ZULU ENERGY CORP. (Form: 8-K, Received: 12/27/2007 16:58:46)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): December 20, 2007

ZULU ENERGY CORP.

(Exact name of registrant as specified in its charter)

Colorado	000-52272	20-3437301
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

1066 West Hastings Street, Vancouver, British Columbia, Canada V6E 3X2

(Address of principal executive offices) (zip code)

(604) 602-1717

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On December 20, 2007, Zulu Energy Corp. (“Zulu Energy”, “we” or “us”) entered into a Share Exchange Agreement and Plan of Reorganization (the “Exchange Agreement”), dated as of December 19, 2007, with Nyati Mauritius Limited (“Nyati Mauritius”) and LMA Hughes LLLP (“LMA Hughes”). Nyati Mauritius is the parent entity of Nyati Resources Limited, which holds 50% of the issued and outstanding capital stock of Nyati Resources Botswana (Proprietary) Limited (“Nyati Botswana”), which holds certain exploration licenses issued by the government of the Republic of Botswana. On December 20, 2007, we also entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”), dated as of December 19, 2007, with Swansi Holdings Corp. (“Swansi”) to acquire the remaining 50% of the issued and outstanding capital of Nyati Botswana. The Exchange Agreement and Stock Purchase Agreement are filed with this Current Report on Form 8-K as Exhibits 10.1 and 10.2 respectively. The transactions contemplated by the Exchange Agreement and the Stock Purchase agreement were consummated and all closing conditions were met on December 20, 2007. As a result of the transactions contemplated by the Exchange Agreement and Stock Purchase Agreement, Nyati Mauritius became our wholly-owned subsidiary, and we became the ultimate parent of Nyati Botswana.

Pursuant to the terms of the Exchange Agreement, we issued 30,000,000 shares of our common stock to LMA Hughes, which was the sole shareholder of Nyati Mauritius prior to the closing, in exchange for all of the issued and outstanding shares of capital stock of Nyati Mauritius. As a result of the foregoing issuance, LMA Hughes became our largest shareholder. We also granted LMA Hughes a 10% over-riding royalty interest in any properties that we acquire from LMA Hughes in the future and we agreed to reimburse LMA Hughes for certain expenses it incurred as part of this transaction.

Pursuant to the terms of the Stock Purchase Agreement, we are obligated to pay Swansi $3 million in the aggregate and issue to Swansi a warrant to purchase 15,000,000 shares of our common stock exercisable at $1.50 per share. The warrant will have a five year term and have substantially the same terms as the warrants issued in the First Private Placement as described below. We are obligated to conclude a $5 million private placement by January 19, 2008 and to pay $1.5 million dollars of the proceeds to Swansi as part of the purchase price. We refer to this private placement as the “First Private Placement”. By September 20, 2008, we are obligated to conclude a second private placement of at least $5 million of which $1.5 million is to be paid to Swansi as part of the purchase price. If, however, we are not successful in concluding either the First Private Placement or the Second Private Placement, Swansi has the right to rescind the sale of its 50% ownership interest in Nyati Botswana under the terms of the Stock Purchase Agreement.

No members of the board of directors of Zulu Energy or the officers of Zulu Energy resigned their positions as a result of the foregoing transactions.

The issuances of the common stock to LMA Hughes was made pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended, as, among other things, each transaction did not involve a public offering, the investor was an accredited investor, the investor had access to information about the company and their investment, the investor took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the common stock.

Item 2.01 Completion of Acquisition or Disposition of Assets.

DESCRIPTION OF ZULU ENERGY’S BUSINESS

The Company

We are a development stage company focused on plans to drill for and extract methane gas from coalbeds, known as coalbed methane (CBM), in the Republic of Botswana. If we are successful in locating and developing coalbed methane in commercial quantities and raising the capital needed for such operations, we are considering one or more strategies to distribute or utilize for various purposes (including gas-to-diesel) the coalbed methane in Botswana and its neighboring countries.

We hold nine Prospecting Licenses, through Nyati Botswana, that were issued by the government of Botswana and which grant us the exclusive right for the exploration of coalbed methane on land to which the government of Botswana holds mineral rights. Our licenses expire in September 2008, but we plan to renew these licenses.

We believe that coalbed methane will become a significant source of competition to conventional natural gas. The potential resources of coalbed methane contained in the world’s coal deposits greatly exceed known conventional natural gas resources. In many areas, coalbeds contain three times more gas than found in the equivalent thicknesses of limestone or sandstone.

Currently, Botswana depends on neighboring countries to meet its energy needs. With the exception of coal, there are no oil, natural gas, or hydro resources in Botswana. During the past five years Botswana has been successful in expanding its electrical grid and electrification of certain rural areas. Botswana has created the goal of developing a greater choice of energy sources during the next five years. The focus is on diversifying its oil supplies and reducing its exposure to energy imports including the development of renewable and environmentally clean energy sources such as coal bed methane.

Incorporation and Organization

We were incorporated on May 6, 2005 as Global Sunrise, Inc. in the State of Colorado. Prior to our acquisition of Nyati Botswana, our efforts had been limited to organizational activities and capital formation and initial due diligence on a mineral claim in Ontario, Canada. After careful consideration and review of the Botswana Coalbed Methane project, our board of directors determined that it would be in the best interest of the Company and its stockholders to abandon the mineral exploration project in Ontario, Canada and concentrate our efforts on the Botswana Coalbed Methane project. In January 2007, we changed our name to Zulu Energy Corp. Since early 2007, we have employed a new Chief Executive Officer and new Chief Financial Officer and appointed new members to the board of directors in conjunction with the resignation of the previous members of the board of directors.

On December 19, 2007, we acquired all the ownership interests in Nyati Botswana in two simultaneous transactions. As further described in Item 1.01 of this Current Report on Form 8-K, we acquired half of the ownership interests in Nyati Botswana from Swansi Holding Corp. and obtained the remaining ownership interest by acquiring Nyati Mauritius Limited, which holds fifty percent of the ownership interests in Nyati Botswana through a subsidiary. We have previously granted overriding royalty interests in the land that is subject to the Prospecting Licenses equal to in the aggregate 10%.

Business Strategy

Our Prospecting Licenses allow us to explore for Coalbed Methane on approximately 2.2 million acres of land in the Pandamatenga area located in the northeast region of the Republic of Botswana on the southern African continent. This area of Botswana is adjacent to the western area of the Republic of Zimbabwe where coal was discovered in the late 1970s and coalbed methane was subsequently discovered. We believe the strata in Zimbabwe extend west into Botswana, and we intend to confirm this belief during our initial exploration phases. Our goal is to discover and produce substantial commercial quantities of coalbed methane on the property under our Prospecting Licenses. However, no assurance can be given that commercial quantities of coalbed methane will be produced.

Our business strategy is predicated on obtaining the necessary capital to fund the required operations. In the early stages of our business strategy, we plan to raise the required funds through primarily equity financings. If we conclude, based on our exploration and testing, that commercial quantities of coalbed methane can be extracted from the area to which we hold licenses we will need substantially more capital for operations and to construct required infrastructure to distribute the methane or otherwise bring the methane to market. Such financings could lie with development banks that are focused on this part of Southern Africa, including the United States Trade & Development Agency and the World Bank, or large institutional investors.

Our business plan is focused on a strategy for maximizing our expertise in identifying and developing coalbed methane resources in Botswana. To date, execution of our business plan has largely focused on identifying and obtaining prospective coalbed methane licenses in Botswana. Successful coalbed methane drilling is dependant on the knowledge and experience of the management team.

The three important concepts in defining economically viable coalbed methane acreage are coal thickness, the relationship between gas content and saturation, and permeability. During our initial exploration phases we intend to validate the economic viability of extracting commercial volumes of coalbed methane from the area to which we hold licenses.

Our business plan involves three phases. During the first phase we plan to drill approximately nine exploration wells to confirm the coal deposit, identify the absorption rates and gas content of the coal and identify production pilot locations. We anticipate that this initial exploration phase will last approximately six months. We plan to begin test drilling and initiate this first phase as soon as practicable after we have received funding. We expect that approximately $7 million of capital will be necessary for the first phase. Assuming we are successful in locating coalbed methane and raising the required capital, the second phase will likely involve the drilling of approximately 16 production test wells with the intent of demonstrating production and commercial viability or commercial volumes of coalbed methane. This phase will also likely include the dewatering of the coal and gas production and is expected to last approximately six months. The third phase will likely involve adding more wells to the pilot wells drilled in the second phase, expand our then existing well footprint and increase production. We anticipate that phase three will last approximately nine months. Costs for the second and third phase are estimated at $20 million. The initiation and completion of each of the three contemplated phases will require us to raise sufficient capital. At this time we have no commitments or agreements for the raising of capital.

If we are successful in locating and developing coalbed methane in commercial quantities and we are successful in obtaining the requisite funding, we plan to utilize the methane for one or more market uses including but not limited to (i) a stand-alone power supply systems including small-scale self-contained gas turbines for power generation that would provide electricity to the national electricity grid network, (ii) gas-to-liquid

production to produce high quality diesel fuel from coalbed methane, (iii) gas-fired power generation plant connecting to the national electricity grid and exporting to neighboring countries, or (iv) the development of a fertilizer plant using coalbed methane as a feedstock and as an energy source for ammonia production for internal use and export. None of the foregoing plans are assured and we have no commitments or agreements for funding at this time.

The Coalbed Methane Industry

Little more than a half-century ago, drillers seeking valuable crude oil bemoaned the discovery of natural gas, despite it being the most efficient and cleanest burning fossil fuel. Given the lack of transportation infrastructure at the time, wells had to be capped or the gas flared. As the U.S. economy expanded after World War II, the development of a vast interstate transmission system facilitated widespread consumption of natural gas in homes and business establishments. The demand for natural gas rose sharply in the 1980’s, when consumers and businesses began to find more uses for it. After years as a low-value commodity, natural gas ascended into the spotlight as demand for the fuel to fire power plants, heat homes and serve as a chemical feedstock outstripped the petroleum industry's ability to tap new reserves. It is our belief that a similar use of natural gas in Africa would have a positive impact on the economic health of Botswana and its neighboring countries and would be a viable business opportunity for us.

We believe the success of coalbed methane developments has been largely the result of improved drilling and completion techniques (including horizontal/lateral completions), better hydraulic fracture designs and significant cost reductions as a result of highly dependable gas content and coalbed reservoir performance analysis. Also aiding this sector’s growth is the apparent shortage of quality conventional exploration and development projects.

We also believe that a major reason propelling the growth in coalbed methane production is its relatively low finding and development costs. Coalbed methane fields are often found where deeper conventional oil and gas reservoirs have already been developed. Therefore, considerable exploration-cost reducing geologic information is often readily available. This available geological information, combined with comparatively shallow depths of prospective coalbed reservoirs, reduces finding and development costs.

Coalbed Methane

Natural gas normally consists of 80% or more methane with the balance comprising such hydrocarbons as butane, ethane and propane. In some cases it may contain minute quantities of hydrogen sulfide, referred to as sour gas. Coalbed methane is, generally, a sweet gas consisting of 95% methane and thus is normally of pipeline quality. Coalbed methane is considered an unconventional natural gas resource because it does not rely on conventional trapping mechanisms, such as a fault or anticline, or stratigraphic traps. Instead coalbed methane is absorbed or attached to the molecular structure of the coals which is an efficient storage mechanism as coalbed methane coals can contain as much as seven times the amount of gas typically stored in a conventional natural gas reservoir such as sandstone or shale.

Coalbed methane is kept within coal by pressure. To produce the gas the water in the coalbed has to be removed, generally by using pumps. As pressure is reduced, the gas desorbs from the coal, flows to the well, and flows up the casing. At the wellhead, the flow rate is measured, and the gas is collected and compressed for transmission via pipelines to household, commercial and industrial users hundreds to thousands of miles away. As dewatering begins to lower the reservoir pressure, gas production occurs rapidly. If the target seam is under-saturated at a specific depth, significant water production must occur to reduce the reservoir pressure to allow gas production to commence. This process usually requires the drilling of adjacent wells and sometimes takes 6 to 36 months to complete. Coalbed methane production typically has a low rate of production decline and an economic life typically of 10 to 20 years.

The principal sources of coalbed methane are either biogenic, producing a dry gas which is generated from bacteria in organic matter, typically at depths less than 1,000 feet, or thermogenic, which is a deeper wet gas formed when organic matter is broken down by temperature and pressure.

The three main factors that determine whether or not gas can be economically recovered from coalbeds are: (1) the relationship between the gas saturation and the content of the coals; (2) the permeability or flow characteristics of the coals; and (3) the thickness of the coalbeds. Relatively high permeability, which can affect the ability of gas to easily travel to the borehole, is an important factor for the success of coalbed methane wells, but is not absolutely required.

Commodity Price Volatility

Oil and natural gas prices are volatile and subject to a number of external factors. Prices are cyclical and fluctuate as a result of shifts in the balance between supply and demand for oil and natural gas, world and North American market forces, conflicts in Middle Eastern countries, inventory and storage levels, OPEC policy, weather patterns and other factors. OPEC supply curtailment, tensions in the Middle East, increased demand in China and low North American crude stocks have kept crude oil prices high. Natural gas prices are greatly influenced by market forces in North America since the primary source of supply is contained within the continent. Market forces include the industry's ability to find new production and reserves to offset declining production, economic factors influencing industrial demand, weather patterns affecting heating demand and the price of oil for fuel switching.

Competition

To our knowledge no other company is producing coalbed methane in Botswana but there is no assurance that other companies with greater resources than what we have will not explore for and produce coalbed methane in Botswana. CIC Energy Corp., however, is engaged in the development and mining of two coal properties located in the Mmamabula Coalfields in Southeastern Botswana and has stated that its business objective is to develop two coal-integrated power stations in Mmamabula, Botswana.

Governmental and Environmental Regulations

Our operations in Botswana are or will be subject to various types of regulation under the laws of the Republic of Botswana. Such regulation includes requiring licenses for the drilling of exploratory wells; environmental impact studies and assessments depending on the phase of exploration or production; permitting and additional license requirements once operations approach commercial production. Following our exploration and identification of coalbed methane in commercial quantities, we will be required to obtain a mining license from the government of Botswana and potentially other permits. In addition, we will be required to fund an environmental assessment or study prior to producing commercial quantities of coalbed methane.

Failure to comply with any laws and regulations may result in the assessment of administrative, penalties, the imposition of injunctive relief or both. Moreover, changes in any of these laws and regulations could have a material adverse effect on our business. In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us, we cannot predict the overall effect of such laws and regulations on our future operations.

We believe that our operations comply in all material respects with applicable laws and regulations and that the existence and enforcement of such laws and regulations have no more restrictive an effect on our operations than on other similar companies in the energy industry.

We plan to establish guidelines and management systems to ensure compliance with governmental laws, rules and regulations. The existence of these controls cannot, however, guarantee total compliance with these laws, rules and regulations.

Employees

As of December 27, 2007, we had one full-time, at-will employee and one full time employee with whom we have entered into an employment agreement. We intend to hire additional employees upon receipt of additional financing.

RISK FACTORS

We Have a History Of Losses Which Should Continue, Which May Negatively Impact Our Ability to Achieve Our Business Objectives.

We (Nyati Resources Limited) incurred net losses of $24,018 & $7,087 and $31,105 for the years ended December 31, 2006 and 2005 and for the period from August 11, 2005 (date of inception) to December 31, 2006, respectively, and $48,468 and $1,418 for the nine months ended September 30, 2007 and September 30, 2006, respectively. We are in the development stage and there can be no assurance that we can achieve revenues or profitability on a quarterly or annual basis in the future. Our operations are subject to the risks inherent in the establishment of a business enterprise, and the special risks of resource exploration. Due to the nature of our business plan to make substantial expenditures for exploration and development activities in 2008 without sources of revenues, we expect to incur a substantial loss in 2008. Revenues and profits, if any, in future years will depend upon various factors, including the results of our exploration and development programs. We may not achieve our business objectives and the failure to achieve our goals would have an adverse impact on us.

Our Independent Auditors Have Expressed Substantial Doubt About Our Ability to Continue As a Going Concern, Which May Hinder Our Ability to Obtain Future Financing.

In their report dated August 8, 2007, our independent auditors stated that our financial statements were prepared assuming that we would continue as a going concern. Our ability to continue as a going concern is an issue raised as a result of recurring losses from operations. We continue to experience net operating losses. Our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources to commence and develop our operations and generate a profit, including obtaining additional funding from the sale of our securities, developing revenues or obtaining loans from various financial institutions where possible. Our continued net operating losses increase the difficulty in meeting such goals and there can be no assurance that such methods will prove successful.

There Is No Assurance That We Will Establish Commercial Discoveries on Our Properties.

We have no proven reserves on our properties in Botswana, and there is only limited data from neighboring areas. Although we believe the neighboring geologic strata may extend into our properties, until we explore the properties, we cannot be certain of the nature of the resource. We may not establish commercial discoveries on any of our properties.

Because We Are Small and Do Not Have Much Capital, We May Not Be Able to Commence or Properly Execute Our Proposed Operations, Which May Result in a Loss of Your Investment.

Because we are small and do not have much capital, we may not be able to commence or properly execute our proposed operations. We must raise capital to initiate and execute the initial exploration phases of our business strategy. We have no commitments or agreements for funding at this time. As such we may not be able to complete an exploration program that is as thorough as we would like. In that event, existing reserves may go undiscovered. Without finding reserves, we cannot generate revenues and you will lose your investment. Our plans to commercialize coalbed methane in Botswana will require additional substantial funding. Such funding is not guaranteed and if we are unable to raise such funds we will be unable to generate revenues and you will lose your investment.

We Have a Limited Operating History and if We Are Not Successful in Commencing Our Exploration Operations and Growing Our Business, Then We May Have to Cease All of Our Operations.

We have no history of revenues from operations. We have yet to generate earnings and there can be no assurance that we will ever operate profitably. Our success is significantly dependent on a successful exploration, development and production program. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to locate recoverable reserves or operate on a profitable basis. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.

The Volatility of Natural Gas and Oil Prices Could Have a Material Adverse Effect on Our Business.

We have not yet begun to produce and sell Coalbed Methane. However, the prices of natural gas and oil affect our business to the extent that such prices influence a decision to invest in our company. If the prices of natural gas and oil are low, investors may decide to invest in other industries.

Terms of Subsequent Financings May Adversely Impact Your Investment.

We expect to engage in common equity, debt, or preferred stock financings to finance our initial operations. Your rights and the value of your investment in our common stock could be reduced by any type of financing we do due to the senior rights and preferences granted in those financings, or the prices at which the securities are sold by us. In addition, any share of common stock that we sell could be sold into the market impacting the price of our common stock.

If We Are Unable to Retain the Services of Mr. Paul Stroud or If We Are Unable to Successfully Recruit Qualified Managerial and Field Personnel Having Experience in Oil and Gas Exploration, We May Not Be Able to Continue Our Operations.

Our success depends to a significant extent upon the continued services of Mr. Paul Stroud, our Chief Executive Officer, President, and a director. Loss of the services of Mr. Stroud could have a material adverse effect on our growth, revenues, and prospective business. In order to successfully implement and manage our business plan, we will be dependent upon, among other things, successfully recruiting qualified managerial and field personnel having experience in the oil and gas exploration business. Competition for qualified individuals is intense. There can be no assurance that we will be able to find, attract and retain existing employees or that we will be able to find, attract and retain qualified personnel on acceptable terms.

The Term of Our Coalbed Methane Prospecting Licenses Expires in September 2008 and Renewal of These Licenses Cannot Be Assured

Our nine Coalbed Methane Prospecting Licenses granted to us by the government of the Republic of Botswana have three year terms and expire in September 2008. We have not made the required expenditures as required by the license during the first and second years of the licenses. Although we plan to make substantial expenditures in early to mid 2008, renewal of our licenses cannot be assured.

The Potential Profitability of Our Project Depends Upon Factors Beyond the Control of Our Company.

The potential profitability of oil and gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect our financial performance.

The marketability of Coalbed Methane in Botswana is not assured and will be affected by numerous factors beyond our control. Infrastructure for the distribution or conversion of this energy resource would have to be created, which will involve planning, funding and governmental approval. Other factors include market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. These factors cannot be accurately predicted and the combination of these factors may result in our company not receiving an adequate return on invested capital.

The Oil And Gas Industry Is Highly Competitive.

The oil and gas industry is intensely competitive. We will compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for competent and experience personnel, exploration equipment, desirable leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised or that any projected work will be completed.

Our Proposed Exploration and Development Operations are Subject to Regulation Which May Cause Substantial Delays or Require Capital Outlays in Excess of Those Anticipated Causing an Adverse Effect on Our Company.

Our proposed exploration and development activities are subject to the regulations and laws of the Republic of Botswana. Oil and gas operations in Botswana are subject to laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Various licenses and permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by governmental authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which it may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in future and this may affect our ability to expand or maintain our operations.

Exploration Activities are Subject to Certain Environmental Regulations Which May Prevent or Delay the Commencement or Continuance of Our Operations.

In general, our exploration activities are subject to certain Botswana laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. These laws and regulations may be changed and we are unable to predict the ultimate cost of compliance.

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.

Any Change to Government Regulation/Administrative Practices May Have a Negative Impact on Our Ability to Operate and Our Profitability.

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the Republic of Botswana or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business.

The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitably.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward Looking Statements

Some of the statements contained in this Form 8-K that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 8-K, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

Our ability to attract and retain management, and to integrate and maintain technical information and management information systems;

Our ability to raise capital when needed and on acceptable terms and conditions;

Delays in the exploration and development of our operations in Botswana due to unavailability of equipment, labor or supplies, limited capacity among engineering, procurement and drilling firms, climatic conditions or otherwise;

Insufficient transportation and transmission capacity, geological and mechanical conditions;

Delays or failures in obtaining regulatory permits and/or licenses concerning mining, power generation, gas distribution and related requirements;

Political risks of operating in Africa;

Lack of infrastructure to distribute commercial quantities of coalbed methane;

Lack of markets for coalbed methane;

The intensity of competition; and

General economic conditions

All written and oral forward-looking statements made in connection with this Form 8-K that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only as of the date of this Form 8-K. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Overview

We are a development stage independent oil and gas company focused on the exploration and development of oil and gas resources. We were incorporated on May 6, 2005 and acquired nine Prospecting Licenses for the exploration of coal bed methane in the Republic of Botswana in Southern Africa. Our business plan is focused on discovery and production of substantial commercial quantities of coalbed methane in the Pandamatenga area of Northeastern Botswana.

Paul Stroud is our Chief Executive Officer. He has worked in the energy industry for over 30 years including as an employee for Royal Dutch Shell and UNOCAL and as an independent consulting engineer. Mr. Stroud has been involved in the acquisition of leases, exploration and production. He has substantial experience with coalbed methane and is in the process of assembling our development and management team.

Operations Plan

Our Prospecting Licenses allow us to explore for coalbed methane on approximately 2.2 million acres of land in the Pandamatenga area located in the northeast region of the Republic of Botswana on the southern African continent. We have previously granted overriding royalty interests in the land that is subject to the Prospecting Licenses equal to 10% in the aggregate.

Our goal is to discover and produce substantial commercial quantities of coalbed methane on the property under our Prospecting Licenses. No assurance can be given that commercial quantities of coalbed methane will be produced, if at all. The execution of our business plan will require additional capital which we do not now have on hand. The availability for such funding is also not assured.

If we conclude, based on our exploration and testing, that commercial quantities of coalbed methane can be extracted from the area to which we hold licenses we will need substantially more capital to construct required infrastructure to distribute the methane or otherwise bring the methane to market. Such financings could lie with development banks that are focused on this part of Southern Africa, including the United States Trade & Development Agency and the World Bank, or large institutional investors, but we have no commitments or arrangements in place for these financings.

Our current cash position is not sufficient to fund our cash requirements during the next twelve months, including operations and capital expenditures. We intend to seek equity and/or debt financing to support our proposed coalbed methane operations and capital expenditures. We cannot assure that continued funding will be available or available on terms acceptable to us.

Our future financial results will depend primarily on (1) our ability to discover and produce commercial quantities of coalbed methane; (2) the market price for oil and gas; and (3) our ability to fully implement our exploration and development program with respect to these and other matters. We cannot assure that we will be successful in any of these activities or that the prices of oil and gas prevailing at the time of production will be at a level allowing for profitable production.

We have not entered into commodity swap arrangements or hedging transactions. Although we have no current plans to do so, we may enter into commodity swap and/or hedging transactions in the future in conjunction with oil and gas production. We have no off-balance sheet arrangements.

Liquidity and Capital Resources

We have no cash on-hand and we will require additional funding to carry out our intended objectives during the next twelve months.

There can be no assurance, however, that such financing will be available or, if it is available, that we will be able to structure such financing on terms acceptable to us and that it will be sufficient to fund our cash requirements until we can reach a level of profitable operations and positive cash flows. If we are unable to obtain the financing necessary to support our operations, we may be unable to continue as a going concern. We currently have no firm commitments for any additional capital.

The trading price of our shares of common stock could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of common stock. If additional financing is not available or is not available on acceptable terms, we will have to change our business or cease our operations.

Summary of Significant Accounting Policies

Our consolidated financial statements have been prepared on a going concern basis. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time.

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. 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 judgment. Actual results may vary from these estimates.

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

Accounting Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on the historical trends and other information available when the consolidated financial statements are prepared. Changes in the estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates and assumptions.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all investment purchased with a maturity of three months or less to be cash equivalents.

Exploration Stage Company

The Company complies with Financial Accounting Standards Board Statement No. 7 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as exploration stage.

Oil and Gas Properties

The Company accounts for its crude oil exploration and natural gas development activities utilizing the successful efforts method of accounting. Under this method, costs of productive exploratory wells, development dry holes and productive wells and undeveloped leases are capitalized. Oil and gas lease acquisition costs are also capitalized. Exploration costs, including personnel costs, certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. During the year $0 was charged to exploration expense for dry hole costs.

Asset Retirement Obligations

We recognize the fair value of a liability for an asset retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability.

Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset. At December 31, 2005 and 2004, the fair value of the oil and gas property’s site restoration costs is insignificant.

Long-Lived Assets Impairment

Our long-term assets are reviewed when changes in circumstances require as to whether their carrying value has become impaired, pursuant to guidance established in SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from the related operations, undiscounted and without interest charges. If impairment is deemed to exist, the assets will be written down to fair value, and a loss is recorded as the difference between the carrying value and the fair value. Fair values are determined based on the quoted market values, discounted cash flows or internal and external appraisal, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

Income Taxes

We have adopted SFAS No. 109, “Accounting for Income Taxes”, going forward, which requires us to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the consolidated financial statements and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

Financial Instruments

The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Stock-based Compensation

We have adopted SFAS No. 123R “Share-Based Payment” as amended by SFAS No. 148 "Accounting for Stock-based Compensation - Transition and Disclosure”. We will recognize stock-based compensation expense using a fair value based method.

Accounting for Derivative Instruments and Hedging Activities

We have adopted SFAS No. 133 “Accounting for Derivative and Hedging Activities”, which requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain and loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. We have not entered into derivative contracts either to hedge existing risks or for speculative purposes, but we may use derivative contracts in the future solely for hedging prices on production.

