Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. 
Yes [X]   No [   ]

ii

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ]   No [X]

State issuer’s revenues for its most recent fiscal year. $Nil

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of December 13, 2007.

56,102,688 common shares @ $0.42 ⁽¹⁾ = $23,563.128.96

⁽¹⁾ average bid and asked price of such common equity, as of December 10, 2007

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
Yes [   ]   No [   ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
87,302,688 common shares as of December 13, 2007

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990).
N/A

Transitional Small Business Disclosure Format (Check one): Yes [   ]   No [   ]

ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED AUGUST 31, 2007

TABLE OF CONTENTS

	Page
PART I	4
ITEM 1. DESCRIPTION OF BUSINESS	4
ITEM 2. DESCRIPTION OF PROPERTY.	7
ITEM 3. LEGAL PROCEEDINGS	7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.	8
PART II	8
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.	8
ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.	10
PLAN OF OPERATIONS AND CASH REQUIREMENTS	10
RESULTS OF OPERATIONS	11
RISK FACTORS	13
RISKS ASSOCIATED WITH OUR COMMON STOCK	19
ITEM 7. FINANCIAL STATEMENTS.	21
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.	22
ITEM 8A. CONTROLS AND PROCEDURES.	22
ITEM 8B. OTHER INFORMATION	22
PART III	22
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS , CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT	22
ITEM 10. EXECUTIVE COMPENSATION	24
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.	25
EQUITY COMPENSATION PLAN INFORMATION AS AT AUGUST 31, 2007	26
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	26
ITEM 13. EXHIBITS	27
AUDIT FEES	29
SIGNATURES	30

–  4 –

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Forward Looking Statements.

This annual report contains forward-looking statements as that term is defined in section 27A of the United States Securities Act of 1933, as amended, and section 21E of the United States Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" commencing on page 3 of this annual report, which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this annual report, the terms “we”, “us”, “our”, “Lusora” and “Western Standard” mean Western Standard Energy Corp., and our wholly-owned subsidiaries, Lusora Inc. and Western Standard Energy Limited, unless otherwise indicated.

Introduction

We are an exploration stage company engaged in the acquisition, exploration, and, if warranted, development of prospective oil and gas properties. We were previously engaged in the business of providing personal emergency response systems for elderly people. Due to our inability to successfully execute on our previous business plan, we decided to change the focus of our business to exploration activities in the oil and gas sector in August, 2007.

Corporate History

We were incorporated in the State of Nevada on February 2, 2005 under the name Comtrix Inc. From incorporation until June 2005, our operating activities consisted primarily of developing fingerprint recognition products for residential buildings in China. Our management investigated opportunities and challenges in the business of developing fingerprint recognition products and security for residential buildings in China and determined that the business did not present the best opportunity for our company to realize value for our shareholders. Accordingly, we abandoned this business plan and focused on the identification of other suitable business opportunities and/or business combinations.

On June 23, 2006, we executed a letter of intent with Lusora Corp. wherein the existing stakeholders of Lusora Corp. agreed to exchange issued and outstanding shares of its common stock for the same number of shares of our company.

–  5 –

Effective June 23, 2006, we completed a merger with Lusora Corp., which was created for the sole purpose of effecting a name change. As a result, we changed our name from “Comtrix Inc.” to “Lusora Healthcare Systems Inc.” to better reflect the anticipated direction and business of our company. In addition, effective June 23, 2006 we effected a 25 for one forward stock split of our authorized, issued and outstanding common stock. As a result, our authorized capital increased from 75,000,000 shares of common stock with a par value of $0.001 to 1,857,000,000 shares of common stock with a par value of $0.001.

On November 30, 2006 we completed our acquisition of 100% of the issued and outstanding common stock of Lusora Inc., a privately-owned Nevada corporation engaged in developing and commercializing wireless personal security and monitoring solutions, pursuant to a share exchange agreement we had entered into with the shareholders of Lusora Inc. Following the acquisition, we became a wireless security company that intended to produce a monitoring and response system for elderly people.

Effective July 17, 2007, Scott Gurley, our Chief Operating Officer and Director and President of our subsidiary, Lusora Inc., resigned from his positions with our company. Because we were not successful in implementing our business plan, we decided to change the direction of our business to oil and gas exploration.

On August 22, 2007, we entered into an assignment agreement with Power Energy Enterprises SA (“Power Energy”), whereby Power Energy agreed to assign all right, title, interest and obligation of Power Energy in a memorandum of intent that Power Energy entered into with Coastal Petroleum Company (“Coastal Petroleum”) on July 19, 2007. Under the memorandum of intent, Power Energy agreed to enter into a formal farmout agreement with Coastal Petroleum on leases owned by Coastal Petroleum on acreage located in Valley County, Montana. In consideration for the assignment, we have issued Power Energy 1,000,000 restricted common shares of our company, equivalent to 1,500,000 shares after the 1.5:1 stock split on September 7, 2007.

On August 30, 2007, we entered into a formal farmout agreement with Coastal Petroleum relating to Coastal Petroleum’s leases on approximately 42,000 acres in its Valley County Shallow Gas Assembly in Montana.

