,000 shares of our Series A Preferred stock and 9,000,000 shares of the Class A preferred stock of our wholly owned subsidiary, First Endeavor Holdings. Each Series A Preferred share is convertible into one share of our common stock and is entitled to 1,000 votes on any matter submitted to our shareholders for approval. The Class A preferred shares of First Endeavor Holdings were, at the option of the holder of the shares, convertible into 9,000,000 shares of our common stock. Cameron King, one of our former officers and directors, owned a controlling interest in Endeavor Canada at the time of this transction and received 6,500 Series A Preferred shares and 6,500,000 First Endeavor Holdings Class A preferred shares in exchange for his shares in Endeavor Canada.

On November 21, 2007 we acquired Holloman Petroleum Pty. Ltd. for 18,600,000 shares of our common stock. Holloman Petroleum’s assets consisted of working interests, varying between 37.5% and 100%, in seven oil and gas permits awarded by the Australian government, including the remaining 37.5% working interest in the Vic P60 permit. These permits, which have remaining terms expiring between October 2010 and June 2013, cover 4,554 square kilometers (1,125,317 acres) of land in the Cooper basin and 2,589 square kilometers (639,755 acres) offshore in the Gippsland basin and the Barrow sub-basin. We are obligated to pay 4.77% in royalties on revenues generated by our operations in the Cooper basin. In the Barrow sub-basin we are obligated to pay 4.43% in royalties on revenues generated by our operations on the WA-372P and Wa-373P permits, and 1.43% in royalties on revenues generated by our operations on the WA-375P permit. As holder of these permits, we are required to drill wells and complete other work on the lands covered by the permits. If we elect to drill all the wells and perform all other work required by all of our Australian permits, very early estimates suggest that the cost may be over $45,000,000 during the twelve months ending March 31, 2010 and nearly $260,000,000 over the terms of the permits.

On February 15, 2008 we disposed of our interest in Endeavor Canada. As part of this process, we transferred all outstanding shares of Endeavor Canada to Cameron King. In consideration for the transfer of these shares, the 6,500 shares of our Series A Preferred stock and the 6,500,000 Class A Preferred shares of First Endeavor Holdings previously issued to Mr. King were returned to us and cancelled. At the option of the remaining preferred stockholders, the residual 2,500 shares of the Company’s Series A Preferred stock and 2,500,000 preferred shares of FEH were converted into an equivalent number of shares of the Company’s common stock during June 2008.

As of February 15, 2008 Endeavor Canada had a 100% working interest in one well, a 50% working interest in four wells, a 40% working interest in seven wells and working interests of 25% or less in two wells. Six of these wells were producing a total of approximately 2,540 mcf of gas per month (1,140 mcf of gas net to Endeavor Canada’s working interest in these wells) and the remaining eight wells were shut in due to required maintenance or the price of natural gas.

On March 7, 2008 we entered into an agreement with Holloman Oil & Gas Limited (“Holloman Oil & Gas”) which granted Holloman Oil & Gas the right to earn a two-thirds working interest in the PEL 112 permit, which covers approximately 2,196 square kilometers (542,643 acres) in the Cooper basin of Australia. To earn this working interest, Holloman Oil & Gas agreed to:

1.

Fund the costs required to drill, and if warranted, complete three wells on the PEL 112 within the timeframes required by the permit work program; and

2

2.

Pay us a 1.33% overriding royalty on gross revenues generated from the sale of any oil or gas produced from wells drilled on the PEL 112.

We have the right to earn up to a one-third working interest in the PEL 112 concession by paying, prior to the time any well has reached 50% of the expected total depth, our proportionate share of the cost of drilling any of the wells involved in the three-well drilling program. We also have the right to earn up to a one-third working interest in any future wells drilled on the PEL 112 (over and above the initial three-well drilling program) by paying our proportionate share of the cost of drilling the wells.

In March 2008 Holloman Oil & Gas drilled its first exploratory well on PEL 112. The well was drilled to approximately 6,000 feet and was a dry hole. The terms of the PEL 112 permit and the related permit covering lands in the Cooper basin require us to drill two additional wells prior to June 10, 2013.

On June 11, 2008 the Australian government consolidated two of our oil and gas permits (PEL 108 and PEL 109) into one permit (PEL 444). In connection with that consolidation, the government also extended the lease term and associated work programs for that permit and PEL 112 by five years. Under Australian Law, at the end of each five year term, one third of the area covered by a petroleum exploration license must be relinquished. During June 2008, we identified and relinquished one - third of the acreage covered by PEL 112 and PEL 444 to the Australian government.

On January 22, 2009, the Australian government extended the time frames within which we must complete the Vic P60 seismic work and interpretation. The revised work program required completion of the seismic work by January 28, 2009. Due to current economic conditions, we have been unable to complete the seismic work and we are seeking an additional extension of time to complete these obligations. Our management has no reason to believe that an additional extension will not be granted.