DIRECTORS AND EXECUTIVE OFFICERS

Names:	Ages	Titles:	Board of Directors
Paul Stroud	60	President, Chief Executive Officer	President, CEO since September 24, 2007.
Satyendra Deshpande	29	Secretary, Treasurer & Chief Financial Officer	Secretary, Treasurer, CFO since September 26 2007
Pierre Besuchet	67	Director	Director since March 4, 2007
Abdul Majeed Al Faheem	48	Director	Director since March 4, 2007
Mohamed Gova	63	Director	Director since September 27, 2007

Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Currently there are five seats on our board of directors.

Directors serve without cash compensation and without other fixed remuneration. Officers are elected by the Board of Directors and serve until their successors are appointed by the Board of Directors.

Mr. Paul Stroud, President, CEO and Director

Mr. Stroud brings over thirty years of experience in all facets of the energy industry, world-wide. His background includes in depth experience in onshore and offshore oil and gas exploration and drilling; coal bed methane wells; and hot water and high pressure steam (thermal) wells. Mr. Stroud graduated from Sacramento State College in 1971 and joined Royal Dutch Shell as an engineer. In 1975 he joined UNOCAL in their geothermal division until leaving in 1998 to start his own consulting business. As a consultant he headed projects for OESI in Hawaii and Calthaness Corporation in Indonesia. In 2003 Mr. Stroud joined Jim Huber Corporation in Gillette Wyoming as Project Manager for CBM Development and Pinnacle Gas Resources, Inc., two companies heavily involved in the CBM exploration and production in Sheridan, Wyoming. From 1998 through 2006, Mr. Stroud served as President of Solutions Team, Inc., a resource planning and operational consulting firm. Prior to joining Zulu Energy Corp. as President and Chief Executive Officer in September of 2007, Mr. Stroud has also served as Chief Operating Officer of Tatonka Oil and Gas, Inc., headquartered in Denver, Colorado, and as President of Ram Energy, Inc. beginning in 2006.

Mr. Satyendra Deshpande, Secretary, Treasurer, Chief Financial Officer and Director

Mr. Deshpande has over 8 years of experience in the areas of accounting and finance across multiple industries ranging from public and private corporations to banks, educational institutions and non-profit organizations. Mr. Deshpande has experience in financial analysis, SEC reporting for public companies and in addressing complex US GAAP and Sarbanes Oxley (SOX) compliance issues. He has been actively involved in annual budgeting process and working capital management of large to midsize public corporations. Prior to 2002, he was actively involved in compiling, analyzing and reporting on financial statements of small to mid sized public as well as private corporations. He has also worked in the capacity of Chief Internal Auditor at a large public accounting firm in India during the course of completion of his Chartered Accountancy. Mr. Deshpande has also earned a MBA in Finance and Accounting at San Diego State University and a Masters in Commerce from a reputed university in India. Prior to joining Zulu Energy Corp. as Secretary, Treasurer and Chief Financial Officer in September of 2007, Mr. Deshpande has also served as the Controller of Tatonka Oil and Gas, Inc., headquartered in Denver, Colorado, beginning in January 2006. From February 2004 through January 2006, Mr. Deshpande served as a Senior Accountant/Senior Financial Analyst at Ingledew & Associates in La Jolla, California. From 1998 to 2003, Mr. Deshpande served as Chief Internal Auditor at a large Chartered Accountancy firm in India.

Mr. Pierre Besuchet, Director

Mr. Besuchet has over forty years experience is asset management and investment banking research. He is founder and managing director of Pierre Besuchet, Asset Management, Geneva, Switzerland. He is currently Director of Faisal Finance S.A., controlled by Dar al-Maal Islami, S.A., Switzerland, Indufina S.A., Switzerland, and Valor Invest Ltd., a Virgin Island corporation. He also serves on the board of directors of W2 Energy Inc., an Ontario corporation, Lunden Mining of Vancouver, British Columbia and Orko Silver Corporation. Mr. Besuchet resides in Geneva, Switzerland.

Mr. Abdul Majeed A. Al Fahim, Director

Mr. Majeed, a resident of Dubai, United Arab Emirates, received a BA in Business Administration from Eastern Washington University and a MBA from the University of Toledo, Ohio. He has served as Executive Director of the private office of HH Dr. Sheik Sultan Bin Khalifa Bin Zayed Al Nahyan since April, 2001. He also has served since July, 2001 as Chief Executive of Spectrum Limited LLC. From March 1995 through April 2001 Mr. Majeed was Head of the Projects and Direct Investment division of Abu Dhabi Investment Company (ADIC). From September 1991 through March 1995 he held the position of Lecture of Finance and Banking at UAE, United Arab Emirates.

Mr. Mohamed H. Gova, Director

Mr. Gova, a citizen of the United Kingdom, has over 30 years experience in the bidding, negotiation, acquisition and execution of major oil & gas contracts. He is a graduate of the University of Kent with a BS degree and a MBA degree from Warwick University. He has held various positions as set forth below. Mr. Gova currently serves as a Commercial Director for Petrofac International, Ltd. and Sharjah, UAE. From 2004 to 2007, Mr. Gova served as Secondment from Halliburton / KBR to AgipKCO Management Team, Kashagan Development Project, Sharjah,UAE, and Kazakhstan and was a Senior member of the Execution Contract Management Team (ECMT), which was based in Sharjah, UAE. From 2000 to 2004, Mr. Gove served as Contracts Director for the Thames Gateway Project London, UK, a $380m Project Finance Initiative to Build, Operate, Own and Turnover, (BOOT) lump sum project involving upgrading to motorway standards, 20 kms of a main road into London.

EXECUTIVE COMPENSATION

We have not paid any compensation to our executive officers from our date of incorporation, May 6, 2005, through August 11, 2005, through June 30, 2007, the completion of our last fiscal year, as identified below.

The following table sets forth all compensation paid to our Chief Executive Officer and those individuals who received compensation in excess of $100,000 per year (collectively, the "Named Executive Officers") for our last two completed fiscal years.

SUMMARY COMPENSATION TABLE


Name and Principal Position	Fiscal Year	Annual Salary ($)	Annual Bonus ($)	Stock Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)

Brant Hydno, President, CEO and Treasurer (1)	2007	0	0	0	0	0	0	0
Brant Hydno, President, CEO and Treasurer (1)	2006	0	0	0	0	0	0	0

Peter Hydno, Secretary (2)	2007	0	0	0	0	0	0	0
	2006	0	0	0	0	0	0	0

(1) Mr. Brant Hydno resigned as our President, CEO and Treasurer effective July 18, 2007.

(2) Mr. Peter Hydno resigned as our Secretary effective March 4, 2007.

Employment Agreements

With the exception of Paul Stroud, who became our President and CEO on September 24, 2007, following the conclusion of our last fiscal year, we currently have no written employment agreements with any of our officers.

Paul Stroud, CEO

Effective September 24, 2007, we entered into an employment agreement with Paul Stroud to serve as our Chief Executive Officer. Pursuant to the agreement, Mr. Stroud will receive an annual base salary of $240,000. In addition, we granted Mr. Stroud 3,000,000 options to purchase shares of our common stock at $1.81 per share. Upon the Company authorizing a qualified stock option plan, the options issued hereunder shall be exchanged for qualified options under the stock option plan, with vesting and terms to be in accordance with the stock option plan. In addition, Mr. Stroud is entitled to a signing bonus and an annual bonus at the discretion of the board of directors and to participate in any and all benefit plans, from time to time, in effect for our employees, along with vacation, sick and holiday pay in accordance with our policies established and in effect from time to time.

Directors

We have not paid any compensation to our directors from our date of inception, which was May 6, 2005, through the completion of our last fiscal year.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of December 26, 2007 there were 82,000,000 shares of common stock outstanding. The following sets forth, as of December 26, 2007, the ownership of our common stock held by each person who beneficially owns more than 5% of our common stock, each of our directors, each executive officer, and all of our directors and executive officers as a group. Except as otherwise indicated, all shares are owned directly and the named person possesses sole voting and sole investment power with respect to all such shares. Shares not outstanding but deemed beneficially owned because a person or a member of a group has a right to acquire them within sixty (60) days after December 26, 2007 are treated as outstanding only when determining the amount and percentage owned by such person or such group.

Name of Beneficial Owner (1)	Common Stock Beneficially Owned	Percentage of Common Stock (2), (3)
Paul Stroud (4)	3,000,000	3.66%
Satyendra Deshpande	0	0%
Pierre Besuchet	0	0%
Abdul Majeed Al Faheem	0	0%
Mohamed Gova	0	0%
All officers and directors as a group (5 persons)	3,000,000	3.66%
LMA Hughes LLLP (5) c/o Nerine Trust Company PO Box 434 Nerine House St. George’s Place St. Perter’s Port Guernsey, GY1 3ZG Channel Islands	30,000,000	36.59%
Brant Hodyno 83-40 Austin Street, Ste 2G Kew Gardens NY 11415	5,000,000	6.09
Peter Hodyno 28 Preston Street, Huntington, NY 11743	5,000,000	6.09%
Donald Murdock LM 122-2303 4 ^th Street SW Calgary, AB CANADA T2S 2S7	5,000,000	6.09%

(1)	Except as otherwise indicated, the address of each beneficial owner is c/o Zulu Energy Corp. 1066 West Hastings Street, Vancouver, BC V6E 3X2.
(2)	Under SEC Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on the date of this report.
(3)	Percentages are based on an aggregate 82,000,000 shares issued and outstanding as of December 26, 2007.
(4)	Mr. Stroud holds an option, which is currently exercisable, to purchase 3,000,000 shares of our common stock with an exercise price of $1.81 per share.
(5)	Mr. Hughes is the President of Hughes Ventures, which is the general partner of LMA Hughes LLLP and has voting and investment control of the shares owned by LMA Hughes LLLP.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Prior to completion of the transactions described in Item 1.01 above, we borrowed $162,610 from LMA Hughes LLLP, our largest shareholder. As of September 30, 2007, this loan remains payable to LMA Hughes LLLP and is unsecured, non-interest bearing and without specific terms for repayment.

As part of the transactions described in Item 1.01 above, we granted a 10% overriding royalty interest to LMA Hughes LLLP on any properties LMA Hughes LLLP finds, acquires or purchases that we subsequently acquire from LMA Hughes LLLP.

None of the other Directors or other Officers of the Company, nor any proposed nominee for election as a Director of the Company, nor any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to all outstanding shares of the Company, nor any promoter of the Company, nor any relative or spouse of any of the foregoing persons has any material interest, direct or indirect, in any transaction since the incorporation date of or in any presently proposed transaction which, in either case, has or will materially affect the Company. The Company has not entered into transactions with any member of the immediate families of the foregoing persons, nor is any such transaction proposed.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

We have our common stock listed for quotation on the OTC Bulletin Board under the symbol “ZLUE”. We began trading on January 1, 2007.

For the periods indicated, the following table sets forth the high and low bid prices per share of common stock during our last two fiscal years. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.

	High Bid	Low Bid
Fiscal Year 2008
First Quarter	$2.35	$2.20
Fiscal Year 2007
First Quarter	None	None
Second Quarter	None	None
Third Quarter	$4.00	$1.00
Fourth Quarter	$2.25	$1.40
Fiscal Year 2006
First Quarter	None	None
Second Quarter	None	None
Third Quarter	None	None
Fourth Quarter	None	None

Holders

As of December 26, 2007, we had approximately 22 holders of record of our common stock and a total of 82,000,000 shares issued and outstanding. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. The transfer agent of our common stock is Holladay Stock Transfer, Inc. with address at 2939 N 67th place, Scottsdale, AZ 85251.

Dividends

On January 8, 2007, we declared a 10-for-1 forward stock split of our issued and outstanding commons stock. We have never declared or paid any cash dividends on our common stock. We do not anticipate paying any cash dividends to stockholders in the foreseeable future. In addition, any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table shows information with respect to each equity compensation plan under which the Company’s common stock is authorized for issuance as of the fiscal year ended June 30, 2006.

EQUITY COMPENSATION PLAN INFORMATION

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
	(a)	(b)	(c)
Equity compensation plans approved by security holders	-0-	-0-	-0-

Equity compensation plans not approved by security holders	-0-	-0-	-0-

Total	-0-	-0-	-0-

As discussed in “Executive Compensation” above, pursuant to the employment agreement we entered into with our President and Chief Executive Officer we have granted options to purchase 3,000,000 shares of our common stock at an exercise price of $1.81 per share.

DESCRIPTION OF SECURITIES

The Company’s authorized capital stock consists of 500,000,000 shares of common stock at a par value of $0.0001 per share and 10,000,000 shares of preferred stock at a par value of $0.001 per share. As of December 27, 2007, there were 82,000,000 shares of the Company’s common stock issued and outstanding and no shares of preferred stock issued and outstanding.

Holders of the Company’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of the Company’s common stock representing a majority of the voting power of the Company’s capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of the Company’s outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to the Company’s articles of incorporation.

Holders of the Company’s common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. The Company’s common stock has no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to the Company’s common stock.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

During the fiscal year ended June 30, 2007 (i) there were no disagreements between the Company and Madsen and Associates CPA’s, Inc. (“Madsen”) on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Madsen would have caused Madsen to make reference to the matter in its reports on the Company’s financial statements dated September 28, 2007. Madsen’s reports on the Company’s financial statements did not contain an adverse opinion or disclaimer of opinion, or was modified as to audit scope or accounting principles. During the two fiscal years ended June 30, 2007 and 2006, there were no reportable events as the term described in Item 304(a)(1)(iv) of Regulation S-B.

RECENT SALES OF UNREGISTERED SECURITIES

From our date of incorporation, May 6, 2005, we have issued the following securities.

The Company issued 10,000,000 shares of its common stock on May 6, 2005 to two shareholders in exchange for services rendered valued at $1,000. The issuance of the foregoing common stock was made pursuant to Section 4(2) of the Securities Act of 1933, as amended.

The Company issued 5,000,000 shares of its common stock on September 24, 2005 valued at $500 for partial payment of the purchase of three mineral claims. The issuance of the foregoing common stock was made pursuant to Section 4(2) of the Securities Act of 1933, as amended.

During the year ended June 30, 2006 the Company issued 37,000,000 shares of its common stock in exchange for cash. The shares were valued at $.01 per share for an aggregate value of $37,000. The issuances of the foregoing common stock were made pursuant to Section 4(2) and Regulation S of the Securities Act of 1933, as amended.

On January 8, 2007, the Board of Directors of the Company authorized a ten to one (10 – 1) forward split of the Company’s issued and outstanding shares of common stock. The total issued and outstanding shares of common stock before the split were 5,200,000 and immediately after the split the total issued and outstanding shares were 52,000,000. In addition the Company changed the par value of its common stock from $0.001 to $.0001. The effect of this stock split has been reflected retroactively in the financial statements as if the stock split had occurred at the inception of the Company. Discussion in this Form 8-K of the number of shares of the Company’s common stock takes into account the forward stock split.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company’s directors and executive officers are indemnified as provided by the Colorado Business Corporation Act and the Company’s Articles of Incorporation and Bylaws. These provisions state that the Company’s directors may cause the Company to indemnify a director or former director against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him as a result of him acting as a director. The indemnification of costs can include an amount paid to settle an action or satisfy a judgment. Such indemnification is at the discretion of the Company’s board of directors and is subject to the Securities and Exchange Commission’s policy regarding indemnification.

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

DESCRIPTION OF PROPERTY

Our principal offices are located at 1066 West Hastings Street, Suite 2610, Vancouver, BC V68 3X2. We intend to move our principal offices to 950, Seventeenth Street, Suite 2300, Denver, Colorado 80202 for convenience of operations. We intend to sublease this property from Tatonka Oil and Gas, Inc. at terms mutually acceptable to both parties.

LEGAL PROCEEDINGS

There are no legal proceedings in which the Company is involved.

Item 3.02 Unregistered Sales of Equity Securities.

As further discussed in Item 1.10 of this Form 8-K above, pursuant to a Stock Exchange Agreement and Plan of Reorganization, dated December 19, 2007, the Company issued 30,000,000 shares of common stock to LMA Hughes LLLP on December 20, 2007. This issuance of common stock is exempt from the registration requirements pursuant to Rule 506 of Regulation D and Rule 4(2) of the Securities Act of 1933, as amended.

Item 5.06 Change in Shell Company Status.

See Item 2.01 of this Form 8-K above.

Item 7.01

Regulation FD Disclosure

On December 24, 2007, the Company issued a press release to announce the events reported under Item 1.01 above. The text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is furnished pursuant to the rules and regulations of the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of business acquired.

Audited Financial Statements of Nyati Mauritius Limited and Subsidiary for the fiscal years ended December 31, 2006 and 2005 and unaudited financial statements for the nine month period ended September 30, 2007.

(b) Pro forma financial information.

Not applicable.

Consolidated unaudited pro forma financial statements for the year ended June 30, 2007 and for the three months ended September 30, 2007.

(d) Exhibits

Exhibit Number

Description

Exhibit 3.1

Amended and Restated Articles of Incorporation

Exhibit 10.1

Stock Exchange Agreement and Plan of Reorganization, dated as of December 19, 2007

Exhibit 10.2

Stock Purchase Agreement, dated as of December 19, 2007

Exhibit 10.3

Tax Indemnification Agreement, dated as of December 19, 2007

Exhibit 99.1

Press release dated December 24, 2007 of Zulu Energy Corp.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	ZULU ENERGY CORP.

Dated: December 27,	2007	By: /s/ Paul Stroud
		Name: Paul Stroud
		Title: Chief Executive Officer

ZULU ENERGY CORP.

Index to Financial Statements

	Page
Report of Independent Registered Certified Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2006 and 2005	F-3
Consolidated Statement of Operations for the year ended December 31, 2006, the period from August 11, 2005 (Inception) to December 31, 2005 and period from August 11, 2005 (Inception) to December 31, 2006	F-4
Consolidated Statement of Stockholders’ Deficit for the period August 11, 2005 (Date of Inception) to December 31, 2006	F-5
Consolidated Statements of Cash Flows for the twelve months ended December 31, 2006, for the period from August 11, 2005 (Inception) to December 31, 2005 and for the period from August 11, 2005 (Inception) to December 31, 2006	F-6
Notes to Financial Statements	F-7
Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006	F-13
Consolidated Statement of Operations for the nine months ended September 30, 2007 and 2006 and the period from August 11, 2005 (Inception) to September 30, 2007	F-14
Consolidated Statement of Stockholders’ Deficit for the period August 1, 2005 (Date of Inception) to September 30, 2007	F-15
Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 and for the period from August 11, 2005 (Inception) to September 30, 2007	F-16
Notes to Financial Statements	F-17
Pro Forma financial information (Unaudited)	F-23

F-1

Independent Auditors' Report

To the Director and Shareholders Nyati Mauritius Limited

We have audited the accompanying consolidated balance sheets of Nyati Mauritius Limited and Subsidiary as of December 31, 2006 and 2005, and the related statements of operations, stockholders' deficit, and cash flows for the year ended December 31,2006, for the period from August I l, 2005 (inception)to December 31, 2005, and for the period from August 11,2005 (inception)to December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nyati Mauritius Limited and Subsidiary as of December 31,2006 and 2005, and the results of its operations and its cash flows for the year ended December 31,2006, for the period from August 11,2005 (inception)to December31,2005, and for the period from August 11,2005 (inception)to December 31, 2006 in conformity with accounting principals generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, net capital deficiencies, and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

De Lean & Company P.A.

Pembroke Pines, Florida August 8,

2007

The accompanying notes are an integral part of these financial statements

F-2

NYATI MAURITIUS LIMITED AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

		Dec. 31,	Dec. 31,
		2006	2005
ASSETS
Current Assets
Cash and cash equivalents		$ -	$ -
Prepaid Expenses		3,723	-
Total Current Assets		3,723	0

Investment in subsidiary		-	-

Total Assets		$ 3,723	$ 0

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities
Accounts Payables		$ 0	$ 1,500
Loan from shareholders		34,826	5,585

Total Current Liabilities		$ 34,826	$ 7,085



Stockholders’ Deficit

Common stock
50,000	shares authorized at $1.00 par value, 2 shares issued and outstanding at 12/31/2006 and none issued on 12/31/2005
		2	2
Additional paid-in capital		-	-
Deficit accumulated during the development stage		(31,105)	(7,087)
		-	-
Total Stockholders’ Deficit		(31,103)	(7,085)

Total Liabilities and Stockholders’ Deficit		$ 3,723	$ 0

The accompanying notes are an integral part of these financial statements

F-3

NYATI MAURITIUS LIMITED AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006, THE PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO DECEMBER 31,2005 AND PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO DECEMBER 31, 2006

	YEAR ENDED DECEMBER 31, 2006	FOR THE PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO DECEMBER 31, 2005	FOR THE PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO December 31, 2006
Revenue	$ -	$ -	$ -
Operating expenses	24,018	7,087	31,105
Loss from operations	(24,018)	(7,087)	(31,105)
Taxes	-	-	-
Loss for the period	$ (24,018)	$ (7,087)	$ (31,105)

Loss per Share:

Primary

$ (12,009)

$ (3,044)

Weighted Average

Shares Outstanding

The accompanying notes are an integral part of these financial statements

F-4

NYATI MAURITIUS LIMITED AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

for the period from August 11, 2005 (Date of Inception) to December 31, 2006

						Deficit
						Accumulated
	Common Stock			Additional		During the	Total
	Number			Paid In		Development	Stockholders
	Shares	Amount		Capital		Stage	(Deficiency)

Balance on Date of Inception	-	$ -		$ -		$ -	$ -
Issuance of common stock–Aug. 11, 2005	2		2	-	-		2

Net loss for the year 2005	-		-	-	(7,087)		(7,087)
Balance, December 31, 2005	2		2	-	(7,087)		(7,085)

Net loss for the year 2006	-		-	-	(24,018)		(24,018)
	-		-	-	-		-

Balance, December 31, 2006	2		$ 2	$ -	(31,105)		(31,103)

The accompanying notes are an integral part of these financial statements

F-5

NYATI MAURITIUS LIMITED AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006, FOR THE PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO DECEMBER 31, 2005 AND FOR THE PERIOD FROM AUGUST 11, 2005 . (INCEPTION) TO DECEMBER 31, 2006

		For the Period	For the Period
		From August 11, 2005	From August 1, 2005
	Year Ended	to	(Inception) to
	December 31,	December 31,	December 31,
	2006	2005	2006

Cash Flows from Operating Activities :

Net loss for the period	$ (24,018)	$ (7,087)	$ (31,105)
Adjustments to reconcile net income to net cash used by operating activities:
Changes in non-cash working capital balances:
Prepaid expenses	(3,723)	-	(3,723)
Trade & other payables	(1,500)	1,500	-
Net cash used by operating activities	(29,241)	(5,587)	(34,828 )

Cash Flows used in Investing Activities:

Property, Plant & Equipment	-	- -	-
Net cash (used) provided by investing activities	-	- -	-

Cash Flows from Financing Activities:
Issuance of stock	-	2	2
Increase in shareholders loan	29,241	5,585	34,826
Net cash provided by financing activities	29,241	5,587	34,828


Increase (decrease) in cash and cash equivalents	0	0	0

Cash and cash equivalents, beginning of period	0	0	0

Cash and cash equivalents, end of the period	$ 0	$ 0	$ 0

The Company did not pay any amounts for interest or taxes during the above periods.

The accompanying notes are an integral part of these financial statements

F-6

Nyati Mauritius Limited.

(A Development Stage Company)

Notes to the Financial Statements

For the Period from August 11, 2005 (inception) to December 31, 2006

Note 1

Significant Accounting Policies

Basis of Presentation

These financial statements include consolidated accounts of the Company Nyati Mauritius Limited and its wholly owned subsidiary, Nyati Resources Limited. The company and it’s subsidiaries are incorporated in the nation of Mauritius.

Development Stage Company

The Company complies with Financial Accounting Standards Board Statement No.7 for its characterization of the Company as a development stage enterprise.

Cash and Cash Equivalents

The Company considers all investments purchased with a maturity of 90 days or less to be cash equivalents.

Oil and Gas Activities - Successful Efforts Method of Accounting

On April 4, 2005, the FASB adopted FASB Staff Position FSP FAS 19-1 that amends Statement of Financial Accounting Standards No. 19 (FAS 19), Financial Accounting and Reporting by Oil and Gas Producing Companies, to permit the continued capitalization of exploratory well costs beyond one year if (a) the well found a sufficient quantity of reserves to justify its completion as a producing well and (b) the entity is making sufficient progress assessing the reserves and the economic and operating viability of the project.

F-7

Nyati Mauritius Limited.

(A Development Stage Company)

Notes to the Financial Statements

For the Period from August 11, 2005 (inception) to December 31, 2006

significantly affect the unit-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. During the year $0 was charged to exploration expense for dry hole costs.

The application of the successful efforts method of accounting requires managerial judgment to determine that proper classification of wells designated as developmental or exploratory which will ultimately determine the proper accounting treatment of the costs incurred. The results from a drilling operation can take considerable time to2 analyze and the determination that commercial reserves have been discovered requires both judgment and industry experience. Wells may be completed that are assumed to be productive and actually deliver oil and gas in quantities insufficient to be economic, which may result in the abandonment of the wells at a later date. Wells are drilled that have targeted geologic structures that are both developmental and exploratory in nature and an allocation of costs is required to properly account for the results. Delineation seismic incurred to select development locations within an oil and gas field is typically considered a development cost and capitalized, but often these seismic programs extend beyond the reserve area considered proved and management must estimate the portion of the seismic costs to expense. The evaluation of oil and gas leasehold acquisition costs requires managerial judgment to estimate the fair value of these costs with reference to drilling activity in a given area. Drilling activities in an area by other companies may also effectively condemn leasehold positions.

Asset Retirement Obligations

The Corporation recognizes the value of a liability for an asset retirement obligation in the year in which a reasonable estimate of value can be made.

Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset. As at December 31, 2006, the value of the oil and gas property’s site restoration costs is insignificant.

Environmental Costs

F-8

Nyati Mauritius Limited.

(A Development Stage Company)

Notes to the Financial Statements

For the Period from August 11, 2005 (inception) to December 31, 2006

revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.

Goodwill and Intangible Assets

The Company has adopted the provisions of the FAS No. 142, “Goodwill and Intangible Assets”. Under FAS No. 142, goodwill and intangible assets with indefinite lives are not amortized but are annually tested for impairment. The determination of any impairment includes a comparison of the estimated future operating cash flows anticipated during the remaining life for the net carrying value of the asset as well as a comparison of the fair value to the book value of the Company or the reporting unit to which the goodwill can be attributed.

Income Taxes

The Company accounts for income taxes by the asset and liability method as mandated by Statement of Financial Standards Number 109. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Future income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are likely to be realized. The Company is subject to taxes in the Country of Mauritious.

Mineral Properties

The costs of acquisition, exploration, carrying and retaining unproven mineral properties are expensed as incurred.

Financial Instruments

The carrying values of cash, accounts payable and accrued liabilities and due to related parties approximate their fair value because of the short maturity of these instruments. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Basic and Diluted Loss Per Share

The Company reports basic loss per share in accordance with the FAS No. 128, “Earnings per Share”. Basic loss per share is computed using the weighted average number of shares outstanding during the period. As at December 31, 2006 the Company did not have any instruments that would dilute the Company’s shareholding.

F-9

Nyati Mauritius Limited.

