Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.

The following discussion is intended to inform existing and potential security holders generally of some of the risks and uncertainties that can affect the Company and to take advantage of the "safe harbor" protection for forward-looking statements afforded under Federal securities laws. From time to time, management or persons acting on the Company's behalf make forward-looking statements to inform existing and potential security holders about the Company. Forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "plan" or other words that convey the uncertainty of future events or outcomes.

Except for statements of historical or present facts, all other statements contained in this report are forward-looking statements. The forward-looking statements may appear in a number of places and include statements with respect to, among other things, business objectives and strategic plans; operating strategies; acquisition strategies; drilling of wells; oil and gas reserve estimates (including estimates of future net revenues associated with such reserves and the present value of such future net revenues); estimates of future production of oil, natural gas and minerals; expected results or benefits associated with recent acquisitions; marketing of oil, gas and minerals; expected future revenues and earnings, and results of operations; future capital, development and exploration expenditures; expectations regarding cash flow and future borrowings sufficient to fund ongoing operations and debt service, capital expenditures and working capital requirements; nonpayment of dividends; expectations regarding competition; impact of the adoption of new accounting standards and the Company's financial and accounting systems; and effectiveness of the Company's control over financial reporting.

These statements by their very nature are subject to certain risks, uncertainties and assumptions and will be influenced by various factors. Should any of the assumptions underlying a forward-looking statement prove incorrect, actual results could vary substantially.

Various risk factors could cause actual results to differ materially from those expressed in forward-looking statements, including, without limitation, the following:

· volatility of the market price for both crude oil and natural gas;

· volatility of the market price for the Company's minerals;

· market capacity and demand for the Company's minerals;

· the timing, effects and success of the Company's acquisitions, exploration and development activities;

· the timing, quantity and marketability of production;

· effectiveness of management's strategies and decisions;

· competition;

· changes in the legal and/or regulatory environment and/or changes in accounting standards;

· policies and practices or related interpretations by auditors and/or regulatory agencies;

· climatic conditions; and

· unanticipated problems, issues or events.

Many, if not all, of these factors are beyond the Company's control and are impossible to predict. These factors are not intended to represent an exhaustive list of the general or specific facts or factors that may affect the Company.

All forward-looking statements speak only as of the date made. All subsequent forward-looking statements are expressly qualified in their entirety by the cautionary statements above. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the forward-looking statement is made or to reflect the occurrence (or non-occurrence) of anticipated or unanticipated events or circumstances.

Results of Operations:

For the three and six months ended March 31, 2009 and 2008:

                                              Three Months Ended             Six Months Ended
                                                   March 31                       March 31
                                              2009           2008           2009           2008
Revenues                                   $  144,912     $  248,991     $  343,555     $  490,504
Net Loss                                   $ (355,957 )   $ (287,191 )   $ (640,248 )   $ (666,321 )
Oil and Gas Production and Cost Information:
Production:
  Oil (Bbl)                                       791            634          1,809          1,506
  Gas (Mcf)                                     9,141         13,509         18,167         25,885
Average Price:
   Oil (per Bbl)                           $    40.18     $    93.52     $    50.17     $    91.04
   Gas (per Mcf)                           $     4.63     $     8.80     $     6.04     $     8.50
Lease Operating Expense and Production
Tax per Mcfe                               $     5.21     $     2.76     $     4.14     $     3.17

The decrease in gas production experienced during the three and six months ended March 31, 2009 is primarily a result of wells being "off-line" for repair, declines in the producing gas-oil ratio from certain producing wells operated by the Company in Texas and curtailments resulting from third party maintenance of natural gas pipelines and processing facilities servicing these properties. The increase in Lease Operating Expenses and Production Tax per Mcfe is primarily the result of the base well/lease operating costs being applied to the reduced production volumes for the three and six months ended March 3 1, 2009. The reduction in oil and gas operating revenues during the three and six months ended March 31, 2009 is the result of the decline in production volumes and the significant declines in the price received by the Company for the crude oil and natural gas sold during period as compared to prior year's three and six month period.

Minerals Operations

The Company is an Exploration Stage company in respect to its mineral holdings.

Minerals Exploration Expenses

Minerals exploration expenses were $3,502 for the six months ended March 31, 2008. The Company did not incur minerals exploration expenses during the first two quarters of fiscal 2009. These expenses were primarily for costs associated with the exploration and quantification of mineral resources and mineral reserves.

Minerals Operating Expenses and Other Costs

Minerals operating expenses and other costs totaled $18,113 and $37,372 for the three and six months ended March 31, 2009, respectively, and $15,847 and $60,839 for the comparable periods of fiscal year 2008. The decrease is primarily attributable to certain lease payments related to the calcium carbonate and zeolite properties during the prior fiscal periods.

Depreciation, Depletion and Amortization: Oil and Gas

Depreciation, depletion and amortization ("DD&A") totaled $46,691 and $93,384 for the three and six months ended March 31, 2009, respectively, and $43,950 and $87,900 for the comparable periods of fiscal year 2008.

Depreciation, Depletion and Amortization: Minerals

Depreciation, depletion and amortization totaled $144,363 and $288,726 for the three and six months ended March 31, 2009, respectively, and $194,563 and $389,126 for the comparable periods of fiscal year 2008. Such amounts include amortization of Technology and Patent Rights of $144,363 and $288,726 in the three and six month periods of each fiscal year, respectively.

