UNITED STATESTable SECURITIESof AND EXCHANGE COMMISSIONContents

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

~~FORM~~Washington, D.C. 20549 ~~10-K~~

~~x ANNUAL REPORT~~FORM ~~PURSUANT TO SECTION 13 OR 15(d) OF THE~~10-K

þ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2009~~2010

¨ o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~SECURITIES EXCHANGE~~Commission ~~ACT~~file OFno. ~~1934~~0-30502

~~Commission file~~JOHN noD. ~~0-30502~~ OIL AND GAS COMPANY

~~JOHN~~ D.(Exact ~~OIL~~name ~~AND~~of ~~GAS~~Registrant ~~COMPANY~~as specified in its charter)

(Exact name of Registrant as specified in its charter)


MARYLAND		94-6542723
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

MARYLAND	94-6542723
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

8500 STATION STREET, SUITE 345, MENTOR, OHIO 44060
(Address of principal executive office)

~~8500~~Registrant’s ~~STATION~~telephone ~~STREET~~number, ~~SUITE 345,~~including ~~MENTOR,~~area ~~OHIO~~code: ~~44060~~(440) 255-6325

Securities registered pursuant to Section 12(~~Address~~ b) of ~~principal~~the ~~executive~~Exchange ~~office)~~Act: NONE

~~Registrant’s telephone~~Securities ~~number,~~registered ~~including~~pursuant ~~area~~to ~~code:~~ Section 12(~~440~~g) of the Exchange Act: SHARES OF COMMON STOCK ~~255-6325~~

~~Securities registered~~Indicate ~~pursuant~~by tocheck ~~Section~~mark ~~12(b)~~if of the ~~Exchange~~registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act~~: NONE~~. Yes o No þ

~~Securities registered~~Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 12or 15(gd) of the Exchange Act~~: SHARES~~ ~~OF COMMON~~Yes ~~STOCK~~o No þ

Indicate by check mark ifwhether the registrant is(1) has afiled ~~well-known~~all ~~seasoned~~reports ~~issuer,~~required asto ~~defined~~be infiled by ~~rule~~Section 13 ~~405~~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 ¨ þ No o x

Indicate by check mark ifwhether the registrant ishas ~~not~~submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to ~~file~~be ~~reports~~submitted and posted pursuant to ~~Section~~ 13Rule 405 orof 15Regulation S-T (d)§232.405 of this chapter) during the ~~Exchange~~preceding ~~Act~~12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes ¨o No o x

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant~~of ~~(1)~~delinquent ~~has~~filers ~~filed~~pursuant ~~all~~to ~~reports~~Item 405 ~~required~~of toRegulation S-K beis ~~filed~~not bycontained ~~Section~~herein, 13and orwill ~~15(d)~~not ofbe ~~the~~contained, ~~Securities~~to ~~Exchange~~the ~~Act~~best of ~~1934~~registrant’s ~~during~~knowledge, ~~the~~in ~~preceding~~definitive 12proxy ~~months (~~or ~~for~~information ~~such~~statements ~~shorter~~incorporated ~~period~~by ~~that~~reference ~~the~~in ~~registrant~~Part III ~~was~~of ~~required to~~this ~~file~~Form ~~such~~10-K or ~~reports),~~any ~~and~~amendment ~~(2) has been subject~~ to ~~such~~this ~~filing~~Form ~~requirements for the past 90 days~~10-K. ~~Yes x No~~þ ¨

Indicate by check mark whether the registrant ~~has~~is ~~submitted~~a ~~electronically~~large ~~and~~accelerated ~~posted~~filer, ~~on its~~an ~~corporate~~accelerated ~~web site~~filer, ifa non-accelerated ~~any~~filer, ~~every~~or ~~Interactive~~a ~~Data~~smaller ~~File~~reporting ~~required~~company. toSee ~~be submitted~~the ~~and~~definitions ~~posted pursuant to Rule 405~~ of ~~Regulation~~“large ~~S-T (§232.405 of this~~accelerated ~~chapter)~~filer,” ~~during~~“accelerated ~~the~~filer” ~~preceding~~and 12“smaller ~~months~~reporting ~~(or~~company” ~~for~~in ~~such~~Rule 12b-2 ~~shorter~~of ~~period that~~ the ~~registrant~~ ~~was~~Exchange ~~required to submit and post such files~~Act.~~) Yes o No ¨~~

~~Indicate by~~Large ~~check~~accelerated ~~mark~~filer ifo ~~disclosure~~Accelerated offiler ~~delinquent~~o ~~filers pursuant to Item 405 of regulation S~~Non-Kaccelerated isfiler ~~not~~o ~~contained~~Smaller ~~herein,~~reporting ~~and~~company will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. xþ

Indicate by check mark whether the registrant is a ~~large~~shell ~~accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting~~ company~~. See~~ ~~the~~(as ~~definitions~~defined ~~of “large accelerated filer,” “accelerated filer” and “smaller reporting company”~~ in Rule 12b-2 of the Exchange Act). Yes o No þ

~~Large~~On March 12, 2011, the aggregate market value of the voting and non-voting common equity held by ~~accelerated~~non-affiliates ~~filer~~was ~~¨ Accelerated~~$213,822 computed as the average bid and asked price of $.04 per share times the ~~filer~~total ~~¨ Non~~shares held by non-~~accelerated filer~~affiliates ~~¨ Smaller~~of 5,345,549. The Registrant had 9,067,090 shares of common ~~reporting~~stock ~~company~~outstanding xon March 12, 2011.

~~Indicate by~~DOCUMENTS ~~check~~INCORPORATED ~~mark~~BY ~~whether~~REFERENCE: ~~the registrant is a shell company (as defined in Rule~~None ~~12b-2 of the Exchange Act). Yes ¨ No x~~

OnJOHN ~~March 18,~~D. ~~2010,~~OIL ~~the~~AND ~~aggregate~~GAS ~~market value of the voting and non-voting common equity~~COMPANY ~~held~~INDEX byTO ~~non-affiliates~~ANNUAL ~~was $427,644 computed as the average bid and asked price~~REPORT ofON ~~$.08~~FORM ~~per share times the total shares held by non~~10-~~affiliates of~~K ~~5,345,549. The Registrant had 9,067,090 shares of common stock outstanding on March 18, 2010.~~

DOCUMENTS INCORPORATED BY REFERENCE


	Page
PART I

Glossary of Terms		3

Item 1. Business		5

Item 1A. Risk Factors		7

Item 2. Properties		13

Item 3. Legal Proceedings		15

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer’s Purchases of Equity Securities		16

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 8. Consolidated Financial Statements and Supplementary Data		25

Item 9A. Controls and Procedures		25

Item 9B. Other Information		26

PART III

Item 10. Directors, Executive Officers and Corporate Governance		27

Item 11. Executive Compensation		28

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		28

Item 13. Certain Relationships and Related Transactions, and Director Independence		30

Item 14. Principal Accountant Fees and Services		33

PART 1V

Item 15. Exhibits and Financial Statement Schedules		33

EX-31.1
EX-31.2
EX-32.1
EX-99.1

~~Portions~~2 ~~of the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on June 15, 2010 are incorporated by reference into Part III of this 10-K.~~

JOHNTable D. OILof AND GAS COMPANYContents

~~INDEX~~PART TOI ~~ANNUAL REPORT~~

ONGlossary ~~FORM~~of Terms ~~10-K~~

		Page
PART I
	Glossary of Terms	3
Item 1.	Business	5
Item 1A.	Risk Factors	7
Item 2.	Properties	13
Item 3.	Legal Proceedings	15
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer’s Purchases of Equity Securities	16
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 8.	Consolidated Financial Statements and Supplementary Data	25
Item 9A(T).	Controls and Procedures	25
Item 9B.	Other Information	27
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	27
Item 11.	Executive Compensation	27
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	27
Item 13.	Certain Relationships and Related Transactions, and Director Independence	27
Item 14.	Principal Accountant Fees and Services	27
PART 1V
Item 15.	Exhibits and Financial Statement Schedules	28

As commonly used in the natural gas and oil industry and as used in this Annual Report on Form 10-K, the following terms have the following meanings:

2Bbl. One stock tank barrel or 42 U.S. gallons liquid volume.

~~PART~~Development well. A well drilled within the proved area of a natural gas or oil reservoir to Ithe depth of a stratigraphic horizon known to be productive.

~~Glossary of~~Developed ~~Terms~~acres. Acres spaced or assigned to productive wells.

~~As commonly~~Dry ~~used~~hole inor ~~the~~well. ~~natural~~A ~~gas~~well ~~and~~found ~~oil~~to ~~industry~~be ~~and~~incapable asof ~~used~~producing hydrocarbons in ~~this Annual~~sufficient ~~Report~~quantities onsuch ~~Form~~that ~~10-K,~~proceeds from the ~~following~~sale ~~terms~~of ~~have~~such ~~the~~production ~~following~~would exceed production ~~meanings:~~expenses and taxes.

~~Bbl~~Field. ~~One~~An ~~stock~~area ~~tank~~consisting ~~barrel~~of a single reservoir or multiple reservoirs all grouped on or 42related ~~U.S.~~to ~~gallons~~the ~~liquid~~same ~~volume~~individual geological structure feature and/or stratigraphic condition.

~~Development well. A~~Gross ~~well~~acres ~~drilled~~or ~~within~~gross ~~the~~wells. ~~proved~~The ~~area~~total ofacres ~~a natural gas~~ or ~~oil~~wells, ~~reservoir~~as to the ~~depth~~case ofmay abe, ~~stratigraphic~~in ~~horizon~~which ~~known~~a ~~to be~~working ~~productive~~interest is owned.