To better coordinate exploration, we are also seeking to consolidate three of our other oil and gas permits (WA-372P, WA-373P and WA-395P).  On March 24, 2009, the Australian government extended the time frames within which we must complete our work obligations  on the WA-372P and WA-373P permits by one year. The work program extension requests we submit evidence of a firm contract to secure a seismic vessel by June 22, 2009.  If a firm commitment is secured in time, a further extension could be considered.

We did not participate in drilling any wells during the year ended December 31, 2008.

As of March 15, 2009 we did not have any proven oil or gas reserves and we did not have any revenue.

During the remainder of 2009 we plan to enter into joint venture agreements with third parties to explore for oil and gas in the Cooper, Gippsland and Barrow basins of Australia.

Competition

The petroleum and natural gas industry is highly competitive. Numerous independent oil and gas companies, oil and gas syndicates and major oil and gas companies actively seek out and bid for oil and gas properties as well as for the services of third party providers, such as drilling companies, upon which we rely. A substantial number of our competitors have longer operating histories and substantially greater financial and personnel resources than we do. Many of these companies not only explore for, produce and market petroleum and natural gas, but also carry out refining operations and market the resultant products on a worldwide basis which may provide them with additional sources of capital. Larger and better capitalized competitors may be in a position to outbid us for particular prospect rights. These competitors may also be better able to withstand sustained periods of unsuccessful drilling. Larger competitors may be able to absorb the burden of any changes in laws and regulations more easily than we can, which would adversely affect our competitive position. In addition, most of our competitors have been operating for a much longer time and have demonstrated the ability to operate through industry cycles.

Petroleum and natural gas producers also compete with other suppliers of energy and fuel to industrial, commercial and individual customers. Competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the governments and/or agencies thereof and other factors out of our control including, international political conditions, terrorism, overall levels of supply and demand for oil and gas, and the markets for synthetic fuels and alternative energy sources.

3

Regulation

The exploration, production and sale of oil and gas are extensively regulated by governmental bodies. Applicable legislation is under constant review for amendment or expansion. These efforts frequently result in an increase in the regulatory burden on companies in our industry and consequently an increase in the cost of doing business and decrease in profitability. Numerous governmental departments and agencies are authorized to, and have, issued rules and regulations imposing additional burdens on the oil and gas industry that often are costly to comply with and carry substantial penalties for failure to comply. Production operations are affected by changing tax and other laws relating to the petroleum industry, by constantly changing administrative regulations and possible interruptions or termination by government authorities.

Oil and gas mineral rights may be held by individuals, corporations or governments having jurisdiction over the area in which such mineral rights are located. As a general rule, parties holding such mineral rights grant licenses or leases to third parties to facilitate the exploration and development of these mineral rights. The terms of the leases and licenses are generally established to require timely development. Notwithstanding the ownership of mineral rights, the government of the jurisdiction in which mineral rights are located generally retains authority over the manner of development of those rights.

Environmental Considerations

Our operations are also subject to a variety of constantly changing laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Failure to comply with these laws and regulations can result in the imposition of substantial fines and penalties as well as potential orders suspending or terminating our rights to operate. Some environmental laws to which we are subject provide for strict liability for pollution damage, rendering a person liable for environmental damage without regard to negligence or fault on the part of such person. In addition, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, such as oil and gas related products or for other reasons.

Some environmental protection laws and regulations may expose us to liability arising out of the conduct of operations or conditions caused by others, or for acts which were in compliance with all applicable laws at the time the acts were performed. Changes in the environmental laws and regulations, or claims for damages to persons, property, natural resources or the environment, could result in substantial costs and liabilities to us. These laws and regulations may substantially increase the cost of exploring, developing, producing or processing oil and gas and may prevent or delay the commencement or continuation of a given project and thus generally could have a material adverse effect upon our capital expenditures, earnings, or competitive position. We believe that we are in substantial compliance with current applicable environmental laws and regulations. Nevertheless, changes in existing environmental laws and regulations or in the interpretations thereof could have a significant impact on us and the oil and gas industry in general.

Risks

The current recession could have a material adverse impact. The oil and gas industry is cyclical in nature and tends to reflect general economic conditions. The US and other world economies are in a recession which could last into 2010 and beyond. The recession may lead to significant fluctuations in demand and pricing for crude oil and natural gas, such as the decline in oil and gas prices which occurred during 2008 and into 2009. Our access to capital, as well as that of our partners and contractors, could be limited due to tightening credit markets that could inhibit development of our property interests.

Our failure of to obtain capital may significantly restrict our proposed operations. We need additional capital to fund our operating losses and to explore for oil and gas. We do not know what the terms of any future capital raising may be but any future sale of our equity securities would dilute the ownership of existing stockholders and could be at prices substantially below the market price of our common stock. We may not be able to obtain the capital which we need.

We have never earned a profit. We expect to incur losses during the foreseeable future and we may never be profitable. To enable us to continue in business we will eventually need to earn a profit or obtain additional financing until we are able to earn a profit.

