UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from ____________ to ______________

Commission file number  000-51569

STANDARD DRILLING, INC.

(Exact name of registrant as specified in its charter)

Nevada (State or Other Jurisdiction of Incorporation or Organization) 6770 (Primary Standard Industrial Classification Code Number) 84-1598154 (I.R.S. Employer Identification Number)

1640 Terrace Way, Walnut Creek, California 94597

(Address of principal executive offices)

(925) 938-0406

(Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer   ¨
Non-accelerated filer  ¨	Smaller reporting company  x

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

As of August 13, 2008, the registrant had 33,458,880 shares of common stock, $0.001 par value per share outstanding ("Common Stock").

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STANDARD DRILLING, INC.

(A Development Stage Company)

FINANCIAL STATEMENTS

June 30, 2008 and December 31, 2007

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STANDARD DRILLING, INC.
( A Development Stage Company)
Balance Sheets
ASSETS
	June 30,			December 31,
	2008			2007
CURRENT ASSETS	(Unaudited)
Cash and cash equivalents	$	661,086		$	795,436
Total Current Assets		661,086			795,436
OTHER ASSETS
Notes receivable, net		-			600,000
Total Other Assets		-			600,000
TOTAL ASSETS	$	661,086		$	1,395,436
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	12,377		$	-
Total Current Liabilities		12,377			-
TOTAL LIABILITIES		12,377			-
STOCKHOLDERS' EQUITY
Common stock; 100,000,000 shares authorized,
at $0.001 par value, 34,207,000 and 34,207,000
shares issued and outstanding, respectively		34,207			34,207
Additional paid-in capital		17,872,203			17,228,483
Accumulated deficit		(17,257,701	)		(15,867,254	)
Total Stockholders' Equity		648,709			1,395,436
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	661,086		$	1,395,436
The accompanying  notes are an integral part of these financial statements.

F-1

STANDARD DRILLING, INC.
(A Development Stage Company)
Statements of Operations
													From Inception
													of the
													Development
													Stage on
													February 14,
	For the Three Months Ended						For the Six Months Ended						2006 Through
	June 30,						June 30,						June 30,
	2008			2007			2008			2007			2008
REVENUES	$	-		$	-		$	-		$	-		$	-
COST OF SALES		-			-			-			-			-
GROSS PROFIT		-			-			-			-			-
OPERATING EXPENSES
General and administrative		1,251,891			-			1,390,447			-			1,465,301
Total Operating Expenses		1,251,891			-			1,390,447			-			1,465,301
OPERATING LOSS		(1,251,891	)		-			(1,390,447	)		-			(1,465,301	)
OTHER INCOME AND EXPENSE
Other income and expense		-			-			-			-			-
Discontinued operations		-			(966,083	)		-			(2,674,116	)		(15,792,400	)
LOSS BEFORE INCOME TAXES		(1,251,891	)		(966,083	)		(1,390,447	)		(2,674,116	)		(17,257,701	)
PROVISION FOR INCOME TAXES		-			-			-			-			-
NET LOSS	$	(1,251,891	)	$	(966,083	)	$	(1,390,447	)	$	(2,674,116	)	$	(17,257,701	)
BASIC AND DILUTED
LOSS PER SHARE	$	(0.04	)	$	(0.02	)	$	(0.04	)	$	(0.06	)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING		34,207,000			45,536,800			34,207,000			45,536,800
The accompanying notes are an integral part of these financial statements.

F-2

STANDARD DRILLING, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
(unaudited)
																			Total
							Additional			Stock			Prepaid						Stockholders'
	Common Stock						Paid-In			Subscriptions			Stock			Accumulated			Equity
	Shares			Amount			Capital			Receivable			Awards			Deficit			(Deficit)
Balance at inception on
February 14, 2006		-		$	-		$	-		$	-		$	-		$	-		$	-
Initial capital from founding shareholders
for services rendered		23,000,000			23,000			-			-			-			-			23,000
Issuance of common stock for cash,
prepaid services, and subscriptions
receivable		22,073,000			22,073			18,026,709			(370,000	)		(722,755	)		-			16,956,027
Net loss for the period from inception
on  February 14, 2006 through
December 31, 2006		-			-			-			-			-			(3,624,042	)		(3,624,042	)
Balance, December 31, 2006		45,073,000			45,073			18,026,709			(370,000	)		(722,755	)		(3,624,042	)		13,354,985
Cash received on subscriptions
receivable		-			-			-			317,600			-			-			317,600
Amortization of prepaid services to
paid-in capital		-			-			(742,472	)		-			722,755			-			(19,717	)
Write-off of stock subscriptions
receivable		-			-			-			52,400			-			-			52,400
Common shares cancelled		(10,866,000	)		(10,866	)		(55,754	)		-			-			-			(66,620	)
Net loss for the year ended
December 31, 2007		-			-			-			-			-			(12,243,212	)		(12,243,212	)
Balance, December 31, 2007		34,207,000			34,207			17,228,483			-			-			(15,867,254	)		1,395,436
Fair value of options granted and amended		-			-			643,720			-			-			-			643,720
Net loss for the six months
ended June 30, 2008		-			-			-			-			-			(1,390,447	)		(1,390,447	)
Balance, June 30, 2008		34,207,000		$	34,207		$	17,872,203		$	-		$	-		$	(17,257,701	)	$	648,709
The accompanying notes are an integral part of these financial statements.