~~Developed acres~~Mcf. ~~Acres~~ ~~spaced~~One orthousand ~~assigned~~cubic ~~to productive wells~~feet.

~~Dry hole or well~~Mcfe. A ~~well~~One ~~found~~thousand tocubic befeet ~~incapable~~equivalent, ofdetermined ~~producing~~using ~~hydrocarbons in~~the ~~sufficient~~ratio ~~quantities~~of ~~such~~six ~~that~~Mcf ~~proceeds~~of ~~from~~natural gas ~~the~~to ~~sale~~one Bbl of ~~such~~crude ~~production would~~oil, ~~exceed~~condensate ~~production~~or ~~expenses~~natural ~~and~~gas ~~taxes~~liquids.

~~Field. An~~Net ~~area consisting~~acres ofor anet ~~single~~wells. ~~reservoir~~The orsum ~~multiple~~of ~~reservoirs~~the ~~all~~fractional ~~grouped~~working oninterests ~~or related~~owned toin ~~the~~gross ~~same~~acres ~~individual~~or gross ~~geological~~wells, ~~structure~~as ~~feature~~the ~~and/or~~case ~~stratigraphic condition~~may be.

~~Gross acres or gross wells~~Oil. ~~The~~ ~~total~~Crude ~~acres or wells~~oil, ascondensate ~~the~~and ~~case~~natural ~~may~~gas ~~be, in which a working interest is owned~~liquids.

~~Mcf~~Productive well. ~~One~~ ~~thousand~~A well that is found to be capable of producing hydrocarbons in sufficient ~~cubic~~quantities ~~feet~~such that proceeds from the sale of such production exceeds production expenses and taxes.

~~Mcfe~~Proved developed reserves. ~~One~~ Reserves that can be expected to be recovered through existing ~~thousand~~wells ~~cubic~~with ~~feet~~existing ~~equivalent,~~equipment ~~determined~~and ~~using~~operating methods. Additional natural gas and oil expected to be obtained through the ~~ratio~~application of ~~six~~fluid ~~Mcf~~injection ofor ~~natural~~other improved recovery ~~gas~~techniques tofor ~~one~~supplementing ~~Bbl~~the natural forces and mechanisms of ~~crude~~primary ~~oil,~~recovery ~~condensate~~are included in “proved developed reserves” only after testing by a pilot project or ~~natural~~after ~~gas~~the operation ~~liquids~~of an installed program has confirmed through production response that increased recovery will be achieved.

~~Net~~Proved ~~acres~~reserves. orProved ~~net~~natural gas and oil reserves are the estimated quantities of natural ~~wells~~gas, natural gas liquids and crude oil which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i. ~~The~~e. ~~sum~~prices based on the average of the ~~fractional~~first ~~working~~day ~~interests~~of ~~owned~~each month in ~~gross~~ ~~acres~~the orprevious ~~gross~~year ~~wells,~~and costs as of the ~~case~~date ~~may~~the beestimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based on future conditions.

~~Oil~~Proved undeveloped drilling location. ~~Crude~~ ~~oil,~~A site on which a development well can be drilled ~~condensate~~consistent ~~and~~with ~~natural~~spacing ~~gas~~rules ~~liquids~~for purposes of recovering proved undeveloped reserves.

~~Productive well. A well that~~3 ~~is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceeds production expenses and taxes.~~

ProvedTable developed reserves. Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional natural gas and oil expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery are included in “proved developed reserves” only after testing by a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved.Contents

Proved undeveloped reserves or PUDs. ~~Proved~~ ~~natural~~Reserves ~~gas~~that ~~and~~are ~~oil~~expected ~~reserves~~to ~~are~~be ~~the~~recovered from new ~~estimated~~wells ~~quantities~~on ofundrilled ~~natural~~acreage ~~gas,~~or ~~natural~~from ~~gas~~existing ~~liquids~~wells ~~and~~where ~~crude~~a ~~oil~~relatively ~~which~~major expenditure is ~~geological~~required ~~and~~for ~~engineering~~recompletion. ~~data~~Reserves ~~demonstrate~~on undrilled ~~with~~acreage ~~reasonable~~are ~~certainty~~limited to ~~be recoverable~~those indrilling ~~future~~units ~~years~~offsetting ~~from~~productive ~~known~~units ~~reservoirs~~that ~~under~~are reasonably ~~existing~~certain ~~economic~~of ~~and operating~~production ~~conditions,~~when idrilled.e. ~~prices~~Proved ~~based~~reserves onfor ~~the~~other ~~average~~undrilled ofunits ~~the~~are claimed ~~first~~only ~~day~~where ofit ~~each month~~can inbe ~~the~~demonstrated ~~previous~~with ~~year~~certainty ~~and~~that ~~costs~~there asis continuity of production from the ~~date~~existing ~~the~~productive ~~estimate~~formation. isEstimates for proved undeveloped reserves ~~made. Prices~~are ~~include~~not ~~consideration~~attributed to any acreage from which an application of ~~changes~~fluid ininjection ~~existing~~or ~~prices~~other ~~provided~~improved ~~only~~recovery bytechniques ~~contractual~~is ~~arrangements~~contemplated, ~~but~~unless ~~not~~such ontechniques ~~escalations~~have ~~based~~been onproved ~~future~~effective ~~conditions~~by actual tests in the area and in the same reservoir.

~~Proved undeveloped drilling location~~Reservoir. A ~~site~~porous onand ~~which~~permeable aunderground ~~development~~formation ~~well~~containing ~~can~~a benatural ~~drilled~~accumulation of ~~consistent~~produce-able ~~with~~natural ~~spacing~~gas ~~rules~~and/or ~~for~~oil ~~purposes~~that ofis ~~recovering~~confined ~~proved~~by ~~undeveloped~~impermeable rock or water barriers and is individual and separate from other reserves.

3Standardized Measure. Standardized Measure is the present value of estimated future net revenues to be generated from the production of proved reserves, determined in accordance with the rules and regulations of the SEC (using prices and costs in effect as of the date of estimation) without giving effect to non-property related expenses such as general and administrative expense, debt service and future income tax expenses or to depreciation, depletion and amortization and discounted using an annual discount rate of 10%. Our Standardized Measure does not include future income tax expenses.

~~Proved~~Successful ~~undeveloped reserves or PUDs~~well. ~~Reserves~~ ~~that~~A ~~are~~well ~~expected~~capable to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of ~~production~~producing ~~when~~natural ~~drilled. Proved~~gas reserves for other undrilled units are claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Estimates for proved undeveloped reserves are not attributed to any acreage from which an application of fluid injection and/or ~~other improved~~oil ~~recovery techniques is contemplated, unless such techniques have been proved effective by actual tests~~ in ~~the area and in the same~~commercial ~~reservoir~~quantities.

~~Reservoir~~Undeveloped acreage. ~~A porous~~ ~~and~~Lease ~~permeable~~acreage ~~underground~~on ~~formation~~which ~~containing~~wells ahave ~~natural~~not ~~accumulation~~been ~~of produce-able~~drilled ~~natural~~or ~~gas~~completed ~~and/or~~to ~~oil~~a point that iswould ~~confined~~permit bythe ~~impermeable~~production ~~rock~~of ~~or water~~commercial ~~barriers~~quantities ~~and~~of isnatural ~~individual~~gas and ~~separate~~oil regardless ~~from~~of ~~other~~whether such acreage contains proved reserves.

~~Standardized Measure~~Working interest. ~~Standardized~~ ~~Measure~~The isoperating ~~the~~interest ~~present~~that ~~value~~gives ~~of estimated~~the ~~future~~owner ~~net~~the ~~revenues~~right to ~~be generated from the production of proved reserves~~drill, ~~determined in accordance with the rules and regulations of the SEC~~produce ~~(using prices~~ and ~~costs~~conduct inoperating ~~effect~~activities ason of the ~~date of estimation) without giving effect to non-~~property ~~related expenses such as general~~ and ~~administrative expense,~~a ~~debt~~share ~~service and future income tax expenses or to depreciation, depletion and amortization and discounted using an annual discount rate~~ of ~~10%. Our~~ ~~Standardized Measure does not include future income tax expenses~~production.

~~Successful well~~Workover. ~~A well~~ ~~capable~~Operations ofon a producing ~~natural~~well ~~gas~~to ~~and/~~restore or ~~oil~~increase ~~in commercial quantities~~production.

~~Undeveloped~~4 acreage. Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of natural gas and oil regardless of whether such acreage contains proved reserves.

Working interest. TheTable operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and a share of production.Contents

~~Workover. Operations on~~Item ~~a producing well to restore or increase production~~1. Business

4John D. Oil and Gas Company, formerly Liberty Self-Stor, Inc. (the “Company”), is a corporation organized under the laws of the State of Maryland.

~~Item~~The Company was originally a self-storage company from 1999 to 2005 when it sold all but two of its 1facilities. ~~Business~~ By May 2007, one self-storage facility in Painesville remained which generated revenue through self-storage rentals and retail leases. In 2006, the Company entered into the business of drilling natural gas wells in Northeast Ohio, and extracting and producing natural gas with oil as a by-product of the process. The Company currently has fifty-eight producing wells. The Company cannot guarantee success under its business plan as drilling wells for oil and natural gas is a high-risk enterprise and there is no guarantee the Company will become profitable.