4

Oil and gas exploration is not an exact science, and involves a high degree of risk.  Our primary exploration risk lies in the drilling of dry holes or drilling and completing wells which, though productive, do not produce gas and/or oil in sufficient amounts to return the amounts expended and produce a profit. Hazards, such as unusual or unexpected formation pressures, downhole fires, blowouts, loss of circulation of drilling fluids and other conditions are involved in drilling and completing oil and gas wells and, if such hazards are encountered, completion of any well may be substantially delayed or prevented. In addition, adverse weather conditions can hinder or delay operations, as can shortages of equipment and materials or unavailability of drilling, completion, and/or work-over rigs. Even though a well is completed and is found to be productive, water and/or other substances may be encountered in the well, which may impair or prevent production or marketing of oil or gas from the well.  Exploratory drilling involves substantially greater economic risks than development drilling because the percentage of wells completed as producing wells is usually less than in development drilling. Exploratory drilling itself can be of varying degrees of risk and can generally be divided into higher risk attempts to discover a reservoir in a completely unproven area or relatively lower risk efforts in areas not too distant from existing reservoirs. While exploration adjacent to or near existing reservoirs may be more likely to result in the discovery of oil and gas than in completely unproven areas, exploratory efforts are nevertheless high risk activities.

Although the completion of oil and gas wells is, to a certain extent, less risky than drilling for oil and gas, the process of completing an oil or gas well is nevertheless associated with considerable risk. In addition, even if a well is completed as a producer, the well for a variety of reasons may not produce sufficient oil or gas in order to repay our investment in the well.

The acquisition, exploration and development of oil and gas properties and the production and sale of oil and gas are subject to many factors which are outside our control. These factors include, among others, general economic conditions, proximity to pipelines, oil import quotas, supply, demand, and price of other fuels and the regulation of production, refining, transportation, pricing, marketing and taxation by federal, state, and local governmental authorities.

The drilling of oil and gas wells involves hazards such as blowouts, unusual or unexpected formations, pressures or other conditions which could result in substantial losses or liabilities to third parties. Although we believe the coverage and types of insurance we maintain are currently adequate, we may not be insured against all losses because insurance may not be available, premium costs may be deemed unduly high, or for other reasons. Accordingly, uninsured liabilities could result in significant losses and have a material adverse effect on our operations.

Other

We currently have no full-time employees.

In September 2008, we entered into an Administrative Services Agreement with our largest shareholder, Holloman Corporation. Beginning September 1, 2008, administrative services fees of $50,000 per month are payable to Holloman Corporation. These fees, totaling $200,000 for the year ended December 31, 2008, are paid quarterly in shares of our restricted common stock at the average closing price of the stock for the last ten trading-days of the applicable monthly billing period. In exchange for its fees, Holloman Corporation has agreed to provide, among other things; executive consultation, management advice, engineering and geological services, office space, office support, communications, IT support, secretarial services, and the costs of North American travel expenses incurred in connection with the performance its services. The agreement under which these fees are incurred can be terminated by either party with 30-days notice. As of December 31, 2008, Holloman Corporation had received 2,005,833 shares of our restricted common stock in connection with this agreement.

As part of our cost cutting efforts, we amended our Administrative Services Agreement with Holloman Corporation effective January 1, 2009. This amendment suspended and cancelled the fees payable to Holloman Corporation under the agreement during the eight month period beginning January 1, 2009 and ending August 31, 2009.

In addition to Holloman Corporation, we use independent consultants who provide us, among other things, with technical support and accounting services.

Other than the planning of geochemical and geophysical programs undertaken in connection with our oil and gas concessions, we have devoted no substantial efforts to research & development within the last two fiscal years.

Our offices are located at 333 North Sam Houston Parkway East, Suite 600, Houston, Texas. Our offices are provided under the terms of an administrative services agreement, on a month by month basis, by Holloman Corporation, our principal shareholder.

5

ITEM 2.

PROPERTIES.

See Item 1 of this report.

ITEM 3.

LEGAL PROCEEDINGS.

None

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

6

PART II

ITEM 5.

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

On February 16, 2007 our common stock began trading on the OTC Bulletin Board under the symbol "DJRP." On April 25, 2007 our trading symbol was changed to “ENEC” and on October 10, 2007 our trading symbol changed to “HENC.” The following chart shows the high and low bid prices as quoted by the OTC Bulletin Board Market for each quarter for the fiscal years ended December 31, 2008 and 2007. Such prices represent quotations between dealers, without dealer markup, markdown or commissions, and may not represent actual transactions.

There is currently only a limited market for our common stock. A limited market is characterized by a relatively limited number of shares in the public float, relatively low trading volume and the small number of brokerage firms acting as market makers. The market for low priced securities is generally less liquid and more volatile than securities traded on national stock markets. Fluctuations in market prices are not uncommon. No assurance can be given that the market for our common stock will continue or that the stock price will be maintained.