General and Administrative Expenses

These expenses totaled $115,108 and $236,431 for the three and six months ended March 31, 2009, respectively, and $208,230 and $428,071 for the comparable periods of fiscal year 2008. The Company recorded stock-based compensation expense of $22,464 and $44,928 for the three and six months ended March 31, 2009, respectively, and $67,496 and $129,603 for the comparable periods of fiscal year 2008. See Note 3 of the Notes to Unaudited Consolidated Financial Statements included in this interim report. General and administrative expenses also decreased as a result of the Company's decreased staff.

Legal and Professional Fees and Expenses

These expenses totaled $45,523 and $101,479 for the three and six months ended March 31, 2009, respectively, and $117,394 and $145,097 for the comparable periods of fiscal year 2008. The decrease is primarily attributed to decreased professional fees related to auditing services. During the six months ended March 31, 2008, the Company's professional fees were reduced by $42,000 which the Company received in respect to fees charged by a prior auditor engaged by the Company in fiscal 2004 while such auditor was not registered with the PCAOB.

Interest Expense

Interest expense totaled $50,656 and $102,571 for the three and six months ended March 31, 2009, respectively, and $45,487 and $84,544 for the comparable periods of fiscal year 2008. This increase is primarily attributable to default interest rates associated with certain debt as the Company has defaulted on certain required payments.

Liquidity and Capital Resources

The Company's cash flow used in operating activities was $362,325 and $195,380 for the six months ended March 31, 2009 and 2008, respectively. Funds have been and are being deployed in efforts to enhance the commercial viability of the Company's existing resource assets, to identify potential expansion opportunities and to retire obligations associated with the Company's assets. The Company's net cash at March 31, 2009 was $81,531.

Liquidity is a measure of a company's ability to access cash. The Company has historically addressed its long-term liquidity requirements through the issuance of equity securities and borrowings or debt financing for certain activities.

At present, the Company does not have a credit facility or other line of credit upon which it may draw. As operating activities increase, the Company will evaluate the need for such a credit facility. For desired acquisitions or project enhancements, the Company must seek project specific financing. None of the Company's properties is encumbered.

The prices the Company receives for its oil and gas and the level of production have a significant impact on the Company's cash flows. The Company is unable to predict with any degree of certainty the prices the Company will receive for its future oil and gas production and the success of the Company's exploration, exploitation and production activities. Increases in the sales of the Company's minerals, which to date have not been mined in substantial commercial quantities, will also affect cash flow.

In an effort to address liquidity shortfalls, the Company has instituted cost containment procedures including staff decreases, sold certain of its oil and gas properties, and is evaluating the sale of additional oil and gas properties. It may take months and possibly longer to sell these properties at a suitable price. The market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand that are beyond our control. We cannot predict whether we will be able to sell a property for the price or on the terms acceptable to us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of any property.

During December 2007, Sonata Investment Company, Ltd. loaned the Company $75,000 which the Company used to satisfy certain delinquent vendor payables (see Note 5 of the Notes to Unaudited Consolidated Financial Statements included in this interim report). This note was repaid in May 2008 with a portion of the proceeds from the sale of the Pennsylvania properties (see below).

In March 2008, the Company entered into an agreement to sell its interests in certain operated gas wells and related gas gathering system in West Virginia with cash consideration to the Company of $150,000 of which $100,000 was received in April 2008. In May 2008, the Company sold its interests in certain oil and gas properties (primarily undeveloped acreage) in Pennsylvania for $250,000.

Commercialization of Existing Assets

The Company is continuing to pursue plans to commercialize its calcium carbonate, kaolin and zeolite projects which are critical for the Company to achieve profitability and establishing the Company as a market innovator in industrial minerals. Those plans have progressed from the data acquisition and analysis phase into ongoing mineral processing and facility design phase. The Company and its current partner and potential other partners are actively investigating various commercial applications for its mineral based products.

The efforts of the Company and Tecumseh Professional Associates LLC to develop the Sierra Kaolin deposit are progressing. The venture's efforts to commercialize the Sierra Kaolin deposit have focused on an initial target area encompassing approximately 32 acres out of the project's 2,740 acres. The test minerals extracted from the target area have been processed into product formulations determined by independent consultants to be suitable for coatings, fillers and pigments for use within the paint and paper manufacturing industries. The analysis results of the processed minerals with respect to its physical properties such as but not limited to, brightness, color, opacity, oil absorption have indicated that commercially viable products can be produced from the deposit's extracted minerals.

The venture, with the assistance of its consultants, has begun technical presentations of the product formulations to entities active on both the demand and supply sides of the coatings, fillers and pigments sectors of the paint and paper industries. Preliminary feedback from these initial presentations has been encouraging and has lead to follow-up discussions and submission of product samples for prospective application testing. The final results of these inquiries and testing are expected over the next several months. Tecumseh, as the project's manager, is proceeding with its efforts to prepare the mineral deposit site for production. These efforts include the submittal of the required regulatory filings and follow-up meetings with the representatives of the various regulatory agencies responsible for the issuance of the extraction permit for the project. Work continues on product identification and process flow sheet design and is expected to be completed in the next few months.

The Company continues to focus on establishing business and/or financial relationships that will provide the necessary capital to effectively exploit its calcium carbonate and zeolite mineral resource holdings. With respect to the Company's zeolite deposit, certain initial small scale tests have progressed to the point where larger scalable pilot tests of commercial applications are to be initiated.

Off-balance Sheet Arrangements

The Company has no "off-balance sheet arrangements" and does not expect to enter into any such arrangements in the foreseeable future.