F-3

STANDARD DRILLING, INC.
(A Development Stage Company)
Statements of Cash Flows
							From Inception
							of the
							Development
							Stage on
							February 14,
	For the Six Months Ended						2006 Through
	June 30,						June 30,
OPERATING ACTIVITIES	2008			2007			2008
Net loss	$	(1,390,447	)	$	(2,674,116	)	$	(17,257,701	)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation, depletion and amortization		-			444,458			476,710
Common stock issued for services		-			-			575,242
Stock options issued for services		643,720			-			643,720
Loss on equity investment		-			531,054			59,146
Gain on disposal of equity instruments		-			-			(39,497	)
Loss on disposal of assets		-			-			(476,709	)
Changes in operating assets and liabilities
Increase in accounts receivable		600,000			288,718			402,537
Increase in prepaid expenses		-			469,476			(219,165	)
Decrease in deposits		-			-			5,285
Change in accounts payable		12,377			(175,156	)		1,315,405
Increase in accrued expenses		-			(1,349,820	)		(728,051	)
Net Cash Used by Operating Activities		(134,350	)		(2,465,386	)		(15,243,078	)
INVESTING ACTIVITIES
Purchase of oil and gas properties		-			-			(2,427,507	)
Change in fixed assets		-			2,316,403			1,074,406
Change in deposits on fixed assets		-			720,138			671,138
Change in notes receivable		-			-			(600,000	)
Cash paid on equity investment		-			-			(87,500	)
Net Cash Used by Investing Activities		-			3,036,541			(1,369,463	)
FINANCING ACTIVITIES
Change in notes payable, net		-			(250,447	)		-
Cash received on subscriptions receivable		-			317,600			317,600
Sale of common stock for cash		-			-			16,956,027
Net Cash Provided by Financing Activities		-			67,153			17,273,627
NET DECREASE IN CASH		(134,350	)		638,308			661,086
CASH AT BEGINNING OF PERIOD		795,436			52,313			-
CASH AT END OF PERIOD	$	661,086		$	690,621		$	661,086
SUPPLIMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
CASH PAID FOR:
Interest	$	-		$	11,324		$	11,324
Income Taxes	$	-		$	-		$	-
The accompanying notes are an integral part of these financial statements.

F-4

STANDARD DRILLING, INC.

(A Development Stage Company)

Notes to Financial Statements

June 30, 2008 and December 31, 2007

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2008, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2007 audited financial statements.  The results of operations for the periods ended June 30, 2008 and 2007 are not necessarily indicative of the operating results for the full years.

NOTE 2 - GOING CONCERN

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

F-5

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

CERTAIN STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q (THIS "FORM 10-Q"), CONSTITUTE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (COLLECTIVELY, THE "REFORM ACT"). CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD", OR "ANTICIPATES", OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF STANDARD DRILLING, INC. ("STANDARD", "THE COMPANY", "WE", "US" OR "OUR") TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM 10-Q, UNLESS ANOTHER DATE IS STATED, ARE TO JUNE 30, 2008.

HISTORY

The Company was originally formed as a Nevada corporation on July 27, 2001, under the name Online Holdings, Inc.  Subsequently on September 1, 2006, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated July 24, 2006 by and among the Company, Standard Drilling Acquisition Co., a Delaware corporation (“Merger Sub”), and Standard Drilling, Inc., a Delaware corporation (“Standard Drilling Delaware”), Merger Sub was merged with and into Standard Drilling Delaware, and Standard Drilling Delaware became a wholly-owned subsidiary of the Company (the “Merger”). As a result of the Merger, the Company, which previously had no material operations, acquired the business of Standard Drilling Delaware.  Also pursuant to the Merger, the Company changed its name to Standard Drilling, Inc.

Subsequent to the Merger, the Company was organized to provide contract land drilling services to independent and major oil and gas exploration and production companies.  The Company constructed, owned and operated land drilling rigs.

On June 5, 2007, we entered into a purchase and sale agreement to sell our sole completed 1500 horsepower land-drilling rig ("Rig 1") for a gross purchase price of $7,800,000. Rig 1 was sold to Romfor West Africa, a subsidiary of Romfor Supply Company, Inc. ("Romfor"). At the time of the signing of the purchase and sale agreement, Romfor was our largest individual creditor. The purchase and sale agreement for Rig 1 closed on September 24, 2007.  Rig 1 represented substantially all of our assets.

On September 24, 2007, the Company entered into an Asset Purchase Agreement with PBT Capital Partners, LLC (“PBT”).  PBT is a private company whose sole shareholder is Prentis B. Tomlinson, Jr., who was our Chairman and Chief Executive Officer at the time we entered into the agreement.  Under the terms of the Asset Purchase Agreement, PBT assumed substantially all of our assets and associated and contingent liabilities in return for leaving not less than $839,068 in cash in the Company and providing us a note payable in the amount of $600,000. The $600,000 note payable by PBT to us was due on or before December 31, 2007 and guaranteed by Mr. Tomlinson. In connection with the Asset Purchase Agreement, $833,389 of the amount owed by the Company under the Interim Credit Agreement was forgiven.  Additionally, in connection with the Asset Purchase Agreement, PBT assumed our obligations under our office space lease, our employment agreements with our various officers and Directors and certain severance agreements we entered into with our former officers and Directors.  We retained all of the liabilities relating to the Advisory Consulting Agreement between us and International Capital Advisory, Inc., the Support Services Agreement between us and Petroleum Financial Inc., and the obligation to provide healthcare benefits to David Wilson, our former Manager of Operations under the terms of his severance agreement until February 2009.

During the three months ended June 30, 2008, we wrote-off the $600,000 note payable to us by PBT.

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In connection with the Asset Purchase Agreement in September and October 2007, we entered into Mutual Releases (the “Releases”) with various of our former officers, Directors and parties who we had previously entered into agreements with, including Romfor West Africa, Ltd., Prentis B. Tomlinson, Jr., our former Chairman and Chief Executive Officer, O. Oliver Pennington, III, our former Vice President and Chief Financial Officer, E.L. Moses, Jr., our former President, Chief Operating Officer and Director, W. Richard Andersen, our former Director, Peter F. Frey, Treasurer, and Daniel A. Drum, our former Vice President of Finance, pursuant to which such individuals and entities agreed to release us from any and all known and unknown claims, we agreed to release such parties from any and all known or known claims, and such individuals and entities agreed to cancel the shares of common stock and options to acquire shares of common stock which they held in the Company.

Additionally, in connection with the Asset Purchase Agreement we transferred all of the shares of our former wholly-owned subsidiary, Standard E & P, Inc. to PBT.