The Securities and Exchange Commission has adopted regulations which generally define a "penny stock" to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our shares of common stock are subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established clients and "accredited investors". For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our shares of common stock and may affect the ability of investors to sell such shares of common stock in the secondary market and the price at which investors can sell any of such shares.

As of March 15, 2009 we had 31 record holders of our common stock.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future. We plan to retain any earnings to finance the expansion of our operations.

On December 31, 2008, we issued 1,812,783 shares of our restricted common stock, at an average price of $0.083 per share in connection with the conversion of $150,000 in management fees due our largest shareholder, Holloman Corporation. We relied upon the exemption provided by Section 4(2) of the Securities Act of 1933 in connection with the sale of these securities. We believe Holloman Corporation had knowledge and experience in financial and business matters which allowed it to evaluate the merits and risks of an investment in our securities. We did not pay any underwriting discounts or sales commissions in connection with the issuance of these shares.

During the year ended December 31, 2008 we did not purchase any shares of our common stock from third parties in a private transaction or as a result of any purchases in the open market. During the year ended December 31, 2008 none of our officers or directors, or any of our principal shareholders purchased any shares of our common stock on our behalf from third parties in a private transaction or as a result of purchases in the open market.

7

ITEM 6.

SELECTED FINANCIAL DATA.

Not Applicable

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

General

From our inception in May 2004 through May 2007 we were relatively inactive.

On August 3, 2007 we acquired Endeavor Canada, an Alberta corporation involved in the exploration and development of oil and gas. For accounting purposes, our acquisition of Endeavor Canada constituted a recapitalization and the acquisition was accounted for as a reverse merger whereby Endeavor Canada was deemed to have acquired us. As a result, our financial statements reflect the historical operations of Endeavor Canada prior to the merger, and our joint operations for the period from August 3, 2007, the merger date, through February 15, 2008, the date on which we divested of Endeavor Canada (see below).

Following the acquisition of Endeavor Canada, we paid $1,640,000 in principal and accrued interest to Endeavor Canada’s note holders with 1,093,155 shares of our restricted common stock.

For the year ended December 31, 2007 our only revenues were from the sale of gas from wells in Alberta, Canada owned by Endeavor Canada. During that year, Endeavor Canada generated $58,957 in net revenues and sustained an operating loss of $634,610. Of the $2,566,246 we reported as current liabilities at December 31, 2007, $1,504,147 related to the operations of Endeavor Canada.

On February 15, 2008 we sold our interest in Endeavor Canada to Cameron King, one of our former officers and directors, in return for the shares previously issued to Mr. King during its acquisition. The assets of Endeavor Canada included all of our Canadian oil and gas properties.

In May 2007 we acquired a 62.5% working interest in an Australian oil and gas exploration permit area known as Victoria Permit 60 (“Vic P60”). In November 2007, we also acquired working interests, varying between 37.5% and 100%, in seven oil and gas permits awarded by the Australian government, including the remaining 37.5% working interest in the Vic P60 permit. These permits cover onshore acreage in the Cooper basin and offshore acreage in the Gippsland basin and Barrow sub-basin.

During fiscal 2008, we pursued work program obligations, sought consolidation/extension of certain of our permits, and actively sought joint venture partners for our oil and gas concessions. During the remainder of 2009 we plan to pursue joint venture agreements with third parties to explore for oil and gas in the Cooper, Gippsland and Barrow basins of Australia. We are currently engaged in discussions with three potential joint venture candidates regarding our Cooper and Barrow leases.

Results of Operations

We acquired Endeavor Canada in August 2007. Between May 2006 (the date of its incorporation) and February 2008, Endeavor Canada acquired its oil and gas properties in Alberta, Canada but was otherwise relatively inactive. We divested Endeavor Canada during February 2008. As a result, a comparison of our operations for the year ended December 31, 2008 with our operations for the year ended December 31, 2007 is not meaningful.

During the year ended December 31, 2008, our general and administrative expenses increased. This growth in expense relates primarily to an increase in consulting, management and professional fees incurred in connection with capital formation and the expansion of our operations in Australia. Our deferred income tax recovery of $1,090,844 for the year ended December 31, 2008 results almost entirely from the strengthening of the US dollar against the Australian dollar.

We have recognized inception to date net losses from the discontinued operations of Endeavor Canada totaling $2,454,637. During February 2008, we recognized a gain upon the divestiture of Endeavor Canada of $783,868.

8

Financial Condition, Liquidity and Capital Resources

The oil and gas industry is cyclical in nature and tends to reflect general economic conditions. The US and other world economies are in a recession which continues to inhibit investment liquidity. Fluctuating oil & gas prices provide additional uncertainty in capital markets. We expect current economic conditions to result in greater drilling rig availability and somewhat decreased exploration costs. Our access to capital however, as well as that of our partners and contractors, could be limited due to tightening credit markets and may inhibit the formation of exploration ventures and consortiums. As a result, the development of our property interests may be delayed due to financial constraints.