Recent Corporate Developments

We experienced the following significant corporate developments since the completion of our year ended August 31, 2007:

1.	Effective September 7, 2007, we completed a merger with our subsidiary, Western Standard Energy Corp. As a result, we have changed our name from “Lusora Healthcare Systems Inc.” to “Western Standard Energy Corp.” In addition on September 7, 2007, we have also effected a 1.5 for one stock split of our authorized and issued and outstanding common stock. As a result, our authorized capital has increased from 1,875,000,000 shares of common stock with a par value of $0.001 to 2,812,500,000 shares of common stock with a par value of $0.001.
2.	On November 9, 2007, we signed an assignment agreement and a farmout agreement with Coastal Petroleum Company to obtain rights to two Lodgepole Reef prospects. We paid $40,000 for the assignment of the leases. Our interests are subject to a royalty of 17%.
3.	On November 28, 2007 we completed a merger with our subsidiary Lusora Inc.
	On December 4, 2007, we entered into a memorandum of understanding with Coastal Petroleum Company for the acquisition of four highly graded Lodgepole Reef Prospects located in Slope County, North Dakota for $80,000. $40,000 of this amount for the first two prospects will come from the $70,000 already advanced to Coastal pursuant to the assignment and farmout agreements dated November 9 for drilling completion of a test well, Federal 1-19, in Valley County, Montana.

–  6 –

	The delay in drilling and redirection of the funds was appropriate due to a delay by the government in the issuance of any permits for the type of drilling required in the Valley County area until Spring 2008. The remaining $30,000 of the $70,000 advance will now be used by Coastal Petroleum for lease rentals and acquiring/exploring other prospects. When the drilling permits become available in the Spring, we intend to advance an additional $65,000 to Coastal to complete the drilling operations on the test well. The $40,000 balance for the other two Lodgepole Reef Prospects is not payable until March 2008.
	The lease assignments are subject to the agreement between Suncor Energy (Natural Gas) America Inc. (“Suncor”) and Oil For America, LLC (“OFA”) and a back-in working interest to Coastal Petroleum of 20% after payout. The leases assigned by Suncor to OFA and to Coastal Petroleum cover all rights below the Tyler formation, including the Lodgepole formation, and have an 80% net revenue interest.
4.	On December 11 and 12, 2007, we signed a farmout agreement and an assignment agreement with Coastal Petroleum Company covering three of the four leases for the Lodgepole Reef Prospects that we expect to acquire under the memorandum of intent dated December 4, 2007.
5.	On December 13, 2007, we signed an assignment agreement with Coastal Petroleum Company covering the final of the four leases for the Lodgepole Reef Prospects that we expect to acquire under the memorandum of intent dated December 4, 2007.

Competition

We are an exploration stage company engaged in the acquisition of prospective oil and gas properties. We compete with other companies for both the acquisition of prospective properties and the financing necessary to develop such properties.

We conduct our business in an environment that is highly competitive and unpredictable. In seeking out prospective properties, we have encountered intense competition in all aspects of our business as we compete directly with other development stage companies as well as established international companies. Many of our competitors are national or international companies with far greater resources, capital and access to information than us. Accordingly, these competitors may be able to spend greater amounts on the acquisition of prospective properties and on the exploration and development of such properties. In addition, they may be able to afford greater geological expertise in the exploration and exploitation of oil and gas properties. This competition could result in our competitors having resource properties of greater quality and attracting prospective investors to finance the development of such properties on more favorable terms. As a result of this competition, we may become involved in an acquisition with more risk or obtain financing on less favorable terms.

Compliance with Government Regulation

The exploration and development of oil and gas properties is subject to various United States federal, state and local governmental regulations. Our company may from time to time, be required to obtain licenses and permits from various governmental authorities in regards to the exploration of our property interests.

If our company proceeds with the development of our properties, we anticipate that we will be subject to increased governmental regulation. Matters subject to regulation include discharge permits for drilling operations, drilling and abandonment bonds, reports concerning operations, the spacing of wells, and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and gas wells below actual production capacity in order to conserve supplies of oil and gas. 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 also subject to regulation under federal, state and local laws and regulations relating primarily to the protection of human health and the environment. As our company has not proceeded to the development of our properties, we have not incurred any expenditures related to complying with such laws, or for remediation of existing environmental contamination. The requirements imposed

–  7 –

by such laws and regulations are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.

Research and Development Expenditures

We have not incurred any pure research and development expenditures over the last fiscal year. The product development expenses of $270,897 for the year ended August 31, 2007 consist primarily of direct materials and personnel costs, contract services and indirect costs.

Employees

Our company is currently operated by Dan Bauer as our President, Secretary, Treasurer and Director and Julian Lee as our Chief Financial Officer and Director. Will Divine is a professional oil and gas consultant who performs the function of Vice-President of Acquisitions and Exploration for us including locating prospective oil and gas properties having a high probability of proven reserves, monitoring performance of existing exploration projects, providing leadership towards implementation of our goals and objectives, etc.

We intend to periodically hire independent contractors to help us execute our business plan.and specific employees when circumstances warrant.

Subsidiaries

Following the November 28, 2007 merger with our subsidiary, Lusora Inc, we have only one remaining wholly-owned subsidiary, Western Standard Energy Limited, a UK company.

Intellectual Property

We do not own, either legally or beneficially, any patent or trademark.

ITEM 2. DESCRIPTION OF PROPERTY.