~~John D.~~ Oil and Natural Gas ~~Company, formerly Liberty Self-Stor, Inc~~Overview. ~~(the “Company”), is a~~ ~~corporation organized under the laws of the State of Maryland.~~

The Company ~~was~~had ~~originally~~redirected aits ~~self-storage~~efforts ~~company~~to ~~from~~natural ~~1999~~gas exploration to ~~2005~~increase ~~when~~cash itflow ~~sold~~and ~~all~~enhance ~~but~~shareholder ~~two of its facilities~~value. By ~~May~~At ~~2007~~December 31, ~~one self-storage facility in Painesville remained which generated revenue through self-storage rentals and retail leases. In 2006~~2010, the Company ~~entered~~had ~~into the business of extracting and producing oil and natural gas products, drilling oil and natural gas wells in Northeast Ohio. The Company currently has~~ fifty-eight producing wells. ~~The~~ The Company’s ~~cannot~~wells ~~guarantee~~are ~~success~~mostly ~~under~~operator-owned ~~the~~by ~~new business~~John ~~plan~~D. asOil ~~drilling~~and ~~wells~~Gas ~~for~~Company, ~~oil~~although ~~and~~there ~~natural~~are ~~gas is~~ a ~~high-risk~~ ~~enterprise~~limited ~~and~~number ~~there~~of isjoint nointerest ~~guarantee the Company will become profitable~~wells.

~~Oil~~The Company is also an owner and the managing member of Kykuit Resources, LLC (“Kykuit”), which leases natural gas and ~~Natural~~oil ~~Gas~~rights ~~Overview~~to 166,745 net acres located in the Montana Breaks area of Montana. The partnership has drilled eight wells which have not shown any production to date. Therefore, Kykuit decided in 2010 to write-off the remaining balance of the intangibles for these wells. The Company had previously written-off a portion of the intangibles in 2009.

The Company ~~had~~is ~~redirected~~also ~~its~~an ~~efforts~~owner ~~to oil~~ and ~~natural~~managing ~~gas~~member ~~exploration~~of ~~to increase~~Lucky ~~cash~~Brothers ~~flow and enhance shareholder value. At December 31~~LLC, ~~2009,~~ ~~the~~which ~~Company~~ had ~~fifty-eight~~drilled ~~wells~~one well in ~~production~~2008. ~~The Company’s~~ ~~wells are mostly operator-owned by John D. Oil and Gas Company, although there are a limited number of joint interest wells.~~

WeOil ~~are~~and Natural Gas Competition. The industry is intensely competitive, and we compete with other ~~also~~companies anthat ~~owner~~have significantly greater resources. Our ability to acquire additional properties and to discover reserves in the ~~managing~~future ~~member~~will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. Many of ~~Kykuit~~our larger ~~Resources~~competitors not only drill for and produce natural gas and oil, ~~LLC~~but ~~(“Kykuit”)~~also carry on refining operations and market petroleum and other products on a regional, ~~which~~national or worldwide basis. ~~leases~~These companies may be able to pay more for natural gas and oil ~~rights~~properties toand ~~203~~evaluate,~~842~~ ~~net~~bid ~~acres~~for and ~~located~~purchase ina ~~the~~greater ~~Montana~~number of properties than our financial or human resources permit. In ~~Breaks~~addition, ~~area~~these companies may have a greater ability to continue drilling activities during periods of ~~Montana~~low natural gas and oil prices and to absorb the burden of present and future federal, state, local and other laws and regulations. ~~The~~ ~~partnership~~Our ~~has~~inability ~~drilled~~to ~~eight~~compete ~~wells~~effectively ~~which~~with larger companies could have ~~not~~a ~~shown~~material ~~any~~adverse ~~production~~impact toon ~~date~~our business activities, financial condition and results of operations.

Oil and Natural Gas ~~Competition. The~~Environmental ~~industry is intensely competitive,~~ and weOther ~~compete with other companies that have significantly greater resources~~Regulations. ~~Our~~ ~~ability~~The ~~to acquire~~oil ~~additional properties~~ and tonatural ~~discover~~gas ~~reserves~~business ~~in the future will be~~is ~~dependent~~regulated ~~upon~~extensively ~~our~~at ~~ability~~the tofederal, ~~evaluate~~state and ~~select~~local ~~suitable properties and to consummate transactions in a highly competitive environment~~levels. ~~Many~~Environmental ~~of our larger competitors not only drill for~~ and ~~produce~~other ~~natural gas and oil, but also carry~~governmental onlaws ~~refining operations~~ and ~~market~~regulations ~~petroleum~~have ~~and~~increased ~~other~~the ~~products~~costs onto aplan, ~~regional~~design, ~~national~~ ordrill, ~~worldwide~~install, ~~basis.~~operate ~~These~~and ~~companies may be able to pay more for natural~~abandon natural gas and oil ~~properties and evaluate, bid for and purchase a greater number of properties than our financial or human resources permit~~wells. InUnder ~~addition,~~ these ~~companies~~ ~~may~~laws ~~have a greater ability to continue drilling activities during periods of low natural gas~~ and ~~oil~~regulations, ~~prices~~industry ~~and~~participants tocould ~~absorb~~be ~~the burden of present~~liable ~~and~~for ~~future~~personal ~~federal~~injuries, ~~state,~~property ~~local~~damage and other ~~laws and regulations~~damages. ~~Our~~These ~~inability to~~laws ~~compete effectively with larger companies could have a material adverse impact on our business activities, financial condition~~ and ~~results~~regulations ofmay: ~~operations.~~

~~Oil~~• ~~and~~require ~~Natural Gas Environmental and Other Regulations. The oil and natural gas business is regulated extensively at~~ the ~~federal,~~acquisition ~~state~~of ~~and~~various ~~local levels. Environmental~~permits ~~and~~before ~~other~~drilling governmental laws and regulations have increased the costs to plan, design, drill, install, operate and abandon natural gas and oil wells. Under these laws and regulations, industry participants could be liable for personal injuries, property damage and other damages. These laws and regulations may:commences;

·• require the ~~acquisition~~installation of ~~various~~expensive ~~permits~~pollution ~~before~~control ~~drilling commences~~equipment;

·• ~~require~~restrict the ~~installation~~types, quantities and concentration of ~~expensive~~various ~~pollution~~substances ~~control~~that ~~equipment~~can be released into the environment in connection with drilling and production activities;

·• ~~restrict~~limit ~~the~~or ~~types,~~prohibit ~~quantities~~drilling ~~and~~activities ~~concentration~~on oflands ~~various~~lying ~~substances~~within ~~that~~wilderness, ~~can~~wetland ~~be released into the environment in connection with drilling~~ and ~~production~~other ~~activities~~protected areas;

·• ~~limit~~require orremedial ~~prohibit~~measures ~~drilling~~to ~~activities~~prevent onpollution ~~lands~~from ~~lying~~former ~~within wilderness~~operations, ~~wetland~~such as pit closure and ~~other~~plugging ~~protected~~of ~~areas~~abandoned wells;

·• ~~require~~impose ~~remedial~~substantial ~~measures~~liabilities tofor ~~prevent~~ pollution resulting from ~~former~~ operations,; ~~such as pit closure~~ and ~~plugging of abandoned wells;~~

·• ~~impose~~with ~~substantial~~respect ~~liabilities~~to ~~for~~operations ~~pollution~~affecting ~~resulting~~federal ~~from~~lands ~~operations;~~or leases, require preparation of a resource management plan, an environmental assessment, and/or an environmental impact statement.

~~· with respect to operations affecting federal lands or leases, require preparation of a resource management plan, an environmental assessment, and/or an environmental impact statement.~~5

Failure toTable comply with these laws and regulations could result in the suspension or termination of operations and subject companies to administrative, civil and criminal penalties. Moreover, public interest in environmental protection has increased in recent years, and environmental organizations have opposed, with some success, certain drilling projects.Contents

5Failure to comply with these laws and regulations could result in the suspension or termination of operations and subject companies to administrative, civil and criminal penalties. Moreover, public interest in environmental protection has increased in recent years, and environmental organizations have opposed, with some success, certain drilling projects.

The environmental laws and regulations applicable to the Company and its operations include, among others, the following United States federal laws and regulations:

·• Clean Air Act, and its amendments, which governs air emissions;

·• Clean Water Act, which governs discharges to waters of the United States;

·• Comprehensive Environmental Response, Compensation and Liability Act, which imposes liability where hazardous releases have occurred or are threatened to occur;

·• Energy Independence and Security Act of 2007, which prescribes new fuel economy standards and other energy saving measures;

·• National Environmental Policy Act, which governs oil and gas production activities on federal lands;

·• Resource Conservation and Recovery Act, which governs the management of solid waste;

·• Safe Drinking Water Act, which governs the underground injection and disposal of wastewater; and

·• U.S. Department of Interior regulations, which impose liability for pollution cleanup and damages.

On the state level, significant change in the Ohio oil and natural gas industry occurred in September 2004. House bill 278 became the effective law of Ohio, which recognizes the Ohio Division of Mineral Resources Management, or “DMRM,” as the sole and exclusive authority to regulate the permitting, location and spacing of oil and gas wells. The result was the effective elimination of township and municipal regulation that significantly disrupted new oil and natural gas development. The change streamlines previously cumbersome permitting and regulation imposed by townships and municipalities, since a centralized agency, the DMRM now handles all permitting ~~and~~ and enforces the laws regulating drilling and producing activities.

Self-Storage Overview.