(A Development Stage Company)

Notes to the Financial Statements

For the Period from August 11, 2005 (inception) to December 31, 2006

Foreign Currency Translation

The accounts of the Company are translated in accordance with Statement of Financial Accounting Standard No. 52, which requires that foreign currency assets and liabilities be translated using the exchange rates in effect at the balance sheet date. Results of operations are translated using the average rates prevailing throughout the period. The effects of unrealized exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as the accumulated other comprehensive adjustment in shareholders’ equity.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make assumptions and estimates that effect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates.

Note 2

Nature and Continuance of Operations

The Company was incorporated under the laws of the country of Mauritius on August 11, 2005 as Nyati Mauritius Limited.

The Company’s share capital is comprised of authorized common stock of 50,000 shares at $1 par value. The common shareholders have a right to one vote per share held. At inception, the company issued 2 shares at $1 par value to the subscribers of the company.

The Company is in the development stage and is in the process of acquiring and exploring oil and gas properties located in Botswana. The recoverability of amounts shown for oil and gas properties is dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest therein, the ability of the Company to obtain necessary financing to complete their development and upon future profitable production or proceeds from their disposition.

These annual financial statements have been prepared in accordance with generally accepted accounting principles U.S. applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has had recurring losses since inception, deficits in its capital accounts, and negative working capital all of which raise doubt as to it’s ability to continue without infusion of cash resources. Management considers that the

F-10

Nyati Mauritius Limited.

(A Development Stage Company)

Notes to the Financial Statements

For the Period from August 11, 2005 (inception) to December 31, 2006

Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.

Note 3

Fixed Assets

The Company did not have any fixed assets as at December 31, 2006. All fixed assets acquired in future will be recorded at cost. Depreciation would be provided for using the straight-line method.

Note 4

Related Party Transactions

Amounts due to related parties consist of loan in the amount of $34,826 from LMA

Hughes, LLLP which is the controlling company. As at December 31, 2006 these

loans remain payable to LMA Hughes, LLLP and are unsecured, non-interest bearing

and without specific terms for repayment.

Note 5

Income Taxes

The Company is incorporated in the Country of Mauritius and is subject to the corporate taxes of Mauritious. The Corporate tax rate is 25% and losses can be carried forward until such time as profits are made. Losses are not available for carryforwards if there is more than a 50% change in ownership. Currently the Company has a net loss carryforward of $31,105.The Company has a deferred tax asset of $7,776 which has been offset by a valuation allowance.

Note 6

Subsequent Events

(i)

The Company acquired a controlling stake (90%) in a company called Nyati Botswana (Proprietary) Limited through it’s wholly owned subsidiary by acquiring 90 shares of Nyati Botswana on February 14, 2007 at par value i.e. Pula 1 per share. Nyati Botswana (Proprietary) Limited is a oil and gas (exploration stage) company. As on this date, the other 10% shares of Nyati Botswana were held by Swansi Holdings Corp.

(ii)

On March 2, 2006 Swansi Holdings Corp. had entered into a call options agreement to buy 50 shares of Nyati Resources Botswana (Proprietary) Limited from Nyati Resources Limited at $1 per share. As stated under (i) above on February 14, 2007 Nyati Resources Limited sold 10 shares of Nyati Resources Botswana (Proprietary) Limited to Swansi Holdings Corp. pursuant to their exercising the call option agreement mentioned above. On June 6, 2007 Nyati Resources Limited sold a further 40 shares of Nyati Resources Botswana (Proprietary) Limited to Swansi Holdings Corp. pursuant to their exercising the

F-11

Nyati Mauritius Limited.

(A Development Stage Company)

Notes to the Financial Statements

For the Period from August 11, 2005 (inception) to December 31, 2006

call options agreement mentioned above, thus bringing down the ownership of Nyati Resources Limited in Nyati Resources Botswana (Proprietary) Limited from 90% to 50%.

F-12

NYATI MAURITIUS LIMITED AND SUBSIDIARIES

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS AS AT

		September 30,	Dec 31,
		2007	2006
ASSETS
Current Assets
Cash and cash equivalents		$ 10,413	$ -
Escrow Deposit		7,741	-
Prepaid Expenses		6,738	3,723
Total Current Assets		24,892	3,723

Fixed Assets		296	-
Less: Accumulated Depreciation		(63)	-
Oil and Gas Properties		29,356	-

Total Assets		$ 54,481	$ 3,723

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities
Accounts Payables		$ 35,206	$ -
Loan from shareholders		162,610	34,826
Due to Safgas		10,294	-
Total Current Liabilities		$ 208,110	$ 34,826

Stockholders’ Deficit:

Common stock
50,000	shares authorized at $1.00 par value, 100 shares and 2 shares issued and outstanding at 09/30/2007 and 12/31/2006, respectively
		100	2
Additional paid-in capital		-	-
Minority Interest		(74,156)	-
Deficit accumulated during the development stage		(79,573)	(31,105)
		-	-
Total Stockholders’ Deficit		(153,629)	(31,103)

Total Liabilities and Stockholders’ Deficit		$ 54,481	$ 3,723

The accompanying notes are an integral part of these financial statements

F-13

NYATI MAURITIUS LIMITED AND SUBSIDIARIES

(A Development Stage Company)

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 AND THE PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO SEPTEMBER 30, 2007

	NINE MONTHS ENDED SEPTEMBER 30, 2007	NINE MONTHS ENDED SEPTEMBER 30, 2006	FOR THE PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO SEPTEMBER 30, 2007
Revenue	$ -	$ -	$ -
Operating expenses	60,569	1,418	91,674
Loss from operations before Minority Interest	(60,569)	(1,418)	(91,674)
Minority Interest	12,101	-	12,101
Taxes	-	-	-
Loss for the period	$ (48,468)	$ (1,418)	$ (79,573)

Loss per Share:

Primary

$ (1,385)

$ (709)

Weighted Average

Shares Outstanding

F-14

The accompanying notes are an integral part of these financial statements

NYATI MAURITIUS LIMITED AND SUBSIDIARIES

(An Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

for the period from August 11, 2005 (Date of Inception) to September 30, 2007

										Deficit
										Accumulated
	Common Stock			Additional						During the	Total
	Number			Paid In			Minority			Development	Stockholders
	Shares	Amount		Capital			Interest			Stage	(Deficiency)

Balance on Date of Inception	-		$ -	$ -		$ -		$ -				$ -
Issuance of common stock Aug. 11, 2005	2		2		-	-			-			2

Net loss for the year 2005	-		-		-	-			(7,087)			(7,087)
Balance, December 31, 2005	2		2		-	-			(7,087)			(7,085)

Net loss for the year 2006	-		-		-	-			(24,018)			(24,018)
Balance, December 31, 2006	2		2		-				(31,105)			(31,103)

Net Loss for the nine months ended September 30, 2007	-		-		-	-			(48,468)			(48,468)
Shares Issued	98		98		-							98
Minority Interest	-		-		-	(74,156)			-			(74,156)
Balance, September 30, 2007	100		100		-	(74,156)			(79,573)			(153,629)

The accompanying notes are an integral part of these financial statements

F-15

NYATI MAURITIUS LIMITED AND SUBSIDIARIES

(An Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 AND FOR THE PERIOD FROM AUGUST 11, 2005 (DATE OF INCEPTION) TO SEPTEMBER 30, 2007

			For the Period
			From August 1, 2005
	Nine months Ended	Nine months Ended	(Inception) to
	September 30,	September 30,	September 30,
	2007	2006	2007

Cash Flows from Operating Activities :

Net loss for the period	$ (48,468)	$ (1,418)	$ (79,573)
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation	43	-	43
Minority Interest in net loss of subsidiaries	(12,101)	-	(12,101)
Changes in working capital balances:
Prepaid expenses	2,347	-	(1,376)
Deposits & other	395	-	395
Trade & other payables	26,653	0	26,653
Net cash used by operating activities	(31,131)	(1,418)	(65,959)

Cash Flows used in Investing Activities:

Cash acquired upon investment in subsidiary	1,616	-	1,616
Oil and gas properties	(6,780)	- -	(6,780)
Net cash used by investing activities	(5,164)	- -	(5,164)

Cash Flows from Financing Activities:
Issuance of stock	98	-	100
Due to Safgas	7,603	-	7,603
Increase in shareholders loan	39,007	1,418	73,833
Net cash provided by financing activities	46,708	1,418	81,536

Effects on exchange rates on cash	-	-	-

Increase in cash and cash equivalents	10,413	0	10,413

Cash and cash equivalents, beginning of period	0	0	0

Cash and cash equivalents, end of the period	$ 10,413	$ 0	$ 10,413

The accompanying notes are an integral part of these financial statements

F-16

Nyati Mauritius Limited and Subsidiaries

(A Development Stage Company)

Notes to the Consolidated Financial Statements

For the Period from August 11, 2005 (inception) to September 30, 2007

Note 1

Significant Accounting Policies

Basis of Presentation

These financial statements include consolidated accounts of the Company Nyati Mauritius Limited and its wholly owned subsidiary, Nyati Resources Limited and Nyati Botswana (Proprietary) Limited, in which Nyati Resources has 50% shareholding.

Development Stage Company

The Company complies with Financial Accounting Standards Board Statement No.7 for its characterization of the Company as development stage.

Cash and Cash Equivalents

The Company considers all investments purchased with a maturity of three months or less to be cash equivalents.

Oil and Gas Activities - Successful Efforts Method of Accounting

The Company accounts for its crude oil development and natural gas development activities utilizing the successful efforts method of accounting. Under this method, costs of productive exploratory wells, development dry holes and productive wells and undeveloped leases are capitalized. Oil and gas lease acquisition costs are also capitalized. Exploration costs, including personnel costs, certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties.

F-17

Nyati Mauritius Limited and Subsidiaries

(A Development Stage Company)

Notes to the Consolidated Financial Statements

For the Period from August 11, 2005 (inception) to September 30, 2007

that commercial reserves have been discovered requires both judgment and industry experience. Wells may be completed that are assumed to be productive and actually deliver oil and gas in quantities insufficient to be economic, which may result in the abandonment of the wells at a later date. Wells are drilled that have targeted geologic structures that are both developmental and exploratory in nature and an allocation of costs is required to properly account for the results. Delineation seismic incurred to select development locations within an oil and gas field is typically considered a development cost and capitalized, but often these seismic programs extend beyond the reserve area considered proved and management must estimate the portion of the seismic costs to expense. The evaluation of oil and gas leasehold acquisition costs requires managerial judgment to estimate the fair value of these costs with reference to drilling activity in a given area. Drilling activities in an area by other companies may also effectively condemn leasehold positions.

Asset Retirement Obligations

The Corporation recognizes the value of a liability for an asset retirement obligation in the year in which a reasonable estimate of value can be made.

Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset. As at September 30, 2007 the value of the oil and gas property’s site restoration costs is insignificant.

Environmental Costs

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.

Goodwill and Intangible Assets

F-18

Nyati Mauritius Limited and Subsidiaries

(A Development Stage Company)

Notes to the Consolidated Financial Statements

For the Period from August 11, 2005 (inception) to September 30, 2007

remaining life for the net carrying value of the asset as well as a comparison of the fair value to the book value of the Company or the reporting unit to which the goodwill can be attributed.

Income Taxes

Mineral Properties

The costs of acquisition, exploration, carrying and retaining unproven mineral properties are expensed as incurred.

Financial Instruments

Basic and Diluted Loss Per Share

The Company reports basic loss per share in accordance with the FAS No. 128, “Earnings per Share”. Basic loss per share is computed using the weighted average number of shares outstanding during the period. As at September 30, 2007 the Company did not have any instruments that would dilute the Company’s shareholding.

Foreign Currency Translation

F-19

Nyati Mauritius Limited and Subsidiaries

(A Development Stage Company)

Notes to the Consolidated Financial Statements

For the Period from August 11, 2005 (inception) to September 30, 2007

Use of Estimates

Note 2

Nature and Continuance of Operations

The Company was incorporated under the laws of the country of Mauritius on August 11, 2005 as Nyati Mauritius Limited.

Nyati Resources Limited acquired a controlling stake (90%) in a company called Nyati Botswana (Proprietary) Limited, when 90 shares of Nyati Botswana were issued to Nyati Resources on February 14, 2007 at par value i.e. Pula 1 per share. Nyati Botswana (Proprietary) Limited is a oil and gas (development stage) company. As on this date, the other 10% shares of Nyati Botswana were held by Swansi Holdings Corp.

On March 2nd, 2007 Swansi Holdings Corp. had entered into a call options agreement to buy 40 shares of Nyati Botswana (Proprietary) Limited from Nyati Resources Limited at $1 per share. On June 6 ^th , 2007 Nyati Resources Limited sold 40 shares of Nyati Botswana (Proprietary) Limited to Swansi Holdings Corp. pursuant to their exercising the call options agreement mentioned above, thus bringing down the ownership of Nyati Resources Limited in Nyati Botswana (Proprietary) Limited from 90% to 50%. As on September 30, 2007 the company’s shareholding in Nyati Botswana (Proprietary) Limited stood at 50%. The other 50% in Nyati Botswana (Proprietary) Limited was held by Swansi Holdings Corp.

The Company issued 98 shares to its holding company LMA Hughes, LLP on July 2 ^nd , 2007 at par value, thus bringing the total shares issued and outstanding of the company to 100. All shares of the company were held by LMA Hughes, LLP as on September 30, 2007.

F-20

Nyati Mauritius Limited and Subsidiaries

(A Development Stage Company)

Notes to the Consolidated Financial Statements

For the Period from August 11, 2005 (inception) to September 30, 2007

These annual financial statements have been prepared in accordance with United States generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has had recurring losses since inception, deficits in its capital accounts, and negative working capital all of which raise doubt as to it’s ability to continue without infusion of cash resources. Management considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.

Note 3

Fixed Assets

All fixed assets are recorded at cost. Depreciation is provided for using the straight-line method as follows:

	September 30,			December 31,
	2007			2006
		Accumulated
Asset Class	Cost	Depreciation	Net	Net
Property, Plant & Equipment	$ 296	$ 63	$ 233	$ --

Total	$ 296	$ 63	$ 233	$ --

Estimate for the life of property, plant and equipment is 10 years and a 10% rate of depreciation is assumed fair.

Note 4

Oil and Gas Properties

The Company has acquired leases in unproved oil and gas properties located in Botswana. Under the terms of the lease agreements the Company is required to pay its share of royalties and other obligations. The Company paid $7,578 and $7,996 for the lease years ended September 30, 2005 and 2006, respectively to the Government of Botswana under such lease agreements. Such leases expire in September 30, 2008. There is no assurance that the leases will be extended by the government.

Pursuant to such contracts, as at September 30, 2007 the Company was obligated to pay $13,263 to maintain the leases as follows:

F-21

Nyati Mauritius Limited and Subsidiaries

(A Development Stage Company)

Notes to the Consolidated Financial Statements

For the Period from August 11, 2005 (inception) to September 30, 2007

Year end December 31,	2007	$7,579
	2008	$5,684
	Total	$13,263

This amount does not contemplate funds required for exploration.

Pursuant to the lease agreements the Company was required to expend the following amounts during the lease period:

Lease

Amount

Conversion

Period Ended

Description

in Pulas

Rate

US Dollars

9/30/06

Study of Data,

$1,150,000

$.1640(1)

$ 188,600

Bore hole to 300m,

Desorption study for

6 months

9/30/07

Data interpretation,

Permeability study,

Drill production

borehole, Test

CBM produced

$2,000,000

N/A

9/30/08

Full feasibility

Study, Production

And marketing Study

$3,000,000

N/A

(1)

Conversion rate used is based on inter-bank rate at 9/30/06.

As of September 30, 2007 the Company has not expended the amounts required during the lease period. The Company intends to perform the requirements of year one in year two, however it is not in compliance with the lease terms. Management does not believe that this will have a negative effect on the lease agreements with the Government.

Note 5

Related Party Transactions

Amounts due to related parties consist of loan in the amount of $162,610 from LMA Hughes, LLLP which is the controlling company. As at September 30, 2007 these loans remain payable to LMA Hughes, LLLP and are unsecured, non-interest bearing and without specific terms for repayment.

F-22

Zulu Energy Corp.

(An Exploration Stage Company)

Notes to the Financial Statements

December 31, 2005 and 2006

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

Zulu Energy, Corp. (“Zulu”) acquired all the outstanding stock of Nyati Mauritius Limited on December 20, 2007 pursuant to stock purchase agreements. The aggregate consideration for the acquisition was the issuance of 30,000,000 shares of Zulu’s common stock.

Zulu Energy, Corp. (“Zulu”) acquired 50% of the outstanding stock of Nyati Botswana (Proprietary) Limited from Swansi Holdings, Corp. on December 20, 2007. The consideration for the acquisition was $3,000,000 in cash and an option to acquire 15,000,000 million shares of Zulu at $1.50 expiring five years after issuance.

The unaudited pro forma statements of Zulu for the year ended June 30, 2007 and for the three months ended September 30, 2007 give effect to both acquisitions. The shares issued have been valued at $1.40, the last trading date closing prior to December 20, 2007. The acquisition has been accounted as a reverse merger and recapitalization of Zulu.

The fair value of the net assets acquired has been estimated pending completion of a valuation by an independent appraiser.

F-23

Zulu Energy Corp.

(An Exploration Stage Company)

PRO FORMA CONSOLIDATED BALANCE SHEET

JUNE 30, 2007

(UNAUDITED)

	Historical
	Zulu Energy, Corp	Nyati Mauritius Limited	Adjustments		Pro Forma
ASSETS
Current Assets
Cash	$ -	$ 21,111	$ -		$ 21,111
Escrow deposits	-	7,599	-		7,599
Prepaid expenses	-	7,754	-		7,754
Total Current Assets	-	36,464	-		36,464

Fixed assets, net	-	247	-		247

Oil and gas properties		28,818	3,000,000	(2)	3,028,818

Total Assets	$ -	$ 65,529	$ 3,000,000		$ 3,065,529

LIABILITIES AND
STOCKHOLDERS’ DEFICIT

Current Liabilities
Accounts payable	$ 16,800	$ 19,806	$ 3,000,000	(2)	$ 3,036,606
Loan from shareholder	-	149,956	-		149,956
Other current liability	-	16,206	-		16,206
Total Current Liabilities	16,800	185,968	3,000,000		3,202,768

Stockholders’ deficit
Common Stock	5,200	2	30,000 (2)	(3) (4)	35,200
Additional Paid in capital	33,300	-	41,970,000	(3)	42,003,300
Deficit Accumulated During Exploration Stage	(55,300)	(55,976)	(64,465) (2) (42,000,000)	(1) (4) (3)	(42,175,239)
Minority Interest		(64,465)	64,465	(1)	-
Total Stockholders’ Deficit	16,800	(120,439)	-		(137,239)
Total Liabilities and Stockholders’ Deficit	$ -	$ 65,529	$ 3,000,000		$3,065,529

F-24

Zulu Energy Corp.

(An Exploration Stage Company)

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2007

(UNAUDITED)

	Historical
	Zulu Energy, Corp	Nyati Mauritius Limited	Adjustments		Pro Forma

General and Administrative	$ -	$33,288	$ 9,691		$ 42,979

Total Operating Loss	-	(33,288)	(9,691)		(42,979)

Minority Interest	-	9,691	(9,691)	(4)	-

Net Loss	$ -	$(23,597)	$ (9,691)		$ (42,979)

Earnings per Share
Basic and Fully Diluted	N/A	-			-

Weighted Average Common Shares Outstanding	52,000,000	-	30,000,000		82,000,000

F-25

Zulu Energy Corp.

(An Exploration Stage Company)

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – The Company acquired the remaining ownership interest in Nyati Botswana (Private) Limited (“Botswana”) from Swansi Holdings and therefore owns 100%.

NOTE 2 – 50% of the net assets of Botswana are fair valued at $3,000,000 the cash consideration to be paid.

NOTE 3 – The shares issued to acquire Nyati Resources Limited (“NR”) are valued at $1.40 per share for a total fair value of $42,000,000. Due to the recapitalization, no goodwill is allowed.

NOTE 4 – The Company acquire 100% of the interest of Botswana and therefore there is no longer a minority interest.

NOTE 5 – The Company issued 30,000,000 shares to acquire NR. For the pro forma presentation such shares are considered to be outstanding from the beginning of the period. Dilutive share computation have not been presented since the results would be antidilutive.

F-26

The accompanying notes are an integral part of these financial statements

EXHIBIT INDEX

Exhibit Number

Description

Exhibit 3.1

Amended and Restated Articles of Incorporation

Exhibit 10.1

Stock Exchange Agreement and Plan of Reorganization, dated December 19, 2007

Exhibit 10.2

Stock Purchase Agreement, dated December 19, 2007

Exhibit 10.3

Tax Indemnification Agreement

Exhibit 99.1

Press release dated December 24, 2007 of Zulu Energy Corp.

[EX3ONE002.GIF]

[EX3ONE004.GIF]

[EX3ONE006.GIF]

STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION

AMONG

ZULU ENERGY CORP.

NYATI MAURITIUS LIMITED

AND LMA HUGHES LLLP

Dated as of December 19, 2007

TABLE OF CONTENTS


Section		Page

Article I EXCHANGE OF SHARES		1
1.1	Exchange of Shares	1
Article II DELIVERY OF CERTIFICATES BY SELLER		2
2 .1	Delivery of Shares	2
Article III CLOSING AND TERMINATION		2
3 .1	Closing Date	2
3 .2	Termination of Agreement	2
3 .3	Procedure Upon Termination	2
3 .4	Effect of Termination	3
Article IV REPRESENTATIONS AND WARRANTIES OF THE SELLER		3
4 .1	Organization and Good Standing of the Company	3
4 .2	Authority	3
4.3	Shares	4
4.4	Basic Corporate Records	4
4. 5	Minute Books	5
4. 6	Subsidiaries and Affiliates	5
4. 7	Consents	5
4. 8	Financial Statements	6
4. 9	Records and Books of Account	6
4. 10	Absence of Undisclosed Liabilities	6
4. 11	Taxes	7
4. 12	Accounts Receivable	8
4. 13	Inventory	8
4. 14	Machinery and Equipment	9
4. 15	Real Property Matters	10
4. 16	Leases	11
4. 17	Patents, Software, Trademarks, Etc	11
4. 18	Insurance Policies	12
4. 19	Banking and Personnel Lists	12
4.20	Lists of Contracts, Etc	13
4.21	Compliance With the Law	14
4.22	Litigation; Pending Labor Disputes	14
4.23	Absence of Certain Changes or Events	15
4.24	Employee Benefit Plans	16
4.25	Product Warranties and Product Liabilities	17
4.26	Assets	18
4.27	Absence of Certain Commercial Practices	18
4.28	Licenses, Permits, Consents and Approvals	18
4.29	Environmental Matters	19
4.30	Broker	19

267671.03

4. 31	Related Party Transactions	19
4. 32	Patriot Act	20
4. 33	Investment Intent	20
4. 34	Investment Experience; Suitability	20
4. 35	Accredited Investor Status	20
4.36	Reliance on Exemptions	21
4. 37	Legends	21
4.38	Disclosure	21
Article V REPRESENTATIONS AND WARRANTIES OF PURCHASER		21
5.1	Organization and Good Standing	21
5.2	Authority	22
5.3	Conflicts; Consents of Third Parties	22
5.4	Litigation	22
5.5	Investment Intention	22
5.6	Due Authorization of Exchange Consideration	22
5.7	Broker	23
5.8	Patriot Act	23
5.9	Tax Matters	23
Article VI COVENANTS		25
6.1	Access to Information	25
6.2	Conduct of the Business Pending the Closing	25
6.3	Consents	27
6.4	Other Actions	27
6.5	No Solicitation	27
6.6	Preservation of Records	28
6.7	Publicity	28
6.8	Use of Name	28
6.9	Financial Statements	29
6.10	Tax Election	29
6.11	Tax Matters	29
6.12	Additional Compensation	31
6.13	Expenses	31
Article VII CONDITIONS TO CLOSING		32
7.1	Conditions Precedent to Obligations of Purchaser	32
7.2	Conditions Precedent to Obligations of the Seller	33
Article VIII DOCUMENTS TO BE DELIVERED		34
8.1	Documents to be Delivered by the Seller	34
8.2	Documents to be Delivered by the Purchaser	34
Article IX INDEMNIFICATION		34
9.1	Indemnification	34
9.2	Limitations on Indemnification for Breaches of Representations and Warranties	35
9.3	Indemnification Procedures	35
9.4	Tax Treatment of Indemnity Payments	37
Article X MISCELLANEOUS		37
10.1	Payment of Sales, Use or Similar Taxes	37
10.2	Survival of Representations and Warranties	37

267671.03

10.4	Specific Performance	37
10.5	Further Assurances	38
10.6	Submission to Jurisdiction; Consent to Service of Process; Attorney’s Fees	38
10.7	Entire Agreement; Amendments and Waivers	38
10.8	Governing Law	39
10.9	Table of Contents and Headings	39
10.10 Notices		39
10.11 Severability		40
10.12 Binding Effect; Assignment		40

iii

STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION

STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 19, 2007 (the “Agreement”), among Zulu Energy Corp., a corporation existing under the laws of Colorado (the “Purchaser”), Nyati Mauritius Limited, a private company limited by shares organized under the laws of the Republic of Mauritius (the “Company”), and LMA Hughes LLLP, the sole shareholder of the Company (the “Seller”).

W I T N E S S E T H :

WHEREAS, the Seller owns 100 shares of common stock, $1.00 par value of the Company (the “Shares”), which Shares constitute all of the issued and outstanding shares of capital stock of the Company; and

WHEREAS, the Company is a holding company that owns all of the issued and outstanding shares of capital stock of Nyati Resources Limited, a company organized under the laws of the Republic of Mauritius (“Nyati Resources”), which owns 50 shares of common stock, BPULA 1.00 par value of Nyati Resources Botswana (Proprietary) Limited, a company limited by shares organized under the laws of the Republic of Botswana (“Nyati Botswana”), which represents 50% of Nyati Botswana’s outstanding shares. Nyati Resources and Nyati Botswana are collectively referred to as the “Subsidiaries” and each a “Subsidiary”). The Company through its Subsidiaries is engaged in the business of prospecting for and the exploration of coal bed methane and related activities in the Republic of Botswana including related activities (the “Business”).

WHEREAS, the Seller desires to transfer to the Purchaser, and the Purchaser desires to acquire from the Seller, the Shares for the consideration and upon the terms and conditions hereinafter set forth in a transaction intended to qualify as a tax-deferred reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code,” and the transaction contemplated by this Agreement, the “Exchange”);

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I
EXCHANGE OF SHARES

1.1 Exchange of Shares .

Upon the terms and subject to the conditions contained herein, on the Closing Date the Seller shall transfer and deliver the Shares as set forth opposite the Seller's name on Annex A hereto to the Purchaser in exchange for 30,000,000 shares of the Purchaser’s common stock to be issued at the Closing to the Seller (the “Exchange Consideration”).

ARTICLE II
DELIVERY OF CERTIFICATES BY SELLER

2.1 Delivery of Shares .

The transfer of the Shares shall be effected by the delivery to the Purchaser at the Closing of certificates representing the Shares duly endorsed in blank or accompanied by stock transfer powers and with all requisite stock transfer tax stamps attached.