Executive Offices

Our executive and head offices are located at 2 Sheraton Street, London, UK W1K 3AJ. We lease our office space at this location on a month-to-month basis at a rental rate of approximately $1,000.00 per month. Our current premises are adequate for our current operations and we do not anticipate that we will require any additional premises in the foreseeable future.

The Shallow Gas Prospect

On August 30, 2007, we entered into a formal farmout agreement with Coastal Petroleum relating to Coastal Petroleum’s leases on 42,260 gross mineral acres in its Valley County Shallow Gas Assembly in Montana. Coastal Petroleum has staked a test well on the Shallow Gas Prospect on a 160 acre spacing unit in the center of the Shallow Gas Prospect in Section 19, Township 36 North, Range 38 East.

Under the farmout agreement, Coastal Petroleum will farmout the Shallow Gas Prospect test well location to us when we pay 100% of the cost of the test well and associated lease rentals, in return for a 100% working interest before payout of the test well and an 80% working interest after payout. The cost of the test well and associated lease rentals will be $384,000. This amount was paid by us to Coastal Petroleum on October 10, 2007 and the test well was drilled on October 22, 2007, with initial results showing indications of a gas discovery. The test well needs to be completed in order to conduct qualitative and quantitative tests. Completion operations have been delayed to May 2008 due to government permitting regulations.

–  8 –

In addition, within 30 days after the test well is completed, we may elect to purchase or not to purchase a 50% interest in the leases owned by Coastal Petroleum in its Valley County Shallow Gas Assembly for $1,000,000. If we make the full payment of $1,000,000, Coastal Petroleum and our company would each pay 50% of the cost of wells in which they both participate and each be entitled to 50% of the revenues of wells in which they both participate. After we earn our 50% undivided interest in the leases, either party may propose a well within the leases or additional acreage acquired within the area of mutual interest (which exists within four miles of the leases). The other party may opt-in or opt-out of the proposed well, on a well by well basis.

Lodgepole Reef Prospects

Through farmout agreements with Coastal Petroleum Company, we have obtained rights on four Lodgepole Reef Prospects in Slope County North Dakota:

On November 9 we signed an assignment agreement and a farmout agreement with Coastal Petroleum Company to obtain rights to two Lodgepole Reef prospects. We paid $40,000 for the assignment of the leases. Our interests are subject to a royalty of 17%.

On December 11 and 12, 2007, we signed a farmout agreement and an assignment agreement with Coastal Petroleum Company covering two of the four leases for the Lodgepole Reef Prospects that we expect to acquire under the memorandum of intent dated November 29, 2007 but signed on December 4, 2007. Our interest in these leases is an 80% net revenue interest.

ITEM 3. LEGAL PROCEEDINGS.

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Securities

Our common shares are approved for quotation on the OTC Bulletin Board under the symbol “WSEG”. Our CUSIP number is 959590 100.” Our transfer agent for our common shares is the Nevada Agency and Trust Company, 880-50 West Liberty Street, Reno, Nevada, 89501(Telephone: 775.322.0626; Facsimile: 775.322.5623) .

Our resident agent is Business First Formations, Inc. located at 3990 Warren Way, Reno, NV 89509.

The following table reflects the high and low bid information for our common stock for each fiscal quarter during the fiscal year ended August 31, 2006 and 2007. The bid information was obtained from the OTC Bulletin Board and reflects inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

–  9 –

*Please note that on September, 7, 2007, we conducted a forward stock split, issuing each shareholder 1.5 shares of our company’s common stock for every one share of our common stock already held.

As of December 10, 2007 the following share purchaser warrants to purchase, or securities convertible into, our common shares were outstanding:

Holders of our Common Stock

As of December 13, 2007, there were 23 registered stockholders holding 87,302,688 shares of our issued and outstanding common stock.

Dividend Policy

Since our inception, we have not declared nor paid any cash dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future. Our current policy is to retain any earnings in order to finance the expansion of our operations. Our board of directors will determine future declarations and payments of dividends, if any, in light of the then-current conditions they deem relevant and in accordance with applicable corporate law.

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

	1.	We would not be able to pay our debts as they become due in the usual course of business; or
	2.	Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

– 10 –

Recent Sales of Unregistered Securities

Since our last quarter ended May 31, 2007, we have completed the following unregistered sales of our securities:

1.	On November 5, 2007, we closed a private placement of 500,000 units of our securities (the “Units”) at a price of US $0.40 per Unit for aggregate proceeds of $200,000. Each Unit consists of one common share and one common share purchase warrant (a “Warrant”). One Warrant shall be exercisable into one common share (a “Warrant Share”) at a price of US $0.60 per Warrant Share until November 4, 2009.
2.	On October 10, 2007, we closed a private placement of 1,100,000 units of our securities (the “Units”) at a price of US $0.40 per Unit for aggregate proceeds of $440,000. Each Unit consists of one common share and one common share purchase warrant (a “Warrant”). One Warrant shall be exercisable into one common share (a “Warrant Share”) at a price of US $0.60 per Warrant Share until October 9, 2009.
	We issued the Units to a non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933
3	On September 10, 2007, we closed a private placement of 576,934 units of our securities (the “Units”) at a price of US $0.26 per Unit for aggregate proceeds of $150,000. Each Unit consists of one common share and one common share purchase warrant (a “Warrant”). One Warrant shall be exercisable into one common share (a “Warrant Share”) at a price of US $0.39 per Warrant Share until September 9, 2010.
4	On July 24, 2007, we closed a private placement of 419,463 units of our securities (the “Units”) at a price of US $0.24 per Unit for aggregate proceeds of $100,000. Each Unit consists of one common share and one common share purchase warrant (a “Warrant”). One Warrant shall be exercisable into one common share (a “Warrant Share”) at a price of US $0.36 per Warrant Share until July 23, 2010.

ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Plan of Operation

We are an exploration stage company engaged in the acquisition, exploration and, if warranted, development of prospective oil and gas properties. Following the entry into the farmout agreement with Coastal Petroleum, Coastal Petroleum and we may: (1) drill four step out wells as soon as possible following completion of a successful test well, of which there is no assurance; (2) complete a reserve study; (3) obtain financing based upon the reserve study to complete the development of the field; and (4) install pipelines needed to carry the gas to transmission lines.

Under the farmout agreement, Coastal Petroleum will farmout the Shallow Gas Prospect test well location to us when we pay 100% of the cost of the test well and associated lease rentals, in return for 100% of the working interest before payout of the test well and 80% of the working interest of the test well after payout. The amount of the cost of the test well and associated lease rentals will be $384,000. In addition, within 30 days after the test well is completed, we will elect to purchase or not to purchase a 50% interest in the leases owned by Coastal Petroleum in its Valley County Shallow Gas Assembly for $1,000,000. If we elect to purchase this interest, we will pay the total purchase price of $1,000,000 to Coastal Petroleum in five installments of $200,000.

Coastal Petroleum will be designated as an operator for all operations on the leases for the joint account of Coastal Petroleum and our company except where Coastal Petroleum declines to participate in the drilling of a well or wells by our company, in which case, we may elect to act as an operator and owner of such well or wells.

Through assignment and farmout agreements with Coastal Petroleum Company, on December 12 and 13, 2007, we obtained rights on four Lodgepole Reef Prospects in Slope County North Dakota. Those agreements are attached hereto as exhibits.

In addition to the exploration and development of the property interests subject to our farmout agreements, we intend to acquire additional oil and gas interests in the future. Management believes that future growth of our

–  11 –

company will primarily occur through the acquisition of additional oil and gas properties following extensive due diligence by our company. However, we may elect to proceed through collaborative agreements and joint ventures in order to share expertise and reduce operating costs with other experts in the oil and gas industry. The analysis of new property interests will be undertaken by or under the supervision of our management and board of directors. Although the oil and gas industry is currently very competitive, management believes that many undervalued prospective properties remain available for acquisition purposes.

Since we are an exploration stage company, there is no assurance that a commercially viable oil and gas reserve exists on any of our property interests, and a great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined. To date, we have not discovered an economically viable oil and gas reserve on any of our property interests, and there is no assurance that we will discover one.

Our plan of operation is to conduct exploration work on each of our property interests in order to ascertain whether any possess commercially exploitable oil and gas reserves. There can be no assurance that such oil and gas reserves exist on any of our property interests.

Even if we complete our proposed exploration programs on our property interests and we are successful in identifying an oil and gas reserve, we will have to spend substantial funds on further drilling and engineering studies before we will know whether we have a commercially viable oil and gas reserve.

Cash Requirements

Over the next 12 months, we have estimated the following operating expenses:

Purchase of Significant Equipment

We do not intend to purchase any significant equipment over the 12 months ending August 31, 2008 other than office computers, furnishings, and communication equipment as required.

Future Financings

We recorded a net loss of $$1,163,678 for the 12 months ended August 31, 2007 and have an accumulated deficit of $2,142,289 since inception. As at August 31, 2007 we had cash reserves in the amount of $3,475. This is significantly less than the $2,820,000 that our management anticipates spending on our exploration and development programs and the anticipated costs associated with our continuing operations. Accordingly, we expect that we will need to obtain additional financing in the near future.

Obtaining additional financing is subject to a number of factors, including the market prices for our mineral property and gold. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. Since our inception, we have used our common stock to raise money for our operations and for our property acquisitions. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation. For these reasons, our independent auditors believe there exists a substantial doubt about our ability to continue as a going concern.

–  12 –

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement.

The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

Oil and gas properties

The Company utilizes the full cost method to account for its 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 unproven properties, geological expenditures, tangible and intangible development costs (including direct internal costs), are capitalized into the full cost pool. As of August 31, 2007, the Company has no properties with proven reserves. When the company commences 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 proven reserves. Investments in unproved properties and major development projects, including capitalized interest if any, are not depleted until proven reserves associated with the projects can be determined. If the future exploration of unproven properties are determined to be uneconomical, the amount of such properties is added to the capital costs to be depleted. As of August 31, 2007, all of the Company’s oil and gas properties were unproven and excluded from depletion.

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 10% discount rate, of the future net revenues from the proven reserves, based on current economic and operating conditions plus the lower of cost and estimated net realizable value of unproven properties.

Sales of proven and unproven 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 proven reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.

Asset Retirement Obligations

In accordance with Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (''SFAS 143''), the fair value of an asset retirement cost, and corresponding liability, should be recorded as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. Our company will record an asset retirement obligation to reflect its legal obligations related to future abandonment of its mineral property interests using estimated expected cash flow associated with the obligation and discounting the amount using a credit-adjusted, risk-free interest rate. At least annually, our company will reassess the obligation to determine whether a change in any estimated obligation is necessary. Our company will evaluate whether there are indicators that suggest the estimated cash flows underlying the obligation have materially changed. Should those indicators suggest the estimated obligation has materially changed, our company will accordingly update its assessment. At August 31, 2007, our company had not undertaken any drilling activity on its properties had not incurred significant reclamation obligations. As such, no asset retirement obligation accrual was made in the August 31, 2007 financial statements.