As of ~~December~~ December 31, ~~2009~~2010, the Company owned and operated one self-storage facility which includes retail and office space located in Painesville, Ohio. The Painesville self-storage facility was acquired in October of 2000 with 3132,~~660~~495 of rentable square footage situated on 3.20 acres including ~~363~~366 units with outside space available for parking vehicles. The self-storage units are inside and difficult to rent due to limited accessibility by using an elevator or stairs. In addition, the Painesville building facility has 2122,~~985~~285 square feet of office and retail space to lease.

The self-storage facility is operated through a partnership agreement between Liberty Self-Stor Ltd. (“Ltd”) and John D. Oil and Gas Company. Ltd has a 70.1% equity interest and the Company has a 29.9% equity interest in the operating partnership of LSS I Limited Partnership (“LSS I”). The members of Ltd consist of Richard M. Osborne, Chairman and Chief Executive Officer of the Company, Thomas J. Smith, a director and the former President and Chief Operating Officer of the Company, and Retirement Management Company, an Ohio corporation owned by Mr. Osborne. These members have Class A limited partnership interests that are redeemable for cash or, at the election of the Company, convertible into shares of the Company’s stock based on an exchange factor. The current exchange factor is .1377148 of a share for each unit. LSS I’s losses reduced the ~~initial~~ initial investment to a receivable and therefore the Company wrote-off the minority interest in 2006 as it was deemed not to be collectible.

Investment Policy.

Management, in its sole discretion, may change or modify the Company’s investment objective. ~~The Company is taxed as a C Corp.~~

Activities of the Company. Subject to Maryland law, the Company has the ability to:

·• issue senior securities;

·• borrow money;

·• make loans;

~~· underwrite securities of other issuers;~~6

·Table engage in the purchase or sale of investments;Contents

·• ~~offer~~underwrite securities inof ~~exchange~~other ~~for property~~issuers;

6• engage in the purchase or sale of investments;

·• ~~repurchase~~offer orsecurities ~~otherwise~~in ~~reacquire~~exchange ~~its~~for ~~shares or other securities~~property; ~~and~~

·• ~~provide~~repurchase ~~annual~~or ~~reports~~otherwise ~~and~~reacquire ~~other~~its ~~reports~~shares toor ~~stockholders~~other ~~which~~securities; ~~contain annual audited financial statements.~~and

~~The Company~~• ~~could~~provide ~~borrow money necessary to acquire properties, could offer preferred senior securities, could offer interests of the operating partnership in exchange for properties, and prepare~~ annual reports ~~with~~and ~~audited financial statements. The Company has no current plans to engage in any of the~~ other ~~listed~~ ~~activities. During each of the last three years, the Company filed annual and quarterly~~ reports ~~with the SEC. The Company’s ability~~ to ~~engage in~~stockholders ~~any~~which ofcontain ~~the~~annual ~~above~~audited ~~activities~~financial ~~is subject to change without the approval of stockholders~~statements.

~~Subsequent~~The Company could borrow money necessary to acquire properties, could offer preferred senior ~~Events~~securities, could offer interests of the operating partnership in exchange for properties, and prepare annual reports with audited financial statements. The Company has no current plans to engage in any of the other listed activities. During each of the last three years, the Company filed annual and quarterly reports with the SEC. The Company’s ability to engage in any of the above activities is subject to change without the approval of stockholders.

~~As previously~~Principal ~~disclosed, on August 20, 2009, RBS Citizens, N~~Offices.~~A., d/b/a Charter One~~ (“Charter One”), the holder of the Company’s $9.5 million line of credit, received a judgment in its favor against the Company, Mr. Osborne and the Richard M. Osborne Trust, jointly and severally, for the amount of $9.5 million plus interest and late charges as well as attorneys’ fees, costs and other amounts payable under the line of credit. Charter One has requested that the court appoint a receiver for the Company. A hearing on the appointment of a receiver for the Company is currently scheduled for April 16, 2010.

~~During the~~The ~~month~~Company’s ofprincipal ~~February~~executive ~~2010,~~offices ~~LSS~~are Ilocated ~~received a letter from the Lake County Board of Revision and Lake County Auditor reducing the taxable values on two parcels~~ at ~~the~~8500 ~~Painesville~~Station ~~facility~~Street, ~~from 2006 through 2009. The Company will record approximately $157~~Suite 345,~~000~~ ~~of other income in 2010 from the receipt of a cash~~Mentor, ~~refund~~Ohio 44060 and ~~reduction~~its intelephone ~~accrued~~number ~~real~~is ~~estate taxes~~440-255-6325.

~~Principal Offices~~Federal Income Tax.

~~The Company’s~~Effective ~~principal executive offices are located at 8500 Station Street~~January 1, ~~Suite 345~~2006, ~~Mentor,~~the ~~Ohio~~Company ~~44060~~became ~~and~~a ~~its~~“C” ~~telephone~~Corporation ~~number~~for istax ~~440-255-6325~~purposes.

~~Federal Income Tax~~Employees.

~~Effective January~~The 1,Company ~~2006,~~currently employs six full-time employees. None of the Company’s ~~became~~employees are covered by a ~~“C”~~collective ~~Corporation~~bargaining ~~for~~agreement. ~~tax~~The Company considers its employee relations to be ~~purposes~~excellent.

~~Employees~~Item 1A. Risk Factors

~~The Company~~Risks ~~currently~~Related ~~employs~~to ~~six~~Our ~~full-time~~Oil and ~~one~~Natural ~~part-time employee. None~~Gas ~~of the Company’s employees are covered by a collective~~Business ~~bargaining agreement. The Company considers its employee relations to be excellent.~~

~~Item~~The report of our independent registered public accounting firm questions our ability to continue ~~1A. Risk~~as ~~Factors~~a going concern.

~~Risks~~Our independent auditors have indicated in their audit report for the year ended December 31, 2010 ~~Related~~in an explanatory paragraph that, due to ~~Our~~our ~~Oil~~recurring losses and ~~Natural~~our ~~Gas~~outstanding ~~Business~~debt of $10.5 million that is largely due and being held by a forbearance agreement, there is substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustment that might result from the outcome of this uncertainty. See Note 2 — Going Concern of the Company’s Consolidated Financial Statements for more information. If the Company is unable to continue as a going concern you will lose your investment.

~~The report~~In ofthe event we are unable to refinance our ~~independent~~line ~~registered~~of ~~public~~credit ~~accounting~~which ~~firm~~is ~~questions~~currently ~~our~~due and being held by ~~ability~~a toforbearance agreement until July of 2011 or obtain substitute financing, we may not be able to continue as a going concern.

~~Our independent~~At ~~auditors~~December 31, ~~have~~2010, ~~indicated~~our inoutstanding ~~their~~debt ~~audit~~totaled ~~report~~over ~~for~~$10.5 million, ~~the~~including ~~year~~a ~~ended~~$9.5 million ~~December~~line 31of credit with RBS Citizens, ~~2009~~N.A. indba anCharter ~~explanatory~~One. ~~paragraph~~The ~~that,~~line ~~due~~of tocredit ~~our~~is ~~recurring~~guaranteed ~~losses~~by Mr. ~~and~~Osborne, our ~~outstanding~~CEO ~~debt~~and Chairman of ~~$10~~the Board.6 ~~million~~Our ~~that~~line isof ~~currently~~credit ~~due~~matured ~~and~~on ~~in default~~August 1, 2009. On ~~there~~August 20, is2009, ~~substantial~~the ~~doubt~~Company ~~about~~received ~~our~~a ~~ability~~declaration of default with respect to ~~continue~~its asline aof ~~going~~credit ~~concern~~with Charter One. ~~Our~~ ~~financial~~On ~~statements~~August 24, do2009, ~~not~~Charter ~~include~~One ~~any~~received ~~adjustment~~a ~~that might~~judgment ~~result~~in ~~from~~its favor against the Company, ~~outcome~~Mr. Osborne, ofand ~~this~~the ~~uncertainty~~Richard M. ~~See~~ ~~Note~~Osborne 2Trust -(of ~~Going Concern~~which ofMr. Osborne is the ~~Company’s~~sole ~~Consolidated~~trustee), jointly ~~Financial~~and ~~Statements~~severally, for ~~more information~~the amount of $9. If5 million ~~the~~plus ~~Company~~interest isand ~~unable~~late tocharges ~~continue~~as well as attorneys’ afees, ~~going~~costs ~~concern you~~and ~~will~~other ~~lose~~amounts ~~your~~payable ~~investment~~under the loan agreement.