ARTICLE III
CLOSING AND TERMINATION

3.1 Closing Date .

Subject to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof (or the waiver thereof by the party entitled to waive that condition), the closing of the sale and purchase of the Shares provided for in Section 1.1 hereof (the "Closing") shall take place at the offices of Sichenzia Ross Friedman Ference LLP located at 61 Broadway, New York, New York 10006 (or at such other place as the parties may designate in writing) on such date as the Seller and the Purchaser may designate. The date on which the Closing shall be held is referred to in this Agreement as the "Closing Date".

3.2 Termination of Agreement .

This Agreement may be terminated prior to the Closing as follows:

(a) At the election of the Seller or the Purchaser on or after December 31, 2007, if the Closing shall not have occurred by the close of business on such date, provided that the terminating party is not in default of any of its obligations hereunder;

(b)	by mutual written consent of the Seller and the Purchaser; or

(c)	by the Seller or the Purchaser if there shall be in effect a final

nonappealable order of a Governmental Body (as defined below) of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that the parties hereto shall promptly appeal any adverse determination which is not nonappealable (and pursue such appeal with reasonable diligence).

(i) For purposes of this Agreement, “Governmental Body” shall mean any agency, public or regulatory authority, department, commission, court, ministry, or board of government, whether foreign or domestic and whether national, federal, provincial, state, regional, local or municipal.

3.3 Procedure Upon Termination .

267671.03

In the event of termination and abandonment by the Purchaser or the Seller, or both, pursuant to Section 3.2 hereof, written notice thereof shall forthwith be given to the other party, and this Agreement shall terminate, and the purchase of the Shares hereunder shall be abandoned, without further action by the Purchaser or the Seller. If this Agreement is terminated as provided herein, each party shall redeliver all documents, work papers and other material of any other party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same.

3.4 Effect of Termination .

In the event that this Agreement is validly terminated as provided herein, then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to the Purchaser, the Company or the Seller; provided, however, that nothing in this Section 3.4 shall relieve the Purchaser or the Seller of any liability for a breach of this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller hereby represents and warrants to the Purchaser that:

4.1 Organization and Good Standing of the Company . The Company is a private company limited by shares duly organized, validly existing and in good standing under the laws of the Republic of Mauritius. Each Subsidiary is a company or a company limited by shares duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation set forth above. Neither the Company nor either Subsidiary is required to be qualified to transact business in any other jurisdiction where the failure to so qualify would have an adverse effect on the business of the Company or any Subsidiary.

4.2 Authority .

(a) The Company has full power and authority (corporate and otherwise) to carry on its business and has all permits and licenses that are necessary to the conduct of its business or to the ownership, lease or operation of its properties and assets.

(b) The execution of this Agreement and the delivery hereof to the Purchaser and the sale and the transactions contemplated herein have been, or will be prior to Closing, duly authorized by the Company’s Board of Directors and by the Company’s stockholder having full power and authority to authorize such actions.

(c) Subject to any consents required under Section 4.7 below, the Seller and the Company have the full legal right, power and authority to execute, deliver and carry out the terms and provisions of this Agreement. Seller has duly approved and authorized the execution and delivery of this Agreement and documents and instruments contemplated hereby and the consummation of the transactions contemplated hereby, and has duly authorized Brian Hughes to sign on its behalf, and no other proceedings, approvals or other action on the part of the Seller, the Company or any Subsidiary is necessary to approve and authorize the execution, delivery and performance by the Seller of this Agreement and the documents and instruments contemplated

267671.03

hereby or the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered on behalf of Seller and the Company and constitutes a valid and binding obligation of the Seller and the Company enforceable in accordance with its terms.

(d) Neither the execution and delivery of this Agreement, the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement will violate, conflict with, result in a breach of, or constitute a default under (i) any Law (as defined below), indenture, mortgage, loan agreement, or other agreement or instrument to which the Company, the Subsidiaries or the Seller is a party or by which it or any of them is bound, (ii) any charter, regulation, bylaw, constitutional provision of the Company, or (iii) any decree, order, or rule of any court or Governmental Body or arbitrator that is binding on the Company or the Seller in any way.

(i) For purposes of this Agreement, a “Law” or “Laws” shall mean, including those applicable of the United States of America, the Republic of Mauritius and the Republic of Botswana, any statute, common law, rule, ordinance, regulation, code, licensing requirement, order, judgment, injunction, decree, license, permit and bylaw of a Governmental Body.

4.3 Shares .

(a) The Company’s authorized capital stock consists of 50,000 shares of common stock, of which 100 shares have been issued to Seller, which constitutes the Shares as defined above. No other shares of capital stock have been issued by the Company. All of the Shares are duly authorized, validly issued, fully paid and non-assessable.

(b) The Seller is the lawful record and beneficial owner of all the Shares, free and clear of any liens, pledges, encumbrances, charges, claims or restrictions of any kind, and has, or will have on the Closing Date, the absolute, unilateral right, power, authority and capacity to enter into and perform this Agreement, including the exchange of the Shares, without any other or further authorization, action or proceeding, except as specified herein.

(c) There are no authorized or outstanding subscriptions, options, rights, warrants, calls, contracts, demands, commitments, shareholder agreements, convertible securities or other agreements or arrangements of any character or nature whatever under which the Seller or the Company are or may become obligated to issue, assign or transfer any shares of capital stock of the Company or any Subsidiary. Upon the delivery to Purchaser on the Closing Date of the certificate(s) representing the Shares, Purchaser will have good, legal, valid, marketable and indefeasible title to all the then issued and outstanding shares of capital stock of the Company, free and clear of any liens, pledges, encumbrances, charges, agreements, options, claims or other arrangements or restrictions of any kind.

4.4 Basic Corporate Records . The copies of the Constitution of the Company and Nyati Resources (each certified as of the date of this Agreement as true, correct and complete by the Company’s secretary or assistant secretary) , have been delivered to the Purchaser, are true, correct and complete as of the date of this Agreement. The copy of the Memorandum and

267671.03

Articles of Association of Nyati Botswana (certified as of the date of this Agreement as true, correct and complete by the Nyati Botswana’s secretary or assistant secretary), which has been delivered to the Purchaser, are true, correct and complete as of the date of this Agreement.

4.5 Minute Books . The minute books of the Company and each Subsidiary, which shall be exhibited to the Purchaser between the date hereof and the Closing Date, each contain true, correct and complete minutes and records of all meetings, proceedings and other actions of the shareholders, Boards of Directors and committees of such Boards of Directors of each such corporation, if any, and, on the Closing Date, will contain true, correct and complete minutes and records of any meetings, proceedings and other actions of the shareholders, respective Boards of Directors and committees of such Boards of Directors of each such corporation.

4.6 Subsidiaries and Affiliates . Except for its interests in Nyati Resources and as disclosed on Schedule 4.6, the Company has no ownership, voting or profit and loss sharing percentage interest in any businesses, entities, enterprises and organizations. Except for its interests in Nyati Botswana and as disclosed on Schedule 4.6, Nyati Resources has no ownership, voting or profit and loss sharing percentage interest in any businesses, entities, enterprises and organizations. Unless the context requires otherwise or specifically designated to the contrary on Section 4.6 hereto, “Company” as used in this Agreement shall include all such Subsidiaries. Except as set forth in Schedule 4.6 or 4.31, (i) neither the Company nor any Subsidiary has made any advances to, or investments in, nor owns beneficially or of record, any securities of or other interest in, any business, entity, enterprise or organization, (ii) there are no arrangements through which the Company or any Subsidiary has acquired from, or provided to, the Seller or its affiliates any goods, properties or services, (iii) there are no rights, privileges or advantages now enjoyed by the Company or any Subsidiary as a result of the ownership of the Company by the Seller which, to the knowledge of the Seller or the Company, might be lost as a result of the consummation of the transactions contemplated by this Agreement. Each entity shown on Schedule 4.6 is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has full corporate power to own all of its property and to carry on its business as it is now being conducted. Also set forth on Schedule 4.6 is a list of jurisdictions in which each Subsidiary is qualified as a foreign company. Such jurisdictions are the only jurisdictions in which the ownership or leasing of property by each Subsidiary or the conduct of its business requires it to be so qualified. All of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable, and, except as set forth on Schedule 4.6, are owned, of record and beneficially, by the Company, and on the Closing Date will be owned by the Company, free and clear of all liens, encumbrances, equities, options or claims whatsoever. No Subsidiary has outstanding any other equity securities or securities options, warrants or rights of any kind that are convertible into equity securities of such Subsidiary, except as set forth on Schedule 4.6.

4.7 Consents . Except as set forth in Schedule 4.7, no consents or approvals of any public body or authority and no consents or waivers from other parties to leases, licenses, franchises, permits, indentures, agreements or other instruments are (i) required for the lawful consummation of the transactions contemplated hereby, or (ii) necessary in order that the Business can be conducted by the Purchaser in the same manner after the Closing as heretofore

267671.03

conducted by the Company, nor will the consummation of the transactions contemplated hereby result in creating, accelerating or increasing any liability of the Company.

4.8 Financial Statements . The Seller has delivered, or will deliver prior to Closing, to the Purchaser copies of the following financial statements (which include all notes and schedules attached thereto), all of which are true, complete and correct, have been prepared from the books and records of the Company in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied with past practice and fairly present the financial condition, assets, liabilities and results of operations of the Company as of the dates thereof and for the periods covered thereby:

the audited balance sheet of the Company as at December 31, 2005 and 2006, and the related audited statements of operations, and of cash flows of the Company for the period then ended and (ii) the unaudited balance sheet of the Company as of September 30, 2007 and the related compiled statement of operations of the Company for the nine month period then ended (such statements, including the related notes and schedules thereto, are referred to herein as the “Financial Statements”).

In such Financial Statements, the Statements of Operations do not contain any items of special or nonrecurring income or any other income not earned in the ordinary course of business except as set forth in Schedule 4.8, and the financial statements for the interim periods indicated include all adjustments, which consist of only normal recurring accruals, necessary for such fair presentation. There are no facts known to the Seller or the Company that, under GAAP consistently applied, would alter the information contained in the foregoing Financial Statements in any material way. Neither the Company nor any Subsidiary, or any director, officer, employee or agent of the Company or the Subsidiaries has received any written or oral complaint, allegation or claim that the Company or such Subsidiary has engage in questionable accounting or business practices.

For the purposes hereof, the balance sheet of the Company as of September 30, 2007 is referred to as the “Balance Sheet” and September 30, 2007 is referred to as the “Balance Sheet Date”.

4.9 Records and Books of Account . The records and books of account of the Company and of each Subsidiary reflect all material items of income and expense and all material assets, liabilities and accruals, and have been, and to the Closing Date will be, regularly kept and maintained in conformity with GAAP applied on a consistent basis with preceding years.

4.10 Absence of Undisclosed Liabilities . Except as and to the extent reflected or reserved against in the Company’s Financial Statements or disclosed in Schedule 4.10, there are no liabilities or obligations of the Company of any kind whatsoever, whether accrued, fixed, absolute, contingent, determined or determinable, and including without limitation (i) liabilities to former, retired or active employees of the Company under any pension, health and welfare benefit plan, vacation plan or other plan of the Company, (ii) tax liabilities incurred in respect of or measured by income for any period prior to the close of business on the Balance Sheet Date,

267671.03

or arising out of transactions entered into, or any state of facts existing, on or prior to said date, and (iii) contingent liabilities in the nature of an endorsement, guarantee, indemnity or warranty, and there is no condition, situation or circumstance existing or which has existed that could reasonably be expected to result in any liability of the Company, other than liabilities and contingent liabilities incurred in the ordinary course of business since the Balance Sheet Date consistent with the Company’s recent customary business practice, none of which is materially adverse to the Company.

4.11 Taxes .

(a) For purposes of this Agreement, “Tax” or “Taxes” refers to: (i) any and all federal, state, local and foreign (including the Republic of Botswana and the Republic of Mauritius) taxes, assessments and other governmental charges, duties, impositions and liabilities relating to taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes and escheatment payments, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity; (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including, without limitation, any liability under Treas. Reg. Section 1.1502 -6 or any comparable provision of foreign, state or local law); and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify any other person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

(b) (i) The Company has timely filed all federal, state, local and foreign returns, estimates, information statements and reports (“Returns”) relating to Taxes required to be filed by the Company with any Tax authority. All such Returns are true, correct and complete in all material respects. The Company has paid all Taxes shown to be due on such Returns. Except as listed on Schedule 4.11 hereto, the Company is not currently the beneficiary of any extensions of time within which to file any Returns. The Seller and the Company have furnished and made available to the Purchaser complete and accurate copies of all income and other Tax Returns and any amendments thereto filed by the Company in the last three (3) years.

(ii) The Company, as of the Closing Date, will have withheld and accrued or paid to the proper authority all Taxes required to have been withheld and accrued or paid.

(iii) The Company has not been delinquent in the payment of any Tax nor is there any Tax deficiency outstanding or assessed against the Company. The Company has not executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

(iv) There is no dispute, claim, or proposed adjustment concerning any Tax liability of the Company either (A) claimed or raised by any Tax authority in

267671.03

writing or (B) based upon personal contact with any agent of such Tax authority, and there is no claim for assessment, deficiency, or collection of Taxes, or proposed assessment, deficiency or collection from the Internal Revenue Service or any other Governmental Body against the Company which has not been satisfied. The Company is not a party to nor has it been notified in writing or otherwise that it is the subject of any pending, proposed, or threatened action, investigation, proceeding, audit, claim or assessment by or before the Internal Revenue Service or any other Governmental Body, nor does the Company have any reason to believe that any such notice will be received in the future. Neither the Internal Revenue Service nor any other Governmental Body, nor any state or local taxation authority has ever audited any income tax return of the Company. The Company has not filed any requests for rulings with the Internal Revenue Service nor any other Governmental Body. No power of attorney has been granted by the Company or its Affiliates with respect to any matter relating to Taxes of the Company. There are no Tax liens of any kind upon any property or assets of the Company, except for inchoate liens for Taxes not yet due and payable.

(v) The Company has no liability for any unpaid Taxes which has not been paid or accrued for, or otherwise, or reserved on the Financial Statements in accordance with GAAP, as adjusted for the passage of time through the Closing Date in accordance with the Company’s past custom and practice, whether asserted or unasserted, contingent or otherwise.

(vi) There is no contract, agreement, plan or arrangement to which the Company is a party as of the date of this Agreement, including but not limited to the provisions of this Agreement, covering any employee or former employee of the Company that, individually or collectively, would reasonably be expected to give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) or any applicable provision under any Law. There is no contract, agreement, plan or arrangement to which the Company is a party or by which it is bound to compensate any individual for excise taxes paid pursuant to Section 4999 of the Code or any applicable provision under any Law.

(vii) The Company has not filed any consent agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the Company.

(viii) The Company is not a party to, and has no obligation under, any tax-sharing, tax-indemnity or tax-allocation agreement or arrangement.

(ix) None of the Company’s assets are tax-exempt-use property within the meaning of Section 168(h) of the Code.

4.12 Accounts Receivable . Neither the Company nor any Subsidiary has any accounts receivable.

4.13 Inventory . Neither the Company nor any Subsidiary has any inventory.

267671.03

4.14 Machinery and Equipment . Except for items disposed of in the ordinary course of business, all machinery, tools, furniture, fixtures, equipment, vehicles, leasehold improvements and all other tangible personal property (hereinafter “Fixed Assets”) of the Company and the Subsidiaries currently being used in the conduct of the Business, or included in determining the net book value of the Company on the Balance Sheet Date, together with any machinery or equipment that is leased or operated by the Company or the Subsidiaries, are in fully serviceable working condition and repair. Said Fixed Assets shall be maintained in such condition from the date hereof through the Closing Date. Except as described on Schedule 4.14 hereto, all Fixed Assets owned, used or held by the Company are situated at its business premises and are currently used in its business. Schedule 4.14 describes all Fixed Assets owned by or an interest in which is claimed by any other person (whether a customer, supplier or other person) for which the Company is responsible (copies of all agreements relating thereto being attached to said Schedule 4.14), and all such property is in the Company’s actual possession and is in such condition that upon the return of such property in its present condition to its owner, the Company will not be liable in any amount to such owner. There are no outstanding requirements or recommendations by any insurance company that has issued a policy covering either (i) such Fixed Assets or (ii) any liabilities of the Company relating to operation of the Business, or by any board of fire underwriters or other body exercising similar functions, requiring or recommending any repairs or work to be done on any Fixed Assets or any changes in the operations of the Business, any equipment or machinery used therein, or any procedures relating to such operations, equipment or machinery. All Fixed Assets of the Company are set forth on Schedule 4.14 hereto.

267671.03

4.15 Real Property Matters .

(a) Schedule 4.15(a) sets forth a complete list of (i) all real property and interests in real property owned in fee by the Company or any Subsidiary (individually, an "Owned Property" and collectively, the "Owned Properties"), and (ii) all real property and interests in real property leased by the Company or any Subsidiary (individually, a "Real Property Lease" and the real properties specified in such leases, together with the Owned Properties, being referred to herein individually as a "Company Property" and collectively as the "Company Properties") as lessee or lessor. The Company and the Subsidiaries, as the case may be, have good and marketable fee title to all Owned Properties, free and clear of all Liens of any nature whatsoever except (A) Liens set forth on Schedule 4.15(a) and (B) Permitted Exceptions. The Company Properties constitute all interests in real property currently used or currently held for use in connection with the Business and which are necessary for the continued operation of the Business as the Business is currently conducted. The Company has a valid and enforceable leasehold interest under each of the Real Property Leases, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), and the Company has not received any written notice of any default or event that with notice or lapse of time, or both, would constitute a default by the Company under any of the Real Property Leases. All of the Company Property, buildings, fixtures and improvements thereon owned or leased by the Company are in good operating condition and repair (subject to normal wear and tear).

(i) For purposes of this Agreement, “Lien” shall mean debts, liabilities, commitments, obligations, duties and responsibilities of any kind and description, whether absolute or contingent, monetary or non-monetary, direct or indirect, known or unknown or matured or unmatured, or of any other nature.

(b) The Company and the Subsidiaries have all material certificates of occupancy and Permits of any Governmental Body necessary or useful for the current use and operation of each Company Property, and the Company has fully complied with all material conditions of the Permits applicable to it. No default or violation, or event that with the lapse of time or giving of notice or both would become a default or violation, has occurred in the due observance of any Permit.

(c) There does not exist any actual or, to the best knowledge of the Company, the Subsidiaries or the Seller, threatened or contemplated condemnation or eminent domain proceedings that affect any Company Property or any part thereof, and the Company has not received any notice, oral or written, of the intention of any Governmental Body or other Person to take or use all or any part thereof.

(d) Neither the Company nor the Seller has received any written notice from any insurance company that has issued a policy with respect to any Company Property requiring performance of any structural or other repairs or alterations to such Company Property.

267671.03

(e) The Company does not own or hold, and is not obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell, assign or dispose of any real estate or any portion thereof or interest therein.

4.16 Leases . All leases of real and personal property of the Company and the Subsidiaries are described in Schedule 4.16, are in full force and effect and constitute legal, valid and binding obligations of the respective parties thereto enforceable in accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting generally the enforcement of creditor’s rights, and have not been assigned or encumbered. The Company has performed in all material respects the obligations required to be performed by it under all such leases to date and it is not in default in any material respect under any of said leases, except as set forth in Schedule 4.16, nor has it made any leasehold improvements required to be removed at the termination of any lease, except signs. No other party to any such lease is in material default thereunder. Except as noted on Schedule 4.16, none of the leases listed thereon require the consent of a third party in connection with the transfer of the Shares.

4.17 Patents, Software, Trademarks, Etc . The Company owns, or possesses adequate licenses or other rights to use, all patents, software, trademarks, service marks, trade names, copyrights, proprietary information and trade secrets, if any, necessary to conduct the Business as now operated by it. The patents, software, trademarks, service marks, copyrights, trade names and trade secrets, if any, registered in the name of or owned or used by or licensed to the Company and applications for any thereof (hereinafter the “Intangibles”) are described or referenced in Schedule 4.17. The Seller hereby specifically acknowledges that all right, title and interest in and to all patents, software and proprietary information listed on Schedule 4.17 are owned by the Company or its Subsidiaries and that the ownership of such patents, software or proprietary information will be transferred as part of the Company to Purchaser as part of the transaction contemplated hereby. No officer, director, shareholder or employee of the Company or any relative or spouse of any such person owns any patents or patent applications or any inventions, software, secret formulae or processes, trade secrets or other similar rights, nor is any of them a party to any license agreement, used by or useful to the Company or related to the Business except as listed in Schedule 4.17. All of said Intangibles are valid and in good standing, are free and clear of all liens, security interests, charges, restrictions and encumbrances of any kind whatsoever, and have not been licensed to any third party except as described in Schedule 4.17. The Company has not been charged with, nor has it infringed, nor to the Seller’s knowledge is it threatened to be charged with infringement of, any patent, proprietary rights or trade secrets of others in the conduct of its business, and, to the date hereof, neither the Seller nor the Company has received any notice of conflict with or violation of the asserted rights in intangibles or trade secrets of others. The Company is not now manufacturing any goods under a present permit, franchise or license, except as set forth in said Schedule 4.17. The consummation of the transactions contemplated hereby will not alter or impair any rights of the Company in any such Intangibles or in any such permit, franchise or license, except as described in Schedule 4.17. The Intangibles and the Company’s tooling, manufacturing and engineering drawings, process sheets, specifications, bills of material and other like information and data are in such form and of such quality and will be maintained in such a manner that the Company can, following the Closing, design, produce, manufacture, assemble and sell the products and provide the services heretofore provided by it so that such products and services meet applicable

267671.03

specifications and conform with the standards of quality and cost of production standards heretofore met by it. The Company has the sole and exclusive right to use its corporate and trade names in the jurisdictions where it transacts business.

4.18 Insurance Policies . There is set forth in Schedule 4.18 a list and brief description of all insurance policies on the date hereof held by the Company or on which it pays premiums, including, without limitation, life insurance and title insurance policies, which description includes the premiums payable by it thereunder. Schedule 4.18 also sets forth, in the case of any life insurance policy held by the Company, the name of the insured under such policy, the cash surrender value thereof and any loans thereunder. All such insurance premiums in respect of such coverage have been, and to the Closing Date will be, paid in full, or if not due, properly accrued on the Balance Sheet. All claims, if any, made against the Company which are covered by such policies have been, or are being, settled or defended by the insurance companies that have issued such policies. Up to the Closing Date, such insurance coverage will be maintained in full force and effect and will not be cancelled, modified or changed without the express written consent of the Purchaser, except to the extent the maturity dates of any such insurance policies expiring prior to the Closing Date. No such policy has been, or to the Closing Date will be, cancelled by the issuer thereof, and, to the knowledge of the Seller and the Company, between the date hereof and the Closing Date, there shall be no increase in the premiums with respect to any such insurance policy caused by any action or omission of the Seller or of the Company.

4.19 Banking and Personnel Lists . The Seller and the Company will deliver to the Purchaser prior to the Closing Date the following accurate lists and summary descriptions relating to the Company:

(i) The name of each bank in which the Company has an account or safe deposit box and the names of all persons authorized to draw thereon or have access thereto.

(ii) The names, current annual salary rates and total compensation for the preceding fiscal year of all of the present directors and officers of the Company, and any other employees whose current base accrual salary or annualized hourly rate equivalent is $20,000 or more, together with a summary of the bonuses, percentage compensation and other like benefits, if any, paid or payable to such persons for the last full fiscal year completed, together with a schedule of changes since that date, if any.

(iii) A schedule of workers’ compensation payments of the Company over the past five full fiscal years and the fiscal year to date, a schedule of claims by employees of the Company against the workers’ compensation fund for any reason over such period, identification of all compensation and medical benefits paid to date on each such claim and the estimated amount of compensation and medical benefits to be paid in the future on each such claim.

(iv) The name of all pensioned employees of the Company whose pensions are unfunded and are not paid or payable pursuant to any formalized pension arrangements, their agent and annual unfunded pension rates.

267671.03

4.20 Lists of Contracts, Etc . There is included in Schedule 4.20 a list of the following items (whether written or oral) relating to the Company and the Subsidiaries, which list identifies and fairly summarizes each item:

(i) All collective bargaining and other labor union agreements (if any); all employment agreements with any officer, director, employee or consultant; and all employee pension, health and welfare benefit plans, group insurance, bonus, profit sharing, severance, vacation, hospitalization, and retirement plans, post-retirement medical benefit plans, and any other plans, arrangements or custom requiring payments or benefits to current or retiring employees.

(ii) All joint venture contracts and joint operating agreements of the Company or the Subsidiaries or affiliates relating to the Business;

(iii) All contracts of the Company and the Subsidiaries relating to (a) obligations for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) obligations under capital leases, (e) debt of others secured by a lien on any asset of the Company of a Subsidiary, and (f) debts of others guaranteed by the Company or any Subsidiary.

(iv) All agreements of the Company or any Subsidiary relating to the supply of raw materials for and the distribution of the products of the Business, including without limitation all sales agreements, manufacturer’s representative agreements and distribution agreements of whatever magnitude and nature, and any commitments therefor;

(v) All contracts that individually provide for aggregate future payments to or from the Company or any Subsidiary of $25,000 or more, to the extent not included in (i) through (iv) above;

(vi) All contracts of the Company or any Subsidiary that have a term exceeding one year and that may not be cancelled without any liability, penalty or premium, to the extent not included in (i) through (v) above;

(vii) A complete list of all outstanding powers of attorney granted by the Company or any Subsidiary; and

(viii) All other contracts of the Company or any Subsidiary material to the business, assets, liabilities, financial condition, results of operations or prospects of the Business taken as a whole to the extent not included above, including but not limited to contracts for the licensing and ownership of geological and geophysical data (raw data and interpretations thereon).

Except as set forth in Schedule 4.20, (i) all contracts, agreements and commitments of the Company or any Subsidiary set forth in Schedule 4.20 are valid, binding and

267671.03

in full force and effect, and (ii) neither the Company nor any Subsidiary nor any other party to any such contract, agreement, or commitment has materially breached any provision thereof or is in default thereunder. Except as set forth in Schedule 4.20, the sale of the Shares by the Seller in accordance with this Agreement will not result in the termination or provide any party to such contract the opportunity to terminate of any contract, agreement or commitment of the Company or any Subsidiary set forth in Schedule 4.20, and immediately after the Closing, each such contract, agreement or commitment will continue in full force and effect without the imposition or acceleration of any burdensome condition or other obligation on the Company resulting from the sale of the Shares by the Seller. True and complete copies of the contracts, leases, licenses and other documents referred to in this Section 4.20 will be delivered to the Purchaser, certified by the Secretary or Assistant Secretary of the Company as true, correct and complete copies, not later than four weeks from the date hereof or ten business days before the Closing Date, whichever is sooner.

There are no pending disputes with customers or vendors of the Company regarding quality or return of goods involving amounts in dispute with any one customer or vendor, whether for related or unrelated claims, in excess of $5,000 except as described on Schedule 4.20 hereto, all of which will be resolved to the reasonable satisfaction of Purchaser prior to the Closing Date. To the knowledge of Seller and the Company, there has not been any event, happening, threat or fact that would lead them to believe that any of said customers or vendors will terminate or materially alter their business relationship with the Company after completion of the transactions contemplated by this Agreement.