–  13 –

Future income taxes

The Company follows the asset and liability method of accounting for income taxes as set forth in SFAS No. 109, “Accounting for Income Taxes”. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the date of enactment or substantial enactment. For deferred tax assets, the full amount of the potential future benefit is recorded; then a valuation allowance is used to adjust for the probability of realization.

Recently Issued Accounting Standards

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities”. This statement permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company does not expect the implementation of SAB No. 108 will have any material impact on its financial position and results of operations.

Purchase of Significant Equipment

We do not anticipate the purchase or sale of any plant or significant equipment during the next 12 months.

Personnel Plan

We do not anticipate any significant changes in the number of employees during the next 12 months.

RISK FACTORS

In addition to other information in this current report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, the trading price of our securities could decline, and you may lose all or part of your investment.

Risks Relating To Our Business And The Oil And Gas Industry

We have had a history of losses and no revenue, which raise substantial doubt about our ability to continue as a going concern.

Since inception, we have incurred aggregate net losses of $2,142,288 from operations. We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. To date, we have not generated any revenues from our operations. Our history of losses and no revenues raise substantial doubt about our ability to continue as a going concern. We will not be able to generate significant revenues in the future and our management expects operating expenses to increase substantially over the next 12 months following the commencement of oil and gas exploration activities. As a result, our management expects the business to continue to experience negative cash flow for the foreseeable future and cannot predict when, if ever, our business might become profitable. We will need to raise additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations.

–  14 –

We are a new entrant into the oil and gas industry without a profitable or long operating history. We do not have any income producing oil and gas properties and we have limited financial resources. There is no means by which investors can evaluate our potential for success and there is no assurance that we will ever operate profitably.

We are an exploration stage company with only a limited operating history upon which to base an evaluation of our current business and future prospects. We have only begun engaging in the oil and gas exploration and development business since entering into the assignment agreement with Power Energy Enterprises SA in August 2007 and we do not have an established history of locating and developing properties that have oil and gas reserves. As a result, the revenue and income potential of our business is unproven. In addition, because of our limited operating history, we have limited insight into trends that may emerge and affect our business. Errors may be made in predicting and reacting to relevant business trends and we will be subject to the risks, uncertainties and difficulties frequently encountered by early-stage companies in evolving markets. We may not be able to successfully address any or all of these risks and uncertainties. Failure to adequately do so could cause our business, results of operations and financial condition to suffer.

Our proposed operations will require significant capital expenditures for which we may not have sufficient funding and if we do obtain additional financing, our existing shareholders may suffer substantial dilution.

We intend to make capital expenditures far in excess of our existing capital resources to acquire and explore oil and gas properties. We intend to rely on external sources of financing to meet our capital requirements to continue acquiring, exploring and developing oil and gas properties and to otherwise implement our business plan. We plan to obtain such funding through the debt and equity markets, but we cannot assure that we will be able to obtain additional funding when it is required or that it will be available to us on commercially acceptable terms, if at all. In addition, any additional equity financing may involve substantial dilution to our then existing shareholders. Furthermore, additional debt financing could lead to:

• a substantial portion of operating cash flow being dedicated to the payment of principal and interest;
• being more vulnerable to competitive pressures and economic downturns; and
• restrictions on our operations.

If sufficient capital resources are not available, we might be forced to curtail our drilling and other activities or be forced to sell some assets on an untimely or unfavorable basis, which would have an adverse effect on our business, financial condition and results of operations.

Our exploratory drilling operations likely will not be successful, our business may fail and investors may lose their entire investment in our company.

We intend to drill test wells on the Montana properties subject to our farmout agreement. There can be no assurance that our future drilling activities will be successful. We may not recover all or any portion of our capital investment in the wells. Unsuccessful drilling activities would have a material adverse effect upon our results of operations and financial condition and would likely result in the ultimate failure of our business operations. The cost of drilling, completing, and operating wells is often uncertain, and a number of factors can delay or prevent drilling operations including: (i) unexpected drilling conditions; (ii) pressure or irregularities in formation; (iii) equipment failures or accidents; (iv) adverse weather conditions; and (iv) shortages or delays in availability of drilling rigs and delivery of equipment.

It is unlikely that we will find commercially viable reserves of oil or gas on any of the Montana properties subject to our farmout agreement or any other properties that we acquire rights to in the future. If we do not discover commercially viable reserves of oil and gas, our business would fail and investors would lose all of their investment in our company.

–  15 –

The failure of an operator of our wells to adequately perform operations, an operator’s breach of the applicable agreements or an operator’s failure to act in ways that are in our best interest could harm our interests.

At least at the present, we do not plan to serve as the operator for our projects. As a result, we have limited ability to exercise influence over, and control the risks associated with, the operations of these properties. The failure of an operator of our wells to adequately perform operations, an operator’s breach of the applicable agreements or an operator’s failure to act in ways that are in our best interest could reduce our potential production and revenues. The success and timing of our drilling and development activities on properties operated by others therefore depend upon a number of factors outside of our control, including the operators’:

• timing and amount of capital expenditures;
• expertise and financial resources;
• inclusion of other participants in drilling wells; and
• use of technology.