The current carrying value of our oil and gas properties substantially exceeds our market capitalization. Our management believes the recent decrease in our market capitalization results from a lack of liquidity in the capital markets associated with the global economic recession. Further, our oil and gas leases are highly sensitive to the market price of oil and the availability of capital required to fulfill our lease obligations in a timely manner. In the event the market price of oil declines permanently, or capital remains unavailable for an extended period, the value of our oil and gas leases may be impaired.

In response to the economic recession, we have undertaken a variety of cost-cutting measures targeted at reducing our administrative expenses. Those measures include reductions in executive compensation as well as the consulting, management and professional fees we incur to support our operations.

We project that seismic acquisition, interpretation of data and related work on our Vic P60 and Barrow sub-basin permits will require an investment of up to $7 to $12 million prior to March 31, 2010. Further, our permits require us to drill two wells in the Barrow sub-basin before February 26, 2010, four wells in the Barrow sub-basin before July 22, 2010, and one well on the Vic P60 permit before November 2010. We are in the process of requesting extensions from the Australian government with respect to those drilling obligations. Our management has no reason to believe that an extension of time to complete those obligations will not be granted.

If we elect to drill all the wells and perform all other work required by all of our permits, very early estimates suggest that the total costs may be over $45,000,000 during the twelve months ending March 31, 2010 and up to $260,000,000 over the terms of the permits. We intend to joint venture our work program obligations with third parties which will pay all, or a significant portion, of the costs required to explore for oil and gas in the area covered by our permits. We are currently engaged in discussions with three potential joint venture candidates regarding the initial drilling obligations on our Cooper and Barrow leases.

At December 31, 2008, we had advances payable to:

·

An unrelated party in the amount of $259,343;

·

Members of our Board of Directors in the amount of $243,554;

·

An entity affiliated with Mr. Petersen, our President and Chief Executive Officer in the amount of $74,728; and

·

Holloman Corporation in the amount of $1,254,521

These advances were used to support our operations in Australia, maintain fund raising efforts, and pay general and administrative expenses. All advances are unsecured, non-interest bearing, and are due on demand.

Our material future contractual obligations as of December 31, 2008, other than the obligations associated with our oil and gas concessions in Australia, are shown below.

Our operations have been financed from the sale of our securities, loans from unrelated third parties and advances from Holloman Corporation, our largest shareholder, our current and former officers, directors and their affiliates. See Item 12 of this report for more information

9

On September 30, 2008, the Company sold 6,764,706 shares of common stock in a private placement of investment units to our largest shareholder, Holloman Corporation, and to Mark Stevenson and Douglas Brown, both directors of the Company and to an affiliated party.

Subsequent to December 31, 2008, we have repaid $840,000 in advances payable to related parties.

We believe our plan of operations may require up to $45,000,000 in exploration work over the twelve-month period ending March 31, 2010. We are attempting to enter into joint ventures with third parties who will pay all, or a significant portion of the costs required to explore for oil and gas and otherwise fulfill the obligations required by our Australian permits.

If we are unable to raise the financing we need, our business plan may fail and our stockholders could lose their investment. If we are unable to perform in accordance with the work programs set forth in our leases, the Australian government could cancel our exploration rights. There can be no assurance that we will be successful in raising the capital we require, or that if the capital is offered, it will be subject to terms we consider acceptable. Investors should be aware that even in the event we are able to raise the funds we require, there can be no assurance that we will succeed in our drilling or production plans and we may never be profitable.

As of March 15, 2009 we did not have any off balance sheet arrangements.

As of March 15, 2009 we did not have any proven oil or gas reserves and we did not have any revenues.

Critical Accounting Policies and Estimates

Measurement Uncertainty

The process of preparing financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements; accordingly, actual results may differ from estimated amounts. The most significant estimates with regard to the financial statements included with this report relate to carrying values of oil and gas properties, determination of fair values of stock based transactions, and deferred income tax rates and timing of the reversal of income tax differences.

These estimates and assumptions are reviewed periodically and, as adjustments become necessary they are reported in earnings in the periods in which they become known.

Petroleum and Natural Gas Properties

We utilize the full cost method to account for our investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, capitalized interest costs relating to unproved properties, geological expenditures, tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. When we commence production from established proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects including capitalized interest, if any, are not depleted until proved reserves associated with the projects can be determined. If the future exploration of unproved properties are determined uneconomical the amount of such properties are added to the capitalized cost to be depleted.

The capitalized costs included in the full cost pool are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions plus the lower of cost and estimated net realizable value of unproven properties. At December 31, 2008, our interests in Australia are all classified as unproven.

Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.

10

Asset Retirement Obligations

We record the fair value of an asset retirement obligation as a liability in the period in which we incur an obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of our assets. The estimated fair value of the asset retirement obligation is based on the current cost escalated at an inflation rate and discounted at a credit adjusted risk-free rate. This liability is capitalized as part of the cost of the related asset and amortized over its useful life. The liability accretes until we settle the obligation.