4.21 Compliance With the Law . Neither the Company nor any Subsidiary is in violation of any applicable federal, state, local or foreign Law, regulation or order or any other, decree or requirement of any governmental, regulatory or administrative agency or authority or court or other tribunal (including, but not limited to, any law, regulation order or requirement relating to securities, properties, business, products, manufacturing processes, advertising, sales or employment practices, terms and conditions of employment, occupational safety, health and welfare, conditions of occupied premises, product safety and liability, civil rights, or environmental protection, including, but not limited to, those related to waste management, air pollution control, waste water treatment or noise abatement). Except as set forth in Schedule 4.21, neither the Company nor any Subsidiary has been and is now charged with, or to the knowledge of the Seller or the Company or any Subsidiary under investigation with respect to, any violation of any applicable law, regulation, order or requirement relating to any of the foregoing, nor, to the knowledge of the Seller or the Company or any Subsidiary after due inquiry, are there any circumstances that would or might give rise to any such violation. The Company and any applicable Subsidiary has filed all reports required to be filed with any governmental, regulatory or administrative agency or authority.

4.22 Litigation; Pending Labor Disputes . Except as specifically identified on the Balance Sheet or footnotes thereto or set forth in Schedule 4.22:

(i) There are no Legal Proceedings (as defined below) or other proceedings or governmental investigations pending or, to the knowledge of the Seller or the Company or any Subsidiary, threatened, against the Seller or the Company or any Subsidiary, relating to the Business or the Company or the Subsidiaries or their properties (including leased

267671.03

property), or the transactions contemplated by this Agreement, nor is there any basis known to the Company or the Subsidiaries or the Seller for any such action.

(ii) There are no judgments, decrees or orders of any court, or any governmental department, commission, board, agency or instrumentality binding upon the Seller or the Company or any Subsidiary relating to the Business or the Company or any Subsidiary the effect of which is to prohibit any business practice or the acquisition of any property or the conduct of any business by the Company or any Subsidiary or which limit or control or otherwise adversely affect its method or manner of doing business.

(iii) No work stoppage has occurred and is continuing or, to the knowledge of the Seller or the Company or the Subsidiaries, is threatened affecting the Business, and no representation question involving recognition of a collective bargaining agent exists in respect of any employees of the Company.

(iv) There are no pending labor negotiations or union organization efforts relating to employees of the Company or the Subsidiaries.

(v) There are no charges of discrimination (relating to sex, age, race, national origin, handicap or veteran status) or unfair labor practices pending or, to the knowledge of the Seller or the Company, threatened before any governmental or regulatory agency or authority or any court relating to employees of the Company.

(vi) For purposes of this Agreement, “Legal Proceedings” shall mean any litigation, legal action, arbitration, administrative proceeding, proceeding, demand, claim or investigation against, affecting or brought by or against the Company or any Subsidiary relating to the Business, operations, assets or liabilities of the Company or any Subsidiary.

4.23 Absence of Certain Changes or Events . The Company has not, since the Balance Sheet Date, except as described on Schedule 4.23:

(i) Incurred any material obligation or liability (absolute, accrued, contingent or otherwise) or in connection with the performance of this Agreement, and any such obligation or liability incurred in the ordinary course is not materially adverse, except for claims, if any, that are adequately covered by insurance;

(ii) Discharged or satisfied any lien or encumbrance, or paid or satisfied any obligations or liability (absolute, accrued, contingent or otherwise) other than (a) liabilities shown or reflected on the Balance Sheet, and (b) liabilities incurred since the Balance Sheet Date in the ordinary course of business that were not materially adverse;

(iii) Increased or established any reserve or accrual for taxes or other liability on its books or otherwise provided therefor, except (a) as disclosed on the Balance Sheet, or (b) as may have been required under generally accepted accounting principles due to income earned or expense accrued since the Balance Sheet Date and as disclosed to the Purchaser in writing;

267671.03

(iv) Mortgaged, pledged or subjected to any lien, charge or other encumbrance any of its assets, tangible or intangible;

(v) Sold or transferred any of its assets or cancelled any debts or claims or waived any rights, except in the ordinary course of business and which has not been materially adverse;

(vi) Disposed of or permitted to lapse any patents or trademarks or any patent or trademark applications material to the operation of its business;

(vii) Incurred any significant labor trouble or granted any general or uniform increase in salary or wages payable or to become payable by it to any director, officer, employee or agent, or by means of any bonus or pension plan, contract or other commitment increased the compensation of any director, officer, employee or agent;

	(viii)	Authorized any capital expenditure for real estate or
leasehold improvements,	machinery, equipment or molds in excess of $5,000.00 in the
aggregate;

	(ix)	Except for this Agreement, entered into any material
transaction;

	(x)	Issued any stocks, bonds, or other corporate securities, or

made any declaration or payment of any dividend or any distribution in respect of its capital stock; or

(xi) Experienced damage, destruction or loss (whether or not covered by insurance) individually or in the aggregate materially and adversely affecting any of its properties, assets or business, or experienced any other material adverse change or changes individually or in the aggregate affecting its financial condition, assets, liabilities or business.

4.24 Employee Benefit Plans .

(a) Schedule 4.24 lists a description of the only Employee Programs (as defined below) that have been maintained (as such term is further defined below) by the Company at any time during the five (5) years prior to the date hereof.

(b) There has not been any failure of any party to comply with any Laws applicable with respect to any Employee Program that has been maintained by the Company or any Subsidiary. With respect to any Employee Programs now or heretofore maintained by the Company, there has occurred no breach of any duty under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or other applicable law which could result, directly or indirectly in any taxes, penalties or other liability to the Purchaser, the Company or any affiliate (as defined below). No litigation, arbitration, or governmental administrative proceeding (or investigation) or other proceeding (other than those relating to routine claims for

267671.03

benefits) is pending or, to the knowledge of the Company or any Subsidiary or the Seller, threatened with respect to any such Employee Program.

(c) Except as set forth in Schedule 4.24 attached hereto, neither the Company nor any affiliate has ever (i) provided health care or any other non-pension benefits to any employees after their employment was terminated (other than as required by Part 6 of Subtitle B of Title I of ERISA) or has ever promised to provide such post-termination benefits or (ii) maintained an Employee Program provided to such employees subject to Title IV of ERISA, Section 401(a) or Section 412 of Code, including, without limitation, any Multiemployer Plan.

(d) For purposes of this Section 4.24:

(i) “Employee Program” means (A) all employee benefit plans within the meaning of ERISA Section 3(3), including, but not limited to, multiple employer welfare arrangements (within the meaning of ERISA Section 3(40)), plans to which more than one unaffiliated employer contributes and employee benefit plans (such as foreign or excess benefit plans) which are not subject to ERISA; and (B) all stock option plans, bonus or incentive award plans, severance pay policies or agreements, deferred compensation agreements, supplemental income arrangements, vacation plans, and all other employee benefit plans, agreements, and arrangements not described in (A) above. In the case of an Employee Program funded through an organization described in Code Section 501(c)(9), each reference to such Employee Program shall include a reference to such organization;

(ii) An entity “maintains” an Employee Program if such entity sponsors, contributes to, or provides (or has promised to provide) benefits under such Employee Program, or has any obligation (by agreement or under applicable law) to contribute to or provide benefits under such Employee Program, or if such Employee Program provides benefits to or otherwise covers employees of such entity (or their spouses, dependents, or beneficiaries);

(iii) An entity is an “affiliate” of the Company for purposes of this Section 3.24 if it would have ever been considered a single employer with the Company under ERISA Section 4001(b) or part of the same “controlled group” as the Company for purposes of ERISA Section 302(d)(8)(C); and

(iv) “Multiemployer Plan” means a (pension or non-pension) employee benefit plan to which more than one employer contributes and which is maintained pursuant to one or more collective bargaining agreements.

4.25 Product Warranties and Product Liabilities . Neither the Company nor any Subsidiary has any products or product warranties and return policies in effect on the date hereof. There are no product liability claims that are currently either pending or, to the best of the Seller’s, the Company’s knowledge or any Subsidiary’s knowledge, threatened against the Company or any Subsidiary. The Company has not paid in the aggregate, or allowed as credits against purchases, or received claims for more than one percent (1%) per year of gross sales, as determined in accordance with GAAP consistently applied, during the past three years pursuant to obligations under any warranty or any product liability claim with respect to goods manufactured, assembled or furnished by the Company. The future cost of performing all such

267671.03

obligations and paying all such product liability claims with respect to goods manufactured, assembled or furnished prior to the Closing Date will not exceed the average annual cost thereof for said past three year period.

4.26 Assets . The assets of the Company and any Subsidiary are located at the locations listed on Schedule 4.26 attached hereto. Except as described in Schedule 4.26, the assets of the Company and the Subsidiaries are, and together with the additional assets to be acquired or otherwise received by the Company or any Subsidiary prior to the Closing, will at the Closing Date be, sufficient in all material respects to carry on the operations of the Business as now conducted by the Company or any Subsidiary. The Company and the Subsidiaries are the only business organizations through which the Business is conducted. Except as set forth in Schedule 4.16 or Schedule 4.26, all assets used by the Company and the Subsidiaries to conduct the Business are, and will on the Closing Date be, owned by the Company or the applicable Subsidiary.

4.27 Absence of Certain Commercial Practices . Neither the Company, nor any of its Subsidiaries, nor to the knowledge of the Company, any director, officer, agent, employee or other person acting on behalf of the Company or any of its Subsidiaries, nor the Seller has (i) made any payment (directly or by secret commissions, discounts, compensation or other payments) or (ii) given any gifts to another business concern, to an agent or employee of another business concern or of any governmental entity (domestic or foreign) or to a political party or candidate for political office (domestic or foreign), to obtain or retain business for the Company or any of its Subsidiaries or to receive favorable or preferential treatment, except for gifts and entertainment given to representatives of customers or potential customers of sufficiently limited value and in a form (other than cash) that would not be construed as a bribe or payoff, or (iii) otherwise been in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended.

4.28 Licenses, Permits, Consents and Approvals . The Company has, and at the Closing Date will have, all licenses, permits or other authorizations of governmental, regulatory or administrative agencies or authorities (collectively, “Licenses”), including but not limited to the Prospecting Licenses issued by the Republic of Botswana (the “Prospecting Licenses”), required to conduct the Business. All Licenses of the Company are listed on Schedule 4.28 hereto. With respect to the Prospecting Licenses: (i) each license is in good standing and is not subject to any pending default or uncured deficiency; (ii) except as disclosed in the audited Financial Statements, all required annual payments to maintain each license have been paid; (iii) all annual minimum expenditure requirements and annual minimum prospecting program obligations with respect to each license have been satisfied and (iv) each license entitles the Purchaser to a net revenue interest of no less than eighty seven percent in all coalbed methane produced therefrom. At the Closing, the Company will have all such Licenses which are material to the conduct of the Business and will have renewed all Licenses which would have expired in the interim. Except as listed in Schedule 4.28, no registration, filing, application, notice, transfer, consent, approval, order, qualification, waiver or other action of any kind (collectively, a “Filing”) will be required as a result of the sale of the Shares by the Seller in accordance with this Agreement (a) to avoid the loss of any License or the violation, breach or termination of, or any default under, or the creation of any lien on any asset of the Company pursuant to the terms of, any law, regulation, order or other requirement or any contract binding

267671.03

upon the Company or to which any such asset may be subject, or (b) to enable Purchaser (directly or through any designee) to continue the operation of the Company and the Business substantially as conducted prior to the Closing Date. All such Filings will be duly filed, given, obtained or taken on or prior to the Closing Date and will be in full force and effect on the Closing Date.

4.29 Environmental Matters . Except as set forth on Schedule 4.29 hereto:

(a) The operations of the Company are in compliance with all applicable Laws promulgated by any governmental entity which prohibit, regulate or control any hazardous material or any hazardous material activity (“Environmental Laws”) and all permits issued pursuant to Environmental Laws or otherwise except for where noncompliance or the absence of such permits would not, individually or in the aggregate, have a Material Adverse Effect (defined as follows);

(i) For purposes of this Agreement, “Material Adverse Effect” shall mean, with respect to any party, any material adverse effect on, or any change, event, occurrence or state of facts materially adverse to, (i) the Business, properties, assets, liabilities (contingent or otherwise), results of operations or condition of the Company and its Subsidiaries taken as a whole, or (ii) such party’s ability to, in a timely manner, perform its obligations under this Agreement;

(b) The Company has obtained all permits required under all applicable Environmental Laws necessary to operate its business;

(c) The Company is not the subject of any outstanding written order or contract with any Governmental Body or person respecting Environmental Laws or any violation or potential violations thereof; and,

(d) The Company has not received any written communication alleging either or both that the Company may be in violation of any Environmental Law, or any permit issued pursuant to Environmental Law, or may have any liability under any Environmental Law.

4.30 Broker . Neither the Company nor the Subsidiaries nor the Seller has retained any broker in connection with any transaction contemplated by this Agreement. Purchaser and the Company shall not be obligated to pay any fee or commission associated with the retention or engagement by the Company or the Seller of any broker in connection with any transaction contemplated by this Agreement.

4.31 Related Party Transactions . Except as described in Schedule 4.31, all transactions during the past five years between the Company and any current or former shareholder or any entity in which the Company or any current or former shareholder had or has a direct or indirect interest have been fair to the Company as determined by the Board of Directors. No portion of the sales or other on-going business relationships of the Company is dependent upon the friendship or the personal relationships (other than those customary within business generally) of the Seller, except as described in Schedule 4.31. During the past five

267671.03

years, the Company has not forgiven or cancelled, without receiving full consideration, any indebtedness owing to it by the Seller.

4.32 Patriot Act . The Company and the Seller certify that neither the Company nor any of its Subsidiaries has been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. The Company and the Seller hereby acknowledge that the Purchaser seeks to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Company and the Seller hereby represent, warrant and agree that: (i) none of the cash or property that the Seller has contributed or paid or will contribute and pay to the Company has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by the Company or any of its Subsidiaries to the Purchaser, to the extent that they are within the Company’s and/or its Subsidiaries’ control shall cause the Purchaser to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Seller shall promptly notify the Purchaser if any of these representations ceases to be true and accurate regarding the Seller, the Company or any of its Subsidiaries. The Seller agree to provide the Purchaser any additional information regarding the Company or any of its Subsidiaries that the Purchaser reasonably requests to ensure compliance with all applicable laws concerning money laundering and similar activities.

4.33 Investment Intent .

The Exchange Consideration is being acquired hereunder by the Seller for investment purposes only, for its own account, not as a nominee or agent and not with a view to the distribution thereof. The Seller has no present intention to sell or otherwise dispose of the Exchange Consideration and will not do so except in compliance with the provisions of the Securities Act of 1933, as amended (the “1933 Act”), and applicable law. The Seller understands that the Exchange Consideration acquired hereunder must be held by it indefinitely unless a subsequent disposition or transfer of any of said shares is registered under the 1933 Act, or is exempt from registration therefrom. The Seller further understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to the Seller) promulgated under the Securities Act of 1933, as amended, depends on the satisfaction of various conditions, and that, if and when applicable, Rule 144 may afford the basis for sales only in limited amounts.

4.34 Investment Experience; Suitability . The Seller is a sophisticated investor familiar with the type of risks inherent in the acquisition of securities such as the shares of the Purchaser and the Seller’s financial position is such that the Seller can afford to retain the Exchange Consideration for an indefinite period of time without realizing any direct or indirect cash return on its investment.

4.35 Accredited Investor Status . The Seller is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D and the Seller shall submit to the Purchaser such additional information as may be reasonably requested by the Purchaser to establish the Seller’s status as such.

267671.03

4.36 Reliance on Exemptions . The Seller understands that shares of Purchaser’s common stock comprising the Exchange Consideration is being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Purchaser is relying in part upon the truth and accuracy of, and the Seller’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Seller set forth herein in order to determine the availability of such exemptions and the eligibility of the Seller to acquire the Exchange Consideration.

4.37 Legends . The Seller understands that the certificates or other instruments representing the Exchange Consideration, shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

4.38 Disclosure . All statements contained in any schedule, certificate, opinion, instrument, or other document delivered by or on behalf of the Seller or the Company pursuant hereto or in connection with the transactions contemplated hereby shall be deemed representations and warranties by the Seller and the Company herein. No statement, representation or warranty by the Seller or the Company in this Agreement or in any schedule, certificate, opinion, instrument, or other document furnished or to be furnished to the Purchaser pursuant hereto or in connection with the transactions contemplated hereby contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading or necessary in order to provide a prospective purchaser of the business of the Company with full and fair disclosure concerning the Company, the Business, and the Company’s affairs.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

5.1 Organization and Good Standing .

The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado.

267671.03

5.2	Authority .

	(a) The execution and delivery of this Agreement and the

consummation of the transactions contemplated herein have been, or will prior to Closing be, duly and validly approved and acknowledged by all necessary corporate action on the part of the Purchaser.

(b) The execution of this Agreement and the delivery hereof to the Seller and the purchase contemplated herein have been, or will be prior to Closing, duly authorized by the Purchaser’s Board of Directors having full power and authority to authorize such actions.

5.3 Conflicts; Consents of Third Parties .

(a) The execution and delivery of this Agreement, the acquisition of the Shares by Purchaser and the consummation of the transactions herein contemplated, and the compliance with the provisions and terms of this Agreement, are not prohibited by the Articles of Incorporation or Bylaws of the Purchaser and will not violate, conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any court order, indenture, mortgage, loan agreement, or other agreement or instrument to which the Purchaser is a party or by which it is bound.

(b) No consent, waiver, approval, order, permit or authorization of, or declaration or filing with, or notification to, any person or governmental body is required on the part of the Purchaser in connection with the execution and delivery of this Agreement or the Purchaser Documents or the compliance by Purchaser with any of the provisions hereof or thereof.

5.4 Litigation .

There are no Legal Proceedings pending or, to the best knowledge of the Purchaser, threatened that are reasonably likely to prohibit or restrain the ability of the Purchaser to enter into this Agreement or consummate the transactions contemplated hereby.

5.5 Investment Intention .

The Purchaser is acquiring the Shares for its own account, for investment purposes only and not with a view to the distribution (as such term is used in Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act") thereof. Purchaser understands that the Shares have not been registered under the Securities Act and cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.

5.6 Due Authorization of Exchange Consideration .

The Exchange Consideration when delivered to the Seller shall be validly issued and outstanding as fully paid and non-assessable, free and clear of any liens, pledges, encumbrances, charges, agreements, options, claims or other arrangements or restrictions of any kind.

267671.03

5.7 Broker .

The Purchaser has not retained any broker in connection with any transaction contemplated by this Agreement. The Seller shall not be obligated to pay any fee or commission associated with the retention or engagement by the Purchaser of any broker in connection with any transaction contemplated by this Agreement.

5.8 Patriot Act .

The Purchaser certifies that neither the Purchaser nor any of its subsidiaries has been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. The Purchaser hereby acknowledges that the Company and the Seller seek to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Purchaser hereby represents, warrants and agrees that: (i) none of the cash or property that the Purchasers have contributed or paid or will contribute and pay to the Seller has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by the Purchaser or any of its subsidiaries to the Seller, to the extent that they are within the Purchaser’s control shall cause the Seller or the Company to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Purchaser shall promptly notify the Seller if any of these representations ceases to be true and accurate regarding the Purchaser or any of its subsidiaries. The Purchaser agrees to provide the Seller any additional information regarding the Purchaser or any of its subsidiaries that the Seller reasonably requests to ensure compliance with all applicable laws concerning money laundering and similar activities.

5.9 Tax Matters .

(a) Neither the Purchaser nor any of its Affiliates has taken or agreed to take any action (other than actions contemplated by this Agreement) that could reasonably be expected to prevent the Exchange from constituting a reorganization under Section 368(a)(1)(B) of the Code, and the Purchaser is not aware of any agreement, plan or other circumstance that could reasonably be expected to prevent the Exchange from so qualifying, including any plan or intention to liquidate the Company for federal tax purposes or reacquire any of the Exchange Consideration.

(b) The Purchaser does not plan or intend to sell or otherwise dispose of any of the Shares, or take any action or cause the Company to take any action, that would result in the Purchaser not being in control of the Company after the Exchange, as required by Section 368(a)(1)(B) of the Code.

(c) The Purchaser does not own, directly or indirectly, any shares of the Company, nor has the Purchaser owned any such shares during the preceding five years.

(d) The Purchaser does not plan or intend to acquire additional shares of the Company other than the Shares.

267671.03

(e) The Purchaser is not an investment company within the meaning of Section 368(a)(2)(F) of the Code.

267671.03

ARTICLE VI
COVENANTS

6.1 Access to Information .

The Seller and the Company agree that, prior to the Closing Date, the Purchaser shall be entitled, through its officers, employees and representatives (including, without limitation, its legal advisors and accountants), to make such investigation of the properties, businesses and operations of the Company and its Subsidiaries and such examination of the books, records and financial condition of the Company and its Subsidiaries as it reasonably requests and to make extracts and copies of such books and records. Any such investigation and examination shall be conducted during regular business hours and under reasonable circumstances, and the Seller shall cooperate, and shall cause the Company and its Subsidiaries to cooperate, fully therein. No investigation by the Purchaser prior to or after the date of this Agreement shall diminish or obviate any of the representations, warranties, covenants or agreements of the Seller contained in this Agreement. In order that the Purchaser may have full opportunity to make such physical, business, accounting and legal review, examination or investigation as it may reasonably request of the affairs of the Company and its Subsidiaries, the Seller shall cause the officers, employees, consultants, agents, accountants, attorneys and other representatives of the Company and its Subsidiaries to cooperate fully with such representatives in connection with such review and examination.

6.2 Conduct of the Business Pending the Closing .

(a) Except as otherwise expressly contemplated by this Agreement or with the prior written consent of the Purchaser, the Seller shall, and shall cause the Company and the Subsidiaries to:

(i) Conduct the Business only in the ordinary course consistent

with past practice;

(ii) Use its best efforts to (A) preserve its present business operations, organization (including, without limitation, management and the sales force) and goodwill of the Company and the Subsidiaries and (B) preserve its present relationship with Persons having business dealings with the Company and the Subsidiaries;

(iii) Maintain (A) all of the assets and properties of the Company in their current condition, ordinary wear and tear excepted and (B) insurance upon all of the properties and assets of the Company in such amounts and of such kinds com-parable to that in effect on the date of this Agreement;

(iv) (A) maintain the books, accounts and records of the Company in the ordinary course of business consistent with past practices, (B) continue to collect accounts receivable and pay accounts payable utilizing normal procedures and without discounting or accelerating payment of such accounts, and (C) comply with all contractual and other obligations applicable to the operation of the Company; and

(v) Comply in all material respects with applicable Laws.

267671.03

(b) Except as otherwise expressly contemplated by this Agreement or with the prior written consent of the Purchaser, the Seller shall not, and shall cause the Company and the Subsidiaries not to:

(i) Declare, set aside, make or pay any dividend or other distribution in respect of the capital stock of the Company or the Subsidiaries or repurchase, redeem or otherwise acquire any outstanding shares of the capital stock or other securities of, or other ownership interests in, the Company or the Subsidiaries;

(ii) Transfer, issue, sell or dispose of any shares of capital stock or other securities of the Company or the Subsidiaries or grant options, warrants, calls or other rights to purchase or otherwise acquire shares of the capital stock or other securities of the Company or the Subsidiaries;

(iii) Effect any recapitalization, reclassification, stock split or like change in the capitalization of the Company of the Subsidiaries;

(iv) Amend the applicable organization documents of the the Company and the Subsidiaries;

(v) (A) materially increase the annual level of compensation of any employee of the Company or a Subsidiary, (B) increase the annual level of compensation payable or to become payable by the Company to any of its executive officers, (C) grant any unusual or extraordinary bonus, benefit or other direct or indirect compensation to any employee, director or consultant, (D) increase the coverage or benefits available under any (or create any new) severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan or arrangement made to, for, or with any of the directors, officers, employees, agents or representatives of the Company or otherwise modify or amend or terminate any such plan or arrangement or (E) enter into any employment, deferred compensation, severance, consulting, non-competition or similar agreement (or amend any such agreement) to which the Company is a party or involving a director, officer or employee of the Company in his or her capacity as a director, officer or employee of the Company;

(vi) Except for trade payables and for indebtedness for borrowed money incurred in the ordinary course of business and consistent with past practice, borrow monies for any reason or draw down on any line of credit or debt obligation, or become the guarantor, surety, endorser or otherwise liable for any debt, obligation or liability (contingent or otherwise) of any other Person, or change the terms of payables or receivables;

(vii) Subject to any Lien (except for leases that do not materially impair the use of the property subject thereto in their respective businesses as presently conducted), any of the properties or assets (whether tangible or intangible) of the Company;

267671.03

Company except, with respect to the items listed on Schedule 6.2(b)(viii) hereto, as previously consented to by the Purchaser;

(ix) Cancel or compromise any debt or claim or waive or release any material right of the Company except in the ordinary course of business consistent with past practice;

(x) Enter into any commitment for capital expenditures out of

the ordinary course;

(xi) Permit the Company to enter into any transaction or to make or enter into any contract which by reason of its size or otherwise is not in the ordinary course of business consistent with past practice;

(xii) Permit the Company to enter into or agree to enter into any merger or consolidation with, any corporation or other entity, and not engage in any new business or invest in, make a loan, advance or capital contribution to, or otherwise acquire the securities of any other Person;

(xiii) Except for transfers of cash pursuant to normal cash management practices, permit the Company to make any investments in or loans to, or pay any fees or expenses to, or enter into or modify any contract with, the Seller or any Affiliate of the Seller; or

(xiv) Agree to do anything prohibited by this Section 6.2 or anything which would make any of the representations and warranties of the Seller in this Agreement untrue or incorrect in any material respect as of any time through and including the Closing.

6.3 Consents .

The Seller shall use its best efforts, and the Purchaser shall cooperate with the Seller, to obtain at the earliest practicable date all consents and approvals required to consummate the transactions contemplated by this Agreement, including, without limitation, the consents and approvals referred to in Section 4.7 hereof; provided, however, that neither the Seller nor the Purchaser shall be obligated to pay any consideration therefor to any third party from whom consent or approval is requested.

6.4 Other Actions .

Each of the Seller and the Purchaser shall use its best efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.

6.5 No Solicitation .

267671.03

The Seller will not, and will not cause or permit the Company or any of the Company's directors, officers, employees, representatives or agents (collectively, the "Representatives") to, directly or indirectly, (i) discuss, negotiate, undertake, authorize, recommend, propose or enter into, either as the proposed surviving, merged, acquiring or acquired corporation, any transaction involving a merger, consolidation, business combination, purchase or disposition of any amount of the assets or capital stock or other equity interest in the Company other than the transactions contemplated by this Agreement (an "Acquisition Transaction"), (ii) facilitate, encourage, solicit or initiate discussions, negotiations or submissions of proposals or offers in respect of an Acquisition Transaction, (iii) furnish or cause to be furnished, to any Person, any information concerning the business, operations, properties or assets of the Company in connection with an Acquisition Transaction, or (iv) otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to do or seek any of the foregoing. The Seller will inform the Purchaser in writing immediately following the receipt by the Seller, the Company or any Representative of any proposal or inquiry in respect of any Acquisition Transaction.

6.6 Preservation of Records .

The Seller and the Purchaser agree that each of them shall preserve and keep the records held by it relating to the business of the Company and the Subsidiaries for a period of three years from the Closing Date and shall make such records and personnel available to the other as may be reasonably required by such party in connection with, among other things, any insurance claims by, legal proceedings against or governmental investigations of the Seller or the Purchaser or any of their Affiliates or in order to enable the Seller or the Purchaser to comply with their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby or thereby.