Exploratory drilling involves many risks and we may become liable for pollution or other liabilities, which may have an adverse effect on our financial position.

Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or adequate machinery, equipment or labor, and other risks are involved. We may become subject to liability for pollution or hazards against which we cannot adequately insure or which we may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.

If we or our operators fail to maintain adequate insurance, our business could be materially and adversely affected.

Our operations are subject to risks inherent in the oil and gas industry, such as blowouts, cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution, earthquakes and other environmental risks. These risks could result in substantial losses due to injury and loss of life, severe damage to and destruction of property and equipment, pollution and other environmental damage, and suspension of operations. We could be liable for environmental damages caused by previous property owners. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could have a material adverse effect on our financial condition and results of operations.

Any prospective drilling contractor or operator which we use will be required to maintain insurance of various types to cover our operations with policy limits and retention liability customary in the industry. Therefore, we do not plan to acquire our own insurance coverage for such prospects. The occurrence of a significant adverse event on such prospects that is not fully covered by insurance could result in the loss of all or part of our investment in a particular prospect which could have a material adverse effect on our financial condition and results of operations.

Shortages of rigs, equipment, supplies and personnel could delay or otherwise adversely affect our cost of operations or our ability to operate according to our business plans.

If drilling activity increases in Montana or the north-western United States generally, a shortage of drilling and completion rigs, field equipment and qualified personnel could develop. These costs have recently increased sharply and could continue to do so. The demand for and wage rates of qualified drilling rig crews generally rise in response to the increasing number of active rigs in service and could increase sharply in the event of a shortage. Shortages of drilling and completion rigs, field equipment or qualified personnel could delay, restrict or curtail our exploration and development operations, which could in turn harm our operating results.

The geographic concentration of all of our current property interests in Montana and North Dakota subjects us to an increased risk of loss of revenue or curtailment of potential production from factors affecting that area.

The geographic concentration of all of our property interests in Montana means that all of our property interests could be affected by the same event should the region experience:

–  16 –

• severe weather;
• delays or decreases in production, the availability of equipment, facilities or services;
• delays or decreases in the availability of capacity to transport, gather or process production; or
• changes in the regulatory environment.

Our future performance is dependent upon our ability to identify, acquire and develop oil and gas properties. If we fail to do this well, our business may fail.

Our future performance depends upon our ability to identify, acquire and develop oil and gas reserves that are economically recoverable. Our success will depend upon our ability to acquire working and revenue interests in properties upon which oil and gas reserves are ultimately discovered in commercial quantities, and our ability to develop prospects that contain proven oil and gas reserves to the point of production. Without successful acquisition and exploration activities, we will not be able to develop oil and gas reserves or generate revenues. We cannot provide you with any assurance that we will be able to identify and acquire oil and gas reserves on acceptable terms, or that oil and gas deposits will be discovered in sufficient quantities to enable us to recover our exploration and development costs or sustain our business.

The successful acquisition and development of oil and gas properties requires an assessment of recoverable reserves, future oil and gas prices and operating costs, potential environmental and other liabilities, and other factors. Such assessments are necessarily inexact and their accuracy inherently uncertain. In addition, no assurance can be given that our exploitation and development activities will result in the discovery of any reserves. Our operations may be curtailed, delayed or canceled as a result of lack of adequate capital and other factors, such as lack of availability of rigs and other equipment, title problems, weather, compliance with governmental regulations or price controls, mechanical difficulties, unusual or unexpected formations or pressures or work interruptions. In addition, the costs of exploitation and development may materially exceed our initial estimates.

Market conditions or operation impediments may hinder our access to natural gas and crude oil markets or delay our potential production.

The marketability of potential production from our property interests depends in part upon the availability, proximity and capacity of pipelines, natural gas gathering systems and processing facilities. This dependence is heightened where this infrastructure is less developed. Therefore, if drilling results are positive in certain areas of our oil and gas property interests, a new gathering system would need to be built to handle the potential volume of oil and gas produced. We might be required to shut in wells, at least temporarily, for lack of a market or because of the inadequacy or unavailability of transportation facilities. If that were to occur, we would be unable to realize revenue from those wells until arrangements were made to deliver production to market.

Our ability to produce and market natural gas and crude oil is affected and also may be harmed by:

• the lack of pipeline transmission facilities or carrying capacity;
• government regulation of natural gas and crude oil production;
• government transportation, tax and energy policies;
• changes in supply and demand; and
• general economic conditions.

To the extent that we establish natural gas and crude oil reserves, we will be required to replace, maintain or expand our natural gas and crude oil reserves in order to prevent our reserves and production from declining, which would adversely affect cash flows and income.

In general, production from natural gas and crude oil properties declines over time as reserves are depleted, with the rate of decline depending on reservoir characteristics. If we establish reserves, of which there is no assurance, and we are not successful in our subsequent exploration and development activities or in subsequently acquiring properties containing proved reserves, our proved reserves will decline as reserves are produced. Our future natural

–  17 –

gas and crude oil production is highly dependent upon our ability to economically find, develop or acquire reserves in commercial quantities.