The Asset Purchase Agreement is part of a plan of restructuring which the Company anticipates will allow it to raise additional capital and pursue new business opportunities. Standard's Board of Directors will continue to evaluate the Company's strategic options.

In connection with the Company’s entry into the Asset Purchase Agreement with PBT Capital Partners, LLC, Mr. Tomlinson resigned as Chairman and Chief Executive Officer of the Company, and the Board appointed Edward L. Moses as Interim Chairman.  Subsequently on November 28, 2007, the Board appointed David S. Rector as Chairman and principal executive officer of the Company.  Also on or around November 28, 2007, W. Richard Anderson and Edward L. Moses resigned as Directors, leaving Mr. Rector as the sole Director of the Company.

The Company's drilling and rig construction operations are currently idle as Management and the Board of Directors are currently evaluating strategic options in light of changing market conditions and the Company's inability to secure additional financing. The Company is also actively seeking a merger with or an acquisition of an existing operating company as it evaluates financing alternatives and strategic options.

On or around December 17, 2007, the NASDAQ Stock Market informed the Company that all quotations for the Company's securities would be deleted from the Over-The-Counter Bulletin Board (“OTCBB”) effective with the open of business on December 18, 2007 due to its failure to satisfy NASD Rule 6530.  NASDAQ had determined that the Company was late in filing required annual and quarterly financial information three times in two years, and thus was subject to automatic delisting for a period of one year pursuant to Rule 6530.  In the event the Company timely files its periodic reports for a period of one year, and otherwise meets NASDAQ’s listing requirements, the Company may be allowed to quote its securities on the OTCBB once again, of which there can be no assurance.  The Company's common shares are currently quoted on the Pink Sheets under the symbol “STDR”.

The Company agreed to cancel an aggregate of 11,000,000 shares of the Company’s common stock and options to purchase 5,650,000 shares held by former employees and consultants of the Company, in connection with the execution of the Releases in October 2007.    To date all of the 11,000,000 shares and options to purchase 5,650,000 shares have been cancelled.  

CURRENT STATUS AS A BLANK CHECK SHELL COMPANY

Since approximately September 2007, after we affected the sale and purchase agreement with Romfor and the Asset Purchase Agreement with PBT Capital Partners, LLC, we have been classified as a "shell company". Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the "Securities Act") defines "shell company," as a company (other than an asset-backed issuer), which has "no operations; and either no or nominal assets; assets consisting of solely cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets." Additionally, since approximately September 2007, our operations have been classified as a "blank check" company, which is defined as "any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Exchange Act and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies." Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities until we have successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act of 1934, as amended (the “Exchange Act”) for so long as we are subject to those requirements.

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We currently plan to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation and, to a lesser extent that desires to employ our funds in its business. Our principal business objective for the next twelve (12) months and beyond will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

The analysis of new business opportunities has and will be undertaken by or under the supervision of David S. Rector, our sole officer and Director. As of the date of this filing, we have not had any conversations with potential merger or acquisition targets nor have we entered into any definitive agreement with any party. In our efforts to analyze potential acquisition targets, we may consider the following kinds of factors:

(a)	Potential for growth, indicated by new technology, anticipated market expansion or new products;
(b)	Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
(c)	Strength and diversity of management, either in place or scheduled for recruitment;
(d)	Capital requirements and anticipated availability of required funds, to be provided by the Registrant or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
(e)	The cost of participation by us as compared to the perceived tangible and intangible values and potentials;
(f)	The extent to which the business opportunity can be advanced;
(g)	The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and
(h)	Other relevant factors.

In applying the foregoing criteria, no one of which will be controlling, our management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the limited capital we have available for investigation, we may not discover or adequately evaluate adverse facts about the opportunity to be acquired.

FORM OF ACQUISITION

The manner in which we participate in an opportunity will depend upon the nature of the opportunity, our respective needs and desires as well as those of the promoters of the opportunity, and the relative negotiating strength of us and such promoters.

It is likely that we will acquire our participation in a business opportunity through the issuance of common stock or other securities. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), depends upon the issuance to the stockholders of the acquired company of at least 80 percent of the common stock of the combined entities immediately following the reorganization. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares. This could result in substantial additional dilution to the equity of those who were our stockholders prior to such reorganization.

-5-

Our present stockholders will likely not have control of a majority of our voting shares following a reorganization transaction. As part of such a transaction, our current director may resign and new directors may be appointed without any vote by stockholders.

In the case of an acquisition, the transaction may be accomplished upon the sole determination of our management without any vote or approval by stockholders. In the case of a statutory merger or consolidation directly involving the Company, it will likely be necessary to call a stockholders' meeting and obtain the approval of the holders of a majority of the outstanding shares. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will seek to structure any such transaction so as not to require stockholder approval if possible.

It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in our loss of the related costs incurred.

We presently have no employees apart from our sole officer and Director, David S. Rector. Mr. Rector is engaged in outside business activities and as a result, he is unsure of the amount of time he will be able to devote to our business until the acquisition of a successful business opportunity has been consummated.

PLAN OF OPERATIONS

Our current business objective for the next twelve (12) months is to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next twelve (12) months and beyond will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

We do not currently engage in any business activities that provide us with positive cash flows. As such, the costs of investigating and analyzing business combinations for the next approximately twelve (12) months and beyond will be paid with our current cash and other current assets on hand and through funds raised through other sources, which may not be available on favorable terms, if at all.

During the next twelve (12) months we anticipate incurring costs related to:

(i)	filing of Exchange Act reports, and
(ii)	costs relating to consummating an acquisition.

We believe we will be able to meet these costs with our current cash on hand and funds we may borrow, and additional amounts, as necessary, to be loaned to or invested in us by our stockholders or other investors.

We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading

market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.

-6-

Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.

Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing, and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management's plan to offer a controlling interest to a target business in order to achieve a tax free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.