6.7 Publicity .

Neither the Seller nor the Purchaser shall issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other party hereto, which approval will not be unreasonably withheld or delayed, unless, in the sole judgment of the Purchaser or the Seller, disclosure is otherwise required by applicable Law or by the applicable rules of any stock exchange on which the Purchaser lists securities, provided that, to the extent required by applicable law, the party intending to make such release shall use its best efforts consistent with such applicable law to consult with the other party with respect to the text thereof.

6.8 Use of Name .

The Seller hereby agrees that upon the consummation of the transactions contemplated hereby, the Purchaser and the Company shall have the sole right to the use of the names "Nyati Mauritius Limited" and "Nyati Resources Limited" and the Seller shall not, and shall not cause or permit any Affiliate to, use such name or any variation or simulation thereof.

267671.03

6.9 Financial Statements .

The Seller shall cooperate with the Purchaser to provide all information required for the completion of audited financial statements of the Company to be prepared and delivered as of the Closing Date.

6.10 Tax Election .

Neither the Purchaser nor any of its Affiliates shall cause the Company or any of its Affiliates, including Nyati Resources Limited, a Mauritius private company limited by shares and wholly owned by the Company (“Nyati Resources”), and Nyati Resources Botswana (PTY) Limited, a Botswana private limited liability company 50%-owned by Nyati Resources, to affirmatively elect to be classified as a partnership or disregarded entity for U.S. federal tax purposes. For purposes of clarification, any deemed classification or recharacterization as a partnership or disregarded entity for U.S. federal tax purposes: (i) resulting from any act or omission of the Seller on or prior to the Closing; or (ii) resulting from the execution or closing of the transactions contemplated herein, shall not be an affirmative election or act of the Purchaser or any of its Affiliates for purposes of this section.

6.11 Tax Matters .

(a) Tax Periods Ending on or Before the Closing Date . The Seller shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company for all periods ending on or prior to the Closing Date which are to be filed after the Closing Date as soon as practicable and prior to the date due (including any proper extensions thereof). The Seller shall permit the Company and the Purchaser to review and provide comments, if any, on each such Return described in the preceding sentence prior to filing. Unless the Purchaser or the Company provides comments to the Seller, the Company shall deliver to the Seller each such Return signed by the appropriate officer(s) of the Company for filing within ten (10) days following the Seller’s delivery to the Company and the Purchaser of any such Return. The Seller shall deliver to the Company promptly after filing each such Return a copy of the filed Return and evidence of its filing. The Seller shall pay the costs and expenses incurred in the preparation and filing of the Tax Returns on or before the date such costs and expenses are due.

If the Company provides comments to the Seller and at the end of such ten (10) day period the Company and the Seller have failed to reach written agreement with respect to all of such disputed items, the parties shall submit the unresolved items to arbitration for final determination. Promptly, but no later than thirty (30) days after its acceptance of its appointment as arbitrator, the arbitrator shall render an opinion as to the disputed items. The determination of the arbitrator shall be conclusive and binding upon the parties. The Company and the Seller shall each pay one half of the fees, costs and expenses of the arbitrator. The prevailing party may be entitled to an award of pre- and post-award interest as well as reasonable attorneys’ fees incurred in connection with the arbitration and any judicial proceedings related thereto as determined by the arbitrator.

(b) Tax Periods Beginning Before and Ending After the Closing Date . The Company or the Purchaser shall prepare or cause to be prepared and file or cause to be filed any

267671.03

Returns of the Company for Tax periods that begin before the Closing Date and end after the Closing Date. To the extent such Taxes are not fully reserved for in the Company’s Financial Statements, as adjusted for the passage of time through the Closing Date in accordance with the Company’s past custom and practice, the Seller shall pay to the Company an amount equal to the unreserved portion of such Taxes that relates to the portion of the Tax period ending on the Closing Date. Such payment, if any, shall be paid by the Seller within fifteen (15) days after receipt of written notice from the Company or the Purchaser that such Taxes were paid by the Company or the Purchaser for a period beginning prior to the Closing Date. For purposes of this Section, in the case of any Taxes that are imposed on a periodic basis and are payable for a Taxable period that includes (but does not end on) the Closing Date, the portion of such Tax that relates to the portion of such Tax period ending on the Closing Date shall (i) in the case of any Taxes other than Taxes based upon or related to income or receipts, be deemed to be the amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the Tax period ending on the Closing Date and the denominator of which is the number of days in the entire Tax period (the “Pro Rata Amount”), and (ii) in the case of any Tax based upon or related to income or receipts, be deemed equal to the amount that would be payable if the relevant Tax period ended on the Closing Date. The Seller shall pay to the Company with the payment of any taxes due hereunder, the Seller’s Pro Rata Amount of the costs and expenses incurred by the Purchaser or the Company in the preparation and filing of the Tax Returns. Any net operating losses or credits relating to a Tax period that begins before and ends after the Closing Date shall be taken into account as though the relevant Tax period ended on the Closing Date. All determinations necessary to give effect to the foregoing allocations shall be made in a reasonable manner as agreed to by the parties.

(c) Refunds and Tax Benefits . Any Tax refunds related to the Company that are received after the Closing Date by the Seller (other than tax refunds received in connection with the Seller’s individual tax Returns), the Purchaser or the Company, and any amounts credited against Tax to which the Seller, the Purchaser or the Company become entitled, shall be for the account of the Company, and the Seller shall pay over to the Company any such refund or the amount of any such credit within fifteen (15) days after receipt or entitlement thereto. In addition, to the extent that a claim for refund or a proceeding results in a payment or credit against Tax by a taxing authority to the Seller, the Seller shall pay such amount to the Company within fifteen (15) days after receipt or entitlement thereto.

(d)	Cooperation on Tax Matters .

	(i) The Purchaser, the Company and the Seller shall cooperate

fully, as and to the extent reasonably requested by the other party, in connection with the filing of any Returns pursuant to this Section and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Company and the Seller agrees (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Purchaser or the Seller, any extensions thereof) of the respective tax periods, and to abide by all record retention agreements entered into

267671.03

with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Seller, as the case may be, shall allow the other party to take possession of such books and records.

(ii) The Purchaser and the Seller further agree, upon request, to use their commercially reasonable best efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).

(iii) After the Exchange, the Purchaser shall cause the Company to continue its historic business or to use a significant portion of its historic business assets in a business within the meaning of Treas. Reg. Section 1.368 -1(d), assuming that the assets of, and the business conducted by, the Company on the Closing Date constitute the Company’s historic business assets and historic business, respectively.

(iv) The Purchaser and the Seller further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to §6043 of the Code and all Treasury Department Regulations promulgated thereunder. Notwithstanding the foregoing, the Purchaser has no plan or intention to liquidate the Company for U.S. federal tax purposes.

(v) Each party shall pay its respective expenses, if any, incurred in connection with the transaction contemplated hereunder.

(vi) Each party shall report the Exchange as a tax-deferred reorganization under Section 368(a)(1)(B) for all applicable U.S. federal tax purposes.

(vii) From and after the date of this Agreement, each party hereto shall use its best efforts to cause the Exchange to qualify, and shall not take any actions or cause any actions to be taken that could reasonably be expected to prevent the Exchange from qualifying, as a reorganization under Section 368(a)(1)(B) of the Code.

6.12 Additional Compensation . In the event that subsequent to the Closing Date, Seller or any agent or employee of Seller shall find, acquire or purchase any properties that Purchaser shall subsequently acquire from Seller (the “Acquired Properties”), Purchaser shall pay to Seller an overriding royalty interest in the Acquired Properties equal to ten percent (10%).

6.13 Expenses . No later than ninety days after the Closing, the Purchaser shall reimburse Seller for expenses incurred by it in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”), including, without limitation, attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Documents, as well as all fees and expenses

267671.03

incurred by Seller on behalf of the Company from January 1, 2007 until the Closing Date hereof, which expenses shall not exceed $250,000.

ARTICLE VII
CONDITIONS TO CLOSING

7.1 Conditions Precedent to Obligations of Purchaser .

The obligation of the Purchaser to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Purchaser in whole or in part to the extent permitted by applicable law):

(a) all representations and warranties of the Seller contained herein shall be true and correct as of the date hereof;

(b) all representations and warranties of the Seller contained herein qualified as to materiality shall be true and correct, and the representations and warranties of the Seller contained herein not qualified as to materiality shall be true and correct in all material respects, at and as of the Closing Date with the same effect as though those representations and warranties had been made again at and as of that time;

(c) the Seller shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing Date;

(d) the Purchaser shall have been furnished with certificates (dated the Closing Date and in form and substance reasonably satisfactory to the Purchaser) executed by the Seller certifying as to the fulfillment of the conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof;

(e) Certificates representing the Shares shall have been, or shall at the Closing be, validly delivered and transferred to the Purchaser, free and clear of any and all Liens;

(f) there shall not have been or occurred any material adverse change to the Company, any Subsidiary or the Business;

(g) the Seller shall have obtained all consents and waivers referred to in Section 4.7 hereof, in a form reasonably satisfactory to the Purchaser, with respect to the transactions contemplated by this Agreement;

(h) no Legal Proceedings shall have been instituted or threatened or claim or demand made against the Seller, the Company, or the Purchaser seeking to restrain or prohibit or to obtain substantial damages with respect to the consummation of the transactions contemplated hereby, and there shall not be in effect any order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

267671.03

(i) the Purchaser shall have received the written resignation of each officer and director of the Company; and

(j) the Purchaser shall have received the audited financial statements of the Company, in form and scope required for SEC reporting purposes.

7.2 Conditions Precedent to Obligations of the Seller .

The obligations of the Seller to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by the Seller in whole or in part to the extent permitted by applicable law):

(a) all representations and warranties of the Purchaser contained herein shall be true and correct as of the date hereof;

(b) all representations and warranties of the Purchaser contained herein qualified as to materiality shall be true and correct, and all representations and warranties of the Purchaser contained herein not qualified as to materiality shall be true and correct in all material respects, at and as of the Closing Date with the same effect as though those representations and warranties had been made again at and as of that date;

(c) the Purchaser shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date;

(d) the Seller shall have been furnished with certificates (dated the Closing Date and in form and substance reasonably satisfactory to the Seller) executed by the Chief Executive Officer and Chief Financial Officer of the Purchaser certifying as to the fulfillment of the conditions specified in Sections 7.2(a), 7.2(b) and 7.2(c);

(e) no Legal Proceedings shall have been instituted or threatened or claim or demand made against the Seller, the Company, or the Purchaser seeking to restrain or prohibit or to obtain substantial damages with respect to the consummation of the transactions contemplated hereby, and there shall not be in effect any order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

(f) appropriate actions shall have been taken to remove the Seller from any personal guarantees provided on behalf of the Company or indemnification shall have been provided for such guarantees which is acceptable in the sole discretion of the Seller.

267671.03

ARTICLE VIII
DOCUMENTS TO BE DELIVERED

8.1 Documents to be Delivered by the Seller .

At the Closing, the Seller shall deliver, or cause to be delivered, to the Purchaser the following:

(a) stock certificates representing the Shares, duly endorsed in blank or accompanied by stock transfer powers and with all requisite stock transfer tax stamps attached;

(b) the certificates referred to in Section 7.1(d) and 7.1(e) hereof; (c) copies of all consents and waivers referred to in Section 7.1(g) hereof; (d) written resignation of each officer and director of the Company;

(d) Written resignation of each officer and director of the company

(e) certificate of good standing with respect to (i) the Company and Nyati Resources issued by the Registrar of Companies of the Republic of Mauritius and (ii) Nyati Botswana issued by the secretary of Nyati Botswana; and

(f) such other documents as the Purchaser shall reasonably request.

8.2 Documents to be Delivered by the Purchaser .

At the Closing, the Purchaser shall deliver to the Seller the following:

(a)	The Exchange Consideration;

(b)	the certificates referred to in Section 7.2(d) hereof;

(c)	such other documents as the Seller shall reasonably request.

ARTICLE IX
INDEMNIFICATION

9.1 Indemnification .

(a) Subject to Section 9.2 hereof, the Seller hereby agrees to indemnify and hold the Purchaser, the Company, the Subsidiaries, and their respective directors, officers, employees, Affiliates, agents, successors and assigns (collectively, the "Purchaser Indemnified Parties") harmless from and against:

(i) any and all liabilities of the Company or the Subsidiaries of every kind, nature and description, absolute or contingent, existing as against the Company or the Subsidiaries prior to and including the Closing Date or thereafter coming into being or arising by reason of any state of facts existing, or any transaction entered into, on or prior to the Closing Date, except to the extent that the same have been fully provided for in the Balance

267671.03

Sheet or disclosed in the notes thereto or were incurred in the ordinary course of business between the Balance Sheet date and the Closing Date;

(ii) subject to Section 10.3, any and all losses, liabilities, obligations, damages, costs and expenses based upon, attributable to or resulting from the failure of any representation or warranty of the Seller set forth in Section 4 hereof, or any representation or warranty contained in any certificate delivered by or on behalf of the Seller pursuant to this Agreement, to be true and correct in all respects as of the date made;

(iii) any and all losses, liabilities, obligations, damages, costs and expenses based upon, attributable to or resulting from the breach of any covenant or other agreement on the part of the Seller under this Agreement;

(iv) any and all notices, actions, suits, proceedings, claims, demands, assessments, judgments, costs, penalties and expenses, including reasonable attorneys' and other reasonable professionals' fees and disbursements (collectively, "Expenses") incident to any and all losses, liabilities, obligations, damages, costs and expenses with respect to which indemnification is provided hereunder (collectively, "Losses").

(b) Subject to Section 9.2, Purchaser hereby agrees to indemnify and hold the Seller and its respective Affiliates, agents, successors and assigns (collectively, the "Seller Indemnified Parties") harmless from and against:

(i) any and all Losses based upon, attributable to or resulting from the failure of any representation or warranty of the Purchaser set forth in Section 5 hereof, or any representation or warranty contained in any certificate delivered by or on behalf of the Purchaser pursuant to this Agreement, to be true and correct as of the date made;

(ii) any and all Losses based upon, attributable to or resulting from the breach of any covenant or other agreement on the part of the Purchaser under this Agreement or arising from the ownership or operation of the Company from and after the Closing Date; and

(iii) any and all Expenses incident to the foregoing.

9.2 Limitations on Indemnification for Breaches of Representations and

Warranties .

An indemnifying party shall not have any liability under Section 9.1(a)(ii) or Section 9.1(b)(i) hereof unless the aggregate amount of Losses and Expenses to the indemnified parties that arise thereunder based upon, attributable to or resulting from the failure of any representation or warranty to be true and correct, other than the representations and warranties set forth in Sections 4.3, 4.11, 4.24 and 4.29 hereof, exceeds $5,000 (the “Basket”) and, in such event, the indemnifying party shall be required to pay the entire amount of such Losses and Expenses in excess of $5,000 (the “Deductible”).

9.3 Indemnification Procedures .

267671.03

(a) In the event that any Legal Proceedings shall be instituted or that any claim or demand ("Claim") shall be asserted by any Person in respect of which payment may be sought under Section 9.1 hereof (regardless of the Basket or the Deductible referred to above), the indemnified party shall reasonably and promptly cause written notice of the assertion of any Claim of which it has knowledge which is covered by this indemnity to be forwarded to the indemnifying party. The indemnifying party shall have the right, at its sole option and expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnified party, and to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder. If the indemnifying party elects to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder, it shall within five (5) days (or sooner, if the nature of the Claim so requires) notify the indemnified party of its intent to do so. If the indemnifying party elects not to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder, fails to notify the indemnified party of its election as herein provided or contests its obligation to indemnify the indemnified party for such Losses under this Agreement, the indemnified party may defend against, negotiate, settle or otherwise deal with such Claim. If the indemnified party defends any Claim, then, subject to the last sentence of 9. 3(b), the indemnifying party shall reimburse the indemnified party for the Expenses of defending such Claim upon submission of periodic bills. If the indemnifying party shall assume the defense of any Claim, the indemnified party may participate, at his or its own expense, in the defense of such Claim; provided, however, that such indemnified party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying party if, (i) so requested by the indemnifying party to participate or (ii) in the reasonable opinion of counsel to the indemnified party, a conflict or potential conflict exists between the indemnified party and the indemnifying party that would make such separate representation advisable; and provided, further, that the indemnifying party shall not be required to pay for more than one such counsel for all indemnified parties in connection with any Claim. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Claim.

(i) For purposes of this Agreement, “Person” shall mean any natural person, corporation, business trust, joint venture, association, company, firm, partnership or other entity or government or Governmental Body.

(b) After any final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified party and the indemnifying party shall have arrived at a mutually binding agreement with respect to a Claim hereunder, the indemnified party shall forward to the indemnifying party notice of any sums due and owing by the indemnifying party pursuant to this Agreement with respect to such matter and the indemnifying party shall be required to pay all of the sums so due and owing to the indemnified party within 10 business days after the date of such notice. Notwithstanding anything to the contrary in this Agreement, any payments under this Article IX shall, if made by the Seller to the Purchaser, be made in immediately available funds and, if made by the Purchaser to the Seller, be made in shares of common stock of the Purchaser, with the per-share value of such stock determined based upon 75% on the weighted average of the stock’s closing price for the three trading days preceding the date of (a) submission of the

267671.03

periodic bill be paid, in the case of a payment under Section 9. 3(a), and (b) the notice described in the immediately preceding sentence, in the case of a payment under Section 9.3(b) .

(c) The failure of the indemnified party to give reasonably prompt notice of any Claim shall not release, waive or otherwise affect the indemnifying party's obligations with respect thereto except to the extent that the indemnifying party can demonstrate actual loss or that such failure materially prejudices the indemnifying party’s ability to defend against such Claims.

9.4 Tax Treatment of Indemnity Payments .

The Seller and the Purchaser shall treat any indemnity payment made pursuant to this Article 9 as an adjustment to the Exchange Consideration for federal, state, local and foreign income tax purposes, except to the extent otherwise required by law.

ARTICLE X
MISCELLANEOUS

10.1 Payment of Sales, Use or Similar Taxes .

All value added tax, goods and services tax, and sales, use, transfer, intangible, recordation, documentary stamp or similar Taxes or charges, of any nature whatsoever, applicable to, or resulting from, the transactions contemplated by this Agreement shall be borne by the Seller.

10.2 Survival of Representations and Warranties .

The parties hereto hereby agree that the representations and warranties contained in this Agreement or in any certificate, document or instrument delivered in connection herewith, shall survive the execution and delivery of this Agreement, and the Closing hereunder, regardless of any investigation made by the parties hereto; provided, however, that any claims or actions with respect thereto (other than claims for indemnifications with respect to the representation and warranties contained in Sections 4.3, 4.11, 4.24 and 4.36 which shall survive for periods coterminous with any applicable statutes of limitation) shall terminate unless within twenty-four (24) months after the Closing Date written notice of such claims is given to the Seller or such actions are commenced; provided, however, that the representations and warranties contained in Sections 4.1, 4.2 and 4.3 shall survive the Closing and remain in full force and effect without termination.

10.3 Expenses .

Except as otherwise provided in this Agreement, the Seller and the Purchaser shall each bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby, it being understood that in no event shall the Company bear any of such costs and expenses.

10.4 Specific Performance .

267671.03

The Seller acknowledges and agrees that the breach of this Agreement would cause irreparable damage to the Purchaser and that the Purchaser will not have an adequate remedy at law. Therefore, the obligations of the Seller under this Agreement, including, without limitation, the Seller’s obligation to sell the Shares to the Purchaser, shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise.

10.5 Further Assurances .

The Seller and the Purchaser each agrees to execute and deliver such other documents or agreements and to take such other action as may be reasonably necessary or desirable for the implementation of this Agreement and the consummation of the transactions contemplated hereby.

10.6 Submission to Jurisdiction; Consent to Service of Process; Attorney’s

Fees .

(a) The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Colorado over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action proceeding related thereto may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b) Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by the mailing of a copy thereof in accordance with the provisions of Section 10.10.

(c) If any legal action or any arbitration or other proceeding is brought for the enforcement or interpretation of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with or related to this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys' fees and other costs in connection with that action or proceeding, in addition to any other relief to which it or they may be entitled.

10.7 Entire Agreement; Amendments and Waivers .

This Agreement (including the schedules and exhibits hereto) represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought. No action taken pursuant to this Agreement, including without limitation, any

investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

10.8 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado.

10.9 Table of Contents and Headings .

The table of contents and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

10.10 Notices .

All notices and other communications under this Agreement shall be in writing and shall be deemed given when delivered personally or mailed by certified mail, return receipt requested, to the parties (and shall also be transmitted by facsimile to the Persons receiving copies thereof) at the following addresses (or to such other address as a party may have specified by notice given to the other party pursuant to this provision):

(a) Purchaser:

Zulu Energy Corp.
P.O. Box 6565
1745 Meadowlark Ln.
Sheridan, WY 82801
Attn: Paul Stroud, Chief Executive Officer
Phone: (307) 673-4322
Facsimile:

Copy to:

Robert Bearman, Esq.
Patton Boggs LLP
1801 California Street, Suite 4900
Denver, Colorado 80202
Phone: (303) 830-1776
Facsimile: (303) 894-9239

(b) Seller and Company:
NYATI Mauritius Limited

267671.03

c/o Nerine Trust Company
PO Box 434,
Nerine House,
St George's Place
St. Peter Port
Guernsey, GY1 3ZG
Channel Islands
Attn: Phil Lockett, Esq., Executive Director
Phone: +441481701300
Facsimile: +441481711224

Copy to:

Marc A. Ross, Esq.
Sichenzia Ross Friedman Ference LLP
61 Broadway
New York, New York 10006
Phone: (212) 930-9700
Facsimile: (212) 930-9725

10.11 Severability .

If any provision of this Agreement is invalid or unenforceable, the balance of this Agreement shall remain in effect.

10.12 Binding Effect; Assignment .

This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a party to this Agreement except as provided below. No assignment of this Agreement or of any rights or obligations hereunder may be made by either the Seller or the Purchaser (by operation of law or otherwise) without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void; provided, however, that the Purchaser may assign this Agreement and any or all rights or obligations hereunder (including, without limitation, the Purchaser's rights to purchase the Shares and the Purchaser's rights to seek indemnification hereunder) to any Affiliate of the Purchaser. Upon any such permitted assignment, the references in this Agreement to the Purchaser shall also apply to any such assignee unless the context otherwise requires.

[Remainder of Page Intentionally Left Blank]

267671.03

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written.

ZULU ENERGY CORP.

By:		/s/ Paul Stroud

		Paul Stroud,
		Chief Executive Officer

NYATI MAURITIUS LIMITED

By: /s/Charlotte J. Grisley
Charlotte J. Grisley,
On behalf of Woodleigh Limited
Director

SELLER:

LMA HUGHES LLLP

By:		/s/ Brian Hughes

Brian Hughes,
		Partner

267671.03

		ANNEX A
Seller		Shares
LMA Hughes LLLP		100 shares of Nyati Mauritius Limited

STOCK PURCHASE AGREEMENT

BETWEEN

ZULU ENERGY CORP.

AND SWANSI HOLDINGS CORP.

Dated as of December 19, 2007

267670

TABLE OF CONTENTS


Section		Page

Article I SALE AND PURCHASE OF SHARES		1
1 .1	Sale and Purchase of Shares	1


Article II PURCHASE PRICE AND PAYMENT		1
2 .1	Amount of Purchase Price	1

2 .2	Payment of Purchase Price	1


Article III CLOSING AND TERMINATION		2
3 .1	Closing Date	2
3 .2	Termination of Agreement	2
3 .3	Procedure Upon Termination	3
3 .4	Effect of Termination	3

Article IV REPRESENTATIONS AND WARRANTIES OF THE SELLER		3
4 .1	Organization and Good Standing of the Company	3
4 .2	Authority	3
4.3	Shares	4
4.4	Basic Corporate Records	4

4. 5	Minute Books	5
4. 6	Subsidiaries and Affiliates	5

4.7	Consents	5
4. 8	Financial Statements	5

4. 9	Records and Books of Account	6
4. 10	Absence of Undisclosed Liabilities	6

4. 11	Taxes	6
4. 12	Accounts Receivable	8
4. 13	Inventory	8
4. 14	Machinery and Equipment	8
4. 15	Real Property Matters	9

4. 16	Leases	10
4. 17	Patents, Software, Trademarks, Etc	10
4.18	Insurance Policies	11

4.19	Banking and Personnel Lists	11
4.20	Lists of Contracts, Etc	12
4.21	Compliance With the Law	13

4.22	Litigation; Pending Labor Disputes	14
4.23	Absence of Certain Changes or Events	15
4.24	Employee Benefit Plans	16
4.25	Product Warranties and Product Liabilities	17
4.26	Assets	17

267670

4.27	Absence of Certain Commercial Practices	17
4. 28	Licenses, Permits, Consents and Approvals	18

4. 29	Environmental Matters	18

4. 30	Broker	19
4. 31	Related Party Transactions	19
4. 32	Patriot Act	19

4.33	Disclosure	2

4.34	Investment Intent 20

4.35	Investment Experience; Suitability 20

4.36	Accredited Investor Status 20

4.37	Reliance on Exemptions 20

4.38	Legends 21

Article V REPRESENTATIONS AND WARRANTIES OF PURCHASER		21
5.1	Organization and Good Standing	21
5.2	Authority	21
5.3	Conflicts; Consents of Third Parties	21
5.4	Litigation	22
5.5	Investment Intention	22
5.6	Broker	22
5.7	Patriot Act	22

Article VI COVENANTS		23
6.1	Access to Information	23
6.2	Conduct of the Business Pending the Closing	23
6.3	Consents	25
6.4	Other Actions	25
6.5	No Solicitation	25
6.6	Preservation of Records	26
6.7	Publicity	26
6.8	Financial Statements	26
6.9	Tax Matters	26

Article VII CONDITIONS TO CLOSING		28
7.1	Conditions Precedent to Obligations of Purchaser	28
7.2	Conditions Precedent to Obligations of the Seller	29
7.3	Conditions Subsequent to Closing	30

Article VIII DOCUMENTS TO BE DELIVERED		30
8.1	Documents to be Delivered by the Seller	30
8.2	Documents to be Delivered by the Purchaser	31

Article IX INDEMNIFICATION		31
9.1	Indemnification	31
9.2	Limitations on Indemnification for Breaches of Representations and Warranties	32
9.3	Indemnification Procedures	32

9.4	Tax Treatment of Indemnity Payments	33

Article X MISCELLANEOUS		33
10.1	Payment of Sales, Use or Similar Taxes	33
10.2	Survival of Representations and Warranties	34
10.3	Expenses	34
10.4	Specific Performance	35
10.5	Further Assurances	35
10.6	Submission to Jurisdiction; Consent to Service of Process; Attorney’s Fees	35
10.7	Entire Agreement; Amendments and Waivers	35
10.8	Governing Law	36
10.9	Table of Contents and Headings	36
10.10 Notices		36
10.11 Severability		37
10.12 Binding Effect; Assignment		37

267670

iii

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT, dated as of December 19, 2007 (the “Agreement”), between Zulu Energy Corp., a corporation existing under the laws of Colorado (the “Purchaser”) and Swansi Holdings Corp. (the “Seller”).