To the extent cash flow from operations is reduced, either by a decrease in prevailing prices for natural gas and crude oil or an increase in finding and development costs, and external sources of capital become limited or unavailable, our ability to make the necessary capital investment to maintain or expand our asset base of natural gas and crude oil reserves would be impaired. Even with sufficient available capital, our future exploration and development activities may not result in additional proved reserves, and we might not be able to drill productive wells at acceptable costs.

Our business may suffer if we do not attract and retain talented personnel.

Our success will depend in large measure on the abilities, expertise, judgment, discretion, integrity and good faith of our management and other personnel in conducting the business of our company. We have a small management team, and the loss of a key individual or inability attract suitably qualified staff could materially adversely impact our business.

Our success depends on the ability of our management and employees to interpret market and geological data correctly and to interpret and respond to economic market and other conditions in order to locate and adopt appropriate investment opportunities, monitor such investments, and ultimately, if required, to successfully divest such investments. Further, no assurance can be given that our key personnel will continue their association or employment with us or that replacement personnel with comparable skills can be found. We have sought to and will continue to ensure that management and any key employees are appropriately compensated; however, their services cannot be guaranteed. If we are unable to attract and retain key personnel, our business may be adversely affected.

Future growth could strain our personnel and resources, and if we are unable to implement appropriate controls and procedures to manage our growth, we may not be able to successfully implement our business plan.

We expect to experience rapid growth in our operations, which will place a significant strain on our management, administrative, operational and financial infrastructure. Our future success will depend in part upon the ability of our executive officers to manage growth effectively. This may require us to hire and train additional personnel to manage our expanding operations. In addition, we must continue to improve our operational, financial and management controls and our reporting systems and procedures. If we fail to successfully manage our growth, we may be unable to execute upon our business plan.

The oil and gas industry is highly competitive, and we may not have sufficient resources to compete effectively.

The oil and gas industry is highly competitive. We compete with oil and gas companies and other individual producers and operators, many of which have longer operating histories and substantially greater financial and other resources than we do, as well as companies in other industries supplying energy, fuel and other needs to consumers. Our larger competitors, by reason of their size and relative financial strength, can more easily access capital markets than we can and may enjoy a competitive advantage in the recruitment of qualified personnel. They may be able to absorb the burden of any changes in laws and regulation in the jurisdictions in which we do business and handle longer periods of reduced prices for oil and gas more easily than we can. Our competitors may be able to pay more for oil and gas leases and properties and may be able to define, evaluate, bid for and purchase a greater number of leases and properties than we can. Further, these companies may enjoy technological advantages and may be able to implement new technologies more rapidly than we can. Our ability to acquire additional properties in the future will depend upon our ability to conduct efficient operations, evaluate and select suitable properties, implement advanced technologies and consummate transactions in a highly competitive environment.

Complying with environmental and other government regulations could be costly and could negatively impact our production.

Our business is governed by numerous laws and regulations at various levels of government. These laws and regulations govern the operation and maintenance of our facilities, the discharge of materials into the environment

–  18 –

and other environmental protection issues. Such laws and regulations may, among other potential consequences, require that we acquire permits before commencing drilling and restrict the substances that can be released into the environment with drilling and production activities. Under these laws and regulations, we could be liable for personal injury, clean-up costs and other environmental and property damages, as well as administrative, civil and criminal penalties. Accordingly, we could be liable, or could be required to cease production on properties, if environmental damage occurs.

The costs of complying with environmental laws and regulations in the future may harm our business. Furthermore, future changes in environmental laws and regulations could occur that result in stricter standards and enforcement, larger fines and liability, and increased capital expenditures and operating costs, any of which could have a material adverse effect on our financial condition or results of operations.

The oil and gas exploration and production industry historically is a cyclical industry and market fluctuations in the prices of oil and gas could adversely affect our business.

Prices for oil and gas tend to fluctuate significantly in response to factors beyond our control. These factors include:

• weather conditions in the United States and wherever our property interests are located;
• economic conditions, including demand for petroleum-based products, in the United States wherever our property interests are located;
• actions by OPEC, the Organization of Petroleum Exporting Countries;
• political instability in the Middle East and other major oil and gas producing regions;
• governmental regulations, both domestic and foreign;
• domestic and foreign tax policy;
• the pace adopted by foreign governments for the exploration, development, and production of their national reserves;
• the price of foreign imports of oil and gas;
• the cost of exploring for, producing and delivering oil and gas;
• the discovery rate of new oil and gas reserves;
• the rate of decline of existing and new oil and gas reserves;
• available pipeline and other oil and gas transportation capacity;
• the ability of oil and gas companies to raise capital;
• the overall supply and demand for oil and gas; and
• the availability of alternate fuel sources.

Changes in commodity prices may significantly affect our capital resources, liquidity and expected operating results. Price changes will directly affect revenues and can indirectly impact expected production by changing the amount of funds available to reinvest in exploration and development activities. Reductions in oil and gas prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable. Significant declines in prices could result in non-cash charges to earnings due to impairment.

Changes in commodity prices may also significantly affect our ability to estimate the value of producing properties for acquisition and divestiture and often cause disruption in the market for oil and gas producing properties, as buyers and sellers have difficulty agreeing on the value of the properties. Price volatility also makes it difficult to budget for and project the return on acquisitions and the development and exploitation of projects. We expect that commodity prices will continue to fluctuate significantly in the future.