We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

-7-

COMPARISON OF OPERATING RESULTS

THREE MONTHS ENDED JUNE 30, 2008, COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2007

NET SALES.

For the three months ended June 30, 2007 and the three months ended June 30, 2008, we had no revenues from continuing operations.  We currently only have limited operations focused solely on the search for a potential merger or acquisition target and do not anticipate generating any revenues until such time as we successfully complete a merger or acquisition, if ever.

GENERAL AND ADMINISTRATIVE EXPENSES.

During the three months ended June 30, 2008, we had $1,251,891 in general and administrative expenses. For the three months ended June 30, 2007, general and administrative expenses from continuing operations were $-0-. The general and administrative expenses for the three months ended June 30, 2008, were primarily due to $643,720 of stock options issued for services in connection with the 1,000,000 options granted to Mr. Rector and the reduction in the purchase price of 10,800,300 warrants to $0.125 per share, as described below under “Unregistered Sales Of Equity Securities And Use Of Proceeds”, as well as professional fees principally associated with maintaining the Company as a public entity and preparation and filing of the Company’s public filings, payments in connection with our officer and director, and health insurance premiums and $600,000 associated with the write-off of $600,000 in notes payable to the Company, described below.

DISCONTINUED OPERATIONS.

We had $0 of loss from discontinued operations for the three months ended June 30, 2008, compared to $966,083 of loss from discontinued operations for the three months ended June 30, 2007, which loss was in connection with our prior drilling operations.

NET LOSS.

During the three months ended June 30, 2008, we had a total net loss of $1,251,891, which consisted entirely of the $1,251,891 in general and administrative expenses. For the three months ended June 30, 2007, we had a net loss of $966,083, which was entirely attributable to the discontinued operations from our former drilling program.

For the three months ended June 30, 2008, we had had only minimal operations, which mainly consisted of searching out potential merger or acquisition targets.

SIX MONTHS ENDED JUNE 30, 2008, COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2007

NET SALES.

For the six months ended June 30, 2007 and the six months ended June 30, 2008, we had no revenues from continuing operations.  We currently only have limited operations focused solely on the search for a potential merger or acquisition target and do not anticipate generating any revenues until such time as we successfully complete a merger or acquisition, if ever.

GENERAL AND ADMINISTRATIVE EXPENSES.

During the six months ended June 30, 2008, we had $1,390,447 in general and administrative expenses. For the six months ended June 30, 2007, general and administrative expenses from continuing operations were $-0-. The general and administrative expenses for the six months ended June 30, 2008, were primarily due to $643,720 of stock options issued for services in connection with the 1,000,000 options granted to Mr. Rector and the reduction in the purchase price of 10,800,300 warrants to $0.125 per share, as described below under “Unregistered Sales Of Equity Securities And Use Of Proceeds”, as well as professional fees principally associated with maintaining the Company as a public entity and preparation and filing of the Company’s public filings, payments in connection with our officer and director, and health insurance premiums and $600,000 associated with the write-off of $600,000 in notes payable to the Company, as decribed below.

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DISCONTINUED OPERATIONS.

We had $0 of loss from discontinued operations for the six months ended June 30, 2008, compared to $2,674,116 of loss from discontinued operations for the six months ended June 30, 2007, which loss was in connection with our prior drilling operations.

NET LOSS.

During the six months ended June 30, 2008, we had a total net loss of $1,390,447, which consisted entirely of the $1,390,447 in general and administrative expenses. For the six months ended June 30, 2007, we had a net loss of $2,674,116, which was entirely attributable to the discontinued operations from our drilling program.

For the six months ended June 30, 2008, we had had only minimal operations, which mainly consisted of searching out potential merger or acquisition targets.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2008, we had current assets consisting solely of cash and cash equivalents of $661,086.

As of June 30, 2008, we had current liabilities of $12,377, which consisted solely of $12,377 of accounts payable.

As of June 30, 2008, we had working capital of $648,709 and a total accumulated deficit of $17,257,701.

We expect to have monthly overhead costs of approximately $25,000 per month for the next twelve months.  Since our inception, our primary sources of liquidity have been generated by the sale of equity securities (including the issuance of securities in exchange for goods and services to third parties and to pay costs of employees).  To date, the net proceeds from the sales of securities have been used to fund the construction of our drilling rigs and our general and administrative costs including substantial costs for the registration of our securities.  Our future liquidity and our liquidity in the next twelve months, depends on our continued ability to obtain sources of capital to fund our continuing operations and to seek out potential merger and acquisition partners.

On September 24, 2007, the Company entered into an Asset Purchase Agreement with PBT Capital Partners, LLC.  PBT Capital Partners, LLC is a private company whose sole shareholder is Prentis B. Tomlinson, Jr., who was our Chairman and Chief Executive Officer at the time we entered into the agreement.  Under the terms of the Asset Purchase Agreement, PBT Capital Partners, LLC assumed substantially all of our assets and associated and contingent liabilities in order to improve our financial position. The Asset Purchase Agreement created a $600,000 note payable by PBT Capital Partners LLC to us on or before December 31, 2007, which note is described in greater detail above. During the three months ended June 30, 2008, the Company wrote off the $600,000 note. In connection with the Asset Purchase Agreement, $833,389 of the amount owed by the Company under the Interim Credit Agreement was forgiven.

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CASH FLOW FROM OPERATING ACTIVITIES

For the six months ended June 30, 2008, net cash used by operating activities was $134,350, attributable to a net loss of $1,390,447, offset by $643,720 of stock options issued for services, which represented the value of the 1,000,000 options granted to Mr. Rector, $600,000 of change in accounts receivable in connection with the write-off of the PBT note, and a $12,377 increase in accounts payable.

FUTURE CAPITAL EXPENDITURES AND COMMITMENTS

As of June 30, 2008, our remaining cash balance will be sufficient to cover our current liabilities, obligations and contractual commitments for the remainder of 2008.  We may however need to raise additional capital through the sale of equity and/or debt securities to complete the acquisition of an operating company.