W I T N E S S E T H :

WHEREAS, the Seller owns 50 shares of common stock, BPULA 1.00 par value (the “Shares”) of Nyati Resources Botswana (Proprietary) Limited, a company limited by shares organized under the laws of the Republic of Botswana (the “Company”), which Shares constitute 50% of the issued and outstanding shares of capital stock of the Company;

WHEREAS, the Company is engaged in the business of prospecting for and the exploration of coal bed methane and related activities in the Republic of Botswana including related activities (the “Business”);

WHEREAS, the Company has no subsidiaries; and

WHEREAS, the Seller desires to sell to Purchaser, and the Purchaser desires to purchase from the Seller, the Shares for the purchase price and upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I
SALE AND PURCHASE OF SHARES

1.1 Sale and Purchase of Shares.

Upon the terms and subject to the conditions contained herein, on the Closing Date the Seller shall sell, assign, transfer, convey and deliver to the Purchaser, and the Purchaser shall purchase from the Seller, the Shares of the Company owned by the Seller as set forth opposite the Seller's name on Annex A hereto.

ARTICLE II
PURCHASE PRICE AND PAYMENT

2.1 Amount of Purchase Price.

The purchase price for the Shares shall be $3,000,000.00 (Three Million United States Dollars) (the “Purchase Price”).

2.2 Payment of Purchase Price.

The Purchaser shall pay the Purchase Price to the Seller in two tranches, which shall be paid by wire transfer of immediately available funds into an account designated by the Seller. The first tranche of $1,500,000.00 (the “First Payment”) shall be payable within thirty (30) business days of the Closing Date. The second tranche of $1,500,000.00 (the “Second Payment”) shall be payable upon the earlier of: (a) nine (9) months following the Closing Date; or (b) the Purchaser raising at least $5,000,000 in gross proceeds from one or more private placements of equity, debt or a combination thereof. In addition, upon the closing of the First Private Placement (as hereinafter defined), Purchaser shall issue to Seller warrants to purchase 15,000,000 shares of common stock (the “Warrants”), expiring five (5) years from issuance, at an exercise price of $1.50 per share. The Warrants will have the same other terms and rights (including but not limited to Registration Rights) as the warrants issued in the First Private Placement.

ARTICLE III
CLOSING AND TERMINATION

3.1 Closing Date .

3.2 Termination of Agreement .

This Agreement may be terminated prior to the Closing as follows:

(b) by mutual written consent of the Seller and the Purchaser; or

(c) by the Seller or the Purchaser if there shall be in effect a final nonappealable order of a Governmental Body (as defined below) of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that the parties hereto shall promptly appeal any adverse determination which is not nonappealable (and pursue such appeal with reasonable diligence).

3.3 Procedure Upon Termination .

3.4 Effect of Termination .

In the event that this Agreement is validly terminated as provided herein, then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to the Purchaser or the Seller; provided, however, that nothing in this Section 3.4 shall relieve the Purchaser or the Seller of any liability for a breach of this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller hereby represents and warrants to the Purchaser that:

4.1 Organization and Good Standing of the Company.

The Company is a company limited by shares organized under the laws of the Republic of Botswana. The Company is not required to be qualified to transact business in any other jurisdiction where the failure to so qualify would have an adverse effect on the business of the Company.

4.2 Authority.

(b) The execution of this Agreement and the delivery hereof to the Purchaser and the sale and the transactions contemplated herein have been, or will be prior to Closing, duly authorized by the Seller’s Board of Directors and by the Seller’s stockholder having full power and authority to authorize such actions.

(c) Subject to any consents required under Section 4.7 below, the Seller has the full legal right, power and authority to execute, deliver and carry out the terms and provisions of this Agreement. Seller has duly approved and authorized the execution and delivery of this Agreement and documents and instruments contemplated hereby and the consummation of the transactions contemplated hereby and no other proceedings, approvals or other action on the part of the Seller, the Company is necessary to approve and authorize the execution, delivery and performance by the Seller of this Agreement and the documents and instruments

267670

contemplated hereby or the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered on behalf of the Seller and constitutes a valid and binding obligation of the Seller enforceable in accordance with its terms.

(d) Neither the execution and delivery of this Agreement, the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement will violate, conflict with, result in a breach of, or constitute a default under (i) any Law (as defined below) indenture, mortgage, loan agreement, or other agreement or instrument to which the Company or the Seller is a party or by which it or any of them is bound, (ii) any charter, regulation, or bylaw provision of the Company, or (iii) any decree, order, or rule of any court or Governmental Body or arbitrator that is binding on the Company or the Seller in any way.

4.3	Shares.

	(a) The Company’s authorized capital stock consists of 3,000 shares of

common stock, of which 50 shares have been issued to Seller, which comprises 50% of the issued and outstanding stock of the Company and which constitutes the Shares as defined above. All of the Shares are duly authorized, validly issued, fully paid and non-assessable.

(b) The Seller is the lawful record and beneficial owner of all the Shares, free and clear of any liens, pledges, encumbrances, charges, claims or restrictions of any kind, and has, or will have on the Closing Date, the absolute, unilateral right, power, authority and capacity to enter into and perform this Agreement, including the sale of the Shares, without any other or further authorization, action or proceeding, except as specified herein.

(c) There are no authorized or outstanding subscriptions, options, warrants, calls, rights, contracts, demands, commitments, shareholder agreements, convertible securities or other agreements or arrangements of any character or nature whatever under which the Seller or the Company are or may become obligated to issue, assign or transfer any shares of capital stock of the Company. Upon the delivery to Purchaser on the Closing Date of the certificate(s) representing the Shares, Purchaser will have good, legal, valid, marketable and indefeasible title to 50% of the then issued and outstanding shares of capital stock of the Company, free and clear of any liens, pledges, encumbrances, charges, agreements, options, claims or other arrangements or restrictions of any kind.

4.4 Basic Corporate Records.

The copy of the Memorandum and Articles of Association of Nyati Botswana (certified as of the date of this Agreement as true, correct and complete by the Nyati Botswana’s secretary or assistant secretary), which has been delivered to the Purchaser, are true, correct and complete as of the date of this Agreement.

4.5 Minute Books.

The minute books of the Company, which shall be exhibited to the Purchaser between the date hereof and the Closing Date, each contain true, correct and complete minutes and records of all meetings, proceedings and other actions of the shareholders, Boards of Directors and committees of such Boards of Directors of each such corporation, if any, and, on the Closing Date, will contain true, correct and complete minutes and records of any meetings, proceedings and other actions of the shareholders, respective Boards of Directors and committees of such Boards of Directors of each such corporation.

4.6 Subsidiaries and Affiliates.

The Company has no ownership, voting or profit and loss sharing percentage interest in any businesses, entities, enterprises and organizations including, for purposes of clarity, subsidiaries. Except as set forth in Schedule 4.6 or 4.31, (i) the Company has made no advances to, or investments in, nor owns beneficially or of record, any securities of or other interest in, any business, entity, enterprise or organization, (ii) there are no arrangements through which the Company has acquired from, or provided to, the Seller or its affiliates any goods, properties or services, (iii) there are no rights, privileges or advantages now enjoyed by the Company as a result of the ownership of the Company by the Seller which, to the knowledge of the Seller or the Company, might be lost as a result of the consummation of the transactions contemplated by this Agreement.

4.7 Consents.

Except as set forth in Schedule 4.7, no consents or approvals of any public body or authority and no consents or waivers from other parties to leases, licenses, franchises, permits, indentures, agreements or other instruments are (i) required for the lawful consummation of the transactions contemplated hereby, or (ii) necessary in order that the Business can be conducted by the Purchaser in the same manner after the Closing as heretofore conducted by the Company, nor will the consummation of the transactions contemplated hereby result in creating, accelerating or increasing any liability of the Company.

4.8 Financial Statements.

The Seller has delivered, or will deliver prior to Closing, to the Purchaser copies of the following financial statements (which include all notes and schedules attached thereto), all of which are true, complete and correct, have been prepared from the books and records of the Company in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied with past practice and fairly present the financial condition, assets, liabilities and results of operations of the Company as of the dates thereof and for the periods covered thereby:

the audited balance sheet of the Company as at December 31, 2005 and 2006, and the related audited statements of operations, and of cash flows

of the Company for the period then ended and (ii) the unaudited balance sheet of the Company as of September 30, 2007 and the related compiled statement of operations of the Company for the nine month period then ended (such statements, including the related notes and schedules thereto, are referred to herein as the “Financial Statements”).

In such Financial Statements, the Statements of Operations do not contain any items of special or nonrecurring income or any other income not earned in the ordinary course of business except as set forth in Schedule 4.8, and the financial statements for the interim periods indicated include all adjustments, which consist of only normal recurring accruals, necessary for such fair presentation. There are no facts known to the Seller that, under GAAP consistently applied, would alter the information contained in the foregoing Financial Statements in any material way. Neither the Company, nor Seller, nor any director, officer, employee or agent of the Company has received any written or oral complaint, allegation or claim that the Company has engage in questionable accounting or business practices.

For the purposes hereof, the balance sheet of the Company as of September 30, 2007 is referred to as the “Balance Sheet” and September 30, 2007 is referred to as the “Balance Sheet Date”.

4.9 Records and Books of Account.

The records and books of account of the Company and of each Subsidiary reflect all material items of income and expense and all material assets, liabilities and accruals, and have been, and to the Closing Date will be, regularly kept and maintained in conformity with GAAP applied on a consistent basis with preceding years.

4.10 Absence of Undisclosed Liabilities.

Except as and to the extent reflected or reserved against in the Company’s Financial Statements or disclosed in Schedule 4.10, there are no liabilities or obligations of the Company of any kind whatsoever, whether accrued, fixed, absolute, contingent, determined or determinable, and including without limitation (i) liabilities to former, retired or active employees of the Company under any pension, health and welfare benefit plan, vacation plan or other plan of the Company, (ii) tax liabilities incurred in respect of or measured by income for any period prior to the close of business on the Balance Sheet Date, or arising out of transactions entered into, or any state of facts existing, on or prior to said date, and (iii) contingent liabilities in the nature of an endorsement, guarantee, indemnity or warranty, and there is no condition, situation or circumstance existing or which has existed that could reasonably be expected to result in any liability of the Company, other than liabilities and contingent liabilities incurred in the ordinary course of business since the Balance Sheet Date consistent with the Company’s recent customary business practice, none of which is materially adverse to the Company.

4.11 Taxes.

(a) For purposes of this Agreement, “Tax” or “Taxes” refers to: (i) any and all federal, state, local and foreign (including the Republic of Botswana) taxes,

assessments and other governmental charges, duties, impositions and liabilities relating to taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes and escheatment payments, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity; (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including, without limitation, any liability under Treas. Reg. Section 1.1502 -6 or any comparable provision of foreign, state or local law); and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify any other person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

(b) (i) The Company has timely filed all federal, state, local and foreign returns, estimates, information statements and reports (“Returns”) relating to Taxes required to be filed by the Company with any Tax authority. All such Returns are true, correct and complete in all respects. The Company has paid all Taxes shown to be due on such Returns. Except as listed on Schedule 4.11 hereto, the Company is not currently the beneficiary of any extensions of time within which to file any Returns. The Seller has furnished and made available to the Purchaser complete and accurate copies of all income and other Tax Returns and any amendments thereto filed by the Company in the last three (3) years.

(ii) The Company, as of the Closing Date, will have withheld and accrued or paid to the proper authority all Taxes required to have been withheld and accrued or paid.

(iv) There is no dispute, claim, or proposed adjustment concerning any Tax liability of the Company either (A) claimed or raised by any Tax authority in writing or (B) based upon personal contact with any agent of such Tax authority, and there is no claim for assessment, deficiency, or collection of Taxes, or proposed assessment, deficiency or collection from the Internal Revenue Service or any other Governmental Body against the Company which has not been satisfied. The Company is not a party to nor has it been notified in writing or otherwise that it is the subject of any pending, proposed, or threatened action, investigation, proceeding, audit, claim or assessment by or before the Internal Revenue Service or any other Governmental Body, nor does the Company have any reason to believe that any such notice will be received in the future. Neither he Internal Revenue Service nor any other Governmental Body nor any state or local taxation authority has ever audited any income tax return of the Company. The Company has not filed any requests for rulings with the Internal Revenue Service. No power of attorney has been granted by the Company or its Affiliates with respect to any matter relating to

Taxes of the Company. There are no Tax liens of any kind upon any property or assets of the Company, except for inchoate liens for Taxes not yet due and payable.

(v) The Company has no liability for any unpaid Taxes which has not been paid or accrued for, or otherwise, or reserved on the Financial Statements in accordance with GAAP, whether asserted or unasserted, contingent or otherwise.

(vi) There is no contract, agreement, plan or arrangement to which the Company is a party as of the date of this Agreement, including but not limited to the provisions of this Agreement, covering any employee or former employee of the Company that, individually or collectively, would reasonably be expected to give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). There is no contract, agreement, plan or arrangement to which the Company is a party or by which it is bound to compensate any individual for excise taxes paid pursuant to Section 4999 of the Code or any applicable provision under any Law.

(viii) The Company is not a party to, nor has any obligation under any tax-sharing, tax indemnity or tax allocation agreement or arrangement.

(ix) None of the Company’s assets are tax exempt use property within the meaning of Section 168(h) of the Code.

4.12 Accounts Receivable.

The Company has no accounts receivable.

4.13 Inventory.

The Company has no inventory.

4.14 Machinery and Equipment.

Except for items disposed of in the ordinary course of business, all machinery, tools, furniture, fixtures, equipment, vehicles, leasehold improvements and all other tangible personal property (hereinafter “Fixed Assets”) of the Company currently being used in the conduct of the Business, or included in determining the net book value of the Company on the Balance Sheet Date, together with any machinery or equipment that is leased or operated by the Company, are in fully serviceable working condition and repair. Said Fixed Assets shall be maintained in such condition from the date hereof through the Closing Date. Except as described on Schedule 4.14 hereto, all Fixed Assets owned, used or held by the Company are situated at its business premises and are currently used in its business. Schedule 4.14 describes all Fixed Assets owned by or an interest in which is claimed by any other person (whether a customer,

supplier or other person) for which the Company is responsible (copies of all agreements relating thereto being attached to said Schedule 4.14), and all such property is in the Company’s actual possession and is in such condition that upon the return of such property in its present condition to its owner, the Company will not be liable in any amount to such owner. There are no outstanding requirements or recommendations by any insurance company that has issued a policy covering either (i) such Fixed Assets or (ii) any liabilities of the Company relating to operation of the Business, or by any board of fire underwriters or other body exercising similar functions, requiring or recommending any repairs or work to be done on any Fixed Assets or any changes in the operations of the Business, any equipment or machinery used therein, or any procedures relating to such operations, equipment or machinery. All Fixed Assets of the Company are set forth on Schedule 4.14 hereto.

4.15	Real Property Matters.

	(a) Schedule 4.15(a) sets forth a complete list of (i) all real property

and interests in real property owned in fee by the Company (individually, an "Owned Property" and collectively, the "Owned Properties"), and (ii) all real property and interests in real property leased by the Company (individually, a "Real Property Lease" and the real properties specified in such leases, together with the Owned Properties, being referred to herein individually as a "Company Property" and collectively as the "Company Properties") as lessee or lessor. The Company has good and marketable fee title to all Owned Properties, free and clear of all Liens of any nature whatsoever except (A) Liens set forth on Schedule 4.15(a) and (B) Permitted Exceptions. The Company Properties constitute all interests in real property currently used or currently held for use in connection with the Business and which are necessary for the continued operation of the Business as the business is currently conducted. The Company has a valid and enforceable leasehold interest under each of the Real Property Leases, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), and the Company has not received any written notice of any default or event that with notice or lapse of time, or both, would constitute a default by the Company under any of the Real Property Leases. All of the Company Property, buildings, fixtures and improvements thereon owned or leased by the Company are in good operating condition and repair (subject to normal wear and tear).

(b) The Company has all material certificates of occupancy and Permits of any Governmental Body necessary or useful for the current use and operation of each Company Property, and the Company has fully complied with all material conditions of the Permits applicable to it. No default or violation, or event that with the lapse of time or giving of notice or both would become a default or violation, has occurred in the due observance of any Permit.

267670

(c) There does not exist any actual or, to the best knowledge of the Company or the Seller, threatened or contemplated condemnation or eminent domain proceedings that affect any Company Property or any part thereof, and the Company has not received any notice, oral or written, of the intention of any Governmental Body or other Person to take or use all or any part thereof.

4.16 Leases.

All leases of real and personal property of the Company are described in Schedule 4.16, are in full force and effect and constitute legal, valid and binding obligations of the respective parties thereto enforceable in accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting generally the enforcement of creditor’s rights, and have not been assigned or encumbered. The Company has performed in all material respects the obligations required to be performed by it under all such leases to date and it is not in default in any material respect under any of said leases, except as set forth in Schedule 4.16, nor has it made any leasehold improvements required to be removed at the termination of any lease, except signs. No other party to any such lease is in material default thereunder. Except as noted on Schedule 4.16, none of the leases listed thereon require the consent of a third party in connection with the transfer of the Shares.

4.17 Patents, Software, Trademarks, Etc.

The Company owns, or possesses adequate licenses or other rights to use, all patents, software, trademarks, service marks, trade names, copyrights, proprietary information and trade secrets, if any, necessary to conduct the Business as now operated by it. The patents, software, trademarks, service marks, copyrights, proprietary information, trade names and trade secrets, if any, registered in the name of or owned or used by or licensed to the Company and applications for any thereof (hereinafter the “Intangibles”) are described or referenced in Schedule 4.17. The Seller hereby specifically acknowledges that all right, title and interest in and to all patents, software and proprietary information listed on Schedule 4.17 are owned by the Company and that the ownership of such patents, software or proprietary information will be transferred as part of the Company to Purchaser as part of the transaction contemplated hereby. No officer, director, shareholder or employee of the Company or any relative or spouse of any such person owns any patents or patent applications or any inventions, software, secret formulae or processes, trade secrets or other similar rights, nor is any of them a party to any license agreement, used by or useful to the Company or related to the Business except as listed in Schedule 4.17. All of said Intangibles are valid and in good standing, are free and clear of all liens, security interests, charges, restrictions and encumbrances of any kind whatsoever, and have not been licensed to any third party except as described in Schedule 4.17. The Company has not

267670

been charged with, nor has it infringed, nor to the Seller’s knowledge is it threatened to be charged with infringement of, any patent, proprietary rights or trade secrets of others in the conduct of its business, and, to the date hereof, neither the Seller nor the Company has received any notice of conflict with or violation of the asserted rights in intangibles or trade secrets of others. The Company is not now manufacturing any goods under a present permit, franchise or license, except as set forth in said Schedule 4.17. The consummation of the transactions contemplated hereby will not alter or impair any rights of the Company in any such Intangibles or in any such permit, franchise or license, except as described in Schedule 4.17. The Intangibles and the Company’s tooling, manufacturing and engineering drawings, process sheets, specifications, bills of material and other like information and data are in such form and of such quality and will be maintained in such a manner that the Company can, following the Closing, design, produce, manufacture, assemble and sell the products and provide the services heretofore provided by it so that such products and services meet applicable specifications and conform with the standards of quality and cost of production standards heretofore met by it. The Company has the sole and exclusive right to use its corporate and trade names in the jurisdictions where it transacts business.

4.18 Insurance Policies.

There is set forth in Schedule 4.18 a list and brief description of all insurance policies on the date hereof held by the Company or on which it pays premiums, including, without limitation, life insurance and title insurance policies, which description includes the premiums payable by it thereunder. Schedule 4.18 also sets forth, in the case of any life insurance policy held by the Company, the name of the insured under such policy, the cash surrender value thereof and any loans thereunder. All such insurance premiums in respect of such coverage have been, and to the Closing Date will be, paid in full, or if not due, properly accrued on the Balance Sheet. All claims, if any, made against the Company which are covered by such policies have been, or are being, settled or defended by the insurance companies that have issued such policies. Up to the Closing Date, such insurance coverage will be maintained in full force and effect and will not be cancelled, modified or changed without the express written consent of the Purchaser, except to the extent the maturity dates of any such insurance policies expiring prior to the Closing Date. No such policy has been, or to the Closing Date will be, cancelled by the issuer thereof, and, to the knowledge of the Seller, between the date hereof and the Closing Date, there shall be no increase in the premiums with respect to any such insurance policy caused by any action or omission of the Seller or of the Company.

4.19 Banking and Personnel Lists.

The Seller will deliver to the Purchaser prior to the Closing Date the following accurate lists and summary descriptions relating to the Company:

(i) The name of each bank in which the Company has an account or safe deposit box and the names of all persons authorized to draw thereon or have access thereto.

4.20 Lists of Contracts, Etc.

There is included in Schedule 4.20 a list of the following items (whether written or oral) relating to the Company, which list identifies and fairly summarizes each item:

(ii) All joint venture contracts and joint operating agreements of the Company or affiliates relating to the Business;

(iii) All contracts of the Company relating to (a) obligations for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) obligations under capital leases, (e) debt of others secured by a lien on any asset of the Company, and (f) debts of others guaranteed by the Company.

(iv) All agreements of the Company relating to the supply of raw materials for and the distribution of the products of the Business, including without limitation all sales agreements, manufacturer’s representative agreements and distribution agreements of whatever magnitude and nature, and any commitments therefor;

(v) All contracts that individually provide for aggregate future payments to or from the Company of $25,000 or more, to the extent not included in (i) through (iv) above;

(vi) All contracts of the Company that have a term exceeding one year and that may not be cancelled without any liability, penalty or premium, to the extent not included in (i) through (v) above;

(vii) A complete list of all outstanding powers of attorney granted by the Company; and

(viii) All other contracts of the Company material to the Business, assets, liabilities, financial condition, results of operations or prospects of the Business taken as a whole to the extent not included above, including but not limited to contracts for the licensing and ownership of geological and geophysical data (raw data and interpretations thereon).

Except as set forth in Schedule 4.20, (i) all contracts, agreements and commitments of the Company set forth in Schedule 4.20 are valid, binding and in full force and effect, and (ii) neither the Company nor any other party to any such contract, agreement, or commitment has materially breached any provision thereof or is in default thereunder. Except as set forth in Schedule 4.20, the sale of the Shares by the Seller in accordance with this Agreement will not result in the termination or provide any party to such contract the opportunity to terminate of any contract, agreement or commitment of the Company set forth in Schedule 4.20, and immediately after the Closing, each such contract, agreement or commitment will continue in full force and effect without the imposition or acceleration of any burdensome condition or other obligation on the Company resulting from the sale of the Shares by the Seller. True and complete copies of the contracts, leases, licenses and other documents referred to in this Section 4.20 will be delivered to the Purchaser, certified by the Secretary or Assistant Secretary of the Company as true, correct and complete copies, not later than four weeks from the date hereof or ten business days before the Closing Date, whichever is sooner.

There are no pending disputes with customers or vendors of the Company regarding quality or return of goods involving amounts in dispute with any one customer or vendor, whether for related or unrelated claims, in excess of $5,000 except as described on Schedule 4.20 hereto, all of which will be resolved to the reasonable satisfaction of Purchaser prior to the Closing Date. To the knowledge of Seller, there has not been any event, happening, threat or fact that would lead them to believe that any of said customers or vendors will terminate or materially alter their business relationship with the Company after completion of the transactions contemplated by this Agreement.

4.21 Compliance With the Law.

The Company is not in violation of any applicable federal, state, local or foreign law, regulation or order or any other, decree or requirement of any governmental, regulatory or administrative agency or authority or court or other tribunal (including, but not limited to, any law, regulation order or requirement relating to securities, properties, business, products,

manufacturing processes, advertising, sales or employment practices, terms and conditions of employment, occupational safety, health and welfare, conditions of occupied premises, product safety and liability, civil rights, or environmental protection, including, but not limited to, those related to waste management, air pollution control, waste water treatment or noise abatement). Except as set forth in Schedule 4.21, the Company has not been and is not now charged with, or to the knowledge of the Seller or the Company under investigation with respect to, any violation of any applicable law, regulation, order or requirement relating to any of the foregoing, nor, to the knowledge of the Seller after due inquiry, are there any circumstances that would or might give rise to any such violation. The Company has filed all reports required to be filed with any governmental, regulatory or administrative agency or authority.

4.22 Litigation; Pending Labor Disputes.

Except as specifically identified on the Balance Sheet or footnotes thereto or set forth in Schedule 4.22:

(i) There are no Legal Proceedings (as defined below) or other proceedings or governmental investigations pending or, to the knowledge of the Seller, threatened, against the Seller or the Company, relating to the Business or the Company or its properties (including leased property), or the transactions contemplated by this Agreement, nor is there any basis known to the Seller for any such action.

(ii) There are no judgments, decrees or orders of any court, or any governmental department, commission, board, agency or instrumentality binding upon the Seller or the Company relating to the Business or the Company the effect of which is to prohibit any business practice or the acquisition of any property or the conduct of any business by the Company or which limit or control or otherwise adversely affect its method or manner of doing business.

(iii) No work stoppage has occurred and is continuing or, to the knowledge of the Seller, is threatened affecting the Business, and no representation question involving recognition of a collective bargaining agent exists in respect of any employees of the Company.

(iv) There are no pending labor negotiations or union organization efforts relating to employees of the Company.

(v) There are no charges of discrimination (relating to sex, age, race, national origin, handicap or veteran status) or unfair labor practices pending or, to the knowledge of the Seller, threatened before any governmental or regulatory agency or authority or any court relating to employees of the Company.

4.23 Absence of Certain Changes or Events.

The Company has not, since the Balance Sheet Date, except as described on Schedule 4.23:

(iv) Mortgaged, pledged or subjected to any lien, charge or other encumbrance any of its assets, tangible or intangible;

(v) Sold or transferred any of its assets or cancelled any debts or claims or waived any rights, except in the ordinary course of business and which has not been materially adverse;

(vi) Disposed of or permitted to lapse any patents or trademarks or any patent or trademark applications material to the operation of its business;

(viii) Authorized any capital expenditure for real estate or leasehold improvements, machinery, equipment or molds in excess of $5,000.00 in the aggregate;

(ix) Except for this Agreement, entered into any material transaction

(x) Issued any stocks, bonds, or other corporate securities, or made any declaration or payment of any dividend or any distribution in respect of its capital stock; or

4.24 Employee Benefit Plans.

(a) Schedule 4.24 lists a description of the only Employee Programs as defined below) that have been maintained (as such term is further defined below) by the Company at any time during the five (5) years prior to the date hereof.

(b) There has not been any failure of any party to comply with any Laws applicable with respect to any Employee Program that has been maintained by the Company. With respect to any Employee Programs now or heretofore maintained by the Company, there has occurred no breach of any duty under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or other applicable law which could result, directly or indirectly in any taxes, penalties or other liability to the Purchaser, the Company or any affiliate (as defined below). No litigation, arbitration, or governmental administrative proceeding (or investigation) or other proceeding (other than those relating to routine claims for benefits) is pending or, to the knowledge of the Company and Seller, threatened with respect to any such Employee Program.