In theTable event we are unable to refinance our line of credit which is currently due and in default or obtain substitute financing, we may not be able to continue as a going concern.Contents

~~At December~~On 31June 18, ~~2009~~2010, ~~our~~the ~~outstanding~~Company, ~~debt~~along ~~totaled~~with ~~over $10~~Mr.~~6 million~~ Osborne, ~~including~~the ~~a $9~~Richard M.5 ~~million~~Osborne ~~line~~Trust, ofGreat ~~credit~~Plains Exploration, ~~with~~LLC ~~Charter~~and ~~One. The~~Oz ~~line~~Gas ofLtd. ~~credit~~(companies ~~is guaranteed~~owned by Mr. Osborne), ~~our~~entered ~~CEO~~into ~~and~~a ~~Chairman of the Board. Our~~Forbearance ~~line~~Agreement ofwith ~~credit~~Charter ~~matured~~One onpursuant ~~August~~to 1,which ~~2009. On August 20, 2009,~~ Charter One ~~received~~agreed ato ~~judgment~~forbear infrom ~~its~~enforcing ~~favor against the Company, Mr. Osborne and the~~its ~~Richard~~rights ~~M. Osborne Trust, jointly~~ and ~~severally,~~remedies ~~for~~under the ~~amount~~Company’s offully-drawn $9.5 ~~million~~ ~~plus~~million ~~interest~~line ~~and~~of ~~late~~credit ~~charges~~ as well as ~~attorneys’~~the ~~fees,~~other ~~costs~~parties’ ~~and~~loan ~~other amounts~~agreements ~~payable~~until ~~under~~July 1, ~~the~~2011, ~~line~~subject ofto no ~~credit. We~~further doevents ~~not~~of ~~have~~default including the ~~available~~ ~~cash~~payments todue ~~repay~~under the ~~line~~Forbearance ~~of credit~~Agreement. If ~~we are unsuccessful in~~Pursuant ~~refinancing~~to the ~~line~~Forbearance ofAgreement ~~credit~~and orduring ifthe weforbearance ~~are unsuccessful in obtaining substitute financing~~period, ~~there~~the isparties ~~substantial~~must ~~doubt~~pay ~~about~~Charter ~~our~~One $400,000 ~~ability~~per tomonth, ~~continue~~including as a ~~going concern. The~~$40,000 ~~accompanying~~per ~~financial~~month ~~statements~~forbearance dofee, ~~not~~until ~~include~~all ~~any adjustments~~amounts ~~that~~under ~~might~~the ~~result~~loan agreements ~~from~~have ~~the~~been ~~outcome~~paid ofin ~~this uncertainty~~full. If weSee ~~cannot~~Note ~~continue~~5 as“Line aof ~~going~~Credit ~~concern,~~and ~~your investment~~Long-Term inDebt” to the Company’s consolidated ~~could~~financial ~~become~~statements ~~devalued~~for ormore ~~even worthless~~information.

~~Charter One,~~We do not have the ~~holder~~available ofcash to repay the ~~Company’s~~line $9of credit.5 ~~million~~If we are unsuccessful in refinancing the line of credit or if we are unsuccessful in obtaining substitute financing, ~~has~~there is ~~requested~~substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. If we cannot continue as a ~~receiver~~going beconcern, ~~appointed~~your ~~for~~investment in the Company could become devalued or even worthless.

~~Charter One~~If ~~has~~we ~~requested~~are ~~that~~unable ~~the~~to ~~court~~refinance ~~appoint~~our aexisting ~~receiver~~debt ~~for~~or obtain financing in the ~~Company~~amounts and aon terms ~~hearing~~acceptable onto ~~the~~us ~~appointment~~or ofwe aare ~~receiver~~unable isto ~~currently~~meet ~~scheduled~~our ~~for~~future ~~April~~cash 16commitments, we may be unable to continue ~~2010. If~~our business and as a ~~receiver~~result ismay ~~appointed~~be required to scale back or cease operations of our business, the result ~~receiver~~of which would ~~oversee~~be ~~the Company’s~~that ~~operations~~you ~~and~~could ~~assets~~lose some or all of your investment.

In ~~the~~ ~~event~~addition, ~~that~~we ~~LSS~~require Isubstantial iscapital ~~unable~~expenditures to ~~cure~~maintain ~~the~~and/or ~~defaults~~grow ~~with~~oil ~~respect~~and gas production and reserves. To date, we have been dependent on debt financing to meet our cash requirements and have incurred losses totaling approximately $1.4 million for the ~~First~~year ended ~~Merit~~December 31, ~~mortgage~~2010, orour ~~obtain~~fifth ~~substitute~~consecutive ~~financing~~year of net losses. As of December 31, 2010, we ~~may~~reported negative ~~lose~~net ~~our~~working ~~investment~~capital. We do not expect to be profitable in ~~LSS~~2011. We can provide no Iassurance that actual cash requirements will not exceed our estimates. In particular, ~~including~~additional capital may be required in the ~~Painesville~~event ~~property.~~that:

~~At December~~• ~~31,~~drilling 2009, LSS I had a $1.1 million mortgage outstanding on the Painesville self-storage facility. On August 24, 2009, the Company received a letter from First Merit Bank, N.A., the holder of the $1.2 million mortgage on the Painesville self-storage property in which the Company has a 29.9% interest. The letter constituted formal notice to LSS I that, pursuant to certain cross-default provisions, certain defaults, including Mr. Osborne’s debt with First Merit and ~~the~~completion ~~Charter~~costs ~~One~~for ~~judgments, must be cured within five days or the mortgage would become accelerated, without~~ further ~~notice~~ orwells ~~demand,~~increase ~~and~~beyond ~~fully~~our due and payable. LSS I does not have the available cash to repay the First Merit mortgage. If the defaults with respect to the First Merit mortgage are not cured, the Company could lose its investment in LSS I, including the Painesville property.expectations;

~~If we~~• ~~are~~market ~~unable~~prices tofor ~~refinance~~ our ~~existing~~production ~~debt~~decline orbeyond ~~obtain financing in the amounts and on terms acceptable to us or we are unable to meet~~ our future cash commitments, we may be unable to continue our business and as a result may be required to scale back or cease operations of our business, the result of which would be that you could lose some or all of your investment.expectations;

~~In addition,~~• ~~we require substantial capital expenditures to maintain and/or grow oil and gas~~ production ~~and~~levels reserves. To date, we have been dependent on debt financing to meet our cash requirements and have incurred losses totaling approximately $2.7 million for the year ended December 31, 2009, our fourth consecutive year of net losses. As of December 31, 2009, we reported negative net working capital. We do not ~~expect~~meet ~~to be profitable in 2010. We can provide no assurance that actual cash requirements will not exceed~~ our ~~estimates. In~~expectations; ~~particular, additional capital may be required in the event that:~~or

·• ~~drilling~~we ~~and~~encounter ~~completion~~greater costs ~~for~~associated ~~further~~with ~~wells~~general ~~increase~~and ~~beyond~~administrative ~~our expectations;~~expenses.

·The ~~market~~occurrence ~~prices~~of ~~for~~any of these events could adversely affect our ~~production~~ability ~~decline~~to ~~beyond~~meet our ~~expectations;~~business plans.

·We ~~production~~depend ~~levels~~on dodebt or equity financing to pay for our exploration and operations. The current economic environment makes it more difficult to obtain equity financing on acceptable terms to address our liquidity issues. Capital may not continue to be available if necessary to meet ~~our~~these continuing ~~expectations;~~costs, or if capital is available that it will be on terms acceptable to us. In addition, we may not be able to meet our future cash commitments.

·If we ~~encounter~~are ~~greater~~unable ~~costs~~to ~~associated~~obtaining ~~with~~financing ~~general~~in the amounts and ~~administrative~~on ~~expenses~~terms acceptable to us or if we are unable to meet our future cash commitments, we may be unable to continue our business and as a result may be required to scale back or cease operations of our business, the result of which would be that you could lose some or all of your investment. In addition, if we are unsuccessful in refinancing the line of credit or obtaining substitute financing, we will likely be unable to continue our business and as a result may be required to scale back or cease operations of our business, the result of which would be that you could lose some or all of your investment.

~~The~~8 ~~occurrence of any of these events could adversely affect our ability to meet our business plans.~~

At DecemberTable 31, 2009 and December 31, 2008, our outstanding debt totaled over $10.6 million, including our $9.5 million line of credit with Charter One. The line of credit is guaranteed by Mr. Osborne, our CEO and Chairman of the Board. Our line of credit matured on August 1, 2009. On August 20, 2009, Charter One received a judgment in its favor against the Company, Mr. Osborne and the Richard M. Osborne Trust, jointly and severally, for the amount of $9.5 million plus interest and late charges as well as attorneys’ fees, costs and other amounts payable under the line of credit. We do not have the available cash to repay the line of credit.Contents

8We had a material weakness in our internal control over financial reporting and therefore, we may not be able to accurately report our financial results or prevent fraud.

WeIn ~~depend~~ our annual report on ~~debt~~Form or10-K, ~~equity~~we ~~financing~~are required to ~~pay~~furnish ~~for~~a report by our ~~exploration~~management ~~and~~on our ~~operations~~internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. ~~The~~ Such ~~current~~report ~~economic~~contains, ~~environment~~among ~~makes~~other itmatters, ~~more~~an ~~difficult~~assessment of the effectiveness of our internal tocontrol ~~obtain~~over ~~equity~~financial ~~financing~~reporting onas ~~acceptable~~of ~~terms~~the toend ~~address~~of our ~~liquidity~~fiscal year, including a statement as to ~~issues. Capital~~whether ~~may~~or not ~~continue~~our tointernal becontrol ~~available~~over iffinancial ~~necessary~~reporting was effective. A company’s internal control over financial reporting is a process designed to ~~meet~~provide reasonable assurance regarding the ~~these~~reliability ~~continuing~~of ~~costs,~~financial orreporting ifand ~~capital~~the ispreparation ~~available~~of ~~that~~financial itstatements ~~will~~for beexternal purposes onin ~~terms~~accordance with generally accepted accounting principles. Our size and staff ~~acceptable~~limitations have prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within the internal control system. In ~~addition~~At times, we ~~may~~have ~~not~~one beperson ~~able~~responsible tofor ~~meet~~processing ~~our~~transactions ~~future~~and reporting them. This lack of ~~cash~~segregation ~~commitments~~of duties led our management to conclude that as of December 31, 2010 and 2009.