The actual amount and timing of our capital expenditures may differ materially from our estimates.

OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2008, we had no off-balance sheet arrangements.

We currently plan to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation and, to a lesser extent, that desires to employ our funds in its business. Our principal business objective for the next twelve (12) months and beyond, will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

We do not currently have any commitments from our officer and Director, David S. Rector, and plan to use our current cash on hand to continue our operations until such time as we find a potential merger or acquisition target, of which there can be no assurance.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our unaudited financial statements, which have been prepared in accordance with accounting principals generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to uncollectible receivable, investment values, income taxes, the recapitalization and contingencies. We base our estimates on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Recently issued accounting pronouncements. The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

ITEM 4. CONTROLS AND PROCEDURES

(a)           Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. 

(b)           Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become a party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

ITEM 1A. RISK FACTORS

Our business is subject to numerous risk factors, including the following:

WE MAY NOT BE ABLE TO CONTINUE OUR BUSINESS PLAN AND BUSINESS ACTIVITIES WITHOUT ADDITIONAL FINANCING.

We depend to a great degree on the ability to attract external financing in order to conduct future exploratory activities. We believe we can continue our business operations for approximately the next two (2) years with our current cash on hand.  We do not anticipate the need for any additional funding to continue our operations for the next twelve (12) months.  We have generated nominal revenues to date, and can make no assurances that the Company will have revenues in the future or be able to raise additional financing. If we are unable to raise the additional funds required for our business activities in the future, we may be forced to abandon our current business plan.  If you invest in us and we are unable to raise the required funds, your investment could become worthless.

WE HAVE A LIMITED OPERATING HISTORY AND MINIMAL ASSETS AND HAVE HAD NO OPERATIONS AND GENERATED NO REVENUES SINCE OCTOBER 2003.

We have a limited operating history, and have had no operations since September 2007 and no revenues or earnings from operations since approximately September 2007. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the consummation of a business combination. This may result in us incurring a net operating loss which will increase continuously until we can consummate a business combination with a target company. There is no assurance that we can identify such a target company and consummate such a business combination.

SHAREHOLDERS WHO HOLD UNREGISTERED SHARES OF OUR COMMON STOCK ARE NOT ELIGIBLE TO SELL OUR SECURITIES PURSUANT TO RULE 144, DUE TO OUR STATUS AS A “BLANK CHECK” COMPANY AND A “SHELL COMPANY”

We are characterized as both a “blank check” company and a “shell company.” The term "blank check company" is defined as a company that is a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person; and is issuing "penny stock," as defined in Rule 3a51-1 under the Securities Exchange Act of 1934.  Because we are a “blank check” company, Rule 144 of the Securities Act of 1933, as amended (“Rule 144”) is not available to our shareholders and we are required to comply with additional SEC rules regarding any offerings we may undertake.

Additionally, pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets.  As such, we are a “shell company” pursuant to Rule 144, and as such, sales of our securities pursuant to Rule 144 are not able to be made until 1) we have ceased to be a “shell company; 2) we are subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all of our required periodic reports for a period of one year; and a period of at least twelve months has elapsed from the date “Form 10 information” has been filed with the Commission reflecting the Company’s status as a non-“shell company.”  Because none of our securities can be sold pursuant to Rule 144, until at least a year after we cease to be a “shell company” (as described in greater detail above), any securities we issue to consultants, employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered with the Commission and/or until a year after we cease to be a “shell company” and have complied with the other requirements of Rule 144, as described above.

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As a result of us being a “blank check” company and a “shell company” it will be harder for us to fund our operations and pay our consultants with our securities instead of cash.  Additionally, as we may not ever cease to be a “blank check company” or a “shell company,” investors who hold our securities may be forced to hold such securities indefinitely.

THERE MAY BE CONFLICTS OF INTEREST BETWEEN OUR MANAGEMENT AND OUR NON-MANAGEMENT STOCKHOLDERS.

Conflicts of interest create the risk that management may have an incentive to act adversely to the interests of other investors. A conflict of interest may arise between our management's personal pecuniary interest and its fiduciary duty to our stockholders. Further, our management's own pecuniary interest may at some point compromise its fiduciary duty to our stockholders.

THE NATURE OF OUR PROPOSED OPERATIONS IS HIGHLY SPECULATIVE.

The success of our proposed plan of operation will depend to a great extent on the operations, financial condition and management of the identified target company. While management will prefer business combinations with entities having established operating histories, there can be no assurance that we will be successful in locating candidates meeting such criteria. In the event we complete a business combination, of which there can be no assurance, the success of our operations will be dependent upon management of the target company and numerous other factors beyond our control.

THE COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS IS GREAT.

We are and will continue to be an insignificant participant in the business of seeking mergers with and acquisitions of business entities. A large number of established and well-financed entities, including venture capital firms, are active in mergers and acquisitions of companies which may be merger or acquisition target candidates for us. Nearly all such entities have significantly greater financial resources, technical expertise and managerial capabilities than us and, consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. Moreover, we will also compete with numerous other small public companies in seeking merger or acquisition candidates.

IT WILL BE IMPRACTICABLE FOR US TO CONDUCT AN EXHAUSTIVE INVESTIGATION PRIOR TO ANY BUSINESS COMBINATION, WHICH MAY LEAD TO A FAILURE TO MEET OUR FIDUCIARY OBLIGATIONS TO OUR SHAREHOLDERS.

Our limited funds and the fact that we currently only have one officer and Director will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target company. The decision to enter into a business combination, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys or similar information which, if we had more funds available to it, would be desirable. We will be particularly dependent in making decisions upon information provided by the principals and advisors associated with the business entity seeking our participation. Management may not be able to meet its fiduciary obligation to us and our stockholders due to the impracticability of completing thorough due diligence of a target company. By our failure to complete a thorough due diligence and exhaustive investigation of a target company, we are more susceptible to derivative litigation or other stockholder suits. In addition, this failure to meet our fiduciary obligations increases the likelihood of plaintiff success in such litigation.

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WE HAVE NO CURRENT AGREEMENTS IN PLACE FOR A BUSINESS COMBINATION OR OTHER TRANSACTION, AND WE CURRENTLY HAVE NO STANDARDS FOR POTENTIAL BUSINESS COMBINATIONS, AND AS A RESULT, OUR MANAGEMENT HAS SOLE DISCRETION REGARDING ANY POTENTIAL BUSINESS COMBINATION.

We have no current arrangement, agreement or understanding with respect to engaging in a business combination with a specific entity. There can be no assurance that we will be successful in identifying and evaluating suitable business opportunities or in concluding a business combination. Management has not identified any particular industry or specific business within an industry for evaluation by us. There is no assurance that we will be able to negotiate a business combination on terms favorable to us. We have not established a specific length of operating history or a specified level of earnings, assets, net worth or other criteria which we will require a target company to have achieved, or without which we would not consider a business combination with such business entity. Accordingly, we may enter into a business combination with a business entity having no significant operating history, losses, limited or no potential for immediate earnings, limited assets, negative net worth or other negative characteristics.

ANY FUTURE BUSINESS COMBINATION IS HIGHLY DEPENDENT ON THE ACTIONS OF OUR SOLE OFFICER AND DIRECTOR.

While seeking a business combination, management anticipates devoting only a limited amount of time per month to our business. Our sole officer has not entered into a written employment agreement with us and he is not expected to do so in the foreseeable future. We have not obtained key man life insurance on our officer/director.  David S. Rector, as our current sole officer and Director, currently has significant control over whether we enter into a merger or acquisition in the future.  As a result, shareholders should keep in mind that they may have little control over what merger or acquisition, if any, we may enter into in the future.

OUR AUDITOR HAS RAISED DOUBT AS TO WHETHER WE CAN CONTINUE AS A GOING CONCERN.

We have generated nominal revenues since inception, and have not generated any revenues since September 2007, nor have we had any operations since September 2007. We had an accumulated deficit of $17,257,701 as of June 30, 2008 and working capital of $648,709 as of June 30, 2008. These factors among others indicate that we may be unable to continue as a going concern, particularly in the event that we cannot obtain additional financing and/or attain profitable operations. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty and if we cannot continue as a going concern, your investment in us could become devalued or even worthless.

REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE AN ACQUISITION.

Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act") requires companies subject thereto to provide certain information about significant acquisitions including audited financial statements for the company acquired and a detailed description of the business operations and risks associated with such company's operations. The time and additional costs that may be incurred by some target companies to prepare such financial statements and descriptive information may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by us. Additionally, acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.

WE HAVE NOT CONDUCTED ANY MARKET RESEARCH REGARDING ANY POTENTIAL BUSINESS COMBINATIONS.

We have neither conducted, nor have others made available to it, market research indicating that demand exists for the transactions contemplated by us. Even in the event demand exists for a transaction of the type contemplated by us, there is no assurance we will be successful in completing any such business combination.

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WE DO NOT PLAN TO DIVERSIFY OUR OPERATIONS IN THE EVENT OF A BUSINESS COMBINATION.

Our proposed operations, even if successful, will in all likelihood result in our engaging in a business combination with only one target company. Consequently, our activities will be limited to those engaged in by the business entity which we will merge with or acquire. Our inability to diversify its activities into a number of areas may subject us to economic fluctuations within a particular business or industry and therefore increase the risks associated with our operations.

OUR SOLE OFFICER AND DIRECTOR DOES NOT HAVE MAJORITY VOTING CONTROL OF THE COMPANY AND AS A RESULT, ANY POTENTIAL MERGER OR ACQUISITION TRANSACTION COULD BE SUBJECT TO SHAREHOLDER APPROVAL.

As our sole officer and Director does not hold a majority of our outstanding voting shares, in the event we enter into a merger or acquisition transaction which requires shareholder approval, it may be difficult and/or time consuming for us to obtain such shareholder approval since we will need to file a proxy statement with the Securities and Exchange Commission, formally mail the proxy statement to our shareholders and hold a shareholders meeting to approve such proposed transaction.  Consequently, any proposed acquisition or merger may be delayed by our need to obtain shareholder approval.  Furthermore, our shareholders may not agree to the terms and conditions of such proposed transaction and as a result, the value of our securities, if any, may decline in value and/or become worthless.

ANY BUSINESS COMBINATION WILL LIKELY RESULT IN A CHANGE IN CONTROL AND IN OUR MANAGEMENT.

A business combination involving the issuance of our common stock will, in all likelihood, result in shareholders of a target company obtaining a controlling interest in the Company. Any such business combination may require our shareholder to sell or transfer all or a portion of their common stock. The resulting change in control of the Company will likely result in removal of the present officer and director of the Company and a corresponding reduction in or elimination of his participation in the future affairs of the Company.

REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION.

Our primary plan of operation is based upon a business combination with a business entity which, in all likelihood, will result in our issuing securities to shareholders of such business entity. The issuance of previously authorized and unissued common stock would result in a reduction in percentage of shares owned by our present shareholders and could therefore result in a change in control of our management.

FEDERAL AND STATE TAXATION RULES COULD ADVERSELY EFFECT ANY BUSINESS COMBINATION WE MAY UNDERTAKE.

Federal and state tax consequences will, in all likelihood, be major considerations in any business combination we may undertake. Currently, such transactions may be structured so as to result in tax-free treatment to both companies, pursuant to various federal and state tax provisions. We intend to structure any business combination so as to minimize the federal and state tax consequences to both us and the target company; however, there can be no assurance that such business combination will meet the statutory requirements of a tax-free reorganization or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes which may have an adverse effect on both parties to the transaction.

WE MAY BE FORCED TO RELY ON UNAUDITED FINANCIAL STATEMENTS IN CONNECTION WITH ANY BUSINESS COMBINATION.

We will require audited financial statements from any business entity we propose to acquire. No assurance can be given; however, that audited financials will be available to us prior to a business combination. In cases where audited financials are unavailable, we will have to rely upon unaudited information that has not been verified by outside auditors in making our decision to engage in a transaction with the business entity. The lack of the type of independent verification which audited financial statements would provide increases the risk that we, in evaluating a transaction with such a target company, will not have the benefit of full and accurate information about the financial condition and operating history of the target company. This risk increases the prospect that a business combination with such a business entity might prove to be an unfavorable one for us.

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WE MAY BE SUBJECT TO FURTHER GOVERNMENT REGULATION WHICH WOULD ADVERSELY AFFECT OUR OPERATIONS.

Although we will be subject to the reporting requirements under the Exchange Act, management believes we will not be subject to regulation under the Investment Company Act of 1940, as amended (the "Investment Company Act"), since we will not be engaged in the business of investing or trading in securities. If we engage in business combinations which result in our holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act. If so, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the Securities and Exchange Commission as to our status under the Investment Company Act and, consequently, violation of the Act could subject us to material adverse consequences.

OUR BUSINESS WILL HAVE NO REVENUES UNLESS AND UNTIL WE MERGE WITH OR ACQUIRE AN OPERATING BUSINESS.

We have had no revenues from operations since September 2007.  We have had no operations since September 2007.  We may not realize any revenues unless and until we successfully merge with or acquire an operating business.

THE COMPANY MAY ISSUE MORE SHARES IN CONNECTION WITH A MERGER OR ACQUISITION, WHICH WOULD RESULT IN SUBSTANTIAL DILUTION.

Our Certificate of Incorporation, as amended, authorizes the issuance of a maximum of 100,000,000 shares of common stock and a maximum of 10,000,000 shares of preferred stock. Any merger or acquisition effected by us may result in the issuance of additional securities without stockholder approval and may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. Moreover, the common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm's-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our Board of Directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued in connection with a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially adversely affected

WE CANNOT ASSURE YOU THAT FOLLOWING A BUSINESS COMBINATION WITH AN OPERATING BUSINESS, OUR COMMON STOCK WILL BE LISTED ON NASDAQ OR ANY OTHER SECURITIES EXCHANGE.

Following a business combination, we may seek the listing of our common stock on NASDAQ or the American Stock Exchange. However, we cannot assure you that following such a transaction, we will be able to meet the initial listing standards of either of those or any other stock exchange, or that we will be able to maintain a listing of our common stock on either of those or any other stock exchange. After completing a business combination, until our common stock is listed on the NASDAQ or another stock exchange.  However, investors should keep in mind that we are currently prohibited from quoting our common stock on the Over-The-Counter Bulletin Board until we are able to successfully timely file four consecutive periodic reports.  As such, we provide no assurances that our common stock would be eligible to trade on the OTC Bulletin Board, another over-the-counter quotation system, or on the "pinksheets," following any acquisition or merger, and our stockholders may find it more difficult to dispose of shares or obtain accurate quotations as to the market value of our common stock if we are unable to quote our securities and no market for our securities exists. In addition, we would be subject to an SEC rule that, even if we are able to list our securities on one of the markets described above, that if it failed to meet the criteria set forth in such rule, imposes various practice requirements on broker-dealers who sell securities governed by the rule to persons other than established customers and accredited investors. Consequently, such rule may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital following a business combination. Additionally, there can be no assurances that we will be able to obtain listing on any exchange, the OTC Bulletin Board or maintain our listing on the "pinksheets," which failure could cause our common stock to become worthless.

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PRINCIPAL STOCKHOLDERS MAY ENGAGE IN A TRANSACTION TO CAUSE THE COMPANY TO REPURCHASE THEIR SHARES OF COMMON STOCK.

In order to provide control of the Company to a third party, our principal stockholders may choose to cause the Company to sell Company securities to third parties, with the proceeds of such sale being utilized for the Company to repurchase shares of common stock held by such principal stockholders. As a result of such transaction, our management, principal stockholders and Board of Directors may change.

WE HAVE PREFERRED STOCK AUTHORIZED, WHICH PREFERRED STOCK MAY BE ISSUED BY OUR BOARD OF DIRECTORS WITHOUT FURTHER SHAREHOLDER APPROVAL AND WHICH MAY HAVE RIGHTS AND PREFERENCES GREATER THAN OUR COMMON STOCK.

Our Certificate of Incorporation, as amended, authorizes the issuance of up to 10,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Although we have no present intention to issue any shares of its authorized preferred stock, there can be no assurance that the Company will not do so in the future.

COMPLIANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT WILL STRAIN OUR LIMITED FINANCIAL AND MANAGEMENT RESOURCES.

Moving forward, we anticipate incurring significant legal, accounting and other expenses in connection with our status as a fully reporting public company. The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently implemented by the SEC have imposed various new requirements on public companies, including requiring changes in corporate governance practices. As such, our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure of controls and procedures. In particular, we are required to perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Additionally, for fiscal year 2009, Section 404 will require us to obtain a report from our independent registered public accounting firm attesting to the assessment made by management.  Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.  Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

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WE ARE CURRENTLY BANNED FROM APPLYING FOR QUOTATION ON THE OVER-THE-COUNTER BULLETIN BOARD FOR AT LEAST ONE YEAR.

On or about December 17, 2007, our common stock was removed from quotation on the Over-The-Counter Bulletin Board pursuant to our failure to comply with NASD Rule 6530.  Pursuant to that rule, any OTCBB issuer which fails to file a periodic report (Form 10-Q's or 10-K's) by the due date of such report (notwithstanding any extension granted to the issuer by the filing of a Form 12b-25), three (3) times during any twenty-four (24) month period is automatically de-listed from the OTCBB. As NASDAQ found that we failed to timely file three periodic reports in a twenty-four (24) month period, we were automatically removed from the OTCBB.  Pursuant to the rule, we are not eligible to be relisted on the OTCBB for a period of one-year following our removal, during which time any subsequent late filing would reset the one-year period of de-listing. If we are late in our periodic filings, our one year ban from the OTCBB will be extended, and we may never be able to quote our securities on the OTCBB.  As a result, our securities may become worthless and we may be forced to curtail or abandon our business plan.

INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO FEDERAL REGULATIONS OF PENNY STOCKS.

Our common stock will be subject to the requirements of Rule 15(g)9, promulgated under the Securities Exchange Act as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.

In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the Company’s common stock may have their ability to sell their shares of the common stock impaired.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 6, 2008, the Company’s Board of Directors approved the reduction of the purchase price of all warrants issued by the Company to date, totaling warrants to purchase an aggregate of 10,800,300 common shares of the Company from $1.75 per share in connection with 9,111,500 warrants and from $1.00 per share in connection with 1,688,800 warrants to $0.125 per share, while extending the exercise period from June 9, 2008 until June 9, 2010.  The Company also revised the acceleration term for the acceleration of the termination of the term of the warrants which will lapse in the event the common stock of the Company trades at $0.25 per share for a trading period of 20 days following notice to the warrant holders.

In September 2007, former related parties of the Company cancelled 925,000 shares of common stock in connection with the Asset Purchase Agreement.

The Company agreed to cancel an aggregate of 11,000,000 shares of the Company’s common stock and options to purchase 5,650,000 shares held by former employees and consultants of the Company, in connection with the execution of mutual releases by each of these individuals in October through December 2007.  To date all 11,000,000 shares and options to purchase 5,650,000 shares have been cancelled.  

On or about June 19, 2008, the Board of Directors of the Company approved the issuance of options to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.125 per share for (5) five years to the Company’s President and Chief Executive Officer, David S. Rector.  The Company issued the options as consideration for services rendered to the Company by Mr. Rector.  The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended, for the above issuance, since the issuance did not involve a public offering, the recipient took the securities for investment and not resale and the Company took appropriate measures to restrict transfer. No underwriters or agents were involved in the issuance and no underwriting discounts or commissions were paid by the Company.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

EXHIBITS

2.1	Agreement and Plan of Merger dated July 27, 2006 by and among Online Holdings, Inc., a Nevada corporation, Standard Drilling Acquisition Corp., a Delaware corporation, and Standard Drilling, Inc., a Delaware corporation, (incorporated by reference from Exhibit 2.1 to the Form 8-K filed with the SEC on July 27, 2006).
3.1	Amended and Restated Articles of Incorporation of the Company (incorporated by reference from Exhibit 3.1 to the Form 8-K filed with the SEC on September 6, 2006).
3.2	Bylaws of the Company (incorporated by reference from Exhibit 3.2 to Form SB-2 filed by the Company on December 19, 2001).
10.1	Registration Rights Agreement dated June 9, 2006 by and among Standard Drilling, Inc. and the stockholders named therein (incorporated by reference from Exhibit 10.1 to the Form 8-K filed with the SEC on September 6, 2006).
10.2	Contract with Romfor West Africa Ltd., effective May 15, 2006 (incorporated by reference from Exhibit 10.2 to the Form 8-K filed with the SEC on September 6, 2006).
10.3	Standard Drilling, Inc. 2006 Stock Incentive Plan (incorporated by reference from Exhibit 10.3 to the Form 8-K filed with the SEC on September 6, 2006).
10.4	Form of Incentive Stock Option Agreement (incorporated by reference from Exhibit 10.4 to the Form 8-K filed with the SEC on September 6, 2006).
10.5	Form of Non-Statutory Stock Option Agreement A (incorporated by reference from Exhibit 10.5 to the Form 8-K filed with the SEC on September 6, 2006).
10.6	Form of Non-Statutory Stock Option Agreement B (incorporated by reference from Exhibit 10.6 to the Form 8-K filed with the SEC on September 6, 2006).
10.7	Employment Agreement dated July 27, 2006 between Standard Drilling, Inc. and Prentis B. Tomlinson, Jr. (incorporated by reference from Exhibit 10.7 to the Form 8-K filed with the SEC on September 6, 2006).
10.8	Employment Agreement dated July 27, 2006 between Standard Drilling, Inc. and Edward L. Moses, Jr. (incorporated by reference from Exhibit 10.8 to the Form 8-K filed with the SEC on September 6, 2006).
10.9	Employment Agreement dated July 27, 2006 between Standard Drilling, Inc. and Robert T. Moffett (incorporated by reference from Exhibit 10.9 to the Form 8-K filed with the SEC on September 6, 2006).
10.10	Employment Agreement dated July 27, 2006 between Standard Drilling, Inc. and Michael J. Walker (incorporated by reference from Exhibit 10.10 to the Form 8-K filed with the SEC on September 6, 2006).
10.11	Employment Agreement dated July 27, 2006 between Standard Drilling, Inc. and O. Oliver Pennington, III (incorporated by reference from Exhibit 10.11 to the Form 8-K filed with the SEC on September 6, 2006).
10.12	Purchase and Sale Agreement dated June 5, 2007 between Standard Drilling, Inc. and Romfor West Africa.

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10.13	Asset Purchase Agreement dated September 24, 2007 between Standard Drilling, Inc. and PBT Capital Partners, LLC (incorporated by reference from Exhibit 10.1 to the Form 8-K filed with the SEC on October 11, 2007).
10.15	Promissory Note with PBT (incorporated by reference from Exhibit 10.15 to the Form 10-Q, filed with the SEC on May 15, 2008).
16.1	Letter from Moore & Associates, Chartered (incorporated by reference from Exhibit 16.1 to the Form 8-K, filed with the SEC on November 29, 2007).
17.1	Resignation letter of Prentis B. Tomlinson Jr. dated October 9, 2007 (incorporated by reference from Exhibit 10.14 to the Form 10-QSB filed with the SEC on November 21, 2007).
31*	Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*	Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*Filed herewith

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STANDARD DRILLING, INC.
DATED: August 14, 2008	By: /s/ David S. Rector
	David S. Rector
	Chief Executive Officer

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