Environmental

Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. Liabilities for expenditures of a non-capital nature are recorded when an environmental assessment and/or remediation is probable, and the costs can be reasonably estimated.

Revenue Recognition

Oil and natural gas revenues are recorded using the sales method whereby we recognize oil and natural gas revenue based on the amount of oil and gas sold to purchasers when title passes, the amount is determinable and collection is reasonably assured. Actual sales of oil and gas are based on sales, net of the associated volume charges for processing fees and for costs associated with delivery, transportation, marketing, and royalties in accordance with industry standards. Operating costs and taxes are recognized in the same period of which revenue is earned.

Joint Venture Activities

Substantially all of our petroleum and natural gas exploration and production activities are conducted jointly with others, and, accordingly, our financial statements reflect only our proportionate interest in such activities.

Foreign Currency Translation

Our functional and reporting currency, and that of our Australian subsidiary, is the United States dollar. The financial statements of our former Canadian subsidiary are translated to United States dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian and Australian dollars. We have not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Deferred Income Taxes

We follow the asset and liability method of accounting for future income taxes. Under this method, future income tax assets and liabilities are recorded based on temporary differences between the carrying amount of balance sheet items and their corresponding tax bases. In addition, the future benefits of income tax assets, including unused tax losses, are recognized, subject to a valuation allowance, to the extent that it is more likely than not that such future benefits will ultimately be realized. Future income tax assets and liabilities are measured using enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized.

Earnings per share

We present both basic and diluted earnings (loss) per share (EPS) on the face of the consolidated statements of operations. Basic EPS is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including convertible debt, stock options, and warrants, using the treasury stock method. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Diluted EPS figures are equal to those of basic EPS for each period since we have no dilutive stock options and warrants.

See Note 2 to the financial statements included as part of this report for a discussion of recent accounting pronouncements.

11

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Attached.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

None

ITEM 9A.

CONTROLS AND PROCEDURES.

An evaluation was carried out under the supervision and with the participation of our management, including our Principal Financial Officer and Principal Executive Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-K. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-K, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of December 31, 2008, our disclosure controls and procedures are effective to satisfy the objectives for which they are intended

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as required by Sarbanes-Oxley (SOX) Section 404.A. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on that evaluation, management concluded that during the period covered by this report our internal controls and procedures were not effective to detect the incorrect application of GAAP as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that may be considered to be material weaknesses.

The matters involving internal controls and procedures that our management considered to be material weaknesses were: (1) the lack of a fully functional independent audit committee, (2) the lack of a majority of outside directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) insufficient written policies and procedures for accounting and financial reporting with respect to GAAP and SEC disclosure requirements. These material weaknesses were identified by our Chief Executive and Financial Officer in connection with the audit of our financial statements as of December 31, 2008.

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

There were no changes in our internal control over financial reporting identified in connection with the evaluation performed that occurred during our last fiscal quarter that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting. Management believes that the material weaknesses described above did not have an affect on our financial results.

12

We are committed to improving our organization. We intend to: (i) increase our accounting personnel when funds are available which will also permit better segregation of duties, (ii) appoint one or more additional outside directors who will also be appointed to our audit committee; and (iii) prepare and implement sufficient written policies and procedures pertaining to accounting and financial reporting in accordance with GAAP and SEC disclosure requirements.

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and are committed to taking further action and implementing additional improvements as necessary and as funds allow.

ITEM 9B.

OTHER INFORMATION

None

13

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Our Directors are elected for a one-year term and hold office until the next annual meeting of our shareholders or until their resignation or removal by a vote of our shareholders. Officers are appointed by the Board of Directors and serve at the discretion of the Board. There is no family relationship between or among any of our Directors or Officers.

Grant Petersen, President, Chief Executive Officer, Principal Financial Officer and Treasurer

Grant Petersen was elected as our President and Chief Executive Officer on January 4, 2008. During 2007, Mr. Petersen was an independent financial consultant. Mr. Petersen served as a Director of House of Brussels Chocolates. Inc. from October 2002 to January 2007. Mr. Petersen was also employed by House of Brussels Chocolates as Chief Executive Officer (May 2003 to January 2007), President (January 2004 to January 2007), and General Sales Manager (June 2001 to October 2002). Mr. Petersen was the Chief Executive Officer of SUMmedia.com from August 1999 to December 2001.

Mark Stevenson, Chairman of the Board of Directors and Secretary

Mark Stevenson has been a Director since September 2007. Mr. Stevenson has served as President and Chief Executive Officer of Holloman Corporation since July 1998. Prior to his appointment as President of Holloman Corporation, Mr. Stevenson was employed by Holloman Corporation as Executive Vice President (1997 to 1998), Vice President - Pipeline Division (1979 to 1997), chief estimator (1977 to 1979) and field construction engineer (1976 to 1977).

