Edgar Filing: HOUSTON AMERICAN ENERGY CORP

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________

AMENDMENT NO. 1
TO
FORM SB-2

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
____________________

HOUSTON AMERICAN ENERGY CORP.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

DELAWARE 1311 76-0675953
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(STATE OR JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)

801 TRAVIS STREET, SUITE 2020
HOUSTON, TEXAS 77002
(713) 222-6966
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(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)

MR. JOHN TERWILLIGER
801 TRAVIS STREET, SUITE 2020
HOUSTON, TEXAS 77002
(713) 222-6966
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(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

with a copy to:

MICHAEL SANDERS, ESQUIRE
20333 S.H. 249, SUITE 600
HOUSTON, TEXAS 77070
(832) 446-2599

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this registration statement.

____________________

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]

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

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

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ] ________________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ] ____________________________

In accordance with Rule 429 under the Securities Act of 1933, the
Prospectus contained in this Registration Statement relates to a total of
3,542,907 shares of the Registrant's Common Stock, 1,908,958 of which were
registered, and remain unsold, in the Company's Registration Statement on Form
SB-2 (No. 333-108654) filed with the Securities and Exchange Commission on
September 10, 2003, and declared effective on September 26, 2003. An aggregate
filing fee of $68.46 was paid on the filing of the initial Registration
Statement (No. 333-108654) on September 9, 2003. This Registration Statement,
which is a new Registration Statement, also constitutes Post-Effective Amendment
No. 1 to Registration Statement No. 333-108654, which shall hereafter become
effective concurrently with the effectiveness of this Registration Statement in
accordance with Section 8(a) of the Securities Act of 1933.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION JANUARY 28, 2004

HOUSTON AMERICAN ENERGY CORP.
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3,542,907 Shares of Common Stock
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The selling security holders, identified as "Selling Shareholders" in this
Prospectus, may offer and sell, from time to time, up to 3,542,907 shares of
Common Stock of Houston American Energy Corp. The Selling Shareholders may sell
all or a portion of their shares through public or private transactions at
prevailing market prices or at privately negotiated prices. We will not receive
any part of the proceeds from the sale of these shares by the Selling
Shareholders.

Our Common Stock is traded on the OTC Electronic Bulletin Board under the
symbol "HUSA". The last reported sale price of our Common Stock on the OTC
Electronic Bulletin Board on January 22, 2004 was $0.77 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
___________________

PROSPECTUS DATED , 2004

TABLE OF CONTENTS

PAGE
----

About this Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Prospectus Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Caution about Forward-Looking Statements. . . . . . . . . . . . . . . . . . . .9
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Market for Registrant's Common Equity and Related Stockholder Matters . . . . 10
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Certain Relationships and Related Transactions. . . . . . . . . . . . . . . . 27
Security Ownership of Certain Beneficial Owners and Management. . . . . . . . 28
Selling Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Plan of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Where You Can Find More Information . . . . . . . . . . . . . . . . . . . . . 33
Index to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . 34

ABOUT THIS PROSPECTUS

You should only rely on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The Selling Shareholders are offering to sell,
and seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in the prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering appearing elsewhere in this prospectus and in our Financial Statements
and related notes and other documents incorporated herein by reference.

OUR COMPANY

Houston American Energy Corp. is an oil and gas exploration and production
company. In addition to seeking out oil and gas prospects using advanced
seismic techniques, we utilize the contacts of John F. Terwilliger, our sole
director and executive officer, to identify potential acquisition targets in the
Onshore Texas Gulf Coast Region of the State of Texas, where Mr. Terwilliger has
been involved in oil and gas exploration and production activities since 1983.
Further, we have through an interest in a limited liability company, interests
in two concessions in the South American country of Colombia. As a result, we
expect to be active in Colombia for the foreseeable future. Moreover, as well
as our own drilling activities and acquisition strategy, we may also encourage
others in the oil and gas industry to enter into partnerships or joint ventures
with us for the purpose of acquiring properties and conducting drilling and
exploration activities.

Our principal executive offices are located at 801 Travis Street, Suite
2020, Houston, Texas 77007 and our telephone number is (713) 222-6966.

THE OFFERING

Common stock offered by the
selling shareholders 3,542,907

Common stock to be outstanding
after this offering 19,513,089 shares

Use of proceeds We will not receive any proceeds from the
sale of common stock by the selling
shareholders

OTCBB symbol HUSA

Risk Factors Purchase of the common stock offered hereby
involves certain risk, including risks
associated with need for additional capital,
operating losses, uncertain value or decline
in value of reserves, dependence upon
management and third parties, and operating
risks in the oil and gas industry, among
others. See "Risk Factors."

RISK FACTORS

An investment in our common stock involves certain risks. Prospective
investors should carefully review the following factors, together with the other
information contained in this prospectus, prior to making a decision to invest
in our common stock. The future trading price of shares of our common stock
will be affected by the performance of our business relative to, among other
things, competition, market conditions and general economic and industry
conditions.

RISKS RELATED TO OUR FINANCIAL CONDITION AND OUR BUSINESS

Need for additional financing

Our revenue is currently insufficient to cover our ongoing exploration and
development expenses and our general operating costs. Our auditors have issued
a going concern opinion, which means that there is doubt that we can continue as
an ongoing business for the next 12 months. Our ability to continue our
operations is dependent on the success of our ongoing drilling efforts and the
revenues resulting therefrom and, to the extent such drilling activities produce
inadequate revenues to operate profitably, the willingness and ability of John
F. Terwilliger, our sole director and executive officer, to continue funding our
operations and our ability to obtain additional sources of financing as
discussed below in "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources." As of the date of
this prospectus, our relationship with Mr. Terwilliger is stable and we have no
reason to doubt his willingness to continue providing additional funding.
However, if Mr. Terwilliger discontinues funding our operations and we are
unable to obtain alternative financing when needed on acceptable terms, if at
all, we may be unable to continue our operations.

We may be unable to meet our capital requirements which may slow down or curtail
our business plans

Since our inception on April 2, 2001 to September 30, 2003, we have
suffered operational losses totaling $1,605,149 and we expect to continue to
have substantial capital expenditure and working capital needs. If low natural
gas and oil prices, operating difficulties or other factors, many of which are
beyond our control, cause our revenues or cash flows from operations to
decrease, we may be limited in our ability to obtain the capital necessary to
complete our development, exploitation and exploration programs. We have not
thoroughly investigated whether this capital would be available, who would
provide it, and on what terms. If we are unable, on acceptable terms, to raise
the required capital, our business may be seriously harmed or even terminated.

Revenue from our oil and gas properties often depends on factors beyond our
control

The profitability of our oil and gas operations depends upon factors which
are beyond our control, including:

o Natural gas and crude oil prices, which are subject to substantial
fluctuations as a result of variations in supply and demand and
seasonality;

o Future market, economic and regulatory factors which may materially
affect our sales of gas production; and

o Business practices of our competitors in the oil and gas operating
sector.

The estimates of any proved reserves on our leaseholds are currently unknown

As of the date of this prospectus, we have not obtained an engineering
study of the estimates of the proved natural gas and oil reserves on our
leaseholds, if any, since December 31, 2002. Determining the estimates of proved
reserves is a complex process that requires significant decisions and
assumptions in the evaluation of available geological, geophysical, engineering
and economic data for each reservoir. The actual survey of our leaseholds may
determine that our properties do not have proved natural gas and oil reserves,
which could have a material adverse effect on our business, financial condition,
results of operations and ability to continue our operations.

Our current oil and gas reserves may be depleted

Unless we continue to acquire additional properties containing proven
reserves and expand our reserves through successful exploration and development
activities, our reserves will decline as they are produced. This, in turn, will
reduce cash flow for future growth as well as the assets available to secure
financing for capital expenditures.

Impairment of our oil and gas properties

Although we have not obtained an engineering study to determine the
estimates of the proved oil and gas reserves on our properties, if any, we have
conducted internal studies of the results of our producing wells, which
indicated that there was an impairment to our oil and gas properties. As a
result, in both 2001 and 2002, we wrote down the value of our oil and gas
properties to the estimated recoverable amount of oil and gas, which increased
our losses through December 31, 2002 by $683,904. Should it be necessary to
further write down the value of our oil and gas properties as a result of the
engineering study of our proved reserves, if any, when it is completed, such
additional write down could have a material adverse effect on our business,
financial condition, results of operations and ability to continue our
operations.

We are not the operator of our oil and gas properties

Under the terms of the Operating Agreements related to our oil and gas
properties, third parties act as the operator of our oil and gas wells and
control the drilling activities to be conducted on our properties. Therefore, we
have limited control over certain decisions related to activities on our
properties, which could effect our results of operations. Decisions over which
we have limited control include:

o the timing and amount of capital expenditures;

o the timing of initiating the drilling and recompleting of wells;

o the extent of operating costs; and

o the level of ongoing production.

Our success depends on our management team and other key personnel, the loss of
any of whom could disrupt our business operations

Our success will depend on our ability to retain John F. Terwilliger, our
sole director and executive officer, and to attract other experienced management
and non-management employees, including engineers, geoscientists and other
technical and professional staff. We will depend, to a large extent, on the
efforts, technical expertise and continued employment of such personnel and
members of our management team. If members of our management team should resign
or we are unable to attract the necessary personnel, our business operations
could be adversely affected.

Our management owns a significant amount of our common stock, giving them
influence or control in corporate transactions and other matters, and their
interests could differ from those of other shareholders

John F. Terwilliger, our sole director and executive officer, owns
approximately 43.9 percent of our outstanding common stock. As a result, he is
in a position to significantly influence or control the outcome of matters
requiring a shareholder vote, including the election of directors, the adoption
of any amendment to our certificate of incorporation or bylaws, and the approval
of mergers and other significant corporate transactions. His control of Houston
American may delay or prevent a change of control on terms favorable to the
other shareholders and may adversely affect the voting and other rights of other
shareholders.

Our operations in Colombia are subject to risks relating to political and
economic instability

We currently have interests in two oil and gas concessions in Colombia and
anticipate that operations in Colombia will constitute a substantial element of
our strategy going forward. The political climate in Colombia is unstable and
could be subject to radical change over a very short period of time. In the
event of a significant negative change in the political or economic climate in
Colombia, we may be forced to abandon or suspend our operations in Colombia.

RISKS RELATED TO THE NATURAL GAS AND OIL INDUSTRY

Our operations may expose us to environmental liabilities

Any leakage of crude oil and saltwater from the subsurface portions of our
wells could cause degradation of fresh groundwater resources, as well as surface
damage, potentially resulting in suspension of operation of the wells, fines and
penalties from governmental agencies, expenditures for remediation of the
affected resource, and liabilities to third parties for property damages and
personal injuries.

Oil and natural gas prices are volatile, which could have a material adverse
effect on our business

Natural gas and oil prices are subject to wide fluctuations in response to
relatively minor changes in or perceptions regarding supply and demand.
Historically, the markets for natural gas and oil have been volatile, and they
are likely to continue to be volatile in the future. It is impossible to predict
oil and natural gas price movements with certainty. Lower natural gas and oil
prices may not only decrease our revenues on a per unit basis but also may
reduce the amount of natural gas and oil that we can produce economically. A
substantial or extended decline in natural gas and oil prices may have a
material adverse affect on our future business, financial condition, results of
operations, liquidity and ability to finance planned capital expenditures.

Drilling wells is speculative, often involving significant costs

Developing and exploring for natural gas and oil reserves involves a high
degree of operational and financial risk. The budgeted costs of drilling,
completing and operating wells are often exceeded and can increase significantly
when drilling costs rise due to a tightening in the supply of various types of
oilfield equipment and related services. If our actual drilling and development
costs are significantly more than our estimated costs, our business could be
negatively affected.

The natural gas and oil business involves many uncertainties and operating risks
that can prevent us from realizing profits and cause substantial losses

Development, exploitation and exploration activities may be unsuccessful
for many reasons, including title problems, weather, cost overruns, fire,
explosions, blow-outs and other mechanical difficulties. Moreover, the
successful drilling of a natural gas or oil well does not ensure a profit on
investment. Exploratory wells bear a much greater risk of loss than development
wells. A variety of factors, both geological and market-related, can cause a
well to become uneconomical or only marginally economical. If we experience any
of these problems, it could have a material adverse effect on our results of
operations and we could suffer substantial losses.

Competition in our industry is intense and we may not be able to compete
effectively

Competition for the acquisition of natural gas and oil properties and the
equipment and labor required to operate and to develop properties is very
intense in the oil and gas industry. We compete with many major and independent
companies, many of which have greater financial and other resources than Houston
American. Therefore, our future results of operations will depend on our ability
to conduct operations, to evaluate and select suitable properties and to
consummate transactions in this highly competitive environment.

We are subject to complex laws and regulations, including environmental
regulations, which can adversely affect the cost, manner or feasibility of doing
business

The natural gas and oil industry is subject to extensive laws and
regulations, including environmental laws and regulations. Compliance with
environmental and other governmental regulations often requires large
expenditures. Additionally, failure to comply with these laws and regulations,
which are subject to change over time, may subject us to administrative, civil
and criminal penalties and, in some instances, could result in the suspension or
termination of our operations. Accordingly, the costs of complying with these
laws and regulations and any penalties, suspensions, terminations or regulatory
changes could have a material adverse effect on our business, financial
condition and results of operations.

RISKS RELATED TO THIS OFFERING

Our stock price has been, and is likely to continue to be, highly volatile and
could drop unexpectedly.

The trading price of our common stock has been highly volatile and may
continue to be volatile in response to the following factors:

- quarterly variations in our operating results;
- limited trading volume;
- announcements of results of drilling efforts, acquisitions and
disposals of properties;
- investor perception of us or the energy market in general;
- changes in financial estimates by securities analysts; and
- general economic and market conditions.

Declines in the market price of our common stock could also materially
adversely affect employee morale and retention, our access to capital and other
aspects of our business.

Shares of our common stock may be "penny stocks"

If the market price per share of our common stock is less than $5.00, the
shares of our common stock will be "penny stocks" as defined in the Exchange
Act. As a result, an investor may find it more difficult to dispose of or obtain
accurate quotations as to the price of the shares of our common stock being
registered under this prospectus. In addition, the "penny stock" rules adopted
by the SEC under the Exchange Act subject the sale of shares of our common stock
to regulations which impose sales practice requirements on broker-dealers. For
example, broker-dealers selling penny stocks must, prior to effecting the
transaction, provide their customers with a document that discloses the risks of
investing in penny stocks.

Furthermore, if the person purchasing the securities is someone other than
an accredited investor or an established customer of the broker-dealer, the
broker-dealer must also approve the potential customer's account by obtaining
information concerning the customer's financial situation, investment experience
and investment objectives. The broker-dealer must also make a determination
whether the transaction is suitable for the customer and whether the customer
has sufficient knowledge and experience in financial matters to be reasonably
expected to be capable of evaluating the risk of transactions in penny stocks.
Accordingly, the SEC's rules may limit the number of potential purchasers of
shares of our common stock. Moreover, various state securities laws impose
restrictions on transferring "penny stocks," and, as a result, investors in our
common stock may have their ability to sell their shares impaired.