We may not identify all of liabilities associated with our property interests or obtain protection from sellers against them, which could cause us to incur losses.

Although we have reviewed and evaluated the Montana properties subject to our farmout agreement, such review and evaluation might not necessarily reveal all existing or potential problems. This is also true for any future acquisitions made by us. Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even when problems are identified, a seller may be unwilling or unable to provide effective contractual protection against all or

– 19 –

part of those problems, and we may assume environmental and other risks and liabilities in connection with the acquired properties.

If we hold oil and gas leases in the future, we may be unable to retain our leases and working interests in our leases, which would result in significant financial losses to our company.

We may hold oil and gas leases in the future. If we fail to meet the specific requirements of each lease, such lease may terminate or expire. We cannot assure you that any of the obligations required to maintain each lease will be met. The termination or expiration of our leases may harm our business. Our property interests will terminate unless we fulfill certain obligations under the terms of our leases and other agreements related to such properties. If we are unable to satisfy these conditions on a timely basis, we may lose our rights in these properties. The termination of our interests in these properties may harm our business.

Title deficiencies could render the leases that we may acquire in the future worthless which could have adverse effects on our financial condition or results of operations.

The existence of a material title deficiency can render a lease worthless and can result in a large expense to our business. It is our practice in acquiring oil and gas leases or undivided interests in oil and gas leases to forgo the expense of retaining lawyers to examine the title to the oil or gas interest to be placed under lease or already placed under lease. Instead, we rely upon the judgment of oil and gas landmen who perform the field work in examining records in the appropriate governmental office before attempting to place under lease a specific oil or gas interest. This is customary practice in the oil and gas industry. However, we do not anticipate that we, or the person or company acting as operator of the wells located on the properties that we may lease in the future, will obtain counsel to examine title to the lease until the well is about to be drilled. As a result, we may be unaware of deficiencies in the marketability of the title to the lease. Such deficiencies may render the lease worthless.

Our business will suffer if we cannot maintain necessary licenses.

Our operations will require licenses, permits and in some cases renewals of licenses and permits from various governmental authorities. Our ability to obtain, sustain or renew such licenses and permits on acceptable terms is subject to change in regulations and policies and to the discretion of the applicable governments, among other factors. Our inability to obtain, or our loss of or denial of extension of, any of these licenses or permits could hamper our ability to produce revenues from our operation.

Risks Associated with Our Common Stock

A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all of our planned operations, we may force us to reallocate funds from other planned uses and may have a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

Our certificate of incorporation authorizes the issuance of up to 2,812,500,000 shares of common stock with a par value of $0.001. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will result in a reduction

–  20 –

of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Our common stock is quoted on the OTC Bulletin Board service of the Financial Industry Regulatory Authority (“FINRA”). Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like the American Stock Exchange. Accordingly, our shareholders may have difficulty reselling any of their shares.

Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and FINRA’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.

Financial Industry Regulatory Authority (FINRA) sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission (see above for a discussion of penny stock rules), FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

– 21 –

ITEM 7. FINANCIAL STATEMENTS.

 

WESTERN STANDARD ENERGY CORP.
(Formerly Lusora Healthcare Systems, Inc. and Comtrix, Inc.)
(An Exploration Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Western Standard Energy Corp. (formerly Lusora Healthcare Systems, Inc.):

We have audited the consolidated balance sheets of Western Standard Energy Corp. (formerly Lusora Healthcare Systems, Inc.) (an exploration stage company) as at August 31, 2007 and 2006 and the consolidated statements of operations, stockholders’ equity and cash flows for the years then ended and the period from October 16, 2003 (Inception) to August 31, 2007. 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 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 the Company as at August 31, 2007 and 2006 and the result of its operations, cash flows and changes in stockholders’ equity for the years then ended and the period from October 16, 2003 (Inception) to August 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, to date the Company has reported losses since inception of operations and requires additional funds to meet its obligations and fund 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
DMCL CHARTERED ACCOUNTANTS

Vancouver, Canada
November 20, 2007

WESTERN STANDARD ENERGY CORP.
(Formerly Lusora Healthcare Systems, Inc.)
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS

		August 31,			August 31,
		2007			2006
ASSETS
CURRENT ASSETS
Cash	$	3,475		$	90,994
Other receivables		-			4,400
Prepaid expenses		3,551			220
		7,026			95,614
RESTRICTED CASH		-			9,561
OIL AND GAS PROPERTY, unproven (Note 4)		450,000			-
EQUIPMENT, net		1,325			5,553
	$	458,351		$	110,728
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	130,475		$	69,442
Due to related parties (Note 5)		-			118,680
		130,475			188,122
STOCKHOLDERS' EQUITY (DEFICIT)
COMMON STOCK (Note 6)
Authorized:
2,812,500,000 common shares with a par value of $0.001
Issued and outstanding:
88,360,133 common shares (August 31, 2006 - 45,112,500)		88,360			31,000
ADDITIONAL PAID IN CAPITAL		2,381,805			870,217
DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE		(2,142,289	)		(978,611	)
		327,876			(77,394	)
	$	458,351		$	110,728
GOING CONCERN (Note 1)
COMMITMENTS (Notes 4 and 8)
SUBSEQUENT EVENTS (Note 8)

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

WESTERN STANDARD ENERGY CORP.
(formerly Lusora Healthcare Systems, Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS

&n