J. Douglas Brown, Director

J. Douglas Brown joined our Board of Directors on March 19, 2007. Mr. Brown holds a law degree from Edinburgh University and possesses over 35 years investment banking experience. He began his banking career as a financial analyst with J P Morgan in London and New York. During the period from 1982 to 1997, Mr. Brown served with Citigroup and Banque Indosuez focusing on transactions related to the Middle East. Since 1997, he has actively participated in the creation and management of hedge fund and corporate finance opportunities. Mr. Brown currently sits on the boards of directors of: Lund Gold Ltd; LIM Asia Multi Strategy Fund; and Eastern Capital Fund.

Eric Prim, Director

Eric Prim joined or Board of Directors in September 2007. Mr. Prim has been the Vice President of Engineering and Construction of Holloman Corporation since 1997. Prior to his association with Holloman, Mr. Prim held engineering positions with Huntsman Corporation and Rexene Corporation. Mr. Prim received his Bachelor of Science degree in chemical engineering from the University of Texas in 1982 and a Master of Business Administration degree from Amber University in 1987.

On November 21, 2007 we acquired Holloman Petroleum Pty. Ltd. for 18,600,000 shares of our common stock. As a condition of this acquisition, Mark Stevenson, President and CEO of Holloman Corporation, and Eric Prim, Vice President of Holloman Corporation, were appointed to our Board of Directors.

J. Douglas Brown is an independent director, as that term is defined in Section 803 of the listing standards of the NYSE Alternext US.

14

During 2008, our Audit Committee was comprised J. Douglas Brown and David Lewis who were independent directors (as that term is defined by section 803 of the Listing Standards of the NYSE Alternext US). Mr. Lewis, who resigned from our Board of Directors on January 29, 2009, was our Audit Committee financial expert as that term is defined in Item 407 of Regulation S-B of the Securities and Exchange Commission. Mr. Brown currently serves as the financial expert for the Audit Committee.

We have no separately designated nominating or compensation committees.

On March 26, 2007, our Board of Directors adopted a code of ethics that applies to our principal executive and financial officers. A copy of our Code of Ethics was included as Exhibit 14.1 to our Form 10-KSB for our year ended December 31, 2006.

Compensation Committee Interlocks and Insider Participation

Our directors act as our compensation committee. During the year ended December 31, 2008, all of our directors participated in deliberations concerning executive officer compensation.

During the year ended December 31, 2008, none of our officers was also a member of the compensation committee or a director of another entity, which other entity had one of its executive officers serving as one of our directors or as a member of our compensation committee.

Changes in Management

The following table shows the changes in our officers and directors since January 1, 2007.

Compliance with Section 16A of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors and executive officers and persons who beneficially own more than 10% of our common stock (referred to herein as the “reporting persons”) file with the Securities and Exchange Commission various reports as to their ownership of and activities relating to our common stock. Such reporting persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of copies of Section 16(a) reports and representations received by us from reporting persons, and without conducting any independent investigation of our own, we believe all Forms 3, 4 and 5 were timely filed with the Securities and Exchange Commission by such reporting persons, with the exception of; Douglas Brown our current director, who filed two Form 4’s reporting two transactions after their due date; Mark Stevenson, our current director who filed two Form 4’s reporting two transactions after their due date; Holloman Corporation, our controlling shareholder which filed four Form 4’s reporting four transactions after their due date, David Lewis our former director who filed one Form 4 after its due date, and Grant Petersen, our current officer who filed one Form 4 reporting one transaction after its due date.

15

ITEM 11.

EXECUTIVE COMPENSATION.

The following table shows the compensation paid to our Chief Executive Officer and those executive officers that earned more than $100,000 in 2008 and 2007:

Summary Compensation Table

———————

(1)

Mr. Crimeni, Mr. Fielder and Mr. King all resigned their positions with us prior to December 31, 2007.

(2)

Mr. Petersen became our Chief Executive and Financial Officer on January 4, 2008. Mr. Petersen’s was compensated in the form of management fees for services rendered in the normal course of operations. The amount of the fees was established and approved by our Board of Directors.

During 2007 we paid management fees of $65,623 to King Capital Corporation, a company owned by Cameron King, our former Chief Executive Officer and President.

Director Compensation

Our Directors are reimbursed for reasonable out-of-pocket expenses in connection with attendance at Board of Director and committee meetings. Directors have not been compensated for their service as directors.

Stock-Based Compensation/Retirement Benefits

We do not have any securities authorized for issuance under any stock option, stock bonus or other equity compensation plans.

We have not granted stock-based compensation or stock options to our executive officers. We have never offered any annuity, pension or retirement benefits for our officers, directors or employees.

16

ITEM 12.

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

The following table shows as of March 15, 2009, the beneficial ownership of shares of common stock by (i) each person known to us who owns beneficially more than 5% of the outstanding shares of common stock, (ii) each of our Officers and Directors and (iv) all of our Executive Officers and Directors as a group. Unless otherwise indicated, each stockholder has sole voting and investment power with respect to the shares shown. We have no securities authorized for issuance under equity compensation plans.