If our stock price remains volatile, we may become subject to securities
litigation, which is expensive and could divert our resources.

In the past, following periods of market volatility in the price of a
company's securities, security holders have instituted class action litigation.
Many companies in our industry have been subject to this type of litigation. If
the market value of our stock experiences adverse fluctuations, and we become
involved in this type of litigation, regardless of the outcome, we could incur
substantial legal costs and our management's attention could be diverted,
causing our business to suffer.

The sale of a substantial number of shares of our common stock after this
offering may affect our stock price.

The market price of our common stock could decline as a result of sales of
substantial amounts of common stock in the public market after the closing of
this offering or the perception that substantial sales could occur. These sales
also might make it difficult for us to sell equity securities in the future at
a time and at a price that we deem appropriate.

Our certificate of incorporation and bylaws and the Delaware General Corporation
Law contain provisions that could discourage an acquisition or change of control
of Houston American

Our certificate of incorporation authorizes our board of directors to issue
preferred stock and common stock without shareholder approval. If our board of
directors elects to issue preferred stock, it could be more difficult for a
third party to acquire control of us. In addition, provisions of our certificate
of incorporation and bylaws could also make it more difficult for a third party
to acquire control of us. These provisions include a denial of cumulative voting
rights, limitations on shareholder proposals at meetings of shareholders, and
restrictions on the ability of our shareholders to call special meetings. Our
certificate of incorporation provides that our board of directors is divided
into three classes, each elected for staggered three-year terms. Although we
currently have only one director, we anticipate additional directors will be
added to our board of directors. Thus, control of our board of directors cannot
be changed in one year; rather, at least two annual meetings must be held before
a majority of the members of our board of directors could be changed. In
addition, the Delaware General Corporation Law imposes restrictions on mergers
and other business combinations between us and any holder of 15 percent or more
of our outstanding common stock.

These provisions of Delaware law and our certificate of incorporation and
bylaws may delay, defer or prevent a tender offer or takeover attempt that a
shareholder might consider in his best interest, including attempts that might
result in a premium over the market price for the common stock.

CAUTION ABOUT FORWARD-LOOKING STATEMENTS

Some of the statements under the captions "Prospectus Summary," "Risk
Factors," "Use of Proceeds," "Business" and elsewhere in this prospectus are
"forward-looking statements." These forward-looking statements include, but are
not limited to, statements about our plans, objectives, expectations and
intentions and other statements contained in this prospectus that are not
historical facts. When used in this prospectus, the words "anticipates,"
"believes," "continue," "could," "estimates," "expects," "intends," "may,"
"plans," "seeks," "should" or "will" or the negative of these terms or similar
expressions are generally intended to identify forward-looking statements.
Because these forward-looking statements involve risks and uncertainties, there
are important factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements, including our
plans, objectives, expectations and intentions and other factors discussed under
"Risk Factors."

USE OF PROCEEDS

We will not receive any proceeds from the sales, if any, of the shares
being offered by the selling shareholders. The purpose of this offering is to
register our common stock for resale by the selling shareholders.

MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

Since January 18, 2002, our Common Stock has been listed on the
over-the-counter electronic bulletin board ("OTCBB") under the symbol "HUSA".
The following table sets forth the range of high and low bid prices for each
quarter during the past two fiscal years.

High Low
---- ---

Calendar Year 2003

Fourth Quarter . . . . . $ 0.75 $ 0.38
Third Quarter. . . . . . 0.52 0.31
Second Quarter . . . . . 0.42 0.23
First Quarter. . . . . . 0.51 0.30

Calendar Year 2002

Fourth Quarter . . . . . $ 0.40 $ 0.11
Third Quarter. . . . . . 0.40 0.11
Second Quarter . . . . . 0.72 0.23
First Quarter. . . . . . 0.75 0.05

The quotations reflect inter-dealer prices without retail mark-up,
mark-down or commission and may not represent actual transactions.

At January 27, 2004, the closing bid price of the Common Stock was $0.64.

As of January 27, 2004, there were approximately 1017 beneficial holders of
our Common Stock.

DIVIDEND POLICY

We have not paid dividends in the past and we intend to retain earnings, if
any, and will not pay cash dividends in the foreseeable future. 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, general business conditions and such other
factors as the board of directors may deem relevant.

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

GENERAL

Houston American Energy was incorporated in April 2001, for the purposes of
seeking oil and gas exploration and development prospects. Since inception, we
have sought out prospects utilizing the expertise and business contacts of John
F. Terwilliger, our sole director and executive officer. Through the third
quarter of 2002, the acquisition targets were in the Gulf Coast region of Texas
and Louisiana, where Mr. Terwilliger has been involved in oil and gas
exploration for many years. In the fourth quarter 2002, we initiated
international efforts through a Colombian joint venture more fully described
below. Domestically and internationally, the strategy is to be a non-operating
partner with exploration and production companies that have much larger
resources and operations.

OVERVIEW OF BUSINESS DEVELOPMENT FROM INCEPTION TO DECEMBER 2003

We were incorporated in April 2001 and consummated a merger with Texas
Nevada Oil and Gas Co. ("TNOG") in January 2002.

Our initial efforts in 2001 and 2002 consisted of the evaluation and
assembly of various interests in oil and gas properties in the onshore Gulf
Coast of Texas and Louisiana regions. Pursuant to those efforts, we acquired
varying interests in (1) two properties in Lavaca County, Texas, (2) two
properties in Matagorda County, Texas, and (3) one property in Jackson County,
Texas.

In January 2003, we acquired, from Rio Exploration Company for $312,500, a
12.5% interest in Hupecol, LLC and in the Tambaqui Association Contract.
Through the acquisition of the interest in Hupecol and in the Tambaqui
Association Contract, we acquired interests in two properties in the South
American country of Colombia. Subsequently, in December 2003, we exercised our
right, through Hupecol, to participate in the acquisition of over 3,000
kilometers of seismic data in Colombia covering in excess of 20 million acres.

In 2003, we acquired interests in properties in St. John the Baptist
Parish, Louisiana, Oklahoma and San Patricio County, Texas.

From inception through December 31, 2002, we had drilled four domestic
wells in Lavaca County, Texas. Two of the wells had been completed and were
awaiting a pipeline hook-up, one of the wells was dry and one was being
completed at December 31, 2002. The Mavis Wharton #3 well in Lavaca County,
Texas experienced production problems and was unsuccessfully reworked and,
ultimately, abandoned, in 2003. Through December 31, 2003, we had drilled (1)
one successful well in Matagorda County, Texas, (2) one successful well in
Lavaca County, Texas, and (3) one successful well in Louisiana. A test well in
San Patricio County, Texas was drilled in January 2004 with completion scheduled
to follow and a test well in Jackson County, Texas (the Miller #1) is scheduled
to begin drilling in the first quarter of 2004.

The acquisition of our interest in the Colombian properties included a
producing well, the Tambaqui #1. An offset well to that well was drilled as a
dry hole in 2003. A second offset well is scheduled to be drilled beginning in
the first quarter of 2004.

The second Colombian property, the Cara Cara concession, was successfully
tested with the completion of the Jaguar #1 well in April 2003. Our Colombian
venture acquired 50 square miles of 3D seismic grid covering the Cara Cara
concession and two other prospect areas. In December 2003, drilling began on
the first of three wells planned to offset, and to delineate, the Jaguar #1
well.

CRITICAL ACCOUNTING POLICIES

The following describes the critical accounting policies used in reporting
our financial condition and results of operations. In some cases, accounting
standards allow more than one alternative accounting method for reporting, such
is the case with accounting for oil and gas activities described below. In
those cases, our reported results of operations would be different should we
employ an alternative accounting method.

Full Cost Method of Accounting for Oil and Gas Activities. The Securities
and Exchange Commission ("SEC") prescribes in Regulation S-X the financial
accounting and reporting standards for companies engaged in oil and gas
producing activities. Two methods are prescribed: the successful efforts method
and the full cost method. We follow the full cost method of accounting for oil
and gas property acquisition, exploration and development activities. Under
this method, all productive and nonproductive costs incurred in connection with
the exploration for and development of oil and gas reserves are capitalized.
Capitalized costs include lease acquisition, geological and geophysical work,
delay rentals, costs of drilling, completing and equipping successful and
unsuccessful oil and gas wells and related internal costs that can be directly
identified with acquisition, exploration and development activities, but does
not include any cost related to production, general corporate overhead or
similar activities. Gain or loss on the sale or other disposition of oil and
gas properties is not recognized unless significant amounts of oil and gas
reserves are involved. No corporate overhead has been capitalized as of
December 31, 2002. The capitalized costs of oil and gas properties, plus
estimated future development costs relating to proved reserves are amortized on
a units-of-production method over the estimated productive life of the reserves.
Unevaluated oil and gas properties are excluded from this calculation. The
capitalized oil and gas property costs, less accumulated amortization, are
limited to an amount (the ceiling limitation) equal to the sum of: (a) the
present value of estimated future net revenues from the projected production of
proved oil and gas reserves, calculated at prices in effect as of the balance
sheet date (with consideration of price changes only to the extent provided by
contractual arrangements) and a discount factor of 10%; (b) the cost of unproved
and unevaluated properties excluded from the costs being amortized; (c) the
lower of cost or estimated fair value of unproved properties included in the
costs being amortized; and (d) related income tax effects. Excess costs are
charged to proved properties impairment expense. An allowance for impairment of
$109,573 and $574,331 was provided at December 31, 2002 and 2001, respectively.

Unevaluated Oil and Gas Properties. Unevaluated oil and gas properties
consist principally of our cost of acquiring and evaluating undeveloped leases,
net of an allowance for impairment and transfers to depletable oil and gas
properties. When leases are developed, expire or are abandoned, the related
costs are transferred from unevaluated oil and gas properties to depletable oil
and gas properties. Additionally, we review the carrying costs of unevaluated
oil and gas properties for the purpose of determining probable future lease
expirations and abandonments, and prospective discounted future economic benefit
attributable to the leases. We record an allowance for impairment based on a
review of present value of future cash flows. Any resulting charge is made to
operations and reflected as a reduction of the carrying value of the recorded
asset. Unevaluated oil and gas properties not subject to amortization include
the following at December 31, 2002 and September 30, 2003:

At December 31, 2002 At September 30, 2003
--------------------- ----------------------

Acquisition costs $ 68,000 $ 83,780
Evaluation costs. 120,418 44,853
--------------------- ----------------------
Total $ 188,418 $ 128,633
===================== ======================

The carrying value of unevaluated oil and gas prospects include $57,747 and
$61,366 expended for properties in the South American country of Colombia at
December 31, 2002 and September 30, 2003, respectively. We are maintaining our
interest in these properties and development has or is anticipated to commence
within the next twelve months.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2002

Revenues. Total oil and gas revenues increased by 690.4% to $144,138 for
the nine months ended September 30, 2003 from $18,235 for the nine months ended
September 30, 2002. The increase in revenues for the 2003 period was primarily
attributable to the commencement of revenue producing operations in Colombia and
increased revenue from our South Texas Kalmus well. Revenues from the Columbian
properties were $85,420 for the first nine months of 2003 and were nil for the
same period in the prior year. Primarily as a result of increased natural gas
prices during the 2003 period, our South Texas Kalmus well produced revenues of
$41,700 in 2003 as compared to $10,700 in 2002. During May 2003 the Kalmus well
went to water and was subsequently unsuccessfully reworked and then abandoned.

Operating Expenses. Lease operating expenses increased by 609.7% to
$100,108 in the 2003 period from $14,106 in the 2002 period. The increase in
lease operating expenses was attributable to the increase in the number, and
duration, of wells operated during the 2003 period, including initial well
operating expenses of $72,612 on the two Columbian wells.

During the early developmental stage of exploratory oil and gas wells,
daily operating costs are generally reasonably certain at the commencement of
production. However, the per unit of production costs can vary greatly due to
the fact that certain operating and field administration costs include a
significant fixed component and that initial equivalent barrel production may be
lower or higher than the sustained production achieved over the life of the
well. It is management's opinion that the per unit production costs of all of
its new discoveries can be reduced substantially through optimizing the level of
production from existing wells or the drilling of additional wells. This may be
especially true with the two new Columbian wells where the per well
administrative costs can be reduced as additional successful wells are completed
on the prospect acreage.

Joint Venture Expenses. Joint venture expenses totaled $40,998 in the 2003
period. We incurred no joint venture expenses in the 2002 period. The joint
venture expenses represent our allocable share of administrative expenses
arising from our interest in properties in Colombia.

General and Administrative Expenses. General and administrative expense
increased by 20.5% to $134,685 in the 2003 period from $111,733 in the 2002
period. We continue to experience disproportionately high general and
administrative expense associated with being smaller enterprise including, in
particular, accounting and legal costs associated with meeting our reporting
obligations as a public company. The increase in general and administrative
expenses in 2003 was primarily attributable to an increase in shareholder
relations expense, which was up $26,031 in the first nine months of 2003. The
increase in shareholder relations expense resulted from an undertaking during
2003 to increase our profile in the investment community in light of our need to
access capital to support our accelerated exploration activities.

Depreciation and Depletion Expense. Depreciation and depletion expense
increased by 306.4% to $41,721 in the 2003 period from $10,267 in the 2002
period. The increase in depreciation and depletion expense was primarily
attributable to the increase in production during the 2003 period which resulted
in higher depletion (up $30,750), including depletion attributable to the
Columbian wells ($17,683) and depletion attributable to the abandonment of the
Kalmus well.

Interest Expense. Interest expense increased 28.4% to $104,772 in the 2003
period compared to $81,605 in the 2002 period. The increase in interest expense
was attributable to increased borrowings from our sole officer and director to
finance our operations. In December 2003, shareholders converted $627,533 of
loans to equity and reduced the interest rate on $1 million of loans from 10% to
7.2%. Additionally, in December 2003, we raised approximately $653,000 from the
sale of common stock to support our future operations. Accordingly, interest
expense is expected to decline substantially beginning in 2004.

Write-Down of Oil and Gas Properties. During the 2002 period, we incurred
a charge of $16,976 relating to the write down of oil and gas properties. We
incurred no write downs during the 2003 period. The write-down during the 2002
period was attributable to a determination, based on the findings in an
independent reserve report, that, at September 30, 2002, the capitalized cost of
our oil and gas properties exceeded the maximum carrying value under the full
cost method of accounting.

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

Revenues. Total oil and gas revenues increased by 74.2% to $25,805 for the
year ended December 31, 2002 from $14,814 for the period from April 2, 2001 to
December 31, 2001. The increase in oil and gas revenues for the current period
was attributable to an increase in both volume and prices from the sale of
natural gas. Production volumes increased from 6,170 MCFE in the 2001 period to
8,957 MCFE in the 2002 period. The average price received per MCF of natural
gas sold increased from $2.40 in the 2001 period to $2.88 in the 2002 period.

Operating Expenses. Lease operating expenses increased by 76% to $19,397
in the 2002 period from $11,019 in the 2001 period. The increase in lease
operating expenses was attributable to the increase in the number, and duration,
of wells operated during the 2002 period.

General and Administrative Expenses. General and administrative expense
increased by 708% to $197,518 in the 2002 period from $24,420 in the 2001
period. The increase in general and administrative expenses was attributable to
efforts to support our increased drilling and operations during the 2002 period
and increased expenses associated with compliance with our reporting
requirements as a public company.

Depreciation and Depletion Expense. Depreciation and depletion expense
decreased by 35.7% to $24,166 in the 2002 period from $37,592 in the 2001
period. The decrease in depreciation and depletion expense was primarily
attributable to the write-down of certain oil and gas properties during 2001 and
2002.

Interest Expense. Interest expense increased 158% to $112,405 in the 2002
period compared to $43,602 in the 2001 period. The increase in interest expense
was attributable to increased borrowings from our sole officer and director to
finance our operations.

Write-Down of Oil and Gas Properties. During the 2002 period, we incurred
a charge of $109,573 relating to the write down of oil and gas properties
compared to a similar charge of $574,331 during the 2001 period. The
write-downs during the 2002 and 2001 periods were attributable to a
determination, based on the findings in an independent reserve report, that, at
end of those periods, the capitalized cost of our oil and gas properties
exceeded the maximum carrying value under the full cost method of accounting.

Write-Down of Merger Expenses. During the 2001 period, we incurred a
charge of $256,470 relating to the write-down of capitalized expenses associated
with our reverse merger with TNOG. We incurred no similar write-down during the
2002 period.

Gain on Settlement of Accounts Payable. During the 2002 period, we
reported a gain on the settlement of accounts payable of $42,870. The gain
arose from the settlement, for less than face value, of certain previously
recorded expenses/payables associated with our becoming a public reporting
company.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2003, we had a cash balance of $230,489 and a deficit in
working capital of $1.337 million compared to a cash balance of $939 and a
deficit in working capital of $1.27 million at December 31, 2002.

As discussed by the accountants in the audited financial statements
included herewith, our revenue is currently insufficient to cover our costs and
expenses. In addition to the income received from our wells, certain
significant shareholders, including John F. Terwilliger, our sole director and
executive officer, continue to provide us the funds needed to continue our
development and operations. To the extent our revenue shortfall exceeds the
willingness and ability of such shareholders to continue providing us the funds
needed, management anticipates raising any necessary capital from outside
investors coupled with bank or mezzanine lenders.

Loans from shareholders totaled $1.594 million, including accrued interest,
at September 30, 2003. The shareholders loans were repayable on demand, with
interest accruing at 10% per annum and are unsecured.

In December 2003, we completed a private placement of 1,633,949 shares of
common stock raising approximately $653,579. These funds were raised to support
our working capital requirements, including our ongoing Colombian development
activities and our onshore domestic leasing, drilling and development programs.

Simultaneous with the closing of our December 2003 private placement, we
issued 1,568,833 shares of common stock in full satisfaction of $627,533 of
loans from shareholders. The balance of the loans from shareholders in the
amount of $1 million, including accrued interest, was converted into unsecured
demand promissory notes, with interest accruing at 7.2% per annum and with a
maturity date of January 1, 2007.

During the first nine months of calendar 2003, we invested $665,693 for the
acquisition and development of oil and gas properties, consisting of (1)
acquisition of a 12.5% interest in the Tambaqui concession in Colombia, (2)
acquisition of 3D seismic on the Cara Cara concession in Colombia, (3)
acquisition of a 2.36328% working interest in the Jenny #1-14 well in Oklahoma,
and (4) drilling and/or completing expenses for the Jaguar #1 well in Colombia,
the Tambaqui #1 and the Tambaqui #1Am wells in Colombia, the Harrison #1 well in
Matagorda County, Texas, the Bougere Estate #1 well in Louisiana and the Goyen
#1 well in Lavaca County, Texas.

We initially budgeted expenditures for the fourth quarter of 2003 of
$170,000, consisting of (1) $75,000 for drilling three wells in Colombia on the
Cara Cara concession, (2) $45,000, net of carried interest, for drilling and
completion of the Miller #1 well in Jackson County, Texas, and (3) $50,000 for
new leasehold prospects. As of December 31, 2003, we had (1) spent approximately
$20,000 relative to the planned Columbian wells with drilling commencing in
December 2003, (2) increased from $45,000 to $100,000 our budgeted expenditures
relating to the Miller #1 well with drilling expected to commence in the first
quarter of 2004, and (3) spent $20,000 out of a $25,000 budget to acquire and
commence drilling of the St. Paul Prospect in San Patricio County, Texas with
drilling commencing in January 2004.

At September 30, 2003, we had two revenue producing wells in Columbia, one
revenue producing well in south Texas, one south Texas well that commenced
production September 30 and one successfully completed South Louisiana well that
commenced production following connection to a sales gathering line in December
2003. Preliminary indications are that these wells will more than double
current monthly revenue at the current equivalent per barrel price in the
mid-twenty dollar range. At the end of third quarter of 2003, our total
reserves had increased to an estimated 124,700 equivalent barrels with an
estimated discounted future net revenue stream in excess of $1,000,000.

Management anticipates that our current financing strategy of private debt
and equity offerings, combined with an expected increase in revenues, will meet
our anticipated objectives and business operations for the next 12 months.
Management continues to evaluate producing property acquisitions as well as a
number of drilling prospects. Subject to our ability to obtain adequate
financing at the applicable time, we may enter into definitive agreements on one
or more of those projects.

BUSINESS

GENERAL

EXPLORATION PROJECTS

Our exploration projects are focused on existing property interests, and
future acquisition of additional property interests, in the onshore Texas Gulf
Coast region, Colombia and Louisiana.

Each of our exploration projects differs in scope and character and
consists of one or more types of assets, such as 3-D seismic data, leasehold
positions, lease options, working interests in leases, partnership or limited
liability company interests or other mineral rights. Our percentage interest in
each exploration project ("Project Interest") represents the portion of the
interest in the exploration project we share with other project partners.
Because each exploration project consists of a bundle of assets that may or may
not include a working interest in the project, our Project Interest simply
represents our proportional ownership in the bundle of assets that constitute
the exploration project. Therefore, our Project Interest in an exploration
project should not be confused with the working interest that we will own when a
given well is drilled. Each exploration project represents a negotiated
transaction between the project partners. Our working interest may be higher or
lower than our Project Interest.

Our principal exploration projects as of December 31, 2003 consisted on the
following:

LAVACA COUNTY, TEXAS. In Lavaca County, Texas, we hold three separate
interests consisting of a 5% non-participating royalty interest in a 150 acre
tract known as the Mavis Wharton Lease, a 38% working interest in a 65.645 acre
tract known as the West Hardys Creek Prospect and a 57.46% working interest in a
1,195 acre tract known as the Hardys Creek Prospect.

The Mavis Wharton #3 well was drilled on the Mavis Wharton Lease and,
following completion, experienced production problems. The well was reworked
and determined to be non-commercial and abandoned. We have been advised that a
deep gas test is planned to include the Mavis Wharton Lease. Our royalty
interest in the Mavis Wharton Lease does not bear any costs of well operations.

The Goyen #1 well was drilled on the West Hardys Creek Prospect in the
third quarter of 2003. The Goyen #1 well tested the Frio and Miocene Sands to a
depth of 3,000 feet. The Goyen #1 well was successfully completed in September
2003 and commenced production as a gas well with an initial production rate of
350MCF per day. We presently have no plans with respect to drilling additional
wells on the West Hardys Creek Prospect.

MATAGORDA COUNTY, TEXAS. In Matagorda County, Texas, we hold two separate
interests consisting of a 3.5% working interest with a 2.415% net revenue
interest in a 779 acre tract known as the S.W. Pheasant Prospect and an option
to participate, based on a 3.5% working interest with a 2.415% net revenue
interest, in a 672 acre tract known as the Turtle Creek Prospect.

A well was successfully completed on the S.W. Pheasant Prospect in July
2003 with initial production rates from the Frio K Sand of 1400 MCF and 35
barrels of oil per day. Pursuant to our option covering the adjacent Turtle
Creek Prospect, we anticipate participating in the drilling of a well on the
Turtle Creek Prospect within the next year. Other than the anticipated well on
the Turtle Creek Prospect, we presently have no plans with respect to drilling
additional wells in Matagorda County.

JACKSON COUNTY, TEXAS. In Jackson County, Texas, we hold a 100% leasehold,
subject to a 27% royalty, on an 80 acre tract known as the W. Harmon Prospect.
At December 31, 2003, we had developed a plan with respect to drilling of the
Miller #1 well on the W. Harmon Prospect and had engaged an operator to drill a
7,300 foot test well. Drilling of the Miller #1 is expected to begin in the
first quarter of 2004.

ST. JOHN THE BAPTIST PARISH, LOUISIANA. In St. John the Baptist Parish,
Louisiana, we hold a 2% working interest with a 1.44% net revenue interest in a
726 acre leasehold known as the Bougere Estate and the Bougere Estate #1 well.
The Bougere Estate #1 well was completed in June 2003 with initial production of
200 barrels of oil and 170 MCF of gas per day. Commercial production of the
well commenced in December 2003 following installation of a gas sales pipeline.
We presently have no additional plans with respect to drilling additional wells
on the Bougere Estate.

LLANOS BASIN, COLOMBIA. In the Llanos Basin, Colombia, we hold an
interest, through our ownership in Hupecol, LLC, in a 357,000 acre tract known
as the Cara Cara concession. In conjunction with our acquisition of our
interest in Hupecol, we also acquired, and hold, a 12.6% working interest, with
an 11.31% net revenue interest, in the Tambaqui Association Contract covering
88,000 acres in the State of Casanare, Colombia.

The first well drilled in the Cara Cara concession, the Jaguar #1 well, was
completed in April 2003 with initial production of 892 barrels of oil per day.
In December 2003, Hupecol commenced drilling an additional three wells on the
Cara Cara concession as offsets to, and to delineate, the Jaguar #1 well.

Included in our interest in the Tambaqui Association Contract is an
interest in a producing well, the Tambaqui #1, and in two exploration wells.
The first exploration well drilled as an offset to the Tambaqui #1, the Tambaqui
#1Am, was dry. We expect to drill another offset to the Tambaqui #1 well in the
first quarter of 2004.

In conjunction with the efforts to develop the Cara Cara concession,
Hupecol has acquired 50 square miles of 3D seismic grid surrounding the Jaguar
#1 well and two other prospect areas. That data is expected to be utilized to
identify additional drill site opportunities to develop a field around the
Jaguar #1 well and in other prospect areas within the grid.

Our working interest in our exploration projects in Colombia are subject to
an escalating royalty of 8% on the first 5,000 barrels of oil per day to 20% at
125,000 barrels of oil per day. Our interest in the Tambaqui Association
Contract is subject to reversionary interests of Ecopetrol, the state owned
Colombian oil company, that could cause 50% of the working interest to revert to
Ecopetrol after we have recouped four times our initial investment.

In December 2003, we exercised our right to participate in the acquisition,
through Hupecol, of over 3,000 kilometers of seismic data in Colombia covering
in excess of 20 million acres. The seismic data is expected to be utilized to
map prospects in key areas with a view to delineating multiple drilling
opportunities beginning in 2004. We will hold a 12.5% interest in all prospects
developed by Hupecol arising from the acquired seismic data.

The following table sets forth certain information about each of our
exploration projects:

Acres Leased or Under Option at
December 31, 2003 (1)
---------------------------------
Project Project Company Project
Project Area Gross Net Net Interest
------------------------------- ---------- ---------- --------- ---------

TEXAS:

Lavaca County, Texas
Mavis Wharton. . . . . . . . 300.00 150.00 7.50 5.00%
Hardys Creek . . . . . . . . 1,195.00 418.25 240.33 57.46%
West Hardys Creek. . . . . . 65.65 65.65 24.95 38.00%
Jackson County, Texas
W. Harmon Prospect . . . . . 80.00 80.00 80.00 100.00%
San Patricio County, Texas
St. Paul Prospect. . . . . . 380.00 380.00 19.00 5.00%
Matagorda County, Texas
S.W. Pheasant Prospect . . . 779.00 779.00 27.27 3.50%
Turtle Creek Prospect. . . . 672.00 672.00 23.52 3.50%
---------- ---------- ---------
Texas Sub-Total . . . . . . . . 3,471.65 2,544.90 422.57

LOUISIANA:

St. John the Baptist Parish,
Louisiana . . . . . . . . . . 726.00 726.00 14.52 2.00%
---------- ---------- ---------
Louisiana Sub-Total . . . . . . 726.00 726.00 14.52 2.00%

OKLAHOMA

Jenny #1-14 . . . . . . . . . . 160.00 160.00 3.78 2.36%
---------- ---------- ---------
Oklahoma Sub-Total. . . . . . . 160.00 160.00 3.78

COLOMBIA

Cara Cara Concession . . . . 357,000.00 357,000.00 5,676.30 1.59%
Tambaqui Assoc. Contract (2) 88,000.00 88,000.00 11,088.00 12.6%
---------- ---------- ---------
Colombia Sub-Total. . . . . . . 445,000.00 445,000.00 16,764.30
---------- ---------- ---------
Total . . . . . . . . . . . . . 449,357.65 448,430.90 17,205.17
========== ========== =========

(1) Project Gross Acres refers to the number of acres within a project.
Project Net Acres refers to leaseable acreage by tract. Company Net
Acres are either leased or under option in which we own an undivided
interest. Company Net Acres were determined by multiplying the Project
Net Acres leased or under option times our working interest therein.

(2) The project interest is the working interest in the concession and not
necessarily the working interest in the well.

DRILLING ACTIVITIES

From April 2001 (inception of the Company) through December 31, 2003, we
drilled 9 exploratory and developmental wells, of which 7 were completed and 2
were dry holes. In 2001, 3 exploratory and 0 developmental wells were drilled
of which 2 were completed and 1 was a dry hole. In 2002, 2 exploratory and 0
developmental wells were drilled of which 2 were completed and 0 were dry holes.

The following table sets forth certain information regarding the actual
drilling results for each of the years 2001 and 2002 as to wells drilled in each
such individual year:

Exploratory Wells (1) Developmental Wells (1)
--------------------- -----------------------
Gross Net Gross Net
--------- ---------- ----------- ----------

2001
----

Productive . . . 2 0.45 0 0
Dry. . . . . . . 1 0.15 0 0

2002
----

Productive . . . 2 0.04 0 0
Dry. . . . . . . 0 0.00 0 0

(1) Gross wells represent the total number of wells in which we owned an
interest; net wells represent the total of our net working interests
owned in the wells.

Through December 31, 2003, we participated in the drilling of 3 additional
exploratory and 1 additional developmental wells, 3 of which had been completed
and 1 of which was a dry hole. One well was in progress at December 31, 2003,
on the Cara Cara concession in Colombia.

PRODUCTIVE WELL SUMMARY

The following table sets forth certain information regarding our ownership
as of December 31, 2003 of productive gas and oil wells in the areas indicated:

Gas Oil
------------ ------------
Gross Net Gross Net
----- ----- ----- -----

Texas. . . . . . . . . 2 0.415 0 0
Louisiana. . . . . . . 1 0.020 0 0
Oklahoma . . . . . . . 1 0.024 0 0
Colombia . . . . . . . 0 0.000 2 0.141
----- ----- ----- -----
Total . . . . . . 4 0.459 2 0.141
===== ===== ===== =====

VOLUME, PRICES AND PRODUCTION COSTS

The following table sets forth certain information regarding the production
volumes, average prices received (net of transportation costs) and average
production costs associated with our sales of gas and oil for the periods
indicated:

Year Ended December 31,
-----------------------
2001 2002
----------- ----------

Net Production:

Gas (Mcf). . . . . . . . 6,170 8,957

Average sales price:

Gas ($per Mcf) . . . . . 2.40 2.88

Average production expense and
Taxes ($per Mcfe) . . . . . . 1.78 2.17

NATURAL GAS AND OIL RESERVES

The following table summarizes the estimates of our historical net proved
reserves as of December 31, 2001 and 2002, and the present value attributable to
these reserves at these dates. The reserve data and present values were
prepared by Pressler Petroleum Consultants, Inc., independent petroleum
engineering consultants:

At December 31,
----------------
2001 2002
------- -------

Net proved reserves:

Natural gas (Mcf) . . . . . . . . . . . 27,999 18,872

Standardized measure of discounted future net
cash flows (1) . . . . . . . . . . . . . . . $23,677 $41,289

(1) The standardized measure of discounted future net cash flows represents
the present value of future net revenues after income tax discounted at 10%
per annum and has been calculated in accordance with SFAS No. 69, "Disclosures
About Oil and Gas Producing Activities" (see Note 10 - Supplemental Natural Gas
and Oil Information (Unaudited)) and, in accordance with current SEC guidelines,
and does not include estimated future cash inflows from hedging. The standardized
measure of discounted future net cash flows attributable to our reserves was
prepared using prices in effect at the end of the respective periods presented,
discounted at 10% per annum on a pre-tax basis. Average prices per Mcf of
natural gas used in making the present value determination as of December 31,
2001 and 2002 were $2.139 and $3.767, respectively.

In accordance with applicable requirements of the Securities and Exchange
Commission, we estimate our proved reserves and future net cash flows using
sales prices and costs estimated to be in effect as of the date we make the
reserve estimates. We hold the estimates constant throughout the life of the
properties, except to the extent a contract specifically provides for
escalation. Gas prices, which have fluctuated widely in recent years, affect
estimated quantities of proved reserves and future net cash flows. Any
estimates of natural gas and oil reserves and their values are inherently
uncertain, including many factors beyond our control. The reserve data
contained in this prospectus represent only estimates. Reservoir engineering is
a subjective process of estimating underground accumulations of natural gas and
oil that cannot be measured in an exact manner. The accuracy of reserve
estimates is a function of the quality of available data and of engineering and
geological interpretation and judgment. As a result, estimates of different
engineers, including those we use, may vary. In addition, estimates of reserves
may be revised based upon actual production, results of future development and
exploration activities, prevailing natural gas and oil prices, operating costs
and other factors, which revision may be material. Accordingly, reserve
estimates may be different from the quantities of natural gas and oil that we
are ultimately able to recover and are highly dependent upon the accuracy of the
underlying assumptions. Our estimated proved reserves have not been filed with
or included in reports to any federal agency.

LEASEHOLD ACREAGE

The following table sets forth as of December 31, 2003, the gross and net
acres of proved developed and proved undeveloped and unproven gas and oil leases
which we hold or have the right to acquire:

Proved Developed Proved Undeveloped Unproven
----------------- ------------------ ---------------------
Gross Net Gross Net Gross Net
--------- ------ --------- ------- ---------- ---------

Texas. . . . . . 225.65 30.55 480.00 16.80 2,766.00 375.23

Louisiana. . . . 300.00 6.00 0.00 0.00 426.00 8.52

Oklahoma . . . . 160.00 3.78 0.00 0.00 0.00 0.00

Colombia . . . . 640.00 27.65 3,320.00 88.16 441,040.00 16,648.49
--------- ------ --------- ------- ---------- ---------

Total . . . 1,325.65 67.98 3,800.00 104.96 444,232.00 17,032.24
========= ====== ========= ======= ========== =========

TITLE TO PROPERTIES

Title to properties is subject to royalty, overriding royalty, carried
working, net profits, working and other similar interests and contractual
arrangements customary in the gas and oil industry, liens for current taxes not
yet due and other encumbrances. As is customary in the industry in the case of
undeveloped properties, little investigation of record title is made at the time
of acquisition (other than preliminary review of local records).

Investigation, including a title opinion of local counsel, generally are
made before commencement of drilling operations.

MARKETING

At January 27, 2004, we had no contractual agreements to sell our gas and
oil production and all production was sold on spot markets.

RISKS RELATED TO OUR OIL AND GAS OPERATIONS

Operational Hazards and Insurance. Our development, exploitation and
exploration activities may be unsuccessful for many reasons, including weather,
cost overruns, equipment shortages and mechanical difficulties. Moreover, the
successful drilling of a natural gas and oil well does not ensure a profit on
investment. A variety of factors, both geological and market related can cause
a well to become uneconomical or only marginally profitable. Our business
involves a variety of operating risks which may adversely affect our
profitability, including:

- fires;

- explosions;

- blow-outs and surface cratering;

- uncontrollable flows of oil, natural gas, and formation water;

- natural disasters, such as hurricanes and other adverse weather
conditions;

- pipe, cement, or pipeline failures;

- casing collapses;

- embedded oil field drilling and service tools;

- abnormally pressured formations; and

- environmental hazards, such as natural gas leaks, oil spills, pipeline
ruptures and discharges of toxic gases.

In accordance with industry practice, our insurance protects us against
some, but not all, operational risks. Further, we do not carry business
interruption insurance at levels that would provide enough cash for us to
continue operating without access to additional funds. As pollution and
environmental risks generally are not fully insurable, our insurance may be
inadequate to cover any losses or exposure for such liability.

Volatility of Oil and Gas Prices. As an independent oil and gas producer,
our revenue, profitability and future rate of growth are substantially dependent
upon the prevailing prices of, and demand for, natural gas, oil, and condensate.
Our realized profits affect the amount of cash flow available for capital
expenditures. Our ability to maintain or increase our borrowing capacity and to
obtain additional capital on attractive terms is also substantially dependent
upon oil and gas prices. Prices for oil and natural gas are subject to wide
fluctuation in response to relatively minor changes in the supply of, and demand
for, oil and gas, market uncertainty and a variety of additional factors that
are beyond our control. Among the factors that can cause the volatility of oil
and gas prices are:

- worldwide or regional demand for energy, which is affected by economic
conditions;

- the domestic and foreign supply of natural gas and oil;

- weather conditions;

- domestic and foreign governmental regulations;

- political conditions in natural gas and oil producing regions;

- the ability of members of the Organization of Petroleum Exporting
Countries to agree upon and maintain oil prices and production levels;
and

- the price and availability of other fuels.

OPERATIONS IN COLOMBIA

As described above, we currently have interests in two concessions in the
South American country of Colombia and expect to be active in Colombia for the
foreseeable future. The political climate in Colombia is unstable and could be
subject to radical change over a very short period of time. In the event of a
significant negative change in political and economic stability in the vicinity
of our Colombian operations, we may be forced to abandon or suspend our efforts.
Either of such events could be harmful to our expected business prospects.

COMPETITION

Competition in the oil and gas industry is intense and we compete with
major and other independent oil and gas companies with respect to the
acquisition of producing properties and proved undeveloped acreage. Our
competitors actively bid for desirable oil and gas properties, as well as for
the equipment and labor required to operate and develop the properties. Many of
those competitors, however, have financial resources and exploration and
development budgets that are substantially greater than ours and may be able to
absorb the burden of any changes in federal, state and local laws and
regulations more easily than we can do so, which would adversely affect our
competitive position. These competitors may be able to pay more for natural gas
and oil properties and may be able to define, evaluate, bid for and purchase a
greater number of properties than we can. Our ability to acquire additional
properties and develop new and existing properties in the future will depend on
our capability to conduct operations, to evaluate and select suitable properties
and to consummate transactions in this highly competitive environment.

GOVERNMENTAL REGULATION

Our business and the oil and gas industry in general are subject to
extensive laws and regulations, including environmental laws and regulations.
As such, we may be required to make large expenditures to comply with
environmental and other governmental regulations. State and federal
regulations, including those enforced by the Texas Railroad Commission as the
primary regulator of the oil and gas industry in the State of Texas, are
generally intended to prevent waste of oil and gas, protect rights to produce
oil and gas between owners in a common reservoir and control contamination of
the environment. Matters subject to regulation in the State of Texas include:

- location and density of wells;

- the handling of drilling fluids and obtaining discharge permits for
drilling operations;

- accounting for and payment of royalties on production from state,
federal and Indian lands;

- bonds for ownership, development and production of natural gas and oil
properties;

- transportation of natural gas and oil by pipelines;

- operation of wells and reports concerning operations; and

- taxation.

Under these laws and regulations, we could be liable for personal injuries,
property damage, oil spills, discharge of hazardous materials, remediation and
clean-up costs and other environmental damages. Failure to comply with these
laws and regulations also may result in the suspension or termination of our
operations and subject us to administrative, civil and criminal penalties.
Moreover, these laws and regulations could change in ways that substantially
increase our operating costs.

Natural gas operations are subject to various types of regulation at the
federal, state and local levels. Prior to commencing drilling activities for a
well, we are required to procure permits and/or approvals for the various stages
of the drilling process from the applicable state and local agencies. Permits
and approvals include those for the drilling of wells, and regulations including
maintaining bonding requirements in order to drill or operate wells and the
location of wells, the method of drilling and casing wells, the surface use and
restoration of properties on which wells are drilled, the plugging and
abandoning of wells, and the disposal of fluids used in connection with
operations.

Our operations are also subject to various conservation laws and
regulations. These include the regulation of the size of drilling and spacing
units and the density of wells, which may be drilled and the unitization or
pooling of natural gas properties. In this regard, some states allow the forced
pooling or integration of tracts to facilitate exploration while other states
rely primarily or exclusively on voluntary pooling of lands and leases. In
areas where pooling is voluntary, it may be more difficult to form units, and
therefore, more difficult to develop a project if the operator owns less than
100 percent of the leasehold.

Regulation of Sales and Transportation of Natural Gas. Historically, the
transportation and resale of natural gas in interstate commerce have been
regulated by the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978,
and the regulations promulgated by the Federal Energy Regulatory Commission.
Maximum selling prices of some categories of natural gas sold in "first sales,"
whether sold in interstate or intrastate commerce, were regulated under the
NGPA. The Natural Gas Well Head Decontrol Act removed, as of January 1, 1993,
all remaining federal price controls from natural gas sold in "first sales" on
or after that date. FERC's jurisdiction over natural gas transportation was
unaffected by the Decontrol Act. While sales by producers of natural gas and
all sales of crude oil, condensate and natural gas liquids can currently be made
at market prices, Congress could reenact price controls in the future.

Sales of natural gas are affected by the availability, terms and cost of
transportation. The price and terms for access to pipeline transportation are
subject to extensive regulation. In recent years, FERC has undertaken various
initiatives to increase competition within the natural gas industry. As a
result of initiatives like FERC Order No. 636, issued in April 1992, the
interstate natural gas transportation and marketing system has been
substantially restructured to remove various barriers and practices that

historically limited non-pipeline natural gas sellers, including producers, from
effectively competing with interstate pipelines for sales to local distribution
companies and large industrial and commercial customers. The most significant
provisions of Order No. 636 require that interstate pipelines provide
transportation separate or "unbundled" from their sales service, and require
that pipelines make available firm and interruptible transportation service on
an open access basis that is equal for all natural gas suppliers.

In many instances, the result of Order No. 636 and related initiatives has
been to substantially reduce or eliminate the interstate pipelines' traditional
role as wholesalers of natural gas in favor of providing only storage and
transportation services. Another effect of regulatory restructuring is the
greater transportation access available on interstate pipelines. In some cases,
producers and marketers have benefited from this availability. However,
competition among suppliers has greatly increased and traditional long-term
producer pipeline contracts are rare. Furthermore, gathering facilities of
interstate pipelines are no longer regulated by FERC, thus allowing gatherers to
charge higher gathering rates.

Environmental Regulations. Our operations are subject to additional laws
and regulations governing the discharge of materials into the environment or
otherwise relating to environmental protection. Public interest in the
protection of the environment has increased dramatically in recent years. It
appears that the trend of more expansive and stricter environmental legislation
and regulations will continue.

We generate wastes that may be subject to the Federal Resource Conservation
and Recovery Act ("RCRA") and comparable state statutes, which have limited the
approved methods of disposal for some hazardous wastes. Additional wastes may be
designated as "hazardous wastes" in the future, and therefore become subject to
more rigorous and costly operating and disposal requirements. Although
management believes that we utilize good operating and waste disposal practices,
prior owners and operators of our properties may not have done so, and
hydrocarbons or other wastes may have been disposed of or released on or under
the properties owned or leased by us or on or under locations where wastes have
been taken for disposal. These properties and the wastes disposed on the
properties may be subject to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), RCRA and analogous state laws, which
require the removal and remediation of previously disposed wastes, including
waste disposed of or released by prior owners or operators.

CERCLA and similar state laws impose liability, without regard to fault or
the legality of the original conduct, on some classes of persons that are
considered to have contributed to the release of a "hazardous substance" into
the environment. These persons include the owner or operator of the disposal
site or sites where the release occurred and companies that disposed of or
arranged for the disposal of the hazardous substances found at the site. Persons
who are or were responsible for release of hazardous substances under CERCLA may
be subject to joint and several liability for the costs of cleaning up the
hazardous substances that have been released into the environment and for
damages to natural resources, and it is not uncommon for neighboring landowners
and other third parties to file claims for personal injury and property damage
allegedly caused by the hazardous substances released into the environment.

EMPLOYEES

As of January 27, 2004, we had one full-time employee and no part time
employees. The employee is not covered by a collective bargaining agreement,
and we do not anticipate that any of our future employees will be covered by
such agreement. If our operations continue to grow as expected, we anticipate
hiring as many as three additional employees over the next six to eight months.

MANAGEMENT

The following table sets forth the names, ages and offices of the present
executive officers and directors of the Company. The periods during which such
persons have served in such capacities are indicated in the description of
business experience of such persons below.

Name Age Position
---- --- --------

John Terwilliger 56 President, Treasurer and Director

The following is a biographical summary of the business experience of the
present directors and executive officers of the Company:

John F. Terwilliger has served as our president, secretary and treasurer
since our inception in April 2001. From 1988 to April 2002, Mr. Terwilliger
served as the chairman of the board and president of Moose Oil & Gas Company,
and its wholly-owned subsidiary, Moose Operating Co., Inc., both Houston, Texas
based companies. Prior to 1988, Mr. Terwilliger was the chairman of the board
and president of Cambridge Oil Company, a Houston, Texas based oil exploration
and production company. Mr. Terwilliger served in the United States Army,
receiving his honorable discharge in 1969. On April 9, 2002, Moose Oil & Gas
Company and its wholly-owned subsidiary, Moose Operating Co., Inc., filed a
bankruptcy petition under Chapter 7 of the United States Bankruptcy Code in
Cause No. 02-33891-H507: 02-22892, in the United States District Court for the
Southern District of Texas, Houston Division. At the time of the filing of the
bankruptcy petition, Mr. Terwilliger was the chairman of the board and president
of both Moose Oil & Gas Company and Moose Operating Co., Inc. Mr. Terwilliger
resigned those positions on April 9, 2002.

Although we currently have only one director, our board of directors is
divided into three classes, each elected for staggered three-year terms. Mr.
Terwilliger, our only director, is a Class C director. His term is scheduled to
expire at the third annual meeting following the end of our 2001 fiscal year.
Our executive officers are elected by our board of directors and serve terms of
one year or until their death, resignation or removal by the board of directors.

EXECUTIVE COMPENSATION

During the period from our inception on April 1, 2001 through December 31,
2003, no salary or any other compensation has been paid to any officer for the
services provided to us.

DIRECTOR COMPENSATION

We do not compensate our directors for serving in such capacity.

BOARD COMMITTEES

We do not presently maintain an audit committee or any other committee of
our board of directors. Because we presently have only one director and do not
presently maintain an audit committee, we have no audit committee financial
expert.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our initial oil and gas properties were purchased, at cost, from Moose Oil
& Gas Company, a Texas corporation and an affiliate of John F. Terwilliger, our
sole director and executive officer. As payment for the properties, we issued
Moose Oil & Gas a promissory note in the amount of $216,981, which, as discussed
below, was paid in July 2001.

On April 6, 2001, we entered into an Operating Agreement with Moose
Operating Co., Inc., a Texas corporation and a subsidiary of Moose Oil & Gas.
Under the terms of the Operating Agreement, Moose Operating had full control
over the drilling activities to be conducted on our leaseholds in Lavaca County,
Texas. Although Moose Operating was initially responsible for the payment of all
costs associated with development and operation, we, along with Moose Oil & Gas,
were ultimately responsible for our proportionate share of the costs based on
our respective working interests.

In order to secure repayment of the operating costs, the Operating
Agreement granted Moose Operating a security interest in our proportionate share
of the oil or gas produced from any wells. In addition to being entitled to
utilize and receive payment for the use of our own equipment and labor in
conducting the operations, the Operating Agreement entitled Moose Operating to
receive monthly fixed overhead payments of $4,500 per well being drilled and
$500 per producing well. The monthly fixed overhead payments to Moose Operating
were determined based on competitive rates.

In April 2002, Moose Oil & Gas and Moose Operating both filed a bankruptcy
petition under Chapter 7 of the United States Bankruptcy Code, the Operating
Agreement was terminated and Mr. Terwilliger resigned as Chairman and President
of both of those companies.

In July 2001, we borrowed approximately $664,000 from John F. Terwilliger,
our sole director and executive officer. We utilized a portion of the funds
borrowed from Mr. Terwilliger to pay the principal and accrued interest on the
$216,981 promissory note that was payable to Moose Oil & Gas Company upon the
purchase of our oil and gas properties, and to repay Moose Operating for the
operating expenses and drilling and completing costs it had advanced on our
behalf pursuant to the Operating Agreement.

As of September 30, 2003, we had borrowed $1,166,175 from Mr. Terwilliger
and $173,700 from Lee Tawes, a shareholder of Houston American. The notes,
bearing interest at a rate of 10 percent per annum, were due on demand and were
unsecured. Accrued interest on the shareholder loans totaled $254,478 at
September 30, 2003. In December 2003, Mr. Terwilliger converted $441,516.29 of
loans into 1,103,791 shares of common stock of Houston American and modified the
repayment terms with respect to the balance of the loans to Houston American,
totaling $1 million, to reduce the interest rate on the loans to 7.2% and
provide for a fixed maturity date of January 1, 2007. Also, in December 2003,
Mr. Tawes converted the entire principal and accrued interest on his loans to
Houston American, in the amount of $186,016.83, into 465,042 shares of common
stock of Houston American.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of January 27, 2004, based on
information obtained from the persons named below, with respect to the
beneficial ownership of shares of the Company's Common Stock held by (i) each
person known by the Company to be the owner of more than 5% of the outstanding
shares of the Company's Common Stock, (ii) each director, (iii) each named
executive officer, and (iv) all executive officers and directors as a group:

Name and Address Number of Shares Percentage
of Beneficial Owner (1) Beneficially Owned (2) of Class
----------------------- ---------------------- --------

John F. Terwilliger 8,574,486 43.9%
801 Travis, Suite 2020
Houston, Texas 77002

Orrie Lee Tawes (3) 3,236,034 16.6%
c/o O. Lee Tawes
C.E. Unterberg Towbin
350 Madison Avenue, 8th Floor
New York, New York 10017

All directors and officers
as a group (one person) 8,574,486 43.9%

_______________
(1) Unless otherwise indicated, each beneficial owner has both sole voting and
sole investment power with respect to the shares beneficially owned by such
person, entity or group. The number of shares shown as beneficially owned
include all options, warrants and convertible securities held by such
person, entity or group that are exercisable or convertible within 60 days
of January 27, 2004.
(2) The percentages of beneficial ownership as to each person, entity or group
assume the exercise or conversion of all options, warrants and convertible
securities held by such person, entity or group which are exercisable or
convertible within 60 days, but not the exercise or conversion of options,
warrants and convertible securities held by others shown in the table.
(3) Shares shown as beneficially owned by Orrie Lee Tawes include 119,034 held
by his wife, Marsha Russell.

SELLING SHAREHOLDERS

The selling shareholders are the holders of 3,542,907 shares of common
stock, consisting of 1,633,949 shares purchased in December 2003 for $653,579
and 1,908,958 shares out of 2,014,758 shares purchased in July and August 2003
for $600,000. The shares purchased in July and August 2003 were previously
registered for sale pursuant to a registration statement on Form SB-2 (File No.
333-108654) filed with the Securities and Exchange Commission in September 2003.
Pursuant to the terms of the sale of those shares, we entered into a
Registration Rights Agreement with each of the selling shareholders wherein we
agreed to register for resale the shares purchased.

The following table sets forth the number of shares owned by each of the
selling shareholders and the number of shares offered hereby. Other than their
purchase and ownership of the shares of our common stock, none of the selling
shareholders has had any material relationship with us within the past three
years. We cannot give an estimate as to the amount of shares that will be held
by the selling shareholders after completion of this offering because the
selling shareholders may offer all or some of the shares and because, to our
knowledge, there currently are no agreements, arrangements or understandings
with respect to the sale of any of the shares. The shares offered by this
prospectus may be offered from time to time by the selling shareholders named
below.

Number of
Shares
Name and Relationship Number of Shares Registered for
of Selling Shareholder Beneficially Owned Sale Hereby
-------------------------- ------------------ --------------

LibertyView Funds, LP(1) 679,309 679,309
Lior Bergman 487,500 487,500
E.C. Broun III 385,966 385,966
LibertyView Special
Opportunities Fund, LP(1) 339,891 339,891
Lori M. Price 333,334 333,334
Rochelle Zudkewich 125,000 125,000
Amit Solomon 125,000 125,000
Kenneth Zalk 125,000 125,000
Jack Lahav 125,000 125,000
Sensus LLC(2) 104,932 104,932
Peter S. Rawlings 100,000 100,000
William D. Foster 100,000 100,000
Krusen-Vogt and Co.(3) 100,000 100,000
Pudding Hill Partners(4) 62,500 62,500
Lincoln Partners Group LLC(5) 62,500 62,500
Andrew Arno 62,500 62,500
J. Mitchell Hull 62,500 62,500
James V. Pizzo &
Ellen London-Pizzo 60,000 60,000
William Hyler 60,000 60,000
Stephen P. Hartzell 26,492 26,492
David B. Wheeler 12,500 12,500
Peder Monsen 2,983 2,983
_______________
(1) Steven S. Rogers has voting and investment power with respect to shares held
by Liberty View Funds, LP and Liberty View Special Opportunity Fund, LP.
(2) James V. Pizzo has voting and investment power with respect to shares held by
Sensus LLC.
(3) William Vogt has voting and investment power with respect to shares held by
Krusen-Vogt and Co.
(4) Marc Roberts has voting and investment power with respect to shares held by
Pudding Hill Partners.
(5) Gerald D. Temes has voting and investment power with respect to shares held
by Lincoln Partners Group, LLC.

PLAN OF DISTRIBUTION

We are registering shares of our common stock on behalf of certain selling
shareholders. We will receive no proceeds from this offering. The selling
shareholders named in this prospectus or pledgees, donees, transferees or other
successors-in-interest selling shares received from a named selling shareholder
as a gift, partnership distribution or other non-sale-related transfer after the
date of this prospectus may sell some or all of the shares from time to time.
REGISTRATION OF THE SHARES DOES NOT MEAN, HOWEVER, THAT THE SHARES NECESSARILY
WILL BE OFFERED OR SOLD. The selling shareholders will act independently of us
in making decisions with respect to the timing, manner and size of each sale.
The sales may be made on one or more exchanges or in the over-the-counter market
or otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The selling
shareholders may effect such transactions by selling the shares to or through
broker-dealers. The shares may be sold by one or more of, or a combination of,
the following:

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

- purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus,

- an exchange distribution in accordance with the rules of such exchange,

- ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and

- in privately negotiated transactions.

To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling shareholders may arrange for other
broker-dealers to participate in the resales.

The selling shareholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling shareholders. The
selling shareholders also may sell shares short and redeliver the shares to
close out such short positions. The selling shareholders may enter into option
or other transactions with broker-dealers that require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling shareholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.

Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling shareholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
selling shareholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933 in connection with sales of the
shares. Accordingly, any such commission, discount or concession received by
them and any profit on the resale of the shares purchased by them may be deemed
to be underwriting discounts or commissions under the Securities Act. Because
selling shareholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, the selling shareholders will be subject to
the prospectus delivery

requirements of the Securities Act. In addition, any securities covered by this
prospectus that qualify for sale pursuant to Rule 144 promulgated under the
Securities Act may be sold under Rule 144 rather than pursuant to this
prospectus. To our knowledge, the selling shareholders have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities.

The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Securities and Exchange
Act of 1934, any person engaged in the distribution of the shares may not
simultaneously engage in market making activities with respect to our common
stock for a period of two business days prior to the commencement of such
distribution. In addition, each selling shareholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of our common stock by the
selling shareholders. We will make copies of this prospectus available to the
selling shareholders and we have informed them of the need for delivery of
copies of this prospectus to purchasers at or prior to the time of any sale of
the shares.

We will file a supplement to this prospectus, if required, pursuant to Rule
424(b) under the Securities Act upon being notified by a selling shareholder
that any material arrangement has been entered into with a broker-dealer for the
sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer. Such supplement will
disclose:

- the name of each such selling shareholder and of the participating
broker-dealer(s),

- the number of shares involved,

- the price at which such shares were sold,

- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,

- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus,
and

- other facts material to the transaction.

We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling shareholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
shareholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.

DESCRIPTION OF SECURITIES

GENERAL

Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par
value $0.001 per share. The following summary of the material matters relating
to our common stock and preferred stock is qualified in its entirety by
reference to our certificate of incorporation and bylaws

COMMON STOCK

As of January 27, 2004, there were 19,513,089 shares of our common stock
outstanding.

The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of our shareholders, including
the election of directors, and do not have cumulative voting rights. Subject to
preferences that may be applicable to any then outstanding series of our
preferred stock, holders of our common stock are entitled to receive ratably
such dividends, if any, as may be declared by our board of directors out of
legally available funds. Upon our liquidation, dissolution or winding up, the
holders of our common stock will be entitled to share ratably in the net assets
legally available for distribution to our shareholders after the payment of all
our debts and other liabilities, subject to the prior rights of any series of
our preferred stock then outstanding. The holders of our common stock have no
preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to our common stock. All
outstanding shares of our common stock are fully paid and nonassessable.

PREFERRED STOCK

Our board of directors has the authority, without further action by our
shareholders, to provide for the issuance of our preferred stock in one or more
series and to fix the number of shares, designations, preferences, powers and
relative, participating, optional or other special rights and the qualifications
or restrictions on such rights. The preferences, powers, rights and restrictions
of different series of our preferred stock may differ with respect to dividend
rates, amounts payable on liquidation, voting rights, conversion rights,
redemption provisions, sinking fund provisions and purchase funds and other
matters. The issuance of a series of our preferred stock could decrease the
amount of earnings and assets available for distribution to holders of our
common stock or affect adversely the rights and powers, including voting rights,
of the holders of our common stock, and may have the effect of delaying,
deferring or preventing a change in control of us.

As of January 27, 2004, no shares of our preferred stock were outstanding.

PROVISIONS HAVING POSSIBLE ANTI-TAKEOVER EFFECTS

Our certificate of incorporation and the bylaws contain provisions that
could have an anti-takeover effect. These provisions may discourage certain
types of transactions that may involve an actual or threatened change of control
of Houston American Energy.

Our board of directors has broad powers to fix by resolution the powers,
preferences and rights of any new series of preferred stock. This power could be
used to create a class of preferred stock that, because of its rights, could
discourage a potential takeover. Additionally, our bylaws give the board of
directors power to fill vacancies on the board without shareholder approval. As
a result, an incumbent board, not a potential bidder, would have control over
board positions in the period between annual meetings of shareholders. Our
bylaws also provide for an advance notice procedure governing business

to be brought before an annual meeting of shareholders, which could discourage a
potential bidder from taking action at a meeting.

We are subject to the provisions of Section 203 of the DGCL. In general,
this statute prohibits a publicly held Delaware corporation from engaging in a
"business transaction" with an "interested stockholder" for a period of three
years after the date that the person became an interested stockholder unless
(with certain exceptions) the business combination or the transaction in which
the person became an interested stockholder is approved in a prescribed manner.
A "business combination" generally includes a merger, asset or stock sale or a
transaction resulting in a financial benefit to the interested stockholder. An
"interested stockholder" generally is a person who, together with affiliates and
associates, owns (or within the three prior years did own) 15 percent or more of
a corporation's outstanding voting stock.

A corporation may, at its option, exclude itself from the coverage of
Section 203 of the DGCL by an appropriate provision in its certificate of
incorporation. Our certificate of incorporation contains this exclusion for John
F. Terwilliger, our president and chief executive officer.

TRANSFER AGENT

The transfer agent for our common stock is Atlas Stock Transfer
Corporation, 5899 South State Street, Salt Lake City, Utah 84107.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us
by Michael W. Sanders, Attorney at Law.

EXPERTS

Our audited consolidated financial statements included in this prospectus
and elsewhere in the registration statement to the extent and for the periods
indicated in their reports have been audited by Thomas Leger & Co., L.L.P.,
independent public accountants, and are included herein in reliance upon the
authority of said firm as experts giving said reports.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form SB-2. This
prospectus, which forms a part of the registration statement, does not contain
all the information included in the registration statement. Certain information
is omitted and you should refer to the registration statement and its exhibits.
With respect to references made in this prospectus to any of our contracts or
other documents, such references are not necessarily complete and you should
refer to the exhibits attached to the registration statement for copies of the
actual contract or document. We are required to file annual, quarterly and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's public reference facilities in Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the SEC's public reference facilities by calling the SEC at
1-800-SEC-0330. The SEC maintains a website (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, such as us, that file electronically with the SEC.

We intend to furnish each holder of our common stock annual reports
containing audited financial statements and a report thereon by independent
certified accountants. We will also furnish to each holder of our common stock
such other reports as may be required by law.

HOUSTON AMERICAN ENERGY CORP.
INDEX TO FINANCIAL STATEMENTS

Independent Auditors Report . . . . . . . . . . . . . . . . . . . . . . F-1
Balance Sheet as of December 31, 2002 . . . . . . . . . . . . . . . . . . F-2
Statements of Loss For the Years ended December 31, 2002
and 2001 and For the Period April 2, 2001 (Date of Inception)
to December 31, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Shareholders' Deficit Accumulated in
Development Stage From April 2, 2001 (Date of Inception)
to December 31, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Cash Flows For the Years Ended December 31,
2002 and 2001 and For the Period April 2, 2001 (Date of
Inception) to December 31, 2002. . . . . . . . . . . . . . . . . . . . . F-5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-6

Balance Sheet as of September 30, 2003 (Unaudited). . . . . . . . . . . . F-14
Statements of Loss For the Nine Months Ended
September 30, 2003 and 2002 (Unaudited) and For the Three
Months Ended September 30, 2003 and 2002 (Unaudited) . . . . . . . . . . F-15
Statements of Cash Flows For the Nine Months Ended
September 30, 2003 and 2002 (Unaudited). . . . . . . . . . . . . . . . . F-16
Notes to Unaudited Financial Statements . . . . . . . . . . . . . . . . . F-17

INDEPENDENT AUDITORS REPORT

Houston American Energy Corp.
Houston, Texas

We have audited the accompanying balance sheet of Houston American Energy Corp.
(a development stage company) as of December 31, 2002 and the related statements
of loss, shareholders' deficit, and cash flows for the year December 31, 2002,
for the period from April 2, 2001 (date of inception), to December 31, 2001 and
for the period from April 2, 2001 (date of inception), to December 31, 2002.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with 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 a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the over-all
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Houston American Energy Corp. as
of December 31, 2002, and the results of its operations and its cash flows for
the year December 31, 2002 and for the period from April 2, 2001 (date of
inception) to December 31, 2001, and from April 2, 2001 (date of inception) to
December 31, 2002, in conformity with accounting principles generally accepted
in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage as of December 31, 2002 has suffered recurring losses from operations, has
a net working capital deficit, which raises substantial doubt about its ability
to continue as a going concern. As discussed in Note 2 to the financial
statements, successful completion of the Company's fund raising activities and,
ultimately, the attainment of profitable operations is dependent upon future
events, including obtaining adequate financing to fulfill its development
activities and achieving a level of revenue adequate to support the Company's
cost structure. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.

/s/ Thomas Leger & Co., L.L.P.

Thomas Leger & Co., L.L.P.

February 21, 2003
Houston, Texas

F-1

HOUSTON AMERICAN ENERGY CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2002

ASSETS
------

CURRENT ASSETS
Cash $ 939
Accounts receivable 7,140
Prepaid expenses 7,026
----------------

TOTAL CURRENT ASSETS 15,105
----------------

PROPERTY, PLANT AND EQUIPMENT
Oil and gas properties, full cost method
Costs subject to amortization 785,268
Costs not being amortized 188,418
Office equipment 5,595
----------------
Total properties 979,281
Accumulated depreciation and depletion oil and gas properties (745,661)
----------------

PROPERTY, PLANT AND EQUIPMENT, NET 233,620
----------------

OTHER ASSETS 4,745
----------------

TOTAL ASSETS $ 253,470
================

LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------

CURRENT LIABILITIES
Accounts payable 5,245
Accrued interest on shareholder loans 149,706
Notes payable, shareholder 1,128,523
----------------

TOTAL CURRENT LIABILITIES 1,283,474
----------------

SHAREHOLDERS' DEFICIT
Common stock, par value $.001;
100,000,000 shares authorized, 13,424,883 shares outstanding 13,425
Additional paid-in capital 283,575
Deficit accumulated in development stage (1,327,004)
----------------

TOTAL SHAREHOLDERS' DEFICIT (1,030,004)
----------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 253,470
================

The accompanying notes are an integral part of these
financial statements

F-2

HOUSTON AMERICAN ENERGY CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS

FROM APRIL 2, 2001
FOR THE YEAR ENDED (DATE OF INCEPTION)
DECEMBER 31, TO DECEMBER 31,
--------------------------
2002 2001(a) 2002
------------ ------------ ------------

REVENUE $ 25,805 $ 14,814 $ 40,619
------------ ------------ ------------

EXPENSES OF OPERATIONS
Lease operating expense 19,397 11,019 30,416
General and administrative expense
Accounting and legal 93,688 19,927 113,615
Rent 38,000 3,167 41,167
Shareholder relations 30,092 - 30,092
Printing and duplicating 6,082 309 6,391
Registration fees 11,825 - 11,825
Telephone and fax 9,583 - 9,583
Dues and subscription 3,623 - 3,623
Miscellaneous 4,625 1,017 5,642
Depreciation and depletion 24,166 37,592 61,758
Interest expense 112,405 43,602 156,008
Write-off of merger expenses - 256,470 256,470
Write-down of oil and gas properties - - -
due to ceiling limitation 109,573 574,331 683,904
Gain from settled accounts payable (42,870) - (42,870)
------------ ------------ ------------
Total expenses 420,189 947,434 1,367,623
------------ ------------ ------------

FEDERAL INCOME TAXES - - -
------------ ------------ ------------

NET LOSS $ (394,384) $ (932,620) $(1,327,004)
============ ============ ============

BASIC AND DILUTED LOSS PER SHARE $ (0.03) $ (0.08)
============ ============

BASIC WEIGHTED AVERAGE SHARES 12,119,842 11,403,414
============ ============

(a) The 2001 financial information is for the period from April 2, 2001 (date
of inception) to December 31, 2001.

The accompanying notes are an integral part of these financial statements

F-3

HOUSTON AMERICAN ENERGY CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' DEFICIT
FROM APRIL 2, 2001 (DATE OF INCEPTION) TO DECEMBER 31, 2002

Deficit
Common Stock Accumulated
---------------------------------- in the
Paid-in Development
Shares Amount Capital Stage Total
---------- ------------ -------- ------------ ------------

Balance at inception, April 2, 2001 - $ - $ - $ - $ -

Stock issued for cash 1,000,000 1,000 - - 1,000
Retroactive adjustment for stock
split on September 25, 2001 10,403,414 - - - -
Additional contributed capital
from majority shareholder - 10,403 - - 10,403

Net loss - - - (932,620) (932,620)
---------- ------------ -------- ------------ ------------

Balance at December 31, 2001 11,403,414 11,403 - (932,620) (921,217)

Shares issued for -
Reverse merger with
Texas Nevada Oil and Gas Co. 596,469 597 - - 597
Cash 1,350,000 1,350 268,650 - 270,000
Consulting services 75,000 75 14,925 - 15,000

Net loss - - - (394,384) (394,384)
---------- ------------ -------- ------------ ------------

Balance at December 31, 2002 13,424,883 $ 13,425 $283,575 $(1,327,004) $(1,030,004)
========== ============ ======== ============ ============

The accompanying notes are an integral part of these financial statements

F-4

HOUSTON AMERICAN ENERGY CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED FROM APRIL 2, 2001
DECEMBER 31, (DATE OF INCEPTION)
----------------------- TO DECEMBER 31,
2002 2001(a) 2002
---------- ----------- ------------

CASH FLOW FROM OPERATING ACTIVITIES
Loss from operations $(394,384) $ (932,620) $(1,327,004)

ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH FROM OPERATIONS
Depreciation and depletion 24,166 37,592 61,758
Write-down oil and gas properties 109,573 574,331 683,904
Non-cash expenses 38,076 257,646 295,722
Gain from payable settlement (42,871) - (42,871)
Increase in accounts receivable (1,921) (5,218) (7,139)
(Increase) decrease in prepaid expense 1,116 (8,142) (7,026)
(Increase) decrease in other assets 796 (5,541) (2,371)
Increase in accounts payable - - -
and accrued expenses 108,076 90,341 196,043
---------- ----------- ------------

Net cash (used) provided by operations (157,373) 8,389 (148,984)
---------- ----------- ------------

CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of properties and assets (210,427) - (210,427)
---------- ----------- ------------

CASH FLOW FROM FINANCING ACTIVITIES
Sale of common stock 285,000 1,000 286,000
Loans from principal shareholder 74,350 - 74,350
---------- ----------- ------------

Cash flow from financing activities 359,350 1,000 360,350
---------- ----------- ------------

INCREASE (DECREASE) IN CASH (8,450) 9,389 939
Cash, beginning of period 9,389 - -
---------- ----------- ------------

Cash, end of period $ 939 $ 9,389 $ 939
========== =========== ============

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Oil and gas properties acquired $ - $ 768,854 $ 768,854
Non-cash expense 38,076 257,646 295,722
Note payable for oil and gas properties
and expenses 20,888 1,026,500 1,047,388

(a) The 2001 financial information is for the period from April 2, 2001 (date
of inception) to December 31, 2001.

The accompanying notes are an integral part of these financial statements

F-5

HOUSTON AMERICAN ENERGY CORP.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002

NOTE 1 - NATURE OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Houston American Energy Corp. (a Delaware Corporation) ("the Company") was
incorporated on April 2, 2001. The Company was organized to engage in the
acquisition, exploration and development of domestic and foreign oil and gas
properties.

The Company completed a stock split as of September 25, 2001, which resulted in
total outstanding shares of 11,403,414. The Company has retroactively applied
this stock split to all share amounts and per share amounts in these financial
statements and footnotes.

The Company completed a reverse merger with Texas Nevada Oil and Gas Co.
("TNOG") in January 2002. The Company issued 596,469 shares of common stock to
the shareholders of TNOG. As the majority surviving ownership in the merger,
the Company changed the name to Houston American Energy Corp. and treated the
transaction as an acquisition of TNOG.

OIL AND GAS REVENUES - The Company recognizes oil and gas revenue from its
-----------------------
interest in producing wells as oil and gas is produced and sold from those
wells. The Company does not anticipate that the oil and gas sold will be
significantly different from the Company's production entitlement.

OIL AND GAS PROPERTIES AND EQUIPMENT - The Company follows the full cost method
-------------------------------------
of accounting for oil and gas property acquisition, exploration and development
activities. Under this method, all productive and nonproductive costs incurred
in connection with the exploration for and development of oil and gas reserves
are capitalized. Capitalized costs include lease acquisition, geological and
geophysical work, delay rentals, costs of drilling, completing and equipping
successful and unsuccessful oil and gas wells and related internal costs that
can be directly identified with acquisition, exploration and development
activities, but does not include any cost related to production, general
corporate overhead or similar activities. Gain or loss on the sale or other
disposition of oil and gas properties is not recognized unless significant
amounts of oil and gas reserves are involved. No corporate overhead has been
capitalized as of December 31, 2002.

The capitalized costs of oil and gas properties, plus estimated future
development costs relating to proved reserves are amortized on a
units-of-production method over the estimated productive life of the reserves.
Unevaluated oil and gas properties are excluded from this calculation.

The capitalized oil and gas property costs, less accumulated amortization, are
limited to an amount (the ceiling limitation) equal to the sum of: (a) the
present value of estimated future net revenues from the projected production of
proved oil and gas reserves, calculated at prices in effect as of the
balance sheet date (with consideration of price changes only to the
extent

F-6

HOUSTON AMERICAN ENERGY CORP.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002

NOTE 1 - NATURE OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(CONTINUED)

provided by contractual arrangements) and a discount factor of 10%; (b) the cost
of unproved and unevaluated properties excluded from the costs being amortized;
(c) the lower of cost or estimated fair value of unproved properties included in
the costs being amortized; and (d) related income tax effects. Excess costs are
charged to proved properties impairment expense.

An allowance for impairment of $109,573 and $574,331 was provided at December
31, 2002 and 2001, respectively.

UNEVALUATED OIL AND GAS PROPERTIES - Unevaluated oil and gas properties consist
-----------------------------------
principally of the Company's cost of acquiring and evaluating undeveloped
leases, net of an allowance for impairment and transfers to depletable oil and
gas properties.

When leases are developed, expire or are abandoned, the related costs are
transferred from unevaluated oil and gas properties to depletable oil and gas
properties. Additionally, the Company reviews the carrying costs of unevaluated
oil and gas properties for the purpose of determining probable future lease
expirations and abandonment's, and prospective discounted future economic
benefit attributable to the leases. The Company records an allowance for
impairment based on a review of present value of future cash flows. Any
resulting charge is made to operations and reflected as a reduction of the
carrying value of the recorded asset.

Unevaluated oil and gas properties not subject to amortization include the
following at December 31, 2002:

Acquisition costs $ 68,000
Evaluation costs 120,418
--------

$188,418
========

The carrying value of unevaluated oil and gas prospects include $57,747 expended
for properties in Columbia South America. The Company is maintaining their
interest in these properties and development has or is anticipated to commence
within the next twelve months.

INCOME TAXES - Deferred income taxes are provided on a liability method whereby
-------------
deferred tax assets and liabilities are established for the difference between
the financial reporting and income tax basis of assets and liabilities as well
as operating loss and tax credit carry forwards. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

F-7

HOUSTON AMERICAN ENERGY CORP.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002

NOTE 1 - NATURE OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(CONTINUED)

OFFICE AND EQUIPMENT - Office equipment is stated at cost and are depreciated
----------------------
using the straight-line method over the estimated useful lives of the assets,
generally 5 years. Routine repairs and maintenance costs are charged to
operations as incurred while the costs of significant improvements are
capitalized. Depreciation expense and accumulated depreciation for the year
ended December 31, 2002 was $1,119 and $1,679.

PREFERRED STOCK - The Company has authorized 10,000,000 shares of preferred
----------------
stock with a par value of $0.001. The Board of Directors shall determine the
designations, rights, preferences, privileges and voting rights of the preferred
stock as well as any restrictions and qualifications thereon. No shares of
preferred stock have been issued.

STATEMENT OF CASH FLOWS - Cash equivalents consists of demand deposits and cash
------------------------
investments with initial maturity dates of less than three months. The Company
paid no interest or taxes during the period of the accompanying financial
statements.

NET LOSS PER SHARE - Basic loss per share is computed by dividing the net loss
--------------------
available to common shareholders by the weighted average of common shares
outstanding during the period, as retroactively adjusted by the stock split
described in the second paragraph of Note 1. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to isue common stock
were exercised or converted into common stock, where such exercise or conversion
would result in a lower EPS amount. At December 31, 2002 and 2001, there were
no convertible or dilutive common share equivalents outstanding.

USE OF ESTIMATES - The preparation of financial statements in conformity with
------------------
generally accepted accounting principles requires the Company to make estimates
and assumptions that could affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

GENERAL AND ADMINISTRATIVE EXPENSE - Includes approximately $43,000 of expenses
-----------------------------------
that were incurred and subsequently settled by the Company for less than their
value. Invoices totaling $68,000 were liquidated for approximately $25,000 and
the difference, including other payable adjustments and compromises, has been
included in the statement of operations as a Gain from Settled Accounts Payable.
The settled charges were principally from legal costs and the expenses
associated with becoming a public reporting company.

RECENT ACCOUNTING PRONOUNCEMENTS - In August 2001, the FASB issued Statement No.
--------------------------------
144 "Accounting for the impairment of Long-Lived Assets". This statement
supersedes Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of", and the accounting and
reporting provisions of APB Opinion 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions", for the disposal of
a segment of a business. The statement is effective for the Company in fiscal
2003. The Company does not expect the adoption of Statement No. 144 to have a
material impact on the Company's future results of operations or financial
position.

F-8

HOUSTON AMERICAN ENERGY CORP.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002

NOTE 1 - NATURE OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(CONTINUED)

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires liability recognition for retirement
obligations associated with tangible long-lived assets, such as producing well
sites and other assets associated with oil and gas activities. SFAS 143
requires that the fair value of a liability for an asset retirement obligation
be recorded in the period in which it is incurred and the corresponding cost
capitalized by increasing the carrying amount of the related long-lived asset.
The liability is accreted to its present value of each period, and the
capitalized cost is depreciated over the useful life of the related asset. If
the liability is settled for an amount other than the recorded amount, a gain or
loss is recognized.

The Company will adopt SFAS No. 143 effective January 1, 2003. Management does
not expect this standard to have an impact on the financial position at the date
of adoption (January 1, 2003).

NOTE 2 - DEVELOPMENT STAGE

The Company is in the development stage and has minimum revenue to support its
operations. It is dependent on the majority shareholder to fund its operations
and cost associated with the acquisition, exploration and development of oil and
gas properties. Management has and will continue to attempt to obtain funds
through private and/or public securities offerings.

NOTE 3 - NOTES PAYABLE

Notes payable at December 31, 2002, in the amount of $1,128,523, is due to a
majority shareholder. The note bears interest at 10%, and the principal and
interest is due on demand with all the Company's oil and gas properties serving
as collateral.

NOTE 4 - RELATED PARTIES

The Company's producing oil and gas properties were purchased, at cost, from an
affiliate of a major shareholder.

F-9

HOUSTON AMERICAN ENERGY CORP.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002

NOTE 5 - INCOME TAXES

The following table sets forth a reconciliation of the statutory federal income
tax for the year ended December 31, 2002 and for the period from April 2, 2001
(date of inception) to December 2001.

2002 2001
---------- ----------

Loss before income taxes $(394,384) $(932,620)
========== ==========

Income tax computed at statutory rates $(134,091) $(317,091)
Adjustment to net operating loss carryforward 30,560 -
Permanent differences, nondeductible expenses - 69,165
Increase in valuation allowance 103,531 247,926
---------- ----------

Tax provision $ - $ -
========== ==========

No federal income taxes have been paid since the inception of the Company. The
Company has a net operating loss carry forward of approximately $842,100 which
will expire in 2016 and 2017.

DEFERRED INCOME TAXES
-----------------------

The tax effects of the temporary differences between financial statement income
and taxable income are recognized as a deferred tax asset and liability.
Significant components of the deferred tax asset and liability as of December
31, 2002 are set out below.

Deferred tax asset:
Net operating loss carry forwards $ 286,312
Valuation allowance (348,874)
Tax over book depreciation, depletion
and capitalization methods on oil
and gas properties 24,344
Book over tax accrued interest payments 38,218
----------

Net deferred tax asset $ -
==========

F-10

HOUSTON AMERICAN ENERGY CORP.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002

NOTE 6 - COMMITMENT

As of December 31, 2002, the Company had lease obligation for office space that
expires on November 30, 2006.

Year Amount
----- --------

2003 $ 38,000
2004 38,000
2005 38,000
2006 34,833
--------

Total $148,833
========

NOTE 7 - SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION, DEVELOPMENT AND
PRODUCTION ACTIVITIES (UNAUDITED)

This footnote provides unaudited information required by Statement of Financial
Accounting Standards No. 69, "Disclosures about Oil and gas Producing
Activities".

CAPITAL COSTS

Capitalized costs and accumulated depletion relating to the Company's oil and
gas producing activities as of December 2002, all of which are conducted within
the continental United States of America and Columbia, South America are
summarized below:

Columbia
USA South America
---------- --------------

Properties subject to amortization $ 785,267 $ -
Unevaluated properties 130,670 57,748
Less accumulated amortization and
Impairment (743,982) -
---------- --------------

Capitalized costs $ 171,955 $ 57,748
========== ==============

F-11

HOUSTON AMERICAN ENERGY CORP.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002

NOTE 7 - SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION, DEVELOPMENT AND
PRODUCTION ACTIVITIES (UNAUDITED)

COSTS INCURRED

Costs incurred in oil and gas property acquisition, exploration and development
activities at December 31, 2002 are summarized below:

Property acquisition costs:
Proved $ 18,333
Unproved 192,094
--------

Total costs incurred $210,427
========

RESERVE INFORMATION AND RELATED STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET
--------------------------------------------------------------------------------
CASH FLOWS
-----------

The following supplemental un-audited presentation of proved reserve quantities
and related standardized measure of discounted future net cash flows provides
estimates only and does not purport to reflect realizable values or fair market
values of the Company's reserves. Volumes reported for proved reserves are
based on reasonable estimates. These estimates are consistent with current
knowledge of the characteristics and production history of the reserves. The
Company emphasizes that reserve estimates are inherently imprecise and that
estimates of new discoveries are more imprecise than those of producing oil and
gas properties. Accordingly, significant changes to these estimates can be
expected as future information becomes available.

Proved reserves are those estimated reserves of crude oil (including condensate
and natural gas liquids) and natural gas that geological and engineering data
demonstrate with reasonable certainly to be recoverable in future years from
known reservoirs under existing economic and operating conditions. Proved
developed reserves are those expected to be recovered through existing wells,
equipment, and operating methods.

The standardized measure of discounted future net cash flows relating to proved
oil and gas reserves is computed by applying year-end prices of oil and gas
(with consideration of price changes only to the extent provided by contractual
arrangements) to the estimated future production of proved oil and gas reserves,
less estimated future expenditures (based on year-end costs) to be incurred in
developing and producing the proved reserves, less estimated related future
income tax expenses (based on year-end statutory tax rates, with consideration
of future tax rates already legislated), and assuming continuation of existing
economic conditions. Future income tax expenses give effect to permanent
differences and tax credits but do not reflect the impact of continuing
operations including property acquisitions and exploration. The estimated
future cash flows are then discounted using a rate of ten percent a year to
reflect the estimated timing of the future cash flows.

F-12

NOTE 7 - SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
DEVELOPMENT AND PRODUCTION ACTIVITIES (UNAUDITED) (CONTINUED)

DECEMBER 31,
---------------------
2002 2001 (A)
---------- ---------
GAS (MCF)
---------------------

Proved developed reserves:
Beginning of year 27,999 -
Extensions and discoveries - 34,169
Revision of previous estimates (170) -
Production (8,957) (6,170)
---------- ---------
End of year 18,872 27,999
========== =========

Standard measure of discounted future net cash flows:

Future cash inflows $ 65,760 $ 55,399
Future production cost (19,993) (27,827)
---------- ---------
Future net cash flow 45,767 27,572
10% annual discount for estimated timing
of cash flows (4,478) (3,905)
---------- ---------
Standardized measure of discounted future net
cash flow relating to proved gas reserves $ 41,289 $ 23,677
========== =========

Changes in standardized measure:

Changes due to current year operations:
Sales of gas, net of production costs $ (4,843) $ (3,795)
Extensions and discoveries - 27,462
Changes due to revisions in standaradized value
Prices and production cost: 23,940 -
Revision of previous quantity estimates (280) -
Accretioned discount 2,367 -
Production rates (timing) and other (3,562) -
---------- ---------
Net 17,622 23,667

Beginning of year 23,667 -
---------- ---------
End of year $ 41,289 $ 23,667
========== =========

(a) The 2001 information is for the period from April 2, 2001 (date of
inception) to December 31, 2001

F-13

HOUSTON AMERICAN ENERGY CORP.
BALANCE SHEET
September 30, 2003
(Unaudited)

ASSETS
------

CURRENT ASSETS:
Cash and cash equivalents $ 230,489
Accounts receivable 65,949
Prepaid expenses 1,381
------------
Total current assets 297,820
------------

PROPERTY, PLANT AND EQUIPMENT
Oil and gas properties - full cost method
Costs subject to amortization 1,510,745
Costs not being amortized 128,633
Furniture and equipment 10,878
------------
Total property, plant and equipment 1,650,256
Accumulated depreciation and depletion (787,108)
------------
Total property, plant and equipment, net 863,148
------------

OTHER ASSETS 3,167
------------

Total Assets $ 1,164,134
============

LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------

CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 40,769
Notes payable, shareholders 1,339,875
Accrued interest on notes payable, shareholders 254,478
------------
Total current liabilities 1,635,123
------------

STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; 100,000,000 shares
Authorized; 16,292,307 shares outstanding 16,290
Additional paid-in capital 1,117,870
Accumulated deficit (1,605,149)
------------
Total stockholders' deficit (470,989)
------------

Total liabilities and stockholders' deficit $ 1,164,134
============

The accompanying notes are an integral part of these
financial statements

F-14

HOUSTON AMERICAN ENERGY CORP.
STATEMENTS OF LOSS
(Unaudited)

Nine Months Ended Three Months Ended
September 30, September 30,
------------------------ ------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------

REVENUE $ 144,138 $ 18,235 $ 39,743 $ 6,798
----------- ----------- ----------- -----------

EXPENSES OF OPERATIONS
Lease operating expense 100,108 14,106 34,636 3,409
Joint Venture expenses 40,998 - 9,417 -
General and administrative expenses:
Accounting and legal 50,597 52,219 12,457 9,385
Rent 29,451 28,500 9,908 9,500
Shareholder relations 34,959 8,928 23,323 -
Printing and duplicating 791 4,844 80 -
Registration fees 362 4,415 - 1,849
Telephone and fax 6,005 5,815 2,277 1,904
Dues and subscription 2,799 3,211 674 1,539
Miscellaneous 9,721 3,801 3,072 2,484
Depreciation and depletion 41,721 10,267 23,629 3,169
Interest expense 104,772 81,605 34,241 28,624
Write-down of oil and gas properties
due to ceiling limitation - 16,976 - -
----------- ----------- ----------- -----------

Total expenses 422,284 234,689 153,713 61,863
----------- ----------- ----------- -----------

NET LOSS $ 278,146 $ 216,454 $ 113,971 $ 55,065
=========== =========== =========== ===========

Basic and diluted loss per share $ 0.02 $ 0.02 $ 0.01 $ 0.00
=========== =========== =========== ===========

Basic weighted average shares 14,839,086 11,962,353 16,029,639 11,999,470
=========== =========== =========== ===========

The accompanying notes are an integral part of these financial statements

F-15

HOUSTON AMERICAN ENERGY CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)

For the Nine Months Ended
September 30
-----------------------
2003 2002
----------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (278,146) $(216,454)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and depletion 41,447 10,267
Write-down of oil and gas properties - 16,976
Non-cash expenses 6,041 -
Changes in operating assets and liabilities:
(Increase) in accounts receivable (58,809) (10,464)
(Increase) decrease in prepaid expenses 5,644 6,898
(Increase) decrease in other assets 1,578 -
Increase in accounts payable and accrued expenses 140,297 101,113
----------- ----------
Net cash used in operating activities (141,948) (91,663)
----------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of properties and assets (659,865) (22,009)
----------- ----------
Net cash used in investing activities (659,865) (22,009)
----------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 837,160 596
Loans from shareholders 194,200 103,979
----------- ----------
Net cash provided by financing activities 1,031,360 104,576
----------- ----------

NET INCREASE (DECREASE) IN CASH 229,548 (9,097)

CASH, BEGINNING OF PERIOD 941 9,389
----------- ----------

CASH, END OF PERIOD $ 230,489 $ 292
=========== ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
Federal income taxes paid $ - $ -
=========== ==========
Interest paid $ - $ -
=========== ==========

SUPPLEMENTAL NON-CASH INVESTING ACTIVITIES:
Note payable for oil and gas properties, deferred
assets and expenses $ 11,111 $ 14,441
=========== ==========

The accompanying notes are an integral part of these financial statements

F-16

HOUSTON AMERICAN ENERGY CORP.
Notes to Financial Statements
September 30, 2003
(Unaudited)

NOTE 1. - BASIS OF PRESENTATION

The accompanying unaudited financial statements of Houston American Energy
Corp., a Delaware corporation (the "Company") have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-QSB and
Item 310(b) of Regulation S-B. They do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for a complete financial presentation. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
considered necessary for a fair presentation, have been included in the
accompanying unaudited financial statements. Operating results for the periods
presented are not necessarily indicative of the results that may be expected for
the full year.

These financial statements should be read in conjunction with the financial
statements and footnotes, which are included as part of the Company's Form
10-KSB for the year ended December 31, 2002.

NOTE 2. - NATURE OF COMPANY

The Company was incorporated on April 2, 2001 and was organized to engage
in the acquisition, exploration and development of domestic and international
oil and gas properties as a non-operator closely involved investor.

The Company completed a merger with Texas Nevada Oil and Gas Co. ("TNOG")
on January 18, 2002. The Company issued 596,469 shares to the shareholders of
TNOG and recorded the par value of common stock issued at $596. At the time of
the merger TNOG was a "1934 Act" reporting company with minimal assets and
liabilities. Pursuant to the General Rules and Regulations of the Securities
Exchange Act of 1934, the merged companies, elected to use Houston American
Energy Corp. as the successor issuer to TNOG for securities reporting purposes.
For financial reporting purposes, the merger was treated as a purchase of TNOG
by the Company and under "Purchase Accounting" the acquired company is recorded
at fair value and the acquiring company carries-forward the historical recorded
value of its resources and obligations.

NOTE 3. - CHANGES IN PRESENTATION

Certain financial presentations for the periods presented for 2002 have
been reclassified to conform to the 2003 presentation.

F-17

NOTE 4. - COMPLETION OF THE DEVELOPMENT STAGE

Since inception, the Company has been in the process of accumulating
adequate resources to sustain its operations. During the first nine months of
fiscal 2003, investor funding and revenue producing operations have been
sufficient to currently sustain the development of its oil and gas prospects and
properties. This development permitted the Company to be reclassified and emerge
from its development stage history.

The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern. Such principles contemplate
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has not established a source of revenues
sufficient to allow it to become profitable.

Management's current projections indicate that its operations and capital
resources will allow it to be considered as a viable going concern during the
current fiscal year. Historically, the Company has been dependent on its
majority shareholders to fund its operations and costs associated with the
current acquisition, exploration and development of oil and gas properties.
Management plans to obtain other long-term capital funds through private and/or
public securities offerings for cash and properties.

NOTE 5 - SHARE OFFERINGS

During the nine months ended September 30, 2003, the Company, through a
series of private placements that were exempt from registration under Section
4(2) of the Securities Act of 1933 and related state private offering
exemptions, issued an aggregate of 2,865,424 shares of its common stock for cash
consideration of $837,160 as follows:

- During the first quarter, the Company issued 1,083,334 shares of
common stock for $325,000,

- During the second quarter, the Company issued 100,666 shares of common
stock for $26,000, and

- In July 2003, the Company issued 1,681,424 shares of common stock to
eight investors for $496,180.

In connection with the July 2003 private placement, and through an
agreement with other shareholders, the Company entered into a Registration
Rights Agreement with certain shareholders wherein it agreed to register for
resale the shares purchased by those shareholders. In September 2003, the
Company filed, and the Securities and Exchange Commission declared effective, a
registration statement on Form SB-2, satisfying the Company's obligations under
the Registration Rights Agreements.

F-18

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As permitted by the Delaware General Corporation Law, our certificate of
incorporation includes, subject to the limitations described below, a provision
that would limit or eliminate our directors' liability for monetary damages for
breaches of their fiduciary duties. A director's liability cannot be limited or
eliminated for:

o breaches of the duty of loyalty;

o acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

o the payment of unlawful dividends or expenditure of funds for unlawful
stock purchases or redemptions; or

o transactions from which the director derived an improper personal
benefit.

In addition, the limitation of liability provisions may not restrict a
director's liability for violation of, or otherwise relieve the corporation or
its directors from, the necessity of complying with federal or state securities
laws or affect the availability of nonmonetary remedies such as injunctive
relief or rescission.

Our certificate of incorporation provides that we shall, to the extent
legally permissible, indemnify each of our former or present directors or
officers against all liabilities and expenses imposed upon or incurred by any of
them in connection with, or arising out of, the defense or disposition of any
action, suit or other proceeding, civil or criminal, in which he may be
threatened or involved, by reason of his having been a director or officer, if
it is determined that he acted in good faith and reasonably believed:

o in the case of conduct in his official capacity on our behalf that his
conduct was in our best interests;

o in all other cases, that his conduct was not opposed to our best
interests; and

o with respect to any proceeding which is a criminal action, that he had
no reasonable cause to believe his conduct was unlawful.

The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself be determinative of whether the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to our best
interests, and, with respect to any proceeding which is a criminal action, had
no reasonable cause to believe that his conduct was unlawful.

II-1

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Houston American
pursuant to the foregoing provisions, or otherwise, we are aware that, in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is a list of the estimated expenses to be incurred, all of
which will be paid by the Registrant, in connection with the preparation and
filing of this Registration Statement.

SEC Registration Fee $ 93.19
Printing and Engraving 1,000.00
Accountants' Fees and Expenses 5,000.00
Legal Fees and Expenses 10,000.00
Other Offering Expenses 1,906.81
----------

TOTAL $18,000.00
==========

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The Registrant has sold the following securities within the past three
years which were not registered under the Securities Act of 1933:

In April 2001, John F. Terwilliger, the founder of the Company, acquired
1,000,000 shares of common stock for a purchase price of $1,000.

On October 28, 2001, Orrie Lee Tawes acquired 726,968 shares of the
Company's common stock for a purchase price of $282,410.89.

On November 22, 2002, David W. Barrell Trust acquired 100,000 shares of the
Company's common stock for a purchase price of $20,000 and John F. Terwilliger
acquired 75,000 shares of the Company's common stock for a purchase price of
$15,000.

On December 6, 2002, the Company issued 75,000 shares of common stock to
Duane Street Group, LLC as payment for consulting services valued at $15,000.

On November 22, 2002 and December 6, 2002, Mr. Tawes acquired an aggregate
of 1,175,000 shares of the Company's common stock for a purchase price of
$235,000.

On January 29, 2003, Mr. Tawes acquired 750,000 shares of the Company's
common stock for a purchase price of $225,000.

On March 3, 2003, Lori M. Price acquired 333,334 shares of the Company's
common stock for a purchase price of $100,000.

II-2

In April 2003, Steve Eisenberg acquired 16,666 shares of the Company's
common stock for a purchase price of $5,000 and Sandford B. Prater acquired
84,000 shares of the Company's common stock for a purchase price of $21,000.

In July 2003, the Company issued an aggregate of 1,681,424 shares of common
stock for a purchase price of $496,180.60 to eight accredited investors, being
LibertyView Funds, LP, LibertyView Special Opportunities Fund, LP, Lior Bergman,
Stephen P. Hartzell, Peter S. Rawlings, William D. Forster, James V. Pizzo &
Ellen London-Pizzo, and Sensus LLC.

In December 2003, John Terwilliger, the President and sole Director of the
Company, acquired 1,103,791 shares of the Company's common stock in exchange for
the conversion of outstanding loans in the amount of $441,516.29 and Orrie Lee
Tawes acquired 465,042 shares of the Company's common stock in exchange for the
conversion of outstanding loans in the amount of $186,016.83.

In December 2003, the Company issued an aggregate of 1,633,949 shares of
common stock for a purchase price of $653,579.60 to seventeen accredited
investors, being E.C. Broun III, Lior Bergman, Rochelle Zudkewich, Amit Solomon,
Kenneth Zalk, Jack Lahav, LibertyView Funds, LP, Pudding Hill Partners, Lincoln
Partners Group LLC, Andrew Arno, J. Mitchell Hull, William Hyler, LibertyView
Special Opportunities Fund, LP, Krusen-Vogt and Co., David B. Wheeler, Stephen
P. Hartzell, and Peder Monsen.

The issuance of all shares of our common stock described above was pursuant
to the exemption from registration provided by Section 4(2) of the Securities
Act of 1933, as amended and related state private offering exemptions. All of
the investors were Accredited Investors as defined in the Securities Act who
took their shares for investment purposes without a view to distribution and had
access to information concerning the Company and its business prospects, as
required by the Securities Act.

In addition, there was no general solicitation or advertising for the
purchase of our shares. Our securities were sold only to persons with whom we
had a direct personal preexisting relationship, and after a thorough discussion.
All certificates for our shares contain a restrictive legend. Finally, our stock
transfer agent has been instructed not to transfer any of such shares, unless
such shares are registered for resale or there is an exemption with respect to
their transfer.

No commissions were paid in connection with the issuances described above.

II-3

ITEM 27. EXHIBITS.

Number Description of Exhibit
------ ----------------------

2.1* Amended and Restated Plan and Agreement of Merger dated as of
September 26, 2001, between Texas Nevada Oil & Gas Co. and
Houston American Energy Corp. (incorporated by reference to
Exhibit 2.1 to Amendment No. 5 to the Company's Registration
Statement on Form SB-2, registration number 333-66638 (the
"Company's Registration Statement"), filed with the SEC on
November 30, 2001).

3.1* Certificate of Incorporation of Houston American Energy Corp.
filed April 2, 2001 (incorporated by reference to Exhibit 3.1 to
the Company's Registration Statement filed with the SEC on August
3, 2001).

3.2* Certificate of Merger Merging Opportunity Acquisition Company
with and into Houston American Energy Corp. filed April 12, 2001
(incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement filed with the SEC on August 3, 2001).

3.3* Bylaws of Houston American Energy Corp. adopted April 2, 2001
(incorporated by reference to Exhibit 3.3 to the Company's
Registration Statement filed with the SEC on August 3, 2001).

3.4* Certificate of Amendment to the Certificate of Incorporation of
Houston American Energy Corp. filed September 25, 2001
(incorporated by reference to Exhibit 3.4 to Amendment No. 1 to
the Company's Registration Statement filed with the SEC on
October 1, 2001).

3.5* Certificate of Merger Merging Texas Nevada Oil & Gas Co. with and
into Houston American Energy Corp. filed January 17, 2002
(incorporated by reference to Exhibit 3.5 to the Company's Annual
Report on Form 10-QSB filed with the SEC on March 27, 2002).

4.1* Text of Common Stock Certificate of Houston American Energy Corp.
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement filed with the SEC on August 3, 2001).

4.2* Text of Preferred Stock Certificate of Houston American Energy
Corp. (incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement filed with the SEC on August 3, 2001).

5.1** Form of Opinion and Consent of Michael W. Sanders, Attorney at
Law, regarding legality of shares issued.

II-4

10.1* Model Form Operating Agreement dated April 6, 2001, between Moose
Operating Co., Inc. and Houston American Energy Corp.
(incorporated by reference to Exhibit 10.1 to the Company's
Registration Statement filed with the SEC on August 3, 2001).

10.2* Agreement to Assign Interests in Oil and Gas Leases dated as of
April 6, 2001, between Moose Oil & Gas Company and Houston
American Energy Corp. (incorporated by reference to Exhibit 10.2
to the Company's Registration Statement filed with the SEC on
August 3, 2001).

10.3* Assignment of Interests in Oil and Gas Leases and Bill of Sale
effective as of April 6, 2001, between Moose Oil & Gas Company
and Houston American Energy Corp. (incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement filed with
the SEC on August 3, 2001).

10.4* Promissory Note of Houston American Energy Corp. in the amount of
$216,981.06 dated April 15, 2001, payable to Moose Oil & Gas
Company. (incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement filed with the SEC on August 3,
2001).

10.5* Plan and Agreement of Merger dated as of April 12, 2001, between
Opportunity Acquisition Company and Houston American Energy Corp.
(incorporated by reference to Exhibit 10.5 to the Company's
Registration Statement filed with the SEC on August 3, 2001).

10.6* Agreement dated as of March 23, 2001, between Unicorp, Inc.,
Equitable Assets, Incorporated, Texas Nevada Oil & Gas Co. and
Opportunity Acquisition Company (incorporated by reference to
Exhibit 10.6 to the Company's Registration Statement filed with
the SEC on August 3, 2001).

10.7* First Amendment of Agreement dated as of July 31, 2001, between
Unicorp, Inc., Equitable Assets, Incorporated, Texas Nevada Oil &
Gas Co. and Houston American Energy Corp. (incorporated by
reference to Exhibit 10.7 to the Company's Registration Statement
filed with the SEC on August 3, 2001).

10.8* Gas Purchase Contract No. 36-1599 dated as of May 1, 2001,
between Kinder Morgan Texas Pipeline, L.P. and Moose Operating
Co., Inc. (incorporated by reference to Exhibit 10.8 to Amendment
No. 1 to the Company's Registration Statement filed with the SEC
on October 1, 2001).

10.9* Gas Purchase Agreement dated July 31, 1997, between Dominion
Pipeline Company (as predecessor-in-interest to Pinnacle Natural
Gas Co.) and Moose Operating Co., Inc. (incorporated by reference
to Exhibit 10.9 to Amendment No. 1 to the Company's Registration
Statement filed with the SEC on October 1, 2001).

II-5

10.10* Model Form Operating Agreement dated December 11, 1997, between
Louis Dreyfus Natural Gas Corp., Seisgen Exploration, Inc. and
Moose Operating Co., Inc. (incorporated by reference to Exhibit
10.10 to Amendment No. 1 to the Company's Registration Statement
filed with the SEC on October 1, 2001).

10.11* Promissory Note of Houston American Energy Corp. in the amount
of $390,000 dated July 2, 2001, payable to John F. Terwilliger
(incorporated by reference to Exhibit 10.11 to Amendment No. 4 to
the Company's Registration Statement filed with the SEC on
November 21, 2001).

10.12* Promissory Note of Houston American Energy Corp. in the amount
of $285,000 dated July 30, 2001, payable to John F. Terwilliger
(incorporated by reference to Exhibit 10.12 to Amendment No. 4 to
the Company's Registration Statement filed with the SEC on
November 21, 2001).

10.13* Assignment of Term Royalty Interest dated July 18, 2002, between
Houston American Energy Cop. and Marlin Data Research, Inc.
(incorporated by reference to Exhibit 2.5 to the July 2002 8-K).

10.14* Bill of Sale dated July 18, 2002, between Houston American
Energy Cop. and Marlin Data Research, Inc. (incorporated by
reference to Exhibit 2.6 to the July 2002 8-K).

10.15* Registration Rights Agreement dated July 14, 2003, between
Houston American Energy Corp. and LibertyView Funds, LP
(incorporated by reference to Exhibit 10.19 to the Company's Form
10-QSB for the quarter ended June 30, 2003 (the "June 2003 Form
10-QSB")).

10.16* Registration Rights Agreement dated July 14, 2003, between
Houston American Energy Corp. and LibertyView Special
Opportunities Fund, LP (incorporated by reference to Exhibit
10.20 to the Company's June 2003 Form 10-QSB).

10.17* Registration Rights Agreement dated July 21, 2003, between
Houston American Energy Corp. and William D. Forster
(incorporated by reference to Exhibit 10.21 to the Company's June
2003 Form 10-QSB).

10.18* Registration Rights Agreement dated July 21, 2003, between
Houston American Energy Corp. and James V. Pizzo & Ellen
London-Pizzo (incorporated by reference to Exhibit 10.22 to the
Company's June 2003 Form 10-QSB).

II-6

10.19* Registration Rights Agreement dated July 21, 2003, between
Houston American Energy Corp. and Sensus LLC (incorporated by
reference to Exhibit 10.23 to the Company's June 2003 Form
10-QSB).

10.20* Registration Rights Agreement dated July 14, 2003, between
Houston American Energy Corp. and Stephen P. Hartzell
(incorporated by reference to Exhibit 10.24 to the Company's June
2003 Form 10-QSB).

10.21* Registration Rights Agreement dated July 18, 2003, between
Houston American Energy Corp. and Peter S. Rawlings (incorporated
by reference to Exhibit 10.25 to the Company's June 2003 Form
10-QSB).

10.22* Registration Rights Agreement dated July 14, 2003, between
Houston American Energy Corp. and Lior Bregman (incorporated by
reference to Exhibit 10.26 to the Company's June 2003 Form
10-QSB).

10.23* Form of Subscription Agreement relating to December 2003
placement of shares

10.24* Form of Registration Rights Agreement relating to December 2003
placement of shares.

10.25* Promissory Note, dated December 10, 2003, payable to John
Terwilliger in the amount of $724,658.67.

10.26* Promissory Note, dated December 10, 2003, payable to John
Terwilliger in the amount of $275,341.33.

23.1** Consent of Thomas Leger & Co., LLP

23.2** Consent of Michael W. Sanders, Attorney at Law (included in
Exhibit 5.1)
_______________________________
* Previously filed
** Filed herewith

II-7

ITEM 28. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The registrant hereby undertakes:

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

(i) Include any prospectus required by Section 10(a)(3) of the Act;

(ii) Reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement; and

(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.

(2) That, for the purpose of determining any liability under the Act, each
post-effective amendment to the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.

II-8

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas
on the 28th day of January, 2004.

HOUSTON AMERICAN ENERGY CORP.

BY: /S/ JOHN F. TERWILLIGER
JOHN F. TERWILLIGER, PRESIDENT

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

SIGNATURES TITLE DATE
---------- ----- ----

/s/ John F. Terwilliger President, Treasurer, Secretary January 28, 2004
------------------------- and Director (Principal Executive,
JOHN F. TERWILLIGER Financial and Accounting Officer)

II-9