(d) For purposes of this Section 4.24:

267670

4.25 Product Warranties and Product Liabilities.

The Company has no products or product warranties and return policies in effect on the date hereof. There are no product liability claims that are currently either pending or, to the best of the Seller’s, and the Company’s knowledge threatened against the Company or any Subsidiary. The Company has not paid in the aggregate, or allowed as credits against purchases, or received claims for more than one percent (1%) per year of gross sales, as determined in accordance with GAAP consistently applied, during the past three years pursuant to obligations under any warranty or any product liability claim with respect to goods manufactured, assembled or furnished by the Company. The future cost of performing all such obligations and paying all such product liability claims with respect to goods manufactured, assembled or furnished prior to the Closing Date will not exceed the average annual cost thereof for said past three year period.

4.26 Assets.

The assets of the Company are located at the locations listed on Schedule 4.26 attached hereto. Except as described in Schedule 4.26, the assets of the Company are, and together with the additional assets to be acquired or otherwise received by the Company prior to the Closing, will at the Closing Date be, sufficient in all material respects to carry on the operations of the Business as now conducted by the Company. The Company is the only business organization through which the Business is conducted. All assets used by the Seller and the Company to conduct the Business are, and will on the Closing Date be, owned by the Company.

4.27 Absence of Certain Commercial Practices.

Neither the Company, nor any of its Subsidiaries, nor to the knowledge of the Company, any director, officer, agent, employee or other person acting on behalf of the Company or any of its Subsidiaries, nor the Seller has (i) made any payment (directly or by secret commissions, discounts, compensation or other payments) or (ii) given any gifts to another business concern, to an agent or employee of another business concern or of any governmental entity (domestic or foreign) or to a political party or candidate for political office (domestic or

267670

foreign), to obtain or retain business for the Company or any of its Subsidiaries or to receive favorable or preferential treatment, except for gifts and entertainment given to representatives of customers or potential customers of sufficiently limited value and in a form (other than cash) that would not be construed as a bribe or payoff, or (iii) otherwise been in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended.

4.28 Licenses, Permits, Consents and Approvals.

The Company has, and at the Closing Date will have, all licenses, permits or other authorizations of governmental, regulatory or administrative agencies or authorities (collectively, “Licenses”), including but not limited to the Prospecting Licenses issued by the Republic of Botswana (the “Prospecting Licenses”), required to conduct the Business. All Licenses of the Company are listed on Schedule 4.28 hereto. With respect to the Prospecting Licenses: (i) each license is in good standing and is not subject to any pending default or uncured deficiency; (ii) except as disclosed in the audited Financial Statements, all required annual payments to maintain each license have been paid; (iii) all annual minimum expenditure requirements and annual minimum prospecting program obligations with respect to each license have been satisfied and (iv) each license entitles the Purchaser to a net revenue interest of no less than eighty seven percent in all coalbed methane produced therefrom. At the Closing, the Company will have all such Licenses which are material to the conduct of the Business and will have renewed all Licenses which would have expired in the interim. Except as listed in Schedule 4.28, no registration, filing, application, notice, transfer, consent, approval, order, qualification, waiver or other action of any kind (collectively, a “Filing”) will be required as a result of the sale of the Shares by the Seller in accordance with this Agreement (a) to avoid the loss of any License or the violation, breach or termination of, or any default under, or the creation of any lien on any asset of the Company pursuant to the terms of, any law, regulation, order or other requirement or any contract binding upon the Company or to which any such asset may be subject, or (b) to enable Purchaser (directly or through any designee) to continue the operation of the Company and the Business substantially as conducted prior to the Closing Date. All such Filings will be duly filed, given, obtained or taken on or prior to the Closing Date and will be in full force and effect on the Closing Date.

4.29 Environmental Matters.

Except as set forth on Schedule 4.29 hereto:

267670

whole, or (ii) such party’s ability to, in a timely manner, perform its obligations under this Agreement;

(b) The Company has obtained all permits required under all applicable Environmental Laws necessary to operate its business;

4.30 Broker.

Except as specified in Schedule 4.30, neither the Company nor the Seller has retained any broker in connection with any transaction contemplated by this Agreement. Purchaser and the Company shall not be obligated to pay any fee or commission associated with the retention or engagement by the Company or the Seller of any broker in connection with any transaction contemplated by this Agreement.

4.31 Related Party Transactions.

Except as described in Schedule 4.31, all transactions during the past five years between the Company and any current or former shareholder or any entity in which the Company or any current or former shareholder had or has a direct or indirect interest have been fair to the Company as determined by the Board of Directors. No portion of the sales or other on-going business relationships of the Company is dependent upon the friendship or the personal relationships (other than those customary within business generally) of the Seller, except as described in Schedule 4.31. During the past five years, the Company has not forgiven or cancelled, without receiving full consideration, any indebtedness owing to it by the Seller.

4.32 Patriot Act.

The Seller certifies that neither the Company nor any of its Subsidiaries has been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. The Seller hereby acknowledges that the Purchaser seeks to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Seller hereby represents, warrants and agrees that: (i) none of the cash or property that the Seller has contributed or paid or will contribute and pay to the Company has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by the Company or any of its Subsidiaries to the Purchaser, to the extent that they are within the Company’s and/or its Subsidiaries’ control shall cause the Purchaser to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Seller shall promptly notify the Purchaser if any of these representations ceases to be true and accurate regarding the

267670

Seller, the Company or any of its Subsidiaries. The Seller agree to provide the Purchaser any additional information regarding the Company or any of its Subsidiaries that the Purchaser reasonably requests to ensure compliance with all applicable laws concerning money laundering and similar activities.

4.33 Disclosure.

All statements contained in any schedule, certificate, opinion, instrument, or other document delivered by or on behalf of the Seller pursuant hereto or in connection with the transactions contemplated hereby shall be deemed representations and warranties by the Seller herein. No statement, representation or warranty by the Seller in this Agreement or in any schedule, certificate, opinion, instrument, or other document furnished or to be furnished to the Purchaser pursuant hereto or in connection with the transactions contemplated hereby contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading or necessary in order to provide a prospective purchaser of the business of the Company with full and fair disclosure concerning the Company, the Business, and the Company’s affairs.

4.34 Investment Intent.

The Warrants are being acquired hereunder by the Seller for investment purposes only, for its own account, not as a nominee or agent and not with a view to the distribution thereof. The Seller has no present intention to sell or otherwise dispose of the Warrants or the underlying shares of common stock and will not do so except in compliance with the provisions of the Securities Act of 1933, as amended (the “1933 Act”), and applicable law. The Seller understands that the Warrants and underlying common stock acquired hereunder must be held by it indefinitely unless a subsequent disposition or transfer of any of said shares is registered under the 1933 Act, or is exempt from registration therefrom. The Seller further understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to the Seller) promulgated under the Securities Act of 1933, as amended, depends on the satisfaction of various conditions, and that, if and when applicable, Rule 144 may afford the basis for sales only in limited amounts.

4.35 Investment Experience; Suitability.

The Seller is a sophisticated investor familiar with the type of risks inherent in the acquisition of securities such as the shares of the Purchaser and the Seller’s financial position is such that the Seller can afford to retain the Warrants and underlying common stock for an indefinite period of time without realizing any direct or indirect cash return on its investment.

4.36 Accredited Investor Status.

The Seller is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D and the Seller shall submit to the Purchaser such additional information as may be reasonably requested by the Purchaser to establish the Seller’s status as such; or

4.37 Reliance on Exemptions.

267670

The Seller understands that Warrants and the underlying shares of common stock are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Purchaser is relying in part upon the truth and accuracy of, and the Seller’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Seller set forth herein in order to determine the availability of such exemptions and the eligibility of the Seller to acquire the Warrants.

4.38 Legends.

The Seller understands that the certificates or other instruments representing the Warrants, shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such warrant and underlying shares of common stock):

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

5.1 Organization and Good Standing .

The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado.

5.2 Authority .

(a) The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been, or will prior to Closing be, duly and validly approved and acknowledged by all necessary corporate action on the part of the Purchaser.

5.3 Conflicts; Consents of Third Parties .

(b) No consent, waiver, approval, order, permit or authorization of, or declaration or filing with, or notification to, any person or Governmental Body is required on the part of the Purchaser in connection with the execution and delivery of this Agreement or the Purchaser Documents or the compliance by Purchaser with any of the provisions hereof or thereof.

5.4 Litigation .

5.5 Investment Intention .

5.6 Broker .

5.7 Patriot Act .

The Purchaser certifies that neither the Purchaser nor any of its subsidiaries has been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. The Purchaser hereby acknowledges that the Seller seek to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Purchaser hereby represents, warrants and agrees that: (i) none of the cash or property that the Purchasers have contributed or paid or will contribute and pay to the Seller has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by the Purchaser or any of its subsidiaries to the Seller, to the extent that they are within the Purchaser’s control shall cause the Seller or the Company to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Purchaser shall

promptly notify the Seller if any of these representations ceases to be true and accurate regarding the Purchaser or any of its subsidiaries. The Purchaser agrees to provide the Seller any additional information regarding the Purchaser or any of its subsidiaries that the Seller reasonably requests to ensure compliance with all applicable laws concerning money laundering and similar activities.

ARTICLE VI
COVENANTS

6.1 Access to Information .

The Seller agrees that, prior to the Closing Date, the Purchaser shall be entitled, through its officers, employees and representatives (including, without limitation, its legal advisors and accountants), to make such investigation of the properties, businesses and operations of the Company and its Subsidiaries and such examination of the books, records and financial condition of the Company and its Subsidiaries as it reasonably requests and to make extracts and copies of such books and records. Any such investigation and examination shall be conducted during regular business hours and under reasonable circumstances, and the Seller shall cooperate, and shall cause the Company and its Subsidiaries to cooperate, fully therein. No investigation by the Purchaser prior to or after the date of this Agreement shall diminish or obviate any of the representations, warranties, covenants or agreements of the Seller contained in this Agreement. In order that the Purchaser may have full opportunity to make such physical, business, accounting and legal review, examination or investigation as it may reasonably request of the affairs of the Company and its Subsidiaries, the Seller shall cause the officers, employees, consultants, agents, accountants, attorneys and other representatives of the Company and its Subsidiaries to cooperate fully with such representatives in connection with such review and examination.

6.2 Conduct of the Business Pending the Closing .

(a) Except as otherwise expressly contemplated by this Agreement or with the prior written consent of the Purchaser, the Seller shall, and shall cause the Company to:

(i) Conduct the Business only in the ordinary course consistent with past practice;

(ii) Use its best efforts to (A) preserve its present business operations, organization (including, without limitation, management and the sales force) and goodwill of the Company and (B) preserve its present relationship with Persons having business dealings with the Company;

(iv) (A) maintain the books, accounts and records of the Company in the ordinary course of business consistent with past practices, (B) continue to collect accounts

receivable and pay accounts payable utilizing normal procedures and without discounting or accelerating payment of such accounts, and (C) comply with all contractual and other obligations applicable to the operation of the Company; and

(v) Comply in all material respects with applicable Laws.

(b) Except as otherwise expressly contemplated by this Agreement or with the prior written consent of the Purchaser, the Seller shall not, and shall cause the Company not to:

(i) Declare, set aside, make or pay any dividend or other distribution in respect of the capital stock of the Company or repurchase, redeem or otherwise acquire any outstanding shares of the capital stock or other securities of, or other ownership interests in, the Company;

(ii) Transfer, issue, sell or dispose of any shares of capital stock or other securities of the Company or grant options, warrants, calls or other rights to purchase or otherwise acquire shares of the capital stock or other securities of the Company;

(iii) Effect any recapitalization, reclassification, stock split or like change in the capitalization of the Company;

(iv) Amend the Memorandum and Articles of Association of the Company;

(v) (A) materially increase the annual level of compensation of any employee of the Company, (B) increase the annual level of compensation payable or to become payable by the Company to any of its executive officers, (C) grant any unusual or extraordinary bonus, benefit or other direct or indirect compensation to any employee, director or consultant, (D) increase the coverage or benefits available under any (or create any new) severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan or arrangement made to, for, or with any of the directors, officers, employees, agents or representatives of the Company or otherwise modify or amend or terminate any such plan or arrangement or (E) enter into any employment, deferred compensation, severance, consulting, non-competition or similar agreement (or amend any such agreement) to which the Company is a party or involving a director, officer or employee of the Company in his or her capacity as a director, officer or employee of the Company;

(viii) Acquire any material properties or assets or sell, assign, transfer, convey, lease or otherwise dispose of any of the material properties or assets (except for fair consideration in the ordinary course of business consistent with past practice) of the Company except, with respect to the items listed on Schedule 6.2(b)(viii) hereto, as previously consented to by the Purchaser;

(ix) Cancel or compromise any debt or claim or waive or release any material right of the Company except in the ordinary course of business consistent with past practice;

(x) Enter into any commitment for capital expenditures out of the ordinary course;

6.3 Consents .

6.4 Other Actions .

6.5 No Solicitation .

6.6 Preservation of Records .

The Seller and the Purchaser agree that each of them shall preserve and keep the records held by it relating to the business of the Company for a period of three years from the Closing Date and shall make such records and personnel available to the other as may be reasonably required by such party in connection with, among other things, any insurance claims by, legal proceedings against or governmental investigations of the Seller or the Purchaser or any of their Affiliates or in order to enable the Seller or the Purchaser to comply with their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby or thereby.

6.7 Publicity .

6.8 Financial Statements.

6.9

Tax Matters .

(a) Tax Periods Ending on or Before the Closing Date . The Seller shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company for all

periods ending on or prior to the Closing Date which are to filed after the Closing Date as soon as practicable and prior to the date due (including any proper extensions thereof). The Seller shall permit the Company and the Purchaser to review and provide comments, if any, on each such Return described in the preceding sentence prior to filing. Unless the Purchaser or the Company provides comments to the Seller, the Company shall deliver to the Seller each such Return signed by the appropriate officer(s) of the Company for filing within ten (10) days following the Seller’s delivery to the Company and the Purchaser of any such Return. The Seller shall deliver to the Company promptly after filing each such Return a copy of the filed Return and evidence of its filing. The Seller shall pay the costs and expenses incurred in the preparation and filing of the Tax Returns on or before the date such costs and expenses are due.

If the Company provides comments to the Seller and at the end of such ten (10) day period the Company and the Seller has failed to reach written agreement with respect to all of such disputed items, the parties shall submit the unresolved items to arbitration for final determination. Promptly, but no later than thirty (30) days after its acceptance of its appointment as arbitrator, the arbitrator shall render an opinion as to the disputed items. The determination of the arbitrator shall be conclusive and binding upon the parties. The Company and the Seller shall each pay one half of the fees, costs and expenses of the arbitrator. The prevailing party may be entitled to an award of pre- and post-award interest as well as reasonable attorneys’ fees incurred in connection with the arbitration and any judicial proceedings related thereto as determined by the arbitrator.

(b) Tax Periods Beginning Before and Ending After the Closing Date . The Company or the Purchaser shall prepare or cause to be prepared and file or cause to be filed any Returns of the Company for Tax periods that begin before the Closing Date and end after the Closing Date. To the extent such Taxes are not fully reserved for in the Company’s financial statements, the Seller shall pay to the Company an amount equal to the unreserved portion of such Taxes that relates to the portion of the Tax period ending on the Closing Date. Such payment, if any, shall be paid by the Seller within fifteen (15) days after receipt of written notice from the Company or the Purchaser that such Taxes were paid by the Company or the Purchaser for a period beginning prior to the Closing Date. For purposes of this Section, in the case of any Taxes that are imposed on a periodic basis and are payable for a Taxable period that includes (but does not end on) the Closing Date, the portion of such Tax that relates to the portion of such Tax period ending on the Closing Date shall (i) in the case of any Taxes other than Taxes based upon or related to income or receipts, be deemed to be the amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the Tax period ending on the Closing Date and the denominator of which is the number of days in the entire Tax period (the “Pro Rata Amount”), and (ii) in the case of any Tax based upon or related to income or receipts, be deemed equal to the amount that would be payable if the relevant Tax period ended on the Closing Date. The Seller shall pay to the Company with the payment of any taxes due hereunder, the Seller’s Pro Rata Amount of the costs and expenses incurred by the Purchaser or the Company in the preparation and filing of the Tax Returns. Any net operating losses or credits relating to a Tax period that begins before and ends after the Closing Date shall be taken into account as though the relevant Tax period ended on the Closing Date. All determinations necessary to give effect to the foregoing allocations shall be made in a reasonable manner as agreed to by the parties.

(c) Refunds and Tax Benefits . Any Tax refunds that are received after the Closing Date by the Seller (other than tax refunds received in connection with the Seller’s individual tax Returns), the Purchaser or the Company, and any amounts credited against Tax to which the Seller, the Purchaser or the Company become entitled, shall be for the account of the Company, and the Seller shall pay over to the Company any such refund or the amount of any such credit within fifteen (15) days after receipt or entitlement thereto. In addition, to the extent that a claim for refund or a proceeding results in a payment or credit against Tax by a taxing authority to the Seller, the Seller shall pay such amount to the Company within fifteen (15) days after receipt or entitlement thereto.

(d) Cooperation on Tax Matters .

(i) The Purchaser, the Company and the Seller shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of any Returns pursuant to this Section and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Company and the Seller agrees (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Purchaser or the Seller, any extensions thereof) of the respective tax periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Seller, as the case may be, shall allow the other party to take possession of such books and records.

(iii) The Purchaser and the Seller further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to §6043 of the Code and all Treasury Department Regulations promulgated thereunder.

ARTICLE VII
CONDITIONS TO CLOSING

7.1 Conditions Precedent to Obligations of Purchaser .

(a) all representations and warranties of the Seller contained herein shall be true and correct as of the date hereof;

(e) Certificates representing the Shares shall have been, or shall at the Closing be, validly delivered and transferred to the Purchaser, free and clear of any and all Liens;

(f) there shall not have been or occurred any material adverse change to the Company or its Business;

(i) the Purchaser shall have received the audited financial statements of the Company, in form and scope required for SEC reporting purposes.

7.2 Conditions Precedent to Obligations of the Seller .

(a) all representations and warranties of the Purchaser contained herein shall be true and correct as of the date hereof;

(e) no Legal Proceedings shall have been instituted or threatened or claim or demand made against the Seller, the Company, or the Purchaser seeking to restrain or prohibit or to obtain substantial damages with respect to the consummation of the transactions contemplated hereby, and there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby.

7.3 Conditions Subsequent to Closing .

(a) Purchaser shall be required to close upon a private placement offering (“First Private Placement”) of at least $5,000,000 within thirty (30) business days of the Closing Date, from which the First Payment shall be made to Seller.

(b) Purchaser shall be required to close upon a second private placement offering (“Second Private Placement”) other than the First Private Placement of at least $5,000,000 within nine (9) months after the Closing Date, from which the Second Payment shall be made to Seller.

In the event that the Purchaser fails to timely: (a) close the First Private Placement, (b) close the Second Private Placement, (c) make the First Payment, or (d) make the Second Payment, Seller shall have the right to rescind the transactions contemplated herein.

ARTICLE VIII
DOCUMENTS TO BE DELIVERED

8.1 Documents to be Delivered by the Seller .

At the Closing, the Seller shall deliver, or cause to be delivered, to the Purchaser

the following:

(a) stock certificates representing the Shares, duly endorsed in blank or accompanied by stock transfer powers and with all requisite stock transfer tax stamps attached;

(b) the certificates referred to in Section 7.1(d) and 7.1(e) hereof;

(d) certificate of good standing with respect to the Company issued by the secretary of the company

(e) such other documents as the Purchaser shall reasonably request.

8.2 Documents to be Delivered by the Purchaser .

At the Closing, the Purchaser shall deliver to the Seller the following: (a) the certificates referred to in Section 7.2(d) hereof; and (b) such other documents as the Seller shall reasonably request.

Thirty day following the Closing and upon the closing of the First Private Placement, Purchaser shall deliver to Seller the First Payment.

ARTICLE IX
INDEMNIFICATION

9.1 Indemnification .

(a) Subject to Section 9.2 hereof, the Seller hereby agrees to indemnify and hold the Purchaser and its respective directors, officers, employees, Affiliates, agents, successors and assigns (collectively, the "Purchaser Indemnified Parties") harmless from and against:

(i) any and all liabilities of the Company of every kind, nature and description, absolute or contingent, existing as against the Company prior to and including the Closing Date or thereafter coming into being or arising by reason of any state of facts existing, or any transaction entered into, on or prior to the Closing Date, except to the extent that the same have been fully provided for in the Balance Sheet or disclosed in the notes thereto or were incurred in the ordinary course of business between the Balance Sheet date and the Closing Date;

(iv) any and all notices, actions, suits, proceedings, claims, demands, assessments, judgments, costs, penalties and expenses, including attorneys' and other professionals' fees and disbursements (collectively, "Expenses") incident to any and all losses, liabilities, obligations, damages, costs and expenses with respect to which indemnification is provided hereunder (collectively, "Losses").

(iii) any and all Expenses incident to the foregoing.

9.2 Limitations on Indemnification for Breaches of Representations and

Warranties .

9.3 Indemnification Procedures .

herein provided or contests its obligation to indemnify the indemnified party for such Losses under this Agreement, the indemnified party may defend against, negotiate, settle or otherwise deal with such Claim. If the indemnified party defends any Claim, then the indemnifying party shall reimburse the indemnified party for the Expenses of defending such Claim upon submission of periodic bills. If the indemnifying party shall assume the defense of any Claim, the indemnified party may participate, at his or its own expense, in the defense of such Claim; provided, however, that such indemnified party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying party if, (i) so requested by the indemnifying party to participate or (ii) in the reasonable opinion of counsel to the indemnified party, a conflict or potential conflict exists between the indemnified party and the indemnifying party that would make such separate representation advisable; and provided, further, that the indemnifying party shall not be required to pay for more than one such counsel for all indemnified parties in connection with any Claim. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Claim.

9.4 Tax Treatment of Indemnity Payments .

The Seller and the Purchaser agree to treat any indemnity payment made pursuant to this Article 9 as an adjustment to the Purchase Price for federal, state, local and foreign income tax purposes.

ARTICLE X
MISCELLANEOUS

10.1 Payment of Sales, Use or Similar Taxes .

All value added tax, goods and services tax, and sales, use, transfer, intangible, recordation, documentary stamp or similar Taxes or charges, of any nature whatsoever,

applicable to, or resulting from, the transactions contemplated by this Agreement shall be borne by the Seller.

10.2 Survival of Representations and Warranties .

10.3 Expenses .

267670

10.4 Specific Performance .

10.5 Further Assurances .

10.6 Submission to Jurisdiction; Consent to Service of Process; Attorney’s

Fees .

10.7 Entire Agreement; Amendments and Waivers .

whom enforcement of any such amendment, supplement, modification or waiver is sought. No action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

10.8 Governing Law .

This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado.

10.9 Table of Contents and Headings .

The table of contents and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

10.10 Notices .

(a) Purchaser:

Zulu Energy Corp.
P.O. Box 6565
1745 Meadowlark Ln.
Sheridan, WY 82801
Attn: Paul Stroud, Chief Executive Officer
Phone: (604) 602-1717
Facsimile: (604)

Copy to:

(b) Seller:

SWANSI HOLDINGS CORP
c/o Gareth Corbin, Esq., Director,
Nerine Fiduciaire S.A.,
Rue des Terreaux-du-Temple 4,

Case postale 5023,
CH - 1211 Geneva 11
Switzerland
Phone: +4122 716 0916
Facsimile: +4122 716 0917
10.11 Severability .

If any provision of this Agreement is invalid or unenforceable, the balance of this Agreement shall remain in effect.

10.12 Binding Effect; Assignment .

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written.

ZULU ENERGY CORP.

By:		/s/ Paul Stroud

		Paul Stroud,
		Chief Executive Officer

SWANSI HOLDINGS CORP.

By: /s/ Giuseppe Albanese
Giuseppe Albanese
Authorized Signatory

		ANNEX A
Seller		Shares
Swansi Holdings Corp.		50 shares Nyati Resources Botswana (PTY) Limited

ZULU ENERGY CORP.

1066 West Hastings Street, Suite 2610

Vancouver, BC v6e 3x2

December 19, 2007

LMA Hughes LLLP

c/o Nerine Trust Company

PO Box 434,

Nerine House,

St George's Place

St. Peter Port

Guernsey, GY1 3ZG

Channel Islands

Attn: Phil Lockett, Esq., Executive Director

Re:

Tax Indemnification

Zulu Energy Corp., for itself and its subsidiaries (including, but not limited to Nyati Mauritius Limited) agrees to indemnify and hold harmless LMA Hughes LLLP, and all of its partners (each, an " Indemnified Party" ) from and against (i) any U.S. federal and state income tax liability (including interest and penalties) resulting from a breach of Section 6.11 of the Stock Exchange Agreement and Plan of Reorganization (the " Tax Indemnity Payment "); and (ii) any increase in the Indemnified Party's U.S. federal and state income tax liability resulting from Zulu's payment of the Tax Indemnity Payment to the Indemnified Party determined by dividing the Tax Indemnity Payment by the difference between (a) one and (b) the Indemnified Party’s combined effective federal and state income tax rate (expressed as a decimal) for the taxable year of the payment. The indemnity obligations of Zulu Energy Corp. pursuant to this Agreement shall expire with the applicable statute of limitations for the tax return year reflecting the transactions contemplated by the Stock Exchange Agreement and Plan of Reorganization.

Sincerely,

/s/ Paul Stroud

Paul Stroud, Chief Executive Officer

Accepted and Agreed as of

December 19, 2007:

LMA Hughes LLLP

/s/ Brian Hughes

By: Brian Hughes

Its: Partner

FOR IMMEDIATE RELEASE:

NEWS

December 24, 2007

OTCBB: ZLUE

Zulu Energy Corp. Completes Botswana Acquisition

DENVER, Colorado – Zulu Energy Corp. (OTCBB: ZLUE) today announced the closing of agreements resulting in Zulu Energy becoming the owner of all of the stock of Nyati Mauritius Limited. Nyati Mauritius’ indirect wholly-owned subsidiary, Nyati Energy Resources Botswana (Proprietary) Limited, holds exploration licenses in Botswana. Zulu Energy acquired its interests based on management’s belief in the potential for a significant Coalbed Methane project in the lease area.

In connection with the share acquisition, Zulu issued 30 million shares of its common stock and agreed to pay an aggregate of $3 million in cash and to issue a five-year warrant to purchase 15 million shares of Zulu common stock. Zulu must raise a minimum of $5 million in private financing or a portion of the transaction may be rescinded.

Paul Stroud, President and CEO of Zulu Energy, said he is pleased to have concluded the share acquisitions, and that he is making plans to commence exploratory work in Botswana in early 2008. Mr. Stroud noted that additional financing will be required to meet the Company’s funding commitments in the share exchange and to pursue the project work in Botswana.

Forward-Looking Statements

This press release includes forward-looking statements as determined by the U.S. Securities and Exchange Commission (the "SEC"). All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that the Company believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include the Company's ability to obtain financing to pay a portion of the acquisition consideration and to fund project work in Botswana, the absence of any proved reserves, the need to obtain governmental approvals to renew the leases and to conduct various operational activities, general economic and business conditions, and other factors over which the Company has little or no control. The Company does not intend (and is not obligated) to update publicly any forward-looking statements. The contents of this press release should be considered in conjunction with the warnings and cautionary statements contained in the Company's filings with the SEC.

Contacts:

Jay Pfeiffer

Pfeiffer High Investor Relations, Inc.

303-393-7044

Satyendra Deshpande

Chief Financial Officer

Zulu Energy Energy Corp.

(716) 400-1664