———————

(1)

Includes shares which may be acquired on the exercise of the warrants listed below, all of which were exercisable as of December 31, 2008.

———————

*

Warrants are held of record by Mr. Petersen’s wife.

(2)

Includes shares held by an entity controlled by Mr. Petersen, shares held by Mr. Peterson’s wife, and shares issuable upon the exercise of warrants.

(3)

Includes 388,050 shares held directly, 232,810 shares held indirectly by entities controlled by Mr. Stevenson, and shares issuable upon the exercise of warrants.

17

(4)

Mark Stevenson is the President and chief executive officer of Holloman Corporation. Eric Prim is the Vice President of Holloman Corporation. Holloman Corporation owns all of the outstanding shares of Holloman Oil & Gas. Mr. Stevenson is the president of Holloman Oil & Gas and Mr. Prim is one of its directors. Accordingly, this number includes shares owned of record by Holloman Oil & Gas Limited and Holloman Corporation as well as shares issuable upon the exercise of warrants held by Holloman Corporation.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

As detailed in Items 1 and 7 of this report, we have non-interest bearing advances from certain of our Directors, shareholders and affiliates; and a series of transactions with Holloman Corporation and Holloman Oil & Gas.

During 2007 we paid $65,623 for management services to King Capital Corporation, a company owned by Cameron King, our former Chief Executive Officer and President. During 2008 management fees totaling $175,000 were paid to our current Chief Executive Officer. The fees were incurred as compensation for services rendered in the normal course of operations and were paid at the amount established and agreed to by our Board of Directors.

In November 2007 we acquired Holloman Petroleum Pty. Ltd. for 18,600,000 shares of our common stock. Prior to the acquisition, Holloman Petroleum was a majority owned subsidiary of Holloman Oil & Gas.

The following describes the manner by which our officers, directors and principal shareholders acquired their shares of our common stock.

Grant Peterson:

*  Held of record by Mr. Petersen’s wife and an entity affiliated with Mr. Petersen

Mark Stevenson:

J. Douglas Brown:

Eric Prim:

18

Holloman Oil & Gas Ltd.:

Holloman Corporation:

———————

(1)

Shares were purchased in a private transaction from Adrian Crimeni, our former President and largest shareholder.

(2)

Shares were purchased from us in a private offering. The shares were sold as part of a unit and at a price of $0.255 per unit. Each unit consisted of one share of our restricted common stock, one Series A warrant and one Series B warrant. Each Series A warrant entitles the holder to purchase one share of our restricted common stock at a price of $0.70 per share. Each Series B warrant entitled the holder to purchase one share of our restricted common stock at a price of $2.00 per share. The Series A and B warrants expire on September 30, 2011.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth the aggregate fees paid or accrued for professional services rendered by Dale Matheson Carr-Hilton LaBonte LLP Chartered Accountants for the audit of our annual financial statements for 2008 and 2007, and the aggregate fees paid or accrued for audit-related services and all other services rendered by Dale Matheson Carr-Hilton LaBonte LLP for those years.

The category of “Audit fees” includes fees for our annual audit, quarterly reviews and services rendered in connection with regulatory filings with the SEC. “Tax fees” include fees incurred in the review and preparation of our annual income tax filings.

The Audit Committee of our Board of Directors pre-approves the scope and estimated costs of all services rendered by our Principal Accountants. We concluded that the service provided by Dale Matheson Carr-Hilton LaBonte LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.

19

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

FINANCIAL STATEMENTS

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders Equity (Deficiency)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

EXHIBITS

———————

(1)

Previously filed with our Form SB-2 on January 23, 2006 and incorporated by reference.

(2)

Previously filed with our Form 8-K on August 9, 2007 and incorporated by reference.

(3)

Previously filed with our Form 8-K on November 29, 2007 and incorporated by reference.

(4)

Previously filed with our Form 10-KSB on April 15, 2008 and incorporated by reference.

(5)

Previously filed with our Form 10-KSB/A on April 26, 2007 and incorporated by reference.

20

SIGNATURES

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

In accordance with the Securities Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Holloman Energy Corporation:

We have audited the accompanying consolidated balance sheets of Holloman Energy Corporation (an exploration stage company) as of  December 31, 2008 and 2007 and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended and the period from May 5, 2006 (inception) through December 31, 2008.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Holloman Energy Corporation as at December 31, 2008 and 2007 and the results of its operations and its cash flows for the years then ended and the period from May 5, 2006 (inception) through September 30, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has not generated revenues since inception, has incurred losses in developing its business, and further losses are anticipated.  The Company requires additional funds to meet its obligations and the costs of its operations.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in this regard are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

“DMCL”

DALE MATHESON CARR-HILTON LABONTE LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

March 17, 2009

22

HOLLOMAN ENERGY CORPORATION

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

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

F-1

HOLLOMAN ENERGY CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

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

F-2

HOLLOMAN ENERGY CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

From May 5, 2006 (Inception) to December 31, 2008

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

F-3

HOLLOMAN ENERGY CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS