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Chuma Holdings, Inc. – ‘SB-2/A’ on 5/25/07

On:  Friday, 5/25/07, at 8:06pm ET   ·   As of:  5/29/07   ·   Private-to-Public:  Document/Exhibit ¶  –  Release Delayed   ·   Accession #:  1062993-7-2057   ·   File #:  333-142128

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/29/07  Chuma Holdings, Inc.              SB-2/A¶     5/25/07    4:495K                                   Newsfile Corp/FA

Document/Exhibit                   Description                      Pages   Size 

 1: SB-2/A      Amendment No. 1 to Registration Statement           HTML    466K 
 4: CORRESP   ¶ Comment-Response or Other Letter to the SEC         HTML      9K 
 2: EX-5.1      Legal Opinion & Consent                             HTML      9K 
 3: EX-23.1     Consent of Experts or Counsel                       HTML      5K 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2/A

Amendment #1

Registration Statement under the Securities Act of 1933

XTOL ENERGY INC.
(Name of Small Business Issuer in its Charter)

Suite 600 – 595 Howe Street
Vancouver, British Columbia Canada V6C 2T5
Tel: 604-662-3910
(Address and telephone number of principal executive offices)

CSC Services of Nevada, Inc.
502 East John Street
Carson City, Nevada 89706
(Name, address and telephone number of agent for service)

With a copy to:
Penny Green, Bacchus Law Group
1511 West 40^th Avenue, Vancouver, BC V6M 1V7
Tel (604) 732 4804     Fax (604) 408 5177

Approximate Date of Proposed Sale to the Public: As soon as practicable after this Registration Statement is
declared effective.

If any 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, please 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, please 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 Registration Statement is expected to be made pursuant to Rule 434, check the following box. [   ]

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.

PROSPECTUS
 
1,772,000 Shares Common Stock

Before this offering there has been no public market for our common stock.

This Prospectus relates to the resale by selling shareholders of up to 1,772,000 shares of our common stock currently outstanding. Approximately 41 of our shareholders are offering shares of our common stock to the public by means of this Prospectus.

The selling shareholders will sell at an initial price of $0.50 per share until our shares are quoted on the NASD’s OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.

Our common stock is presently not traded on any national securities exchange or the NASDAQ Stock Market. We do not intend to apply for listing on any national securities exchange or the NASDAQ stock market. The purchaser in this offering may be receiving an illiquid security.

An investment in our common stock is speculative. See "Risk Factors" starting at page 6 of this Prospectus.

Neither the US Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense.

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Table of Contents

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Prospectus Summary

This prospectus, any supplement to this prospectus and the documents incorporated by reference include “forward-looking statements”. To the extent that the information presented in this prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as “intends”, “anticipates”, “believes”, “estimates”, “projects”, “forecasts”, “expects”, “plans” and “proposes”. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the “Risk Factors” and “Management’s Discussion and Analysis or Results of Operations” sections of this prospectus.

Our Business

XTOL Energy Inc. (“XTOL”, “we”, “us”) is a start up oil and gas exploration company. We have incurred losses since inception, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. We have only recently begun operations. In February 2007 we received the first revenue from our 2.34% non operated interest in three operating wells in Oklahoma.

We were incorporated as a Nevada company on February 14, 2006. We are also extra-provincially registered in British Columbia, Canada. We do not have any subsidiaries.

We intend to build our business through the acquisition of producing oil and natural gas wells, interests and leases. Our strategy is to combine the secure and reliable revenue source of non-operated interest from producing oil wells with the potential of an oil and gas exploration project.

Our principal office is located at Suite 600 – 595 Howe Street, Vancouver, British Columbia, Canada, V6C 2T5. Our telephone number is 604 662 3910. Our fiscal year end is November 30.

In August of 2006, we have acquired a non operated interest in three operating wells in Kingfisher County, Oklahoma as described below. These wells are operated by Range Production Company of Fort Worth, Texas. On August 1, 2006 we made a cash payment of $34,038 to complete the purchase of our interest. During the first six months of 2006, three wells produced an approximate average of 127 thousand cubic feet of gas and 1 barrel of oil per day. From 2002 to 2005, the combined average annual income of the 2.34% interest in the wells less operating costs was approximately $6,180. We did not receive any revenues from our 2.34% interest until February 2007 due to the delayed-transfer of the interest. Peggy G. Ellis, the Personal Representative of the Estate of Ella Geiger sold the interest in three operating wells to us.

The following table describes our interest in the Kingfisher County wells:

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Our current management, Gary Chayko and Jordan Shapiro, do not have experience in the oil and gas industry. Our business plan may fail due to our management’s lack of experience in this industry. We intend to retain a full time President and CEO and CFO who has experience in the oil and gas industry for oversight of our development and operations and capital raising. At the same time, we plan to appoint the new President and CEO or CFO as a director. Over the next two months we also intend to hire a full time engineer, land specialist and geologist to meet our technical requirements associating with a potential development stage exploration project. Currently those proposed plans are in an initial stage. We are looking for qualified and experienced personnel, but we have not yet identified any particular persons. There is no guarantee that we can attract and retain our proposed personnel. Failure to retain the qualified management and skilled professionals may have an adverse effect on our business. Also, there are many factors, described in detail under the section "Risk Factors", that may adversely affect our ability to begin and sustain profitable operations.

For the next twelve months (beginning May 2007), we plan to purchase additional non-operated interests, acquire a development stage exploration property and carry out an exploration program on the acquired property.

Over the next twelve months (beginning May 2007) we plan to spend approximately $6,500,000 on acquisition and exploration expenses for oil and gas interests and properties, and approximately $832,000 for other operational costs. We have incurred a loss since our inception, and rely upon the sale of our securities to fund operations. We will be dependent on future financing in order to maintain our operations and carry out our business plan. We anticipate that we will require additional financing in order to pursue exploration of any properties that we acquire. We currently do not have sufficient financing to carry out our business plan and there is no assurance that we will be able to obtain the necessary financing. Accordingly, there is uncertainty about our ability to continue our operations. If we cease our operations, you may lose your entire investment in our stock.

The Offering

The 1,772,000 common shares registered in this Prospectus represent approximately 4.7% of our issued and outstanding stock. Both before and after the offering, our current directors and officers will control us. Before the offering, Gary Chayko, a director, our President and Chief Executive Officer, owns or has the rights to acquire a total of 20,000,000 shares, which would be 47% of our issued and outstanding securities, assuming he exercises all 5,000,000 options. After the offering, if he sells all 200,000 shares he is registering in this Prospectus, he will own or have the right to acquire 19,800,000 shares, which would be approximately 46% of our issued and outstanding securities, assuming he exercises all 5,000,000 options.

Before the offering, Jordan Shapiro, a director and our Chief Financial Officer, owns or has the rights to acquire a total of 20,000,000 shares, which would be approximately 47% of our issued and outstanding securities, assuming he exercises all 5,000,000 options. After the offering, if he sells all 200,000 shares he is registering in this Prospectus, he will own or have the rights to acquire 19,800,000 shares, which would be approximately 46% of our issued and outstanding securities, assuming he exercises all 5,000,000 options.

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The above information regarding common stock to be outstanding after the offering is based on 37,982,000 shares of common stock outstanding as of May 15, 2007.

Financial Condition

Since our inception, we have reported a significant loss. Our auditors stated that these factors raise substantial doubt about our ability to continue as a going concern.

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We will need additional working capital to continue or to be successful in any future business activities. Therefore, our continuation as a going concern is dependent upon obtaining the additional working capital necessary to accomplish our objective. We plan to seek equity or debt financing, or a combination of both, to raise the necessary working capital. As of March 27, 2007, we had approximately $62,816 in our bank accounts. As of February 28, 2007, we had $64,714 in our bank accounts. We expect to require approximately an additional $7,300,000 in financing to continue our planned operations for the next year (beginning May 2007).

All of the references to currency in this filing are to US Dollars, unless otherwise noted. The following table sets forth selected financial information, which should be read in conjunction with the information set forth under "Management’s Discussion and Analysis" and our accompanying Financial Statements and related notes included elsewhere in this Prospectus.

Income Statement Data

Balance Sheet Data

Risk Factors

Please consider the following risk factors before deciding to invest in our common stock. Any investment in our common stock is speculative. You should carefully consider the risks described below and all of the information contained in this Prospectus before deciding whether to purchase our common stock. If any of the following risks actually occur, our business, financial condition and results of operations could be harmed. The trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.

XTOL Risks

1. A decline in or substantial volatility of oil and gas prices could adversely affect our business, which could mean a decrease in our revenues.

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We anticipate that our business will be primarily determined by oil and gas prices in North America. Volatility or weakness in oil and gas prices (or the perception that oil and gas prices will decrease) may result in the drilling of fewer new wells or lower production spending on existing wells. Significant declines in prices for oil and natural gas could harm our financial condition, results of operations and quantities of reserves recoverable on an economic basis. A decline in oil and gas prices or a reduction in drilling activities could materially and adversely affect our business and could seriously decrease our revenues or prevent us from generating any revenues.

2. There is substantial doubt as to whether we will continue operations. If we discontinue operations, you could lose your investment.

The following factors raise substantial doubt regarding the ability of our business to continue as a going concern: (i) the losses we incurred since our inception; (ii) our limited operating revenues as at February 28, 2007; and (iii) our dependence on sale of equity securities and receipt of capital from outside sources to continue in operation. We anticipate that we will incur increased expenses without realizing enough revenues. We therefore expect to incur significant losses in the foreseeable future. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business. If we are unable to obtain additional financing from outside sources and eventually produce enough revenues, we may be forced to sell our assets, curtail or cease our operations. If this happens, you could lose all or part of your investment.

3. We will need significant capital requirements to commence our proposed operations, and we will not be able to further implement our business strategy unless sufficient funds are raised, which could cause us to discontinue our operations.

We will require significant expenditures of capital in order to locate and acquire producing properties or to begin exploration activities on our future properties. We estimate the initial purchase cost of non-operated working interests will be approximately $3,000,000 and the initial cost of acquisition of an exploration project will be about $1,100,000. However, we estimate the cost of developing an exploration project to be approximately $2,000,000, depending on the depth of the well. Also, the estimated expenses of engineer, land specialist and geologist are $400,000 for 12 months. Therefore, we expect that we totally need approximately an additional $6,500,000 in financing on our planned acquisition and exploration expenditures for the next year. We must obtain the necessary funds to proceed with our planned business equity offerings as well as other equity investments, bank loans or joint ventures with other companies. We may not be able to raise those amounts from our planned sources. In addition, the cost and timing of drilling, completing and operating wells is difficult to predict. If we drastically underestimate the amount of money it will cost to begin earning revenues, our ability to continue our business will be adversely affected.

We need to raise additional capital to carry out our business plan. Our ability to obtain additional financing is subject to a number of factors, including the market price of oil and gas, market conditions, investor acceptance of our business plan, and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. If we are unable to raise additional financing, we will have to significantly reduce our spending, delay or cancel planned activities or substantially change our current corporate structure. We cannot assure you that we will have sufficient resources to acquire additional properties or conduct operations as projected, or that we will be able to obtain any additional funding required, any of which events may mean that we may not be able to continue our operations or our business plan may fail. You may lose your entire investment.

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4. We lack an operating history and there is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations.

We were incorporated on February 14, 2006 and we have only realized limited revenues. We have very little operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon:

• completion of our future equity or debt financing;
• our ability to purchase or develop oil and gas properties; and
• our ability to compete with other large or new oil and gas companies.

Based upon current plans, we expect to incur operating losses in the next two years because we will be incurring large expenses and generating small revenues. We cannot guarantee that we will be successful in generating significant revenues in the future. Failure to generate significant revenues will cause us to go out of business.

5. We face strong competition from larger oil and gas companies, which could harm our business and ability to operate profitably.

The exploration and production of oil and gas business is highly competitive. Other oil and gas companies will compete with us by bidding for exploration and production licenses and other properties and services that we will need to operate our business in the countries in which we expect to operate. This competition is increasingly intense as prices of oil and natural gas on the commodities markets have risen in recent years. Additionally, other companies engaged in our line of business may compete with us from time to time in obtaining capital from investors.

Oil and gas properties have limited lives and, as a result, we may seek to replace and expand our reserves through the acquisition of new properties. In addition, there is a limited supply of desirable oil and gas lands available in North America where we would consider conducting exploration and/or production activities. The major oil and gas companies are often better positioned to obtain the rights to exploratory acreage for which we may compete.

Competitors include larger, foreign owned companies, which, in particular, may have access to greater resources than us, may be more successful in the recruitment and retention of qualified employees and may conduct their own refining and petroleum marketing operations. These factors may give them a competitive advantage. Oil and natural gas exploration and development activities are dependent on the availability of drilling and related equipment, transportation, power and technical support in the particular areas and our access to these facilities may be limited due to high competition. Shortages and/or the unavailability of necessary equipment or other facilities will impair our activities, either by delaying our activities, increasing our costs or otherwise.

If we are unable to adequately address our competition, including, but not limited to, finding ways to secure profitable oil and gas producing properties on terms that we consider acceptable, our ability to earn revenues will suffer.

6. We rely heavily upon reserve estimates when determining whether or not to invest in a particular oil or gas property.

The oil and gas reserve information that we use in evaluating oil and gas prospects is based on reserve estimates involving a great deal of uncertainty. The process of estimating oil and gas

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reserves is complex, and will require us to use significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each property. Different reserve engineers may make different estimates of reserves and cash flows based on the same available data. Reserve estimates depend in large part upon the reliability of available geologic and engineering data, which is inherently imprecise. Geologic and engineering data is used to determine the probability that a reservoir of oil and natural gas exists at a particular location, and whether oil and natural gas are recoverable from a reservoir. Recoverability is ultimately subject to the accuracy of data including, but not limited to, geological characteristics of the reservoir, structure, reservoir fluid properties, the size and boundaries of the drainage area, reservoir pressure, and the anticipated rate of pressure depletion. The evaluation of these and other factors is based upon available seismic data, computer modeling, well tests and information obtained from production of oil and natural gas from adjacent or similar properties, but actual recoveries of proved reserves can differ from estimates.

Reserve estimates also require numerous assumptions relating to operating conditions and economic factors, including the price at which recovered oil and natural gas can be sold, the costs of recovery, assumptions concerning future operating costs, severance and excise taxes, development costs and workover and remedial costs, prevailing environmental conditions associated with drilling and production sites, availability of enhanced recovery techniques, ability to transport oil and natural gas to markets and governmental and other regulatory factors, such as taxes and environmental laws. Economic factors beyond our control, such as interest rates and exchange rates, will also impact the value of our reserves. Some of these assumptions are inherently subjective, and the accuracy of our reserve estimates relies in part on the ability of our management team, engineers and other advisors to make accurate assumptions. As a result, our reserve estimates will be inherently imprecise. A negative change in any one or more of these factors could result in quantities of oil and natural gas previously estimated as proved reserves becoming uneconomic.

7. We may not be able to develop oil and gas reserves on an economically viable basis, and our reserves and production may decline as a result.

To the extent that we succeed in discovering oil and/or natural gas reserves at our future properties, we are not sure that these reserves will be capable of supporting production levels we project or in sufficient quantities to be commercially viable. These risks are more acute in the early stages of exploration. Our expenditures on exploration may not result in new discoveries of oil or natural gas in commercially viable quantities. It is difficult to project the costs of implementing an exploratory drilling program due to the inherent uncertainties of drilling in unknown formations, the costs associated with encountering various drilling conditions such as over pressured zones, tools lost in the hole, changes in drilling plans and locations as a result of prior exploratory wells or additional seismic data and interpretations thereof.

On a long-term basis, our viability depends on our ability to find or acquire, develop and commercially produce additional oil and gas reserves. If we are not able to explore acquisition or development in new reserves, our current reserves and production will decline over time as the reserves are developed. Our future reserves will depend not only on our ability to develop then-existing properties, but also on our ability to identify and acquire additional suitable producing properties or prospects, to find markets for the oil and natural gas we develop and to effectively distribute oil and natural gas into our markets.

Future oil and gas exploration may involve unprofitable efforts, not only from dry wells, but from wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs. Completion of a well does not assure a profit on the

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investment, or recovery of drilling, completion and operating costs unless a commercial viable amount of oil and natural gas is returned. In addition, drilling hazards or environmental damage could greatly increase the cost of operations, and various field operating conditions may adversely affect the production from successful wells. If exploration costs exceed our estimates, or if our exploration efforts do not produce results which meet our expectations, our exploration efforts may not be commercially successful, which could adversely impact our ability to generate revenues from our operations.

8. Title deficiencies could render our current or future leases worthless, which could prevent us from achieving revenues.

The existence of a material title deficiency can render a lease worthless and can result in a large expense to our business. We will rely upon the judgment of oil and gas lease brokers or landsmen who perform the field work in examining records in the appropriate governmental office before attempting to place a specific interest under lease. This is customary practice in the oil and gas industry. However, even after taking these precautions, deficiencies in the marketability of the title to the leases may still arise. Ownership of the oil or gas exploration rights can be subject to prior unregistered agreements, interests, undetected claims, or interests. If any such claim relating to lands on which we may have rights is successful, it could have a significant adverse effect on our ability to conduct our business. Such deficiencies may render our current or future leases worthless, which could prevent us from generating revenues.

9. We may encounter operating hazards related to oil and gas exploration and production, which may result in substantial losses to our business and your investment.

We are subject to operating hazards normally associated with the exploration and production of oil and gas, including unexpected formations or pressures, premature declines of reservoirs, blowouts, sour gas release, explosions, craterings, pollution, earthquakes, labor disruptions, fires, pipeline ruptures, oil spills, the invasion of water into producing formations and other environmental hazards and risks. The occurrence of any such operating hazards could result in substantial losses to us due to injury or loss of life and damage to or destruction of oil and gas wells, formations, production facilities or other properties, which could result in substantial losses to our business.

10. Seasonal weather patterns could adversely influence our business and result in a total loss of your investment.

In North America, the amount of oil and gas exploration and production activity is influenced by seasonal weather patterns. In spring, wet weather can make the ground unstable, and result in road closures that restrict the movement of rigs and other heavy equipment, thereby decreasing activity levels. Damage caused by severe weather, natural disasters or other operating hazards could result in substantial losses to us. We are not covered by insurance for any business interruption resulting from such events and, upon the occurrence of a natural disaster; this lack of coverage could harm our financial position and results of operations. We believe that a severe change in weather patterns affecting our current or future properties could lower our business or cause us to go out of business.

12. Our operations are subject to various litigation risks that could harm our business, impact our profitability and lower the value of your investment in us.

Although we currently are not involved in any litigation matters, the nature of our operations expose us to possible litigation claims in the future. There is risk that any litigation matter could be adversely decided against us, and this could harm our financial condition and results of

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operations. Such claims could include, but are not limited to, environmental damage and remediation, workers’ compensation, insurance coverage, property rights and easements, maintenance of mining claims and other issues. Litigation is highly costly and the costs associated with defending litigation could also harm our financial condition. Should we get involved in litigation matters, we will be forced to direct our limited resources to defend or prosecute the litigation thereby harming our ability to carry on revenue producing activities.

13. Our business is subject to environmental legislation and any changes in such legislation could negatively affect our results of operations.

The oil and gas industry is subject to many laws and regulations which govern the protection of the environment, health and safety and the management, transportation and disposal of hazardous substances. These laws and regulations may require removal or remediation of pollutants and may impose civil and criminal penalties for violations. Some of the laws and regulations authorize the recovery of natural resource damages by the government, injunctive relief and the imposition of stop, control, remediation and abandonment orders.

The costs arising from compliance with environmental and natural resource laws and regulations may increase our costs of operations, as well as further restrict our operations. If the costs of such compliance exceeds what we may have budgeted for, our ability to earn revenues will be harmed. Any regulatory changes that impose additional environmental restrictions or requirements on us could adversely affect us through increased operating costs, which could have a material adverse effect on our results of operations.

14. Any oil and gas we may discover or produce may not be readily marketable at the time of production, delaying our ability to generate meaningful revenue.

Crude oil, natural gas, condensate and other oil and gas products are generally sold to other oil and gas companies, government agencies and other industries. Natural gas associated with oil production is often not marketable due to demand or transportation limitations and is often flared at the producing well site. Pipeline facilities do not exist in certain areas of exploration and, therefore, any actual sales of discovered oil and gas might be delayed for extended periods until such facilities are constructed.

15. Since our executive officers do not have any significant training and/or experience in the oil and gas industry, our financial results could suffer irreparable harm as a result of their decisions and choices.

Gary Chayko and Jordan Shapiro, our officers and directors, do not have any significant training or experience in acquiring and operating an oil and gas interest or exploring for a property. With no direct training or experience in these areas, our management may not be fully aware of many of the specific requirements related to working within this industry. Our management’s decisions and choices may fail to take into account standard engineering or managerial approaches oil and gas companies commonly utilize. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to management’s lack of experience in this industry.

16. Our success depends in part on our ability to attract and retain additional key personnel, which we may or may not be able to do. Our failure to do so could prevent us from achieving our goals and becoming profitable.

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Since our current directors and officers do not have experience in the oil and gas industry and they only attribute approximately 20% of their time to us, we plan to retain a full time President, CEO and CFO to manage our operations and supervise our expansion. In addition, we plan to hire a full time engineer, land specialist and geologist to provide us technical services in regards to our proposed exploration project. However, competition for additional qualified management and skilled professionals is intense, so we may be unable to attract and retain additional key personnel. Our failure to do so could prevent us from achieving our goals and becoming profitable.

17. New legislation, including the Sarbanes-Oxley Act, may make it more difficult for us to retain or attract officers and directors, which could increase our operating costs or prevent us from becoming profitable.

The Sarbanes-Oxley Act was enacted in response to public concerns regarding corporate accountability in connection with recent accounting scandals. The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the SEC, under the Exchange Act. Upon becoming a public company, we will be required to comply with the Sarbanes-Oxley Act. The enactment of the Sarbanes-Oxley Act has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. We continue to evaluate and monitor developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These hurdles could prevent us from becoming profitable.

18. As our directors and officers and our future business assets may be located in Canada, investors may be limited in their ability to enforce US civil actions against our directors and officers or our future assets. You may not be able to receive compensation for damages to the value of your investment caused by wrongful actions by our directors.

Our future business assets may be located in Canada and our directors and officers are residents of Canada. Consequently, it may be difficult for United States investors to affect service of process within the United States on our future assets or our directors or officers.

A judgment of a US court predicated solely upon such civil liabilities may not be enforceable in Canada by a Canadian court if the US court in which the judgment was obtained did not have jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of our future assets or our directors and officers predicated solely upon such civil liabilities. You may not be able to recover damages as compensation for a decline in your investment.

19. We indemnify our directors against liability to XTOL and our stockholders, and the costs of this indemnification could negatively affect our operating results.

Our bylaws allow for the indemnification of company officers and directors in regard to their carrying out the duties of their offices. The bylaws also allow for reimbursement of certain legal defenses.

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As to indemnification for liabilities arising under the Securities Act of 1933 for directors, officers or persons controlling XTOL, we have been informed that in the opinion of the SEC such indemnification is against public policy and unenforceable.

Since our directors and officers are aware that they may be indemnified for carrying out the duties of their offices, they may be less motivated to meet the standards required by law to properly carry out their duties, which could have a negative impact on our operating results. Also, if any director or officer claims against XTOL for indemnification, the costs could have a negative effect on our operating results.

Risks Associated with Our Securities

20. Because there is no public trading market for our common stock, you may not be able to resell your stock.

There is currently no public trading market for our common stock. Therefore there is no central place, such as stock exchange or electronic trading system, to resell your shares. If you do want to resell your shares, you will have to locate a buyer and negotiate your own sale. As a result, you may be unable to sell your shares, or you may be forced to sell them at a loss.

We intend to apply to the OTC Bulletin Board for the trading of our common stock. This process takes at least 60 days and the application must be made on our behalf by a market maker. If our common stock becomes listed and a market for the stock develops, the actual price of the shares will be determined by prevailing market prices at the time of sale. We cannot assure you that there will be a market in the future for our common stock. Trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling or obtaining market quotations, which may have a depressive effect on the market price for our common stock. You may not be able to sell your shares at your purchase price or at any price at all. Accordingly, you may have difficulty reselling any shares you purchase from the selling shareholders.

21. The issuance of shares upon exercise of options and warrants may cause immediate dilution to our existing shareholders.

The issuance of shares upon exercise of options and warrants may result in dilution to the interests of other stockholders. As of May 15, 2007, we have outstanding options to purchase 10,000,000 common shares at an exercise price of $0.0001 per share until February 15, 2011 and outstanding warrants to purchase 1,500 common shares at an exercise price of $0.50 per share until February 7, 2008. The outstanding options and warrants would result in an additional 10,001,500 shares issued if all were exercised. This would increase our outstanding shares by approximately 20.8% and result in an immediate dilution to existing shareholders.

22. Our continued sale of equity securities will dilute existing shareholders and may decrease the market price for our common stock.

Given our limited revenues and the doubtful prospect for significant revenues in the next several years, we will require additional financing of $7,300,000 for the next 12 months (beginning May 2007) which will require the issuance of additional equity securities. We expect to continue our efforts to acquire further financing in the future to fund additional exploration and acquisition activities, which will result in future dilution to existing outstanding shareholders. In short, our continued need to sell equity will result in reduced percentage ownership interests for all of our investors.

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23. We do not intend to pay dividends and there will be less ways in which you can make a gain on any investment in us.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may likely prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in us will need to come through appreciation of the stock’s price.

24. Because the SEC imposes additional sales practice requirements on brokers who deal in our shares which are penny stocks, some brokers may be unwilling to trade them. This means that you may have difficulty reselling your shares and this may cause the price of the shares to decline.

Our shares are classified as penny stocks and are covered by Section 15(g) of the Exchange Act which imposes additional sales practice requirements on brokers-dealers who sell our securities in this offering or in the aftermarket. For sales of our securities, the broker-dealer must make a special suitability determination and receive from you a written agreement prior to making a sale for you. Because of the imposition of the foregoing additional sales practices, it is possible that brokers will not want to make a market in our shares. This could prevent you from reselling your shares and may cause the price of the shares to decline.

25. Because our officers and directors, who are also our promoters, will own more than 50% of the outstanding shares after this offering, they will retain control of us and be able to decide who will be directors and you may not be able to remove them as directors which could prevent us from becoming profitable.

Gary Chayko, our President and Chief Executive Officer, and Jordan Shapiro, our Chief Financial Officer, own or have the rights to acquire a total of 40,000,000 shares, which would be 83% of our issued and outstanding securities. After the offering, if they sell their 400,000 shares registered in this Prospectus, they will own or have the rights to acquire 39,600,000 shares, which would be approximately 82.5% of our issued and outstanding securities upon their exercise of all 10,000,000 options.

Because Gary Chayko and Jordan Shapiro will continue to own more than 50% of our issued common stock, they will be able to elect all of our directors and control our operations. They may have an interest in pursuing acquisitions, divestitures and other transactions that involve risks. For example, they could cause us to make acquisitions that increase our indebtedness or to sell revenue generating assets. They may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. If the directors fail to act in our best interests or fail to perform adequately to manage us, you may have difficulty in removing them as directors, which could prevent us from becoming profitable.

Use of Proceeds

We will not receive any proceeds from the sale of the common stock offered through this Prospectus by the selling shareholders.

Determination of Offering Price

The selling shareholders will sell at initial price of $0.50 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.

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The $0.50 per share initial price of our common stock was determined by our Board of Directors. Our Board of Directors considered several factors in such determination, including the following:

• prices of shares we have issued in the past, including our most recent private placement of 30,000 shares for proceeds of $0.50 per share in February 2007;
• our lack of operating history;
• our capital structure; and
• the background of our management.

Therefore, the $0.50 per share initial price of our shares of common stock does not necessarily bear any relationship to established valuation criteria and may not be indicative of prices that may prevail at any time. The price of our shares of common stock is not based on past earnings, nor is the price of the shares of our common stock indicative of current market value for the assets owned by us. No valuation or appraisal has been prepared for our business. You cannot be sure that a public market for any of our securities will develop.

If our common stock becomes listed on the OTC Bulletin Board and a market for the stock develops, the actual price of the shares sold herein by the selling shareholders will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders named in this Prospectus. The number of shares that may be actually sold by a selling shareholder will be determined by each selling shareholder. The selling shareholders are under no obligation to sell all or any portion of the shares offered, nor are the selling shareholders obligated to sell such shares immediately under this Prospectus. A shareholder may sell shares at a price different than $0.50 per share depending on privately negotiated factors such as a shareholder's own cash requirements, or objective criteria of value such as the market value of our assets.

Dilution

All 1,772,000 shares of the common stock to be sold by the selling shareholders are common stock that is currently issued and outstanding. Accordingly, it will not cause dilution to our existing shareholders.

Plan of Distribution

We are registering the common stock on behalf of the selling shareholders. The 1,772,000 shares of our common stock can be sold by the selling shareholders at an initial price of $0.50 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.

No public market currently exists for our shares of common stock. We intend to apply to the OTC Bulletin Board for the trading of our common stock. In order for us to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf to make a market for our common stock. This process takes at least 60 days and can take longer than a year. We have engaged Spartan Securities as our market maker for sponsorship of our securities on the OTC Bulletin Board.

Trading in stocks quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with a company's operations or business prospects. The OTC Bulletin Board should not be confused with the NASDAQ market. OTC Bulletin Board companies are subject to far less restrictions and

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regulations than are companies traded on the NASDAQ market. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like the NASDAQ Small Cap or a stock exchange. In the absence of an active trading market: (a) investors may have difficulty buying and selling or obtaining market quotations; (b) market visibility for our common stock may be limited; and (c) a lack of visibility for our common stock may have a depressive effect on the market price for our common stock.

However, there is no assurance that we can be traded on the OTC Bulletin Board. The NASD, which regulates the OTC Bulletin Board, has applied to the SEC to impose additional restrictions and requirements upon the part of OTC Bulletin Board companies. We currently do not meet either the existing requirements or the proposed additional restrictions and requirements of the OTC Bulletin Board, and we cannot assure you that we will ever meet these requirements.

The selling shareholders may sell some or all of their common stock in one or more transactions, including block transactions:

• on a public market as the common stock may be trading;
• in privately negotiated transactions;
• through the writing of options of the common stock; or
• in any combination of these methods of distribution.

The sales price to the public may be:

• offered at an initial price of $0.50 per share until a market develops;
• the market price prevailing at the time of sale;
• a price related to such prevailing market price; or
• such other price as the selling shareholders determine.

We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock.

The selling shareholders may also sell their shares directly to market makers acting as principals or brokers or dealers, who may act as agent or acquire the common stock as a principal. Any broker or dealer participating in such transactions as agent may receive a commission from the selling shareholders, or, if they act as agent for the purchaser of such common stock, from the purchaser. The selling shareholders will likely pay the usual and customary brokerage fees for such services.

Brokers or dealers may agree with the selling shareholders to sell a specified number of shares at a stipulated price per share and, to the extent such broker or dealer is unable to do so acting as agent for the selling shareholders, to purchase, as principal, any unsold shares at the price required to fulfill the respective broker's or dealer's commitment to the selling shareholders. Brokers or dealers who acquire shares as principals may thereafter resell such shares from time to time in transactions in a market or on an exchange, in negotiated transactions or otherwise, at market prices prevailing at the time of sale or at negotiated prices, and in connection with such re-sales may pay or receive commissions to or from the purchasers of such shares. These

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transactions may involve cross and block transactions that may involve sales to and through other brokers or dealers. If applicable, the selling shareholders may distribute shares to one or more of their partners who are unaffiliated with us. Such partners may, in turn, distribute such shares as described above. We can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders.

If any selling shareholder enters into an agreement after effectiveness of this registration statement, to sell their shares to a broker-dealer as principal and the broker-deal is acting as an underwriter, we will file a post-effective amendment to our registration statement identifying the broker-dealer, providing the required information regarding the plan of distribution, revising the disclosure in the registration statement and filing the agreement as an exhibit. Prior to such involvement, a broker-dealer must seek and obtain clearance of the underwriting compensation and arrangements from the NASD Corporate Finance Department.

The selling shareholders and any underwriters, dealers or agents that participate in the distribution of our common stock may be deemed to be underwriters, and any commissions or concessions received by any such underwriters, dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act. Shares may be sold from time to time by the selling shareholders in one or more transactions at an initial price, which may be changed, or at any varying prices determined at the time of sale or at negotiated prices. We may indemnify any underwriter against specific civil liabilities, including liabilities under the Securities Act.

The selling shareholders must comply with the requirements of the Securities Act and the Exchange Act, including Regulation M, in the offer and sale of the common stock. In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be an underwriter, they must comply with applicable laws and may, among other things:

• not engage in any stabilization activities in connection with our common stock;

• furnish each broker or dealer through which common stock may be offered, such copies of this Prospectus, as amended from time to time, as may be required by such broker or dealer; and

• not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Exchange Act.

None of the selling shareholders will engage in any electronic offer, sale or distribution of the shares. Further, neither XTOL nor any of the selling shareholders have any arrangements with a third party to host or access our Prospectus on the Internet.

Regulation M

During such time as the selling shareholders may be engaged in a distribution of any of the shares being registered by this registration statement, the selling shareholders are required to comply with Regulation M. In general, Regulation M precludes any selling security holder, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete.

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Regulation M defines a “distribution” as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a “distribution participant” as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution.

Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. We have informed the selling shareholders that the anti-manipulation provisions of Regulation M may apply to the sales of their shares offered by this Prospectus, and we have also advised the selling shareholders of the requirements for delivery of this Prospectus in connection with any sales of the common stock offered by this Prospectus.

In regards to short sells, the selling shareholders cannot cover their short sales with shares from this offering. In addition, if such short sale is deemed to be a stabilizing activity, then the selling shareholders will not be permitted to engage in a short sale of our common stock. All of these limitations may affect the marketability of the shares.

Penny Stock Rules

The SEC has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the OTC Bulletin Board system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the SEC, which:

• contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

• contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements;

• contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;

• contains a toll-free telephone number for inquiries on disciplinary actions;

• defines significant terms in the disclosure document or in the conduct of trading penny stocks; and

• contains such other information and is in such form (including language, type, size, and format) as the SEC shall require by rule or regulation.

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The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer:

• with bid and offer quotations for the penny stock;

• the compensation of the broker-dealer and its salesperson in the transaction;

• the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

• monthly account statements showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities.

Selling Shareholders

Since our inception to May 15, 2007, we raised capital pursuant to the following common share issuances:

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(1) On February 15, 2006, we issued an aggregate of 50,000,000 shares of common stock to our directors and affiliates. On September 14, 2006, 20,000,000 shares of these common shares were cancelled without consideration.

(2) On November 29, 2006, we issued 6,000,000 shares of common stock to Sedona AG for $225,000 worth of investment consulting services.

(3) In January 2007, we issued 10,000 shares of common stock to Cleveland Maynard Welsh with a fair value of $0.25 per share for geological consulting services.

(4) We raised gross proceeds of $15,000 for issuance of 30,000 common shares. Canaccord Capital, a Canadian broker, received cash of $1,500 and warrants to purchase 1,500 common shares at $0.50 per share as commission for the sale of these shares. The net proceeds to us were $13,500.

(5) On April 18, 2007, we issued 10,000 common shares to Cleveland Maynard Welsh at a fair value of $0.50 per share for geological and advisory board consulting services.

Shares issued to US residents Chad Smanjak and Cleveland Maynard Welsh were exempt from registration pursuant to Rule 4(2) of the Securities Act. All of the other issuances described above were exempt from registration under Regulation S of the Securities Act. Where the purchasers of the shares in the issuances described above are not named, they are all non US residents, unless otherwise noted.

Of the above described issuances totaling 37,982,000 shares, 1,772,000 shares are being registered by the selling shareholders, including 400,000 shares held or controlled by our directors.

The following table provides as of May 15, 2007 information regarding the beneficial ownership of our common stock held by each of the selling shareholders, including:

• the number of shares owned by each prior to this offering;
• the total number of shares that are to be offered for each;
• the total number of shares that will be owned by each upon completion of the offering; assuming all shares are sold that are being registered;
• the percentage owned by each; and
• the identity of the beneficial holder of any entity that owns the shares.

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The percentages are based on the 37,982,000 shares of common stock outstanding on May 15, 2007 and assume all shares being registered are sold by the selling shareholders.

Other than as described above, none of the selling shareholders or their beneficial owners has had a material relationship with us other than as a shareholder at any time within the past three years, or has ever been one of our officers or directors or an officer or director of our predecessors or affiliates.

None of the selling shareholders are NASD registered broker-dealers or affiliates of NASD registered broker-dealers.

Legal Proceedings

We are not aware of any pending or threatened legal proceedings which involve XTOL or any of our properties.

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Directors, Executive Officers, Promoters, and Control Persons

Directors and Officers

Our Bylaws allow that the authorized number of directors shall be not less than one and no more than fifteen and shall be set by resolution of the Board of Directors. Currently we have two directors.

Our current directors and officers are as follows:

The directors will serve as directors until our next shareholder meeting or until a successor is elected who accepts the position. Officers hold their positions at the will of the Board of Directors. There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of our affairs.

Gary Chayko, Director, President and Chief Executive Officer

Gary Chayko has been a director, our President and Chief Executive Officer since our inception on February 14, 2006. From January to December 2002 Mr. Chayko served as Vice President of Iroquois West in a joint venture with Cott Beverages that purchased and reestablished a spring water bottling plant in Canada. From September 2006 to the present Mr. Chayko has been the Chief Executive Officer and a director of Coatit Industries, a polyurea coating and spray foam insulation company in Ottawa, Ontario, Canada. From 1983 to the present, Mr. Chayko has been a lawyer engaged in private practice as a sole practitioner. He is certified as a specialist in Criminal Law by the Law Society of Upper Canada. In the course of his practice he has been engaged as a private prosecutor for a number of environmental offences and Fishery Act offences which concerned pollution. Mr. Chayko is the author and Editor in Chief of Forensic Evidence in Canada, (Canada Law book 1991 and 2d edition 1999), a textbook on forensic science for Canadian Lawyers, Judges and Police. He taught the forensic course at the University of Ottawa Law School in 1999.

Jordan Shapiro, Director and Chief Financial Officer

Mr. Shapiro has been a director and our Chief Financial Officer since our inception on February 14, 2006 to present. From 2002 to present, Mr. Shapiro has been the founder and President of Hudson Capital Corp., a venture capital firm assisting companies in the areas of corporate finance, business development and investor relations. From 1997 to 2002, Mr. Shapiro worked as an investment advisor at Canaccord Capital Corporation, a company in the business of providing financial services and investment advice to private investors and companies in Canada and the United States. At Canaccord Capital, Mr. Shapiro specialized in venture capital financings and derivatives trading. From November 2005 to the present, Mr. Shapiro has worked with Hemis Corporation, a public company quoted on the OTC Bulletin Board under the symbol HMSO, as an independent contractor to provide financial consulting services in business development. Mr. Shapiro holds a Bachelor of Arts degree from the University of Western Ontario.

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Family Relationships

There are no family relationships among our officers or directors.

No Legal Proceedings

None of our directors, executive officers, promoters or control persons have been involved in any of the following events during the past five years:

• any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

• any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

• being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

• being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Audit Committee

The functions of the Audit Committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not have an audit committee financial expert on our Board of Directors carrying out the duties of the Audit Committee. Our Board of Directors has determined that the cost of hiring a financial expert to act as a director of XTOL and to be a member of the Audit Committee or otherwise perform Audit Committee functions outweighs the benefits of having a financial expert on the Audit Committee.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the ownership, as of May 15, 2007, of our common stock by each of our directors, and by all executive officers and directors as a group, and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of May 15, 2007, there were 37,982,000 common shares issued and outstanding. All persons named have sole voting and investment power with respect to the shares, except as otherwise noted. The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this Prospectus.

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Changes in Control

Even though we intend to retain a new President, CEO and CFO, Mr. Chayko and Mr. Shapiro will continue to be our directors and significant shareholders and control us. There are currently no arrangements which would result in a change in control of XTOL.

Description of Securities

As of May 15, 2007 we had 37,982,000 common shares outstanding. Also, we have outstanding options to purchase 10,000,000 common shares at an exercise price of $0.0001 per share and outstanding warrants to purchase 1,500 common shares at an exercise price of $0.50 per share.

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Common Stock

Our authorized capital stock consists of 80,000,000 common shares, $0.0001 par value. Holders of the common stock have no preemptive rights to purchase additional shares of common stock or other subscription rights. The common stock carries no conversion rights and is not subject to redemption or to any sinking fund provisions. All shareholders of common stock are entitled to share equally in dividends from sources legally available, when and if declared by

the Board of Directors. Upon the liquidation or dissolution of XTOL, whether voluntary or involuntary, all shareholders are entitled to share equally in the assets of XTOL available for distribution to our stockholders.

The Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by our Articles of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action.

Voting Rights

Each holder of common stock is entitled to one vote per share on all matters on which such stockholders are entitled to vote. Since the shares of common stock do not have cumulative voting rights, the holders of more than 50% of the shares voting for the election of directors can elect all the directors if they choose to do so and, in such event, the holders of the remaining shares will not be able to elect any person to the Board of Directors.

Dividend Policy

Holders of our common stock are entitled to dividends if declared by the Board of Directors out of funds legally available therefore. We have never paid any dividends. We do not anticipate the declaration or payment of any dividends in the foreseeable future. We intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy will be subject to the discretion of the Board of Directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions and other factors. Therefore, there can be no assurance that any dividends of any kind will ever be paid.

Preferred Stock

We are authorized to issue up to 20,000,000 shares of $0.0001 par value preferred stock. We have no shares of preferred stock outstanding. Under our Articles of Incorporation, the Board of Directors has the power, without further action by the holders of the common stock, to determine the relative rights, preferences, privileges and restrictions of the preferred stock, and to issue the preferred stock in one or more series as determined by the Board of Directors. The designation of rights, preferences, privileges and restrictions could include preferences as to liquidation, redemption and conversion rights, voting rights, dividends or other preferences, any of which may be dilutive of the interest of the holders of the common stock or the preferred stock of any other series.

Stock Transfer Agent

Island Stock Transfer has been appointed by us to serve as our stock transfer agent.

Shares Eligible for Future Sale

The 1,772,000 shares of common stock registered in this offering will be freely tradable without restrictions under the Securities Act. A total of 400,000 common shares are being registered by our directors and officers; 200,000 shares owned by Gary Chayko, our President and Chief Executive Officer; and 100,000 shares owned by Jordan Shapiro, our Chief Financial Officer; 100,000 shares owned by Hudson Capital, a company owned by Jordan Shapiro.

Of the 36,200,000 shares of our issued common stock that are not being registered in this Prospectus:

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• 14,800,000 shares have been held by Gary Chayko, our President and Chief Executive Officer, for more than a year;

• 7,400,000 shares have been held by Jordan Shapiro, our Chief Financial Officer, for more than a year;

• 7,400,000 shares have been held by Hudson Capital for more than a year; and

• 6,600,000 shares have been held by three other shareholders for less than a year.

In general, under Rule 144 as currently in effect, any of our affiliates and any person or persons whose sales are aggregated who has beneficially owned his or her restricted shares for at least one year, may be entitled to sell in the open market within any three-month period a number of shares of common stock that does not exceed the greater of (i) 1% of the then outstanding shares of our common stock, or (ii) the average weekly trading volume in the common stock during the four calendar weeks preceding any sale. Sales under Rule 144 are also affected by limitations on manner of sale, notice requirements and availability of current public information about us. Non-affiliates who have held their restricted shares for two years may be entitled to sell their shares under Rule 144 without regard to any of the above limitations, provided they have not been affiliates for the three months preceding any sale.

The 36,210,000 outstanding restricted securities held by the directors, affiliates and non-affiliates of XTOL that are not registered in this Prospectus are subject to the sale limitations imposed by Rule 144. The availability for sale of substantial amounts of common stock under Rule 144 could adversely affect prevailing market prices for our securities.

Interest of Named Experts and Counsel

No expert or counsel named in this Prospectus as having prepared or certified any part of this Prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock, was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in XTOL. Nor was any such person connected with XTOL as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

Experts

Our audited financial statements as of November 30, 2006 are included in this Prospectus in reliance upon Manning Elliott LLP, Independent Registered Public Accounting Firm, as experts in auditing and accounting.

The validity of the common stock offered hereby will be passed upon for us by Penny Green of Bacchus Law Group.

Reports to Security Holders

Upon effectiveness of this Prospectus, we will be subject to the reporting and other requirements of the Exchange Act and we intend to furnish our shareholders annual reports containing financial statements audited by our independent auditors and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year.

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The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.

Indemnification for Securities Act Liabilities

Under our Articles of Incorporation and bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

Regarding indemnification for liabilities arising under the Securities Act, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the SEC, indemnification is against public policy, as expressed in the Securities Act and is, therefore, unenforceable.

Description of Business

Overview

We are engaged in the acquisition of interests and leases of producing oil and natural gas wells. Our plan of operations for the next twelve months is to create revenue from non-operated interests of producing oil and gas wells and to acquire an interest in, and further develop a development stage oil and gas exploration project.

We have only recently begun our current operations and have not yet earned any revenues and have an operational loss of $162,909 from February 14, 2006 (date of inception) to February 28, 2007.

We have acquired an interest in three wells in Kingfisher County, Oklahoma. We do not yet have any exploration projects. We need capital to carry out our current business plan. We also anticipate that we will require additional financing in order to pursue full exploration of our acquired claims. We may not have sufficient financing to undertake our current and future business and there is no assurance that we will be able to obtain the necessary financing.

Development of Business

Since our inception on February 14, 2006, we have built a management team and retained experts in geology, law and accounting. On February 15, 2006, Gary Chayko was appointed as a director, President and Chief Executive Officer and Jordan Shapiro was appointed as a director, Chief Financial Officer, Secretary and Treasurer.

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On July 24, 2006, we entered into a consulting agreement with Cleveland Maynard Welsh to provide geological consulting services. On December 1, 2006 we entered into an advisory board agreement to replace this consulting agreement.

On August 1, 2006 we acquired a non-operated interest in three working wells in Kingfisher County, Oklahoma.

From August to October 2006, we have continued to develop our business plan and we have built relationships with potential investors for completion of our equity financing plan.

On November 29, 2006, we entered into a consulting agreement with Sedona AG, a Swiss investment consulting firm, to provide investment banking and financial consulting services.

Since inception to January 2007, we raised approximately $178,000 through private placements. From January to February 2007, we raised net proceeds of $13,500 by an offering memorandum from 18 investors in Canada. We issued 30,000 shares of common stock for gross proceeds of $15,000 and paid Canaccord $1,500 in cash and 1,500 warrants as commission.

Interest in Producing Wells

On August 1, 2006, we purchased a 2.34% non operated interest in three producing wells located in Kingfisher County, Oklahoma. Our interest gives us the right to receive 2.34% of the profits from the operation of three wells described as Stebens #1, Oblander #1-29 and Schneider #1, but it does not give us the right to operate the wells. Range Resources Corporation of Fort Worth, Texas operates the wells and is obligated to pay us our 2.34% interest out of their profits.

During the first six months of 2006, these wells, produced a combined average of approximately 127 thousand cubic feet of gas per day and 1 barrel of oil per day. The 2.34% interest generated an average monthly income of approximately $515 per month during the past five years We did not receive any revenues from our 2.34% interest until February 2007 due to the delayed-transfer of the interest.

Future Oil and Gas Interests

Our search for oil and gas leases or interests in leases has been directed towards small and medium-sized oil and natural gas production companies and properties. For our initial property interest acquisitions, we are looking for low risk interests. During the next 12 months (beginning May 2007), we intend to include in our portfolio additional non-operated interests in producing wells as well as an exploration interest in a development stage oil and gas potential property. As we continue the development of our portfolio of interests, we will be looking for properties and interests which have the following qualities:

• at least developmental drilling in proven producing areas;
• significant additional production capacity through developmental drilling, recompletions and workovers;
• further developmental potential;
• in some cases, ability to assume operatorship or appointment of a known operator with relevant experience in the area.

Plan of future acquisition and exploration is as follows:

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Markets

We remain in the development stage. We have generated only nominal revenues, we had had no oil and gas production, and we do not have any customers as of February 28, 2007. We only have a non-operated working interest in three wells in Oklahoma at this time. However, we intend to acquire a property and carry out exploration of it.

The availability of a ready market and the prices obtained for oil and gas produced depends on many factors, including the extent of domestic production and imports of oil and gas, the proximity and capacity of natural gas pipelines and other transportation facilities, fluctuating demand for oil and gas, the marketing of competitive fuels, and the effects of governmental regulation of oil and gas production and sales.

A ready market exists for domestic oil and gas through existing pipelines and transportation of liquid products. Whether there exists an international market depends upon the existence of international delivery systems, political and pricing factors.

If we are successful in producing oil and gas in the future, our future target customers for our oil and gas are expected to be refiners, remarketers and third party intermediaries, who either have, or have access to, consumer delivery systems. We intend to sell our oil and gas under both short-term (less than one year) and long-term (one year or more) agreements at prices negotiated with third parties. Typically either the entire contract (in the case of short-term contracts) or the price provisions of the contract (in the case of long-term contracts) are renegotiated at intervals ranging in frequency from daily to annually.

We have not yet adopted any specific sales and marketing plans. However, as we purchase future properties, the need to hire marketing personnel will be addressed.

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Competition

We are a new and unestablished oil and gas company and have a weak competitive position in the industry. We compete with other oil and gas companies for financing and for the acquisition of new oil and gas interests and properties. Many of the oil and gas companies with whom we compete have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of oil and gas interests or properties of merit, on exploration of their oil and gas properties, or on development of their oil and gas properties. In addition, they may be able to afford more geological expertise in the targeting and exploration of oil and gas properties. This competition could result in competitors having oil and gas properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact our ability to achieve the financing necessary for us to conduct further exploration of our oil and gas properties.

We will also compete with other junior oil and gas companies for financing from a limited number of investors that are prepared to make investments in junior oil and gas companies. The presence of competing junior oil and gas companies may impact our ability to raise additional capital in order to fund our acquisition or exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the oil and gas properties under investigation and the price of the investment offered to investors.

We will also compete with other junior and senior oil and gas companies for available resources, including, but not limited to, professional geologists, land specialists, engineers, camp staff, helicopters, float planes, oil and gas exploration supplies and drill rigs.

Competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the government of the United States and other countries, as well as factors that we cannot control, including international political conditions, overall levels of supply and demand for oil and gas, and the markets for synthetic fuels and alternative energy sources.

Research and Development Expenditures

We have not spent any amounts on research and development activities since our inception. Our planned expenditures on our operation or exploration programs are summarized under the section of this Prospectus entitled “Management Discussion and Analysis or Plan of Operation.”

Employees and Consultants

As of May 15, 2007, we do not have any full time or part time employees. Our Chief Executive Officer and our Chief Financial Officer work as part time consultants in the areas of business development and management, each contributing approximately 20% of their time to us. We currently engage independent contractors in the areas of accounting, geologist services, legal, auditing services, and investment banking. We plan to engage independent contractors in the areas of consulting, marketing, bookkeeping, and other services.

We intend to retain a full time President, CEO and CFO over the next six months. Gary Chayko, our current President and CEO, and Jordan Shapiro, our current CFO, will resign from their officer positions if we find and retain a new President, and CEO and CFO. Mr. Chayko and Mr. Shapiro intend to continue to serve as our directors, and we do not anticipate any change of control during the next 12 months. Also, we intend to hire a full time engineer, land specialist and geologist over the next six months.

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Subsidiaries

As of May 15, 2007, we do not have any subsidiaries.

Intellectual Property

We have not filed for any protection of our trademarks for XTOL. We own the copyright of our logo and all of the contents of our website, www.xtolenergy.com.

Government Regulations

Our current and future operation and exploration activities are or will be subject to various laws and regulations in US and Canada in which we do or will conduct our activities. These laws and regulations govern the protection of the environment, conservation, prospecting, development, energy production, taxes, labor standards, occupational health, work safety, toxic substances, chemical products and materials, waste management, and other matters relating to the oil and gas industry.

Regarding our current non-operated interest, we are responsible for a 2.34% share of costs for (1) any claims arising from the production and sale of hydrocarbons from the interest after August 1, 2006, which is the date we acquired our 2.34% interest in the three wells in Oklahoma; (2) any governmental request or requirement to plug, re-plug or abandon any wells, status or classification, or take any clean up or other actions with respect to our interest; and (3) any claims for personal injury, death, damage to property or damage to the environment arising directly or indirectly from the use, occupation, operation, maintenance or abandonment of our interest. As at May 15, 2007 we have not incurred any such costs.

Permits, registrations or other authorizations will be required for the operation of our future facilities and for our future oil and gas exploration and production activities. These permits, registrations or authorizations are subject to revocation, modification and renewal. Governmental authorities have the power to enforce compliance with these regulatory requirements, the provisions of required permits, registrations or other authorizations, and lease conditions, and violators are subject to civil and criminal penalties, including fines, injunctions or both. Failure to obtain or maintain a required permit may also result in the imposition of civil and criminal penalties. Third parties may have the right to sue to enforce compliance.

We expect to be able to comply with those laws and do not believe that compliance will have a material adverse effect on our competitive position. We have obtained, and intend to obtain all licenses and permits required by all applicable regulatory agencies in connection with any oil and gas operations we carry out and our future exploration activities. We intend to maintain standards of environmental compliance consistent with regulatory requirements. We have obtained, and will obtain at the appropriate time, environmental permits, licenses or approvals required for our operations. We are not aware of any material violations of environmental permits, licenses or approvals issued with respect to our operations. We believe that the operator of the properties in which we have an interest complies with all applicable laws, rules and regulations relating to the control of air emissions on the properties. At this time, we do not anticipate any material capital expenditures to comply with various environmental requirements.

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Compliance with environmental requirements, including financial assurance requirements and the costs associated with the cleanup of any spill, could have a material adverse effect on our capital expenditures, earnings or competitive position. Failure to comply with any laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of injunctive relief or both. Legislation affecting the oil and gas industry is under constant review for amendment or expansion, frequently increasing the regulatory burden. Changes in any of these laws and regulations could have a material adverse effect on business. In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us, we cannot predict the overall effect of such laws and regulations on our future operations.

US Regulations

Our operations are or will be subject to various types of regulation at the federal, state and local levels. Such regulation includes requiring permits for the drilling of wells; maintaining bonding requirements in order to drill or operate wells; implementing spill prevention plans; submitting notification and receiving permits relating to the presence, use and release of certain materials incidental to oil and gas operations; and regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids and materials used in connection with drilling and production activities, surface usage and the restoration of properties upon which wells have been drilled, the plugging and abandoning of wells and the transporting of production. Our operations are or will be also subject to various conservation matters, including the regulation of the size of drilling and spacing units or proration units, the number of wells which may be drilled in a unit, and the unitization or pooling of oil and gas properties. In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases, which may make it more difficult to develop oil and gas properties. In addition, state conservation laws establish maximum rates of production from oil and gas wells, generally limit the venting or flaring of gas, and impose certain requirements regarding the ratable purchase of production. The effect of these regulations is to limit the amounts of oil and gas we may be able to produce from our wells and to limit the number of wells or the locations at which we may be able to drill.

Operations on properties in which we have an interest are subject to extensive federal, state and local environmental laws that regulate the discharge or disposal of materials or substances into the environment and otherwise are intended to protect the environment. Numerous governmental agencies issue rules and regulations to implement and enforce such laws, which are often difficult and costly to comply with and which carry substantial administrative, civil and criminal penalties and in some cases injunctive relief for failure to comply.

Some laws, rules and regulations relating to the protection of the environment may, in certain circumstances, impose “strict liability” for environmental contamination. These laws render a person or company liable for environmental and natural resource damages, cleanup costs and, in the case of oil spills in certain states, consequential damages without regard to negligence or fault. Other laws, rules and regulations may require the rate of oil and gas production to be below the economically optimal rate or may even prohibit exploration or production activities in environmentally sensitive areas. In addition, state laws often require some form of remedial action, such as closure of inactive pits and plugging of abandoned wells, to prevent pollution from former or suspended operations.

Legislation has been proposed in the past and continues to be evaluated in Congress from time to time that would reclassify certain oil and gas exploration and production waste as hazardous waste. If such reclassification is successful, it would make these wastes subject to much more stringent storage, treatment, disposal and clean-up requirements, which could have a significant

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adverse impact on operating costs. From time to time initiatives to further regulate the disposal of oil and gas wastes are also proposed in certain states and may include initiatives at the county, municipal and local government levels. These various initiatives could have a similar adverse impact on operating costs.

The regulatory burden of environmental laws and regulations increases our cost and risk of doing business and consequently affects our profitability. The federal Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, also known as the “Superfund” law, imposes liability, without regard to fault, on certain classes of persons with respect to the release of a “hazardous substance” into the environment. These persons include the current or prior owner or operator of the disposal site or sites where the release occurred and companies that transported, disposed or arranged for the transport or disposal of the hazardous substances found at the site. Persons who are or were responsible for releases 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 the federal or state government to pursue such claims. The federal Environmental Protection Agency and various state agencies continue to promulgate regulations that limit the disposal and permitting options for certain hazardous and non-hazardous wastes.

It is also not uncommon for neighboring landowners and other third parties to file claims for personal injury or property or natural resource damages allegedly caused by the release of hazardous substances into the environment.

Canadian Regulations

As our business plan may involve operation or exploration activities in Canada, we expect to comply with Canadian laws and regulations related to oil and gas industry. Canada has regulatory provisions relating to permits for the drilling of wells, the spacing of wells, the prevention of oil and natural gas waste, allowable rates of production and other matters. The amount of oil and natural gas produced is subject to control by regulatory agencies in each province that periodically regulate allowable rates of production.

In addition to the foregoing, in the future our Canadian operations may be affected from time to time by political developments in Canada and by Canadian federal, provincial and local laws and regulations, such as restrictions on production and export, oil and natural gas allocation and rationing, price controls, tax increases, expropriation of property, modification or cancellation of contract rights, and environmental protection controls.

The Canada Oil and Gas Operations Act provides for the making of regulations concerning the design, safety, construction, installation, inspection, testing, monitoring, operation, maintenance and repair of installations used in the exploration, development and production of oil and gas. The Act prohibits anyone from carrying on any work or activity related to the exploration for or the production of oil or gas unless they first obtain a license or authorization issued by the National Energy Board. As part of the application process, a plan must be submitted which shows that Canadians are being employed and that Canadian goods and services are being used. The National Energy Board may require that certain conditions be fulfilled, for example, that the person obtain appropriate insurance and that environmental studies be carried out.

The Oil and Gas Spills and Debris Liability Regulations govern the limits of liability for spills, authorized discharges and debris emanating or originating from work or activity related to the exploration or production of oil and gas.

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The Canada Oil and Gas Drilling Regulations govern the exploration, drilling and conservation of oil and gas and specifies measures to ensure the safety of these operations. These regulations stipulate that no person may drill a well without authorization and approval, which is obtained upon application to the Chief Conservation Officer.

The Registration of Storage Tank Systems for Petroleum Products and Allied Petroleum Products on Federal Lands or Aboriginal Lands Regulations require registration of all specified storage tank systems located on federal lands or aboriginal lands, with the appropriate federal department administering the land. The Department of Environment will have access to the consolidated storage tank system records in each appropriate federal department. A prohibition on fuel delivery is provided for any unregistered storage tank systems.

Description of Property

Our principal executive office is located at Suite 600 – 595 Howe Street, Vancouver, British Columbia, Canada V6C 2T5. Our telephone number is (604) 662-3910. Since our inception to February 28, 2007, we recognized $6,000 for the donated for office premises provided by our Chief Financial Officer. The office is about 1,500 square feet. We record a rent expense of $500 per month.

On August 1, 2006, we only have a 2.34% non-operated interest in three producing wells located in Kingfisher County, Oklahoma. During the first six months of 2006, these three wells produced an average of approximately 127 thousand cubic feet of gas and 1 barrel of oil per day. From 2002 to 2005, the combined average annual income to the previous owner of the 2.34% interest less operating costs was approximately $6,180. We did not receive any revenues from our 2.34% interest until February 2007 due to the delayed transfer of the interest. More information on our interest in the Kingfisher Country wells is available under our heading "Description of Business" elsewhere in this Prospectus. Other than our interest in the Kingfisher County wells, we do not own or have any rights to acquire any other interests in oil and gas properties.

Material Agreement

On August 1, 2006, we entered into an agreement with Peggy G. Ellis, the Personal Representative of the Estate of Ella Geiger, to purchase a 2.34% non operated interest in three producing wells located in Kingfisher County, Oklahoma for a purchase price of $34,038. Our interest gives us the right to receive 2.34% of the profits from the operation of three wells described as Stebens #1, Oblander #1-29 and Schneider #1. The interest is conveyed “as it, where is” without warranty of title. We will be responsible to pay all ad valorem taxes on the interest for the 2006 tax period and thereafter. We paid for the interest in full in August of 2006, however, the Estate of Ella Geiger will reimburse its proportionate share of taxes in respect of its ownership of the interest during the 2006 tax period.

Management’s Discussion and Analysis or Plan of Operation

We are a start-up stage corporation with limited operations and limited revenues from our business operations. Our auditors have issued us with a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. Our only source of cash at this time is investments by others in our company. We must raise cash to implement our plan of operation.

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Results of Operations

Since our inception on February 14, 2006 to February 28, 2007, we generated revenues of $927. From February 14, 2006 (date of inception) to February 28, 2007, we incurred a net loss of $162,909. As of March 27, 2007, we had approximately $62,816 in our bank accounts. Our net loss per share was nil for the period from February 14, 2006 (date of inception) to February 28, 2007.

We began to earn revenues in February 2007 from our non-operated working interests in three producing wells. We plan to purchase additional non-operated working interests in existing leases. However, we anticipate that we will incur substantial losses over the next two years.

Our total expenses were $163,836 from February 14, 2006 (date of inception) to February 28, 2007, including $1,429 in depreciation and $162,407 in general and administrative fees.

Our general and administrative fees from February 14, 2006 (date of inception) to February 28, 2007 were $162,407, including $63,492 in professional fees, $51,574 in consulting fees, and $47,341 in other administrative expenses. Our other administrative expenses consist of management and consulting fees, bank charges, travel, meals and entertainment, rent, foreign exchange, office maintenance, communication expenses (cellular, internet, fax, and telephone), courier, postage costs and office supplies. Our professional fees include legal, accounting and auditing fess.

On February 15, 2006 we issued options to acquire 5,000,000 shares at $0.0001 per share to Gary Chayko, our President and Chief Executive Officer; options to acquire 2,500,000 shares at $0.0001 per share to Jordan Shapiro, our Chief Financial Officer; and options to acquire 2,500,000 shares at $0.0001 per share to Hudson Capital, a company owned by Jordan Shapiro. The options were issued as compensation for their services, and we do not intend to issue more options to them in the next two years. The options vested immediately, and are valid for a period of five years from the date of grant. We believe that it is necessary to enter into option agreements in order to retain the services of Mr. Chayko and Mr. Shapiro.

Plan of Operations

We have limited operations and are solely dependent on the funds raised through our equity or debt financing. As of February 28, 2007, we had $64,714 in our bank accounts.

For the next twelve months (beginning May 2007) we intend to:

• Complete the purchase of additional non-operated interests in producing wells;
• Complete the purchase of exploration rights to a development stage oil and gas exploration project;
• Plan and carry out a full exploration program on a potential advanced stage oil and gas property; and
• Complete private and/or public financing to cover the cost of acquiring additional exploration projects and non-operated interests in existing leases.

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Currently, we are reviewing additional non-performing leases in Oklahoma and additional working interests in Oklahoma, Texas, Wyoming and Canada.

We expect to require approximately $7,332,000 in financing to continue our planned operation and exploration over the next year. Our planned acquisition and exploration expenditures for oil and gas interests and properties over the next twelve months (beginning May 2007) are summarized as follows:

Our other planned operational expenses for the next twelve months (beginning May 2007) are summarized as follows:

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The general and administrative expenses for the year will consist primarily of transfer agent fees, management fees, investor relations and general office expenses. The professional fees for the audit and legal work are related to our regulatory filings throughout the year,

We had cash in the amount of $62,816 as of March 27, 2007. Based on our planned expenditures, we require a minimum of approximately $7,300,000 (a total of approximately $7,332,000 less our cash of $62,816) to proceed with our business plan over the next twelve months. If we achieve less than the full amount of financing that we require, we will not be able to carry out our full business plan or we will be forced to proceed with scaled back business plans based on our available financial resources.

For the following two years, we anticipate that we will incur substantial losses. We do not have enough capital to carry out our business plan. Even if we carry out exploration activities on the properties we plan to acquire, this will not guarantee that the properties will contain commercially exploitable quantities of oil and gas. Such exploration projects will be directed by our management and will be supervised by Gary Chayko and Jordan Shapiro, our President, CEO and CFO. If we retain a new President, CEO and CFO, the new officer or officers will manage our operations and supervise our planned exploration projects.

Due to our limited finances, there is no assurance that we will be able to acquire an interest in a property that merits further exploration. If we were to acquire an interest in a property, then our plan would be to conduct resource exploration of the property. In any event, we anticipate that our acquisition of a property and any exploration activities that we would undertake will be subject to us achieving additional financing.

Even though we plan to raise capital by equity or debt financing, we believe that debt financing may not be a viable alternative for funding our operations as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funds from the sale of our common stock to fund our operation and exploration activities. In the absence of such financing, we will not be able to purchase non-operated working interest in existing leases, acquire a development stage exploration project, or carry out a preliminary exploration program on an acquired property. Even if we are successful in obtaining equity financing to fund our operation and exploration, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of our future properties following the completion of preliminary exploration. If we do not continue to obtain additional financing, we will be forced to abandon our properties, our plan of operation and our exploration.

Modifications to our plans will be based on many factors, including: results of exploration, assessment of data, weather conditions, exploration costs, the price of oil and gas and available capital. Further, the extent, to which we carry out our exploration programs, is dependent upon the amount of financing available to us.

We may consider entering into joint venture arrangements to provide the required funding to pursue drilling and advanced exploration of our potential properties. If we enter into a joint venture arrangement, we would likely have to assign a percentage of our interest in our projects to the joint venture partner. The assignment of the interest would be conditional upon contribution by the joint venture partner of capital to enable the advanced exploration on the properties to proceed. There is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of our potential projects.

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Liquidity and Capital Resources

As of February 28, 2007 we had cash of $64,714 and a working capital surplus of $240,891. Our accumulated deficit was $162,909 as at February 28, 2007. Our net loss of ($162,909) from February 14, 2006 (date of inception) to February 28, 2007 was funded by our equity financing. From February 14, 2006 (date of inception) to February 28, 2007, we raised $168,000 in equity financing. The decrease in cash for the three months ended February 28, 2007 was $34,888.

On August 1, 2006 we acquired a 2.34% non-operated interest in three wells in Oklahoma and completed our obligation to make a cash payment of $34,038. On November 29, 2006 we engaged Sedona AG, a Swiss company, to provide investment and financial consulting services to us. We issued 6,000,000 common shares as consideration pursuant to the consulting agreement. On July 24, 2006, we entered into a consulting agreement with Cleveland Maynard Welsh to provide us geological consulting services. We issued Mr. Welsh 10,000 common shares in January 2007 pursuant to this agreement.. We paid him $2,500 per month as consideration for his geological consulting services. On December 1, 2006 we entered into an advisory board agreement with Mr. Welsh to replace the agreement dated July 24, 2006. Under the new agreement, we committed to pay him $400 for every actual day Mr. Welsh provides us geological services and issue him 10,000 common shares annually. On April 28, 2007 we issued 10,000 more common shares to Mr. Welsh as his annual payment under this new agreement. As of February 28, 2007, we have enough money in our bank accounts to cover all of our required payments on our consulting agreements.

We used net cash of $58,388 in operations for the three months ended February 28, 2007. We did not use net cash in investing activities for the three months ended February 28, 2007. We used net cash of $37,429 in investing activities from February 14, 2006 (date of inception) to November 30, 2006. Our investing activities include the purchase of our office equipment and our oil and gas property interest. We received net cash of $23,500 from issuance of our common stock for the three months ended February 28, 2007. For the three months ended February 28, 2007 we raised $23,500 (a total of $25,000 less $1,500 commission fees) in capital through private placements to non US residents that were exempt from registration pursuant to Regulation S of the Securities Act. During the three months ended February 28, 2007, our monthly cash requirement was approximately $19,500 in operating activities. As of February 28, 2007, we had cash of $64,714.

However, we anticipate that after May 2007 our monthly expenses will increase to $611,000, which includes $32,000 monthly for general and administrative expenses, $52,000 monthly for consulting and employee expenses, $19,000 monthly for professional fees, $340,000 for acquisition of non-operated working interests and an exploration project and $168,000 monthly for exploration costs.

Of the $7,332,000 we need for the next 12 months, we had $62,816 in cash as of March 27, 2007. We intend to raise the balance of our cash requirements for the next 12 months (approximately $7,300,000) from private placements, shareholder loans or possibly a registered public offering (either self-underwritten or through a broker-dealer) within the next few months. If we are unsuccessful in raising enough money through future capital raising efforts, we may review other financing possibilities such as bank loans. At this time we do not have any commitments from any broker-dealer to provide us with financing.

There is no assurance that any financing will be available or if available, on terms that will be acceptable to us. We also may need additional financing to carry out our business plan.

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Obtaining additional financing will be subject to a number of factors including market conditions, investor acceptance of our business plan, and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. If we cannot raise at least $7,300,000, we will have to significantly reduce our spending, delay or cancel planned activities or substantially change our current corporate structure. In such an event, we intend to implement expense reduction plans in a timely manner. However, these actions would have material adverse effects on our business, revenues, operating results, and prospects, resulting in a possible failure of our business. We may need to obtain additional financing which may not be available, which could cause us to cease operations.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive exploration activities. For these reasons our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern.

Current Equity Financings

From November 30, 2006 to May 15, 2007, we issued the following common stock as follows for net cash proceeds of $23,500.

(1) We paid a commission of $1,500 to Canaccord Capital.

Future Financings

We will require additional financing of $7,300,000 in order to proceed with our full business plan. We plan to conduct private placements or a public offering in order to raise the funds necessary to pursue our plan of operations. Issuances of additional shares will result in dilution to our existing shareholders. We currently do not have any arrangements in place for the completion of any private placement financings or a public offering and there is no assurance that we will be successful in completing any equity financings.

We are currently offering common shares for sale through private placements pursuant to Regulation S of the Securities Act to non US persons. The sale price per common share that we are currently negotiating is $0.50 per share.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,

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revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

Oil and Gas Properties

We utilize the full-cost method of accounting for petroleum and natural gas properties. Under this method, we capitalize all costs associated with acquisition, exploration and development of oil and natural gas reserves into the full cost pool on a country by country basis. When we obtain proven oil and gas reserves, capitalized costs will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made we assess annually whether impairment has occurred, and include in the amortization base drilling exploratory dry holes associated with unproved properties.

We apply a ceiling test to the capitalized cost in the full cost pool. The ceiling test limits such cost to the estimated present value, using a ten percent discount rate, of the future net revenue from proved reserves, based on current economic and operating conditions. Specifically, we compute the ceiling test so that capitalized cost, less accumulated depletion and related deferred income tax, do not exceed an amount (the ceiling) equal to the sum of: (A) The present value of estimated future net revenue as of the date of the latest balance sheet presented, less estimated future expenditures; plus (B) the cost of property not being amortized; plus (C) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less (D) income tax effects related to differences between the book and tax basis of the property.

For unproven properties, we exclude from capitalized costs subject to depletion, all costs directly associated with the acquisition and evaluation of the unproved property until it is determined whether or not proved reserves can be assigned to the property. Until such a determination is made, we assess the property at least annually to ascertain whether impairment has occurred. In assessing impairment we consider factors such as historical experience and other data such as primary lease terms of the property, average holding periods of unproved property, and geographic and geologic data. We add the amount of impairment assessed to the cost to be amortized subject to the ceiling test.

Stock Based Compensation

In accordance with SFAS No. 123R “Share Based Payments,” we account for share-based payments and stock options using the fair value method. We have granted stock options to directors. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

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Market for Common Equity and Related Stockholder Matters

Market Information

Our common stock is not traded on any exchange. We plan to eventually seek listing on the OTC Bulletin Board, once our Prospectus has been declared effective by the SEC. We cannot guarantee that we will obtain a listing. There is no trading activity in our securities and there can be no assurance that a regular trading market for our common stock will ever be developed.

A market maker sponsoring a company's securities is required to obtain a listing of the securities on any of the public trading markets, including the OTC Bulletin Board. Spartan Securities has agreed to submit an application on our behalf for quotation on the OTC Bulletin Board. There is no assurance that our securities will be able to meet the requirements for a quotation or that the securities will be accepted for listing on the OTC Bulletin Board.

The OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

As of May 15, 2007, there were 41 holders of record of our common stock.

Executive Compensation

The following Summary Compensation Table sets forth the total annual compensation paid or accrued by us to or for the account of the Chief Executive Officers who held this position during the fiscal year 2006 and each other executive officer whose total cash compensation exceeds $100,000:

Summary Compensation Table

Mr. Chayko and Mr. Shapiro each spend approximately 20% of the time they work on our business. Except options granted to Mr. Chayko and Mr. Shapiro, they do not have any other compensations as directors or officers and any benefits. In addition, we do not plan to grand them any options, warrants, other compensations or benefits in the near future.

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Option Grants in the Last Fiscal Year

The following table sets forth the stock options that were granted to the named executive officers during the period from inception (February 14, 2006) to November 30, 2006.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

     The following table sets forth certain information concerning unexercised stock options held by the named executive officers as of November 30, 2006. None of the named executive officers exercised any of their stock options during the period from inception (February 14, 2006) to November 30, 2006.

(1) The calculation of the value of unexercised options held by the named executive officers is based upon the most recent sales of our unregistered stock at a price of $0.50 per share.

Compensation Committee

We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines the executive compensation.

Option and Consulting Agreements

On February 15, 2006 we entered into an option agreement with our President and Chief Executive Officer, Gary Chayko, wherein we agreed to issue him a stock option to purchase up to 5,000,000 common shares at $0.0001 per share for his services. The option may be exercised until February 15, 2011.

On February 15, 2006 we entered into an option agreement with our Chief Financial Officer, Jordan Shapiro, wherein we agreed to issue him a stock option to purchase up to 2,500,000 common shares at $0.0001 per share for his services. The option may be exercised until February 15, 2011.

On February 15, 2006 we entered into an option agreement with Hudson Capital, a company owned by Jordan Shapiro, wherein we agreed to issue it a stock option to purchase up to 2,500,000 common shares at $0.0001 per share for its services. The option may be exercised until February 15, 2011.

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On July 24, 2006 we entered into a consulting agreement with Cleveland Maynard Welsh, whereby Mr. Welsh agreed to act as our Geologist from July 24, 2006 until the agreement is terminated on 14 days notice by either party. As remuneration we agreed to pay Mr. Welsh $2,500 per month and issue 10,000 common shares as compensation. Mr. Welsh will be entitled to receive a bonus of $5,000 and 10,000 common shares upon completion of one to three acquisition projects and a detailed description of each project. We paid $2,500 per month to Mr. Welsh and issued him 10,000 common shares. We did not pay him any bonuses, because Mr. Welsh did not complete the work on time. On December 1, 2006 we entered into an advisory board agreement with Mr. Welsh to replace the consulting agreement dated July 24, 2006. Under the advisory board agreement, Mr. Welsh is entitled to receive $400 for every actual day he provides geological services to us and 10,000 shares of our common stock annually. This advisory board agreement will continue for a period of 3 years unless it is terminated by each party with a 14-day notice.

On November 29, 2006, we entered into a consulting agreement with Sedona AG whereby Sedona AG agreed to provide us investment banking and corporation communication in Europe, assist us in raising capital and promoting the sale of shares in Europe, conduct due diligence on European investors, prepare business plans and other business documents. The agreement commenced on November 29, 2006 and will expire on December 31, 2007. Pursuant to the agreement, we paid Sedona AG 6,000,000 shares of our common stock at a fair value of $225,000 on November 29, 2006 as payment in advance for the full term of service.

None of our directors received compensation for their service as directors during the period from inception (February 14, 2006) to February 28, 2007.

Certain Transactions and Related Parties

On February 15, 2006, we issued an aggregate of 10,000,000 options to our directors and Hudson Capital, a company owned by one of our directors at an exercise price of $0.0001 per share for their services. The expiration date of those options is February 15, 2011. Our directors and Hudson Capital purchased a total of 30,000,000 common shares from us for a cash payment of $5,000.

On November 29, 2006, we issued 6,000,000 shares of common stock with a fair value of $225,000 Sedona AG as advance payment for its investment consulting services to December 31, 2007.

From our inception (February 14, 2006) to February 28, 2007, we recorded $9,000 for services donated by Gary Chayko, our President and Chief Executive, and $6,000 for office rent donated by Jordan Shapiro, our Chief Financial Officer.

Other than as described above, we have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the total assets for the last fiscal year.

Financial Statements

We will provide audited financial statements to our stockholders on an annual basis. Our audited financial statements as of November 30, 2006 follow as pages F-1 through F-13. Our unaudited financial statements as of February 28, 2007 follow as pages F-14 through F-23.

47

XTOL Energy Inc.
(An Exploration Stage Company)

November 30, 2006

Report of Independent Registered Public Accounting Firm

To the Directors and Stockholders
XTOL Energy Inc.
(An Exploration Stage Company)

We have audited the accompanying balance sheet of XTOL Energy Inc. (An Exploration Stage Company) as of November 30, 2006, and the related statements of operations, cash flows and stockholders' equity for the period from February 14, 2006 (Date of Inception) to November 30, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 overall 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 XTOL Energy Inc. as of November 30, 2006, and the results of its operations and its cash flows for the period from February 14, 2006 to November 30, 2006 in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated any revenues and has incurred an operating loss since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MANNING ELLIOTT LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

April 3, 2007

F-1

XTOL Energy Inc.
(An Exploration Stage Company)
Balance Sheet
(Expressed in US dollars)

(The Accompanying Notes are an Integral Part of These Financial Statements)

F-2

XTOL Energy Inc.
(An Exploration Stage Company)
Statement of Operations
(Expressed in US dollars)

(The Accompanying Notes are an Integral Part of These Financial Statements)

F-3

XTOL Energy Inc.
(An Exploration Stage Company)
Statement of Cash Flows
(Expressed in US dollars)

(The Accompanying Notes are an Integral Part of These Financial Statements)

F-4

XTOL Energy Inc.
(An Exploration Stage Company)
Statement of Stockholders’ Equity
For the Period from February 14, 2006 (Date of Inception) to November 30, 2006
(Expressed in US dollars)

(The Accompanying Notes are an Integral Part of These Financial Statements)

F-5

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is November 30.

F-6

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)

F-7

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)

F-8

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)

F-9

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)

F-10

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)

As at November 30, 2006, the following stock options are outstanding:

F-11

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets and liabilities at November 30, 2006 are as follows:

The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management's judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

F-12

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)

F-13

XTOL Energy Inc.
(An Exploration Stage Company)

February 28, 2007

XTOL Energy Inc.
(An Exploration Stage Company)
Balance Sheets
(Expressed in US dollars)

(The Accompanying Notes are an Integral Part of These Financial Statements)

F-14

XTOL Energy Inc.
(An Exploration Stage Company)
Statements of Operations
(Expressed in US dollars)
(Unaudited)

(The Accompanying Notes are an Integral Part of These Financial Statements)

F-15

XTOL Energy Inc.
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in US dollars)
(Unaudited)

(The Accompanying Notes are an Integral Part of These Financial Statements)

F-16

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)

F-17

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)

F-18

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)

F-19

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)

F-20

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)

On August 1, 2006, the Company acquired a 2.34% non operating interest in three oil and gas wells located in Oklahoma for $34,038.

F-21

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)

On February 15, 2006, the Company granted 10,000,000 stock options to the directors with an exercise price of $0.0001 per share and expiring on February 15, 2011. These stock options were fully vested as of the grant date. The fair value for these stock options was estimated at the date of grant using the Black-Scholes option-pricing model assuming an expected life of 5 years, a risk-free rate of 4.51%, an expected volatility of 97%, and a 0% dividend yield. The weighted average fair value of stock options granted was $0.0001 per share. As at February 28, 2007, there were no unvested stock options.

A summary of the Company’s stock option activity is as follows:

F-22

XTOL Energy Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
(Expressed in US dollars)
(Unaudited)

The following table summarizes the continuity of the Company’s share purchase warrants:

As at February 28, 2007, the following share purchase warrants were outstanding:

F-23

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

The accounting firm of Manning Elliott LLP, Independent Registered Public Accounting Firm, audited our financial statements for the period ending November 30, 2006. Since inception, we have had no changes in or disagreements with our accountants.

Dealer Prospectus Delivery Obligation

Until 90 days after the effective date of this Prospectus, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a Prospectus. This is in addition to the dealers' obligation to deliver a Prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Indemnification of Officers and Directors

The only statute, charter provision, bylaw, contract, or other arrangement under which any controlling person, director or officer of XTOL is insured or indemnified in any manner against any liability which he may incur in his capacity as such is pursuant to Nevada Revised Statutes (“NRS”), Chapter 78. The general effect of the foregoing is to allow indemnification of a control person, officer or director from liability, which would make XTOL responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.

Nevada Revised Statutes

Section 78.138 of the NRS provides for immunity of directors from monetary liability, except in certain enumerated circumstances, as follows:

“Except as otherwise provided in NRS 35.230, 90.660, 91.250, 452.200, 452.270, 668.045 and 694A.030, or unless the Articles of Incorporation or an amendment thereto, in each case filed on or after October 1, 2003, provide for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer unless it is proven that:

Section 78.5702 of the NRS provides as follows:

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corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he:

Our Bylaws

Our Bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law.

Our Bylaws further provide that, to the fullest extent permitted by NRS 78, a director or officer of XTOL will not be personally liable to us or our stockholders for damages for breach of fiduciary duty as a director or officer, except for the following situations:

Opinion of the SEC

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by

49

controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court's decision.

Other Expenses of Issuance and Distribution

Our estimated expenses in connection with the issuance and distribution of the securities being registered are estimated to be as follows:

Recent Sales of Unregistered Securities

Since inception on February 14, 2006 to May 15, 2007, we have completed the following sales of unregistered securities.

On February 15, 2006, we issued an aggregate of 50,000,000 shares of common stock to our directors and Hudson Capital, a company owned by one of our directors at $0.0001 per share for cash proceeds of $5,000. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act. On September 14, 2006, 20,000,000 of these shares owned by our directors and affiliate were cancelled without consideration.

On February 15, 2006, we issued an aggregate of 10,000,000 options to our directors and Hudson Capital, a company owned by one of our directors at an exercise price of $0.0001 per share for their services. The expiration date of these options is February 15, 2011. These options were issued without a prospectus pursuant to Regulation S of the Securities Act.

On April 11, 2006, we issued an aggregate of 1,550,000 shares of common stock to four non US investors at $0.05 per share for cash proceeds of $77,500. These shares were issued without a prospectus pursuant to Regulation S and Section 4(2) of the Securities Act.

On April 24, 2006, we issued an aggregate of 122,000 shares of common stock to ten non US investors at $0.25 per share for cash proceeds of $30,500. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

On September 12, 2006, we issued 20,000 shares of common stock to one US investor at $0.25 per share for cash proceeds of $5,000. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

On October 20, 2006, we issued 200,000 shares of common stock to one non US investor at $0.25 per share for cash proceeds of $50,000. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

On November 29, 2006, we issued 6,000,000 shares of common stock to Sedona AG for $225,000 worth of investment consulting services. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

50

In December 2006, we issued 40,000 common shares to three non US investors at $0.25 for cash proceeds of $10,000. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

In January 2007, we issued 10,000 shares of common stock to Cleveland Maynard Welsh with a fair value of $0.25 per share for geological consulting services. These shares were issued without a prospectus pursuant to Section 4(2) of the Securities Act.

In February 2007, we issued 30,000 shares of common stock to eighteen Canadian investors at $0.50 per share by an offering memorandum. The net proceeds of this sale are $13,500, after we paid $1,500 to Canaccord Capital, a Canadian broker. On February 7, 2007, as a sales commission on the sale of this stock, we issued warrants to purchase 1,500 shares of common stock at an exercise price of $0.50 per share until February 7, 2008 to Canaccord Capital, a Canadian broker. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

On April 18, 2007, we issued 10,000 shares of common stock to Cleveland Maynard Welsh with a fair value of $0.50 per share for geological and advisory board consulting services. These shares were issued without a prospectus pursuant to Section 4(2) of the Securities Act.

We completed the offerings of the common stock pursuant to Rule 903 of Regulation S of the Securities Act on the basis that the sale of the common stock was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the units. Each investor was not a US person, as defined in Regulation S, and was not acquiring the shares for the account or benefit of a US person.

Our reliance upon the exemption under Section 4(2) of the Securities Act of 1933 was based on the fact that the issuance of these shares did not involve a “public offering.” The offering was not a "public offering" as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, the investors had the necessary investment intent as required by Section 4(2) since they agreed to and received a share certificate bearing a legend stating that such shares are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these shares would not be immediately redistributed into the market and therefore not be part of a "public offering." The investors negotiated the terms of the transactions directly with our executive officers. No general solicitation was used, no commission or other remuneration was paid in connection with these transactions, and no underwriter participated. Based on an analysis of the above factors, these transactions were effected in reliance on the exemption from registration provided in Section 4(2) of the Securities Act for transactions not involving any public offering.

Each investor was given adequate access to sufficient information about us to make an informed investment decision. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the purchasers.

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Exhibits

1.     Included as exhibits on our Form SB-2 filed April 16, 2007.

Undertakings

XTOL hereby undertakes:

52

Insofar as indemnification for liabilities arising under the Securities Act 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 Securities 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 Securities Act and will be governed by the final adjudication of such issue.

Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses

53

filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

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Signatures

In accordance with the requirements of the Securities Act, XTOL certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this Prospectus on Form SB-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Ottawa, Ontario on the 25^th day of May, 2007.

In accordance with the requirements of the Securities Act, this Prospectus has been signed by the following persons in the capacities and on the dates stated.