If• ~~we are unable to obtaining financing in the amounts and on terms acceptable to us or if we are unable to meet~~ our ~~future~~internal ~~cash~~controls ~~commitments,~~over wefinancial ~~may~~reporting bewere ~~unable~~not ~~to continue our business and as a result may be required to scale back or cease operations of our business~~effective, the result of which would be that you could lose some or all of your investment. In addition, if we are unsuccessful in refinancing the line of credit or obtaining substitute financing, we may be unable to continue our business and ~~as a result may be required to scale back or cease operations of our business, the result of which would be that you could lose some or all of your investment.~~

~~We had~~• aour ~~material~~disclosure ~~weakness~~controls inand ~~our~~procedures ~~internal~~are ~~control~~not ~~over~~effective ~~financial~~to ~~reporting~~give ~~and therefore,~~reasonable weassurance ~~may~~that ~~not~~the beinformation ~~able~~required to ~~accurately~~be ~~report~~disclosed ~~our~~in ~~financial~~reports ~~results~~that ~~or prevent~~we ~~fraud~~file under the Exchange Act are recorded, processed and reported as and when required.

InOur ~~our annual~~failure ~~report on Form 10-K, we are required~~ to ~~furnish~~maintain aeffective ~~report by our management on our~~ internal ~~control~~controls ~~over~~could ~~financial~~harm ~~reporting under Section 404 of the Sarbanes-Oxley Act of 2002. Such report contains, among other matters, an assessment of the effectiveness of~~ our ~~internal~~operating ~~control~~results ~~over financial reporting as of the end of our fiscal year, including a statement as to whether~~ or ~~not~~cause ~~our~~us ~~internal control over financial reporting was~~to ~~effective. A~~fail ~~company’s internal control over financial reporting is a process designed~~ to ~~provide~~meet ~~reasonable~~certain ~~assurance regarding the reliability of financial~~ reporting ~~and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles~~obligations. ~~Our~~ ~~size~~Ineffective ~~and~~internal ~~staff~~controls ~~limitations~~may have ~~prevented~~also ~~us from~~caused ~~being~~investors ~~able~~ to ~~employ~~lose ~~sufficient~~confidence ~~resources~~in toour ~~enable~~reported usfinancial ~~to have an adequate level of supervision and segregation of duties within the internal control system. At times~~information, wewhich may have ~~one person responsible for processing~~negatively ~~transactions~~affected ~~and~~our ~~reporting them~~stock. ~~This lack of segregation of duties~~ ~~led our management to conclude that as of December 31, 2009:~~

·Our ~~our~~Revenues ~~internal~~will ~~controls~~depend ~~over~~on ~~financial~~natural ~~reporting~~gas ~~were not effective, and~~prices.

·Our ~~our~~revenue, ~~disclosure~~profitability ~~controls~~and cash flow depend upon the prices and ~~procedures~~demand ~~are~~for ~~not~~natural ~~effective~~gas. toThe natural ~~give~~gas ~~reasonable~~market ~~assurance~~is ~~that~~very volatile and the ~~information~~current ~~required~~drop toin bemarket ~~disclosed~~prices has significantly affected our financial results and may impede our growth. This decline in ~~reports~~the ~~that~~current wemarket ~~file~~price severely ~~under~~affects the ~~Exchange~~viability ~~Act~~of ~~are~~drilling ~~recorded~~in this market, ~~processed~~because the lower cash flow makes it economically difficult to incur the high costs of drilling a well. Developments in federal regulation pertaining to the sale, transportation and ~~reported~~marketing asof natural gas also will continue to impact future pricing and ~~when~~natural ~~required~~gas contracts.

~~Our~~The price we receive for our natural gas production will be determined by the availability of ~~failure~~favorable purchase contracts, market forces, as well as short and long-term volume commitments. Our current plan will be to ~~maintain~~analyze ~~effective~~available ~~internal~~markets, ~~controls~~with ~~could~~consideration ~~harm~~of ~~our~~both ~~operating~~price ~~results~~and terms, orand ~~cause~~to usenter into those arrangements we believe to ~~fail~~be in the best interest of the Company. We believe the current market pricing is too low to ~~meet~~allow ~~certain~~for ~~reporting~~long-term gas purchase agreements and ~~obligations~~that spot market sales are the only pricing available at this time. ~~Ineffective~~ ~~internal~~We ~~controls~~expect ~~could~~that ~~also~~we ~~cause~~will ~~investors~~be able to ~~lose~~sell ~~confidence~~all innatural gas produced from our ~~reported~~wells ~~financial~~to ~~information~~either utility companies, ~~which~~marketing ~~could~~affiliates of ~~have~~pipeline companies, natural gas marketing firms, or a variety of industrial or commercial ~~negative~~consumers ~~effect~~of onnatural gas. However, we cannot guarantee our ~~stock~~strategy will be effective.

~~Our Revenues~~Natural ~~will~~gas ~~depend~~markets onare ~~natural~~subject ~~gas~~to ~~prices~~many factors.

~~Our revenue,~~The ~~profitability~~deliverability and ~~cash~~price ~~flow~~of ~~depend upon the prices and demand for~~ natural gas~~. The~~ ~~natural~~are ~~gas~~subject ~~market~~to issupply ~~very volatile~~ and ~~the~~demand ~~current drop in~~ market ~~prices~~forces ~~has~~as ~~significantly~~well as ~~affected~~the ~~our~~effects ~~financial~~of ~~results~~state and ~~may impede~~federal ~~our~~regulatory ~~growth. This~~policies ~~decline~~and indevelopments. ~~the~~Prices ~~current~~for ~~market~~natural ~~price severely~~gas ~~affects~~may ~~the~~fluctuate ~~viability~~widely ~~of drilling~~ in ~~this~~response ~~market,~~to ~~because~~relatively ~~the~~minor ~~lower~~changes ~~cash~~in ~~flow makes it economically difficult to incur~~ the ~~high~~supply ~~costs~~ of ~~drilling~~and ademand for ~~well. Developments~~natural ingas, ~~federal~~market ~~regulation~~uncertainty ~~pertaining to the sale, transportation~~ and ~~marketing~~a variety of ~~natural~~additional ~~gas~~factors ~~also~~that ~~will~~are ~~continue~~beyond toour ~~impact future~~control, ~~pricing~~such ~~and natural gas contracts.~~as:

~~The~~• ~~price we receive for our natural gas production will be determined by~~ the ~~availability of~~domestic ~~favorable purchase contracts, market forces, as well as short~~ and ~~long-term volume~~foreign ~~commitments. Our~~supply ~~current plan will be to analyze available markets, with consideration~~ of ~~both price~~ and ~~terms,~~demand ~~and~~for to enter into those arrangements we believe to be in the best interest of the Company. We believe market fluctuations can be partly stabilized by effectively combining long-term gas purchase agreements and spot market sales. We expect that we will be able to sell all natural gas produced from our wells to either utility companies, marketing affiliates of pipeline companies, natural gas marketing firms, or a variety of industrial or commercial consumers of natural gas. However, we cannot guarantee our strategy will be effective.;

9• the price and level of foreign imports;

~~Natural gas~~• ~~markets~~the ~~are~~level ~~subject~~of toconsumer ~~many~~product ~~factors.~~demand;

~~The deliverability~~• ~~and~~weather price of natural gas are subject to supply and demand market forces as well as the effects of state and federal regulatory policies and developments. Prices for natural gas may fluctuate widely in response to relatively minor changes in the supply of and demand for natural gas, market uncertainty and a variety of additional factors that are beyond our control, such as:conditions;

·• ~~the~~overall domestic and ~~foreign~~global ~~supply~~economic ~~of and demand for natural gas~~conditions;

·• ~~the~~political ~~price~~and economic conditions in natural gas and ~~level~~oil ofproducing ~~foreign~~countries, ~~imports~~including those in the Middle East and South America;

~~· the level of consumer product demand;~~9

·Table weatherof conditions;Contents

·• ~~overall~~the ~~domestic~~ability of members of the Organization of Petroleum Exporting Countries to agree to and ~~global~~maintain ~~economic~~oil ~~conditions~~price and production controls;

·• ~~political~~the ~~and~~impact ~~economic~~of ~~conditions~~the inU.S. ~~natural~~dollar ~~gas~~exchange ~~and~~rates ~~oil~~on ~~producing~~natural ~~countries,~~gas ~~including those in the Middle East~~ and ~~South~~oil ~~America~~prices;

·• ~~the~~technological ~~ability~~advances ofaffecting ~~members~~energy ~~of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls~~consumption;

·• ~~the~~domestic ~~impact~~and offoreign ~~the~~governmental ~~U.S.~~regulations ~~dollar exchange rates on natural gas~~ and ~~oil prices~~taxation;

·• ~~technological~~the ~~advances~~impact ~~affecting~~of energy ~~consumption~~conservation efforts;

·• ~~domestic~~the proximity and ~~foreign~~capacity ~~governmental~~of ~~regulations~~natural gas pipelines and ~~taxation~~other transportation facilities; and

·• the ~~impact~~price ofand ~~energy~~availability ~~conservation~~of ~~efforts;~~alternative fuels.

·Prices received for natural gas produced in the Appalachian Basin are generally higher than national averages due to the proximity ~~and~~to ~~capacity~~markets in the Northeast but remain subject to the seasonal market forces. In the past, the prices of natural gas ~~pipelines~~have been extremely volatile, and we ~~other~~expect ~~transportation~~this ~~facilities;~~volatility ~~and~~to continue.

·Locations ~~the~~that ~~price~~we ~~and~~decide ~~availability~~to ofdrill ~~alternative~~may ~~fuels~~not be productive.

~~Prices received~~The ~~for~~cost ~~natural~~of ~~gas~~drilling, ~~produced~~completing inand operating a well is often uncertain, and cost factors can adversely affect the ~~Appalachian~~economics ~~Basin~~of a well. Our efforts will be uneconomic if we drill dry holes or wells that are ~~generally~~productive ~~higher~~but do not produce enough to be commercially viable after drilling, ~~than~~operating ~~national~~and ~~averages~~other ~~due~~costs. These wells may need to be written down to the ~~proximity~~estimated fair value. The Company expects to conduct ~~markets~~its drilling programs in the ~~Northeast~~Appalachian ~~but remain~~Basin ~~subject~~into tosandstone formations of the ~~seasonal~~Clinton group ~~market~~and ~~forces~~similar formations. In ~~the~~These ~~past~~formations frequently are characterized by low permeability, rapid ~~the~~production ~~prices~~decline assuming unrestricted production, and other geological characteristics which may limit the profit potential of ~~natural~~wells ~~gas~~drilled ~~have~~to ~~been~~these ~~extremely~~target ~~volatile~~formations. Although many wells drilled to these formations are completed, ~~and~~it weis ~~expect~~possible ~~this~~for ~~volatility~~a productive well to provide an ~~continue~~amount of revenue which is insufficient to return the costs incurred in drilling and completing the well.

~~Locations that~~Actual wequantities ~~decide~~and topresent ~~drill~~value of our proved reserves may ~~not~~prove to be ~~productive~~lower than we have estimated.

~~The~~This ~~cost of~~report ~~drilling,~~contains ~~completing~~estimates ~~and~~of ~~operating~~our aproved ~~well~~reserves ~~is often uncertain,~~ and ~~cost factors~~the ~~can~~estimated ~~adversely~~future ~~affect~~net ~~the~~revenue ~~economics~~from ofour proved ~~a well~~reserves. ~~Our~~ ~~efforts will~~Determining bethese ~~uneconomic~~estimates ifis wea ~~drill~~complex ~~dry~~process ~~holes~~with orestimates ~~wells~~based ~~that~~upon various ~~are~~assumptions ~~productive~~relating ~~but~~to doreview ~~not produce~~and ~~enough~~decisions toabout beengineering ~~commercially~~and ~~viable~~geological ~~after~~data ~~drilling,~~for ~~operating and other~~each ~~costs~~well. These ~~wells~~estimates ~~may~~are ~~need~~particularly tosensitive ~~be written-down. The Company expects~~ to ~~conduct~~lower ~~its~~market ~~drilling~~prices ~~programs~~which intend ~~the~~to ~~Appalachian Basin into~~reduce ~~sandstone~~reserves ~~formations~~since ofaverage ~~the~~or ~~Clinton~~lower ~~group~~producing ~~and~~wells ~~similar formations. These~~may ~~formations~~not ~~frequently~~produce ~~are~~enough ~~characterized~~to byoffset ~~low permeability, rapid production decline assuming unrestricted production, and other geological characteristics which may limit~~ the ~~profit potential of wells~~expenses ~~drilled~~needed to ~~these~~operate ~~target~~the ~~formations~~wells. ~~Although~~ ~~many~~At ~~wells~~December 31, ~~drilled~~2010 ~~to these~~and ~~formations are completed~~2009, itthe isCompany ~~possible~~was ~~for~~significantly ~~a productive well to provide~~affected anby ~~amount~~lower ofmarket ~~revenue~~prices ~~which~~compared ~~is insufficient~~ to ~~return~~ the ~~costs~~previous ~~incurred~~few ~~in drilling and completing the well~~years.

~~Actual quantities~~Our ~~and~~development ~~present~~operations ~~value~~require ofsubstantial ~~our~~capital ~~proved reserves may prove to be lower than we have estimated~~expenditures.

~~This report~~The ~~contains~~natural ~~estimates~~gas ~~of our proved reserves~~ and ~~the~~oil ~~estimated~~industry ~~future~~is ~~net revenue~~capital ~~from our proved reserves~~intensive. ~~Determining~~ ~~these~~We ~~estimates~~have ismade, ~~a complex~~and ~~process~~if ~~with~~we ~~estimates~~are ~~based~~to ~~upon~~continue operations ~~various~~would ~~assumptions~~have ~~relating~~to continue to ~~review and~~make, ~~decisions~~substantial ~~about~~capital ~~engineering~~expenditures ~~and~~in ~~geological~~our ~~data~~business for ~~each well. These~~the ~~estimates~~development, ~~are~~production ~~particularly~~and ~~sensitive~~acquisition toof ~~lower~~natural ~~market~~gas ~~prices~~reserves. ~~which~~We ~~tend~~have tofinanced ~~reduce~~capital ~~reserves~~expenditures ~~since~~primarily ~~average~~with orequity ~~lower~~infusions ~~producing~~from ~~wells~~existing ~~may~~investors, ~~not~~cash ~~produce~~flow ~~enough~~from tooperations ~~offset~~and ~~the~~proceeds ~~expenses~~from ~~needed to operate the wells~~loans. At ~~December~~We ~~31,~~cannot ~~2009~~guarantee ~~and 2008,~~that ~~the~~these ~~Company~~sources ~~was~~of ~~significantly~~funds ~~affected~~will bybe ~~lower~~adequate ~~market~~to ~~prices~~fund ~~and showed~~our ~~higher~~capital ~~depletion expense than in prior years~~needs.

10We face significant competition.

The natural gas and oil industry is intensely competitive, and we compete with other companies that have significantly greater resources. Our ability to acquire additional properties and to discover ~~development~~reserves in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. Many of our larger competitors not only drill for and produce natural gas and oil, but also carry on refining operations ~~require~~and ~~substantial~~market ~~capital~~petroleum ~~expenditures~~and other products on a regional, national or worldwide basis. These companies may be able to pay more for natural gas and oil properties and evaluate, bid for and purchase a greater number of properties than our financial or human resources permit. In addition, these companies may have a greater ability to continue drilling activities during periods of low natural gas and oil prices and to absorb the burden of present and future federal, state, local and other laws and regulations. Our inability to compete effectively with larger companies could have a material adverse impact on our business activities, financial condition and results of operations.

~~The~~10 natural gas and oil industry is capital intensive. We make and expect to continue to make substantial capital expenditures in our business for the development, production and acquisition of natural gas reserves. We have financed capital expenditures primarily with equity infusions from existing investors, cash flow from operations and proceeds from loans. We cannot guarantee that these sources of funds will be adequate to fund our capital needs.

We faceTable significantof competition.Contents

~~The natural~~We ~~gas~~depend and oil industry is intensely competitive, and we compete with other companies that have significantly greater resources. Our ability to acquire additional properties and to discover reserves in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. Many of our larger competitors not only drill for and produce natural gas and oil, but also carry on ~~refining operations and market petroleum and other products on~~ a ~~regional,~~ ~~national~~related orthird ~~worldwide~~party ~~basis. These companies may be able~~ to ~~pay~~ ~~more~~manage ~~for natural gas and oil properties and evaluate, bid for and purchase a greater number of properties than~~ our financial or human resources permit. In addition, these companies may have a greater ability to continue drilling activities during periods of low natural gas and oil prices and to absorb the burden of present and future federal, state, local and other laws and regulations. Our inability to compete effectively with larger companies could have a material adverse impact on our business ~~activities, financial condition and results of operations~~.

We ~~depend~~ onhave aan ~~third~~agreement ~~party~~with Great Plains Exploration, LLC (“Great Plains”) to manage our oil and natural gas operations. Great Plains is owned by Richard M. Osborne, our Chairman and CEO. Great Plains assists in the drilling process, tends our wells, transports our natural gas and purchases and resells our production as well. If Great Plains fails to provide us with these services, or if the timeliness and quality of Great Plains’ services are not adequate, our business would be negatively impacted.

WeOur ~~have an~~business ~~agreement~~depends ~~with~~on ~~Great~~gathering ~~Plains Exploration, LLC (“Great Plains”) to manage our oil~~ and ~~natural~~transportation ~~gas~~facilities ~~operations. Great Plains is~~ owned by ~~Richard M~~others. Osborne, our Chairman and CEO. Great Plains assists in the drilling process, tends our wells, transports our natural gas and purchases and resells our production as well. On August 20, 2009, Charter One received a judgment in its favor against Great Plains, Oz Gas, Ltd. and Mr. Osborne, jointly and severally, for the amount of $21.2 million plus interest and late charges as well as attorneys’ fees, costs and other amounts payable under those loan agreements. Charter One has asked for the appointment of a receiver for Great Plains and the hearing is currently scheduled for March 25, 2010. If Great Plains fails to provide us with these services, or if the timeliness and quality of Great Plains’ services are not adequate, our business would be negatively impacted.

~~Our business~~The marketability of our natural gas production depends in part on the availability, proximity and capacity of gathering and ~~transportation~~pipeline ~~facilities~~systems owned by third parties. The amount of natural gas that ~~others~~can be produced and sold is subject to curtailment in certain circumstances, such as pipeline interruptions due to scheduled and unscheduled maintenance, excessive pressure, physical damage to the gathering or transportation system, or lack of contracted capacity in the system. The curtailments arising from these and similar circumstances may last from a few days to several months. To the extent that the Company’s wells are shut-in, even temporarily, revenues otherwise available to the Company will be reduced accordingly.

~~The marketability~~We ofdepend ~~our natural gas production depends in part~~ on ~~the~~a ~~availability, proximity~~key ~~and~~customer ~~capacity~~for ofsales ~~gathering and pipeline systems owned by third parties. The amount~~ of our natural gas ~~that can be produced~~ and sold is subject to curtailment in certain circumstances, such as pipeline interruptions due to scheduled and unscheduled maintenance, excessive pressure, physical damage to the gathering or transportation system, or lack of contracted capacity in the systemoil. ~~The curtailments arising from these and similar~~ circumstances may last from a few days to several months. To the extent that the Company’s wells are shut-in, even temporarily, revenues otherwise available to the Company will be reduced accordingly.

We sell all of our natural gas and oil production from the wells we operate to Great Plains, which ~~depend~~in onturn sells a ~~key~~significant ~~customer~~portion ~~for~~of ~~sales~~our production volume to a limited number of ~~our~~customers. To the extent these customers reduce the volume of natural gas that they purchase from Great Plains, we might not be able to advantageously sell all of our production.

WeOur ~~sell all~~business ofis ~~our natural gas production to Great Plains, which in turn sells a significant portion of our production volume to a limited number of customers~~hazardous. ~~To the extent these customers reduce the volume of natural~~ ~~gas that they purchase from Great Plains, we might not be able to advantageously sell all of our production.~~

11Hazards such as geological unconformities, unexpected pressures and other unforeseen conditions are sometimes encountered in drilling wells. On occasion, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce funds available for drilling, resulting in the loss of properties of the Company. We may be subjected to liability for pollution and other damages or may lose a significant portion of our properties due to hazards against which we cannot insure or may not elect to insure because of prohibitive premium costs or for other reasons. Government regulations relating to environmental matters also could increase our costs of doing business or require us to cease operations in certain areas. We will require an independent drilling contractor to insure against hazards and other risks normally encountered in its business. However, there can be no assurance as to the extent and the cost of such coverage. An uninsured claim against us could reduce our capital significantly or cause us to alter or terminate our drilling program.

~~Our business~~The oil and natural gas industry is ~~hazardous~~highly regulated.

~~Hazards such~~Our asoperations ~~geological~~are ~~unconformities,~~regulated ~~unexpected~~extensively ~~pressures~~at ~~and~~the ~~other~~federal, ~~unforeseen conditions~~state ~~are~~and ~~sometimes~~local ~~encountered in drilling wells~~levels. On ~~occasion,~~Environmental and ~~substantial~~other ~~liabilities~~governmental tolaws ~~third~~and ~~parties~~regulations orhave ~~governmental~~increased ~~entities may be incurred,~~ the ~~payment~~costs ofto ~~which~~plan, ~~could~~design, ~~reduce~~drill, ~~funds available for drilling~~install, ~~resulting~~operate inand ~~the~~abandon ~~loss~~natural ofgas ~~properties~~and ofoil ~~the Company~~wells. We ~~may~~Under ~~be subjected~~these tolaws ~~liability for pollution~~ and ~~other~~regulations, ~~damages~~we orcould ~~may~~also ~~lose a significant~~be ~~portion~~liable offor ~~our~~personal ~~properties~~injuries, ~~due~~property todamage ~~hazards~~and ~~against~~other ~~which~~damages. weFailure ~~cannot insure or may not elect~~ to ~~insure~~comply ~~because~~with ofthese ~~prohibitive premium costs or for other~~laws ~~reasons. Government~~and regulations ~~relating~~could toresult ~~environmental~~in ~~matters also~~the ~~could~~suspension ~~increase~~or ~~our~~termination ~~costs~~ of ~~doing~~our ~~business~~operations orand ~~require~~subject us to ~~cease~~ ~~operations~~administrative, incivil ~~certain~~and ~~areas~~criminal penalties. We ~~will~~Moreover, ~~require~~public aninterest ~~independent~~in ~~drilling~~environmental ~~contractor~~protection tohas ~~insure~~increased ~~against hazards and other risks normally encountered~~ in ~~its business. However~~recent years, ~~there can be no assurance as to the extent~~ and ~~the cost~~environmental oforganizations ~~such~~have ~~coverage. An~~opposed, ~~uninsured~~with ~~claim against us could reduce our~~some ~~capital~~success, ~~significantly~~certain ~~or cause us to alter or terminate our~~ drilling ~~program~~ projects.

~~The~~11 ~~oil and natural gas industry is highly regulated.~~

Our operationsTable are regulated extensively at the federal, state and local levels. Environmental and other governmental laws and regulations have increased the costs to plan, design, drill, install, operate and abandon natural gas and oil wells. Under these laws and regulations, we could also be liable for personal injuries, property damage and other damages. Failure to comply with these laws and regulations could result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties. Moreover, public interest in environmental protection has increased in recent years, and environmental organizations have opposed, with some success, certain drilling projects.Contents

Risks Related to the Company

We need to raise additional capital, which may not be available to us and may limit our operations or growth.

We need additional capital to fund the implementation of our business plan and to repay our debt. We cannot provide assurances that any necessary subsequent financing will be obtained. ~~The~~ The Company’s future liquidity and capital requirements are difficult to predict as they depend upon many factors, including the success of its drilling operations and competing market developments. We may need to raise additional funds in order to meet working capital requirements or additional capital expenditures or to take advantage of other opportunities. We cannot be certain that the Company will be able to obtain additional financing on favorable terms or at all. If weWe ~~are~~have been unable to raise needed capital, and our growth and operations may behave been impeded. In addition, if we are able to raise additional capital by selling additional shares of common or preferred stock, your percentage ownership in the Company will be diluted.

We have abeen ~~limited~~unable ~~history~~to ofprofitably ~~operating~~operate the oil and natural gas assets we have acquired.

In considering whether to invest in the Company, an investor should consider that we commenced our oil and gas operations in January 2006 and ~~there~~that iswe ~~only limited~~have ~~historical~~been ~~financial~~unable ~~and~~to ~~operating~~earn ~~information~~a ~~available~~profit onsince ~~which to~~then. ~~base~~To andate, ~~evaluation~~we ofhave ~~our~~failed ~~performance. We may fail~~ to implement our business model and strategy successfully ~~or revise our business model and strategy should industry conditions and the competition within the industry change~~.

Our management team owns a controlling interest in the Company.

Richard M. Osborne, our Chairman and CEO, and Thomas J. Smith, former president and a current board member, own or control an aggregate 41.0% of our outstanding shares, or 52.3% if their partnership units in LSS I were converted into shares. Accordingly, management possesses a near controlling vote on all matters submitted to a vote of our shareholders and has the ability to elect ~~all~~ all members of our board of directors and to control our management and affairs. This concentration of ownership may have the effect of preventing or discouraging transactions involving an actual or a ~~potential~~ potential change of control of our Company, regardless of whether a premium is offered ~~over~~ over then-current market prices.

12Our management team is subject to various conflicts of interest.

~~Our~~Great Plains, a company owned by Richard M. Osborne, our Chairman and CEO, manages our oil and ~~management~~natural ~~team~~gas business and purchases all of our natural gas production. We lease our executive offices from OsAir, Inc., a company owned by Mr. Osborne. Mr. Osborne is ~~subject~~the sole manager of Liberty Self-Stor II, Ltd., which makes trucks available for short-term rental to ~~various~~the ~~conflicts~~public ofat ~~interest~~our self-storage facility and also provides other merchandise at this facility. The Company purchases well supplies from Big Oats Oilfield Supply Company, a company owned by Mr. Osborne. The Company has borrowed money from Oz Gas Ltd., a company owned by Mr. Osborne, for payments made on the Company’s behalf to Charter One during 2010. The Company’s wells are serviced by Great Plains Exploration, LLC, also a company owned by Mr. Osborne and also the primary customer for natural gas and oil production from the wells operated by the Company. Orwell Trumbull Pipeline Co, LLC owns the gathering lines for the wells operated by the Company and is in turn owned by Mr. Osborne.

~~Great Plains,~~These aarrangements ~~company~~create ~~owned~~inherent byconflicts ~~Richard~~of ~~M. Osborne~~interest, ~~our~~although ~~Chairman~~we ~~and~~believe ~~CEO,~~that ~~manages~~the ~~our~~terms we ~~oil~~receive ~~and~~from ~~natural~~Mr. Osborne’s ~~gas~~companies ~~business~~are ~~and~~competitive ~~purchases~~with ~~all~~those ofwe ~~our~~would ~~natural~~receive ~~gas~~from unaffiliated ~~production~~companies. ~~Great~~ ~~Plains~~In ~~loaned~~addition, ~~the~~members ~~Company~~of ~~$600,000~~our management team are participating in ~~the~~other ~~first~~affiliated oil ~~quarter~~and ofnatural ~~2009~~gas ~~which~~drilling ~~was~~enterprises ~~repaid~~or inorganizations or associations formed for the ~~third~~development ~~quarter~~of oil and natural gas properties, some of ~~2009~~which tomay ~~fund~~be ~~the Company’s~~competitive ~~ongoing~~with ~~capital~~the ~~requirements~~Company. We ~~lease~~The ~~our~~Company ~~executive~~may ~~offices~~compete ~~from~~with ~~OsAir,~~these ~~Inc.,~~other acompanies ~~company~~for ~~owned~~drill bysites ~~Mr.~~and ~~Osborne. Mr.~~customers ~~Osborne is~~to ~~the~~purchase ~~sole~~their ~~manager~~products, creating further conflicts of ~~Liberty~~interest. ~~Self-Stor~~Management ~~II,~~is ~~Ltd.,~~not ~~which~~restricted ~~makes~~in ~~trucks~~the ~~available~~conduct of any of ~~for~~these ~~short-term~~additional ~~rental~~activities. toNo ~~the~~specific ~~public~~method atfor ~~our~~the ~~self-storage~~resolution ~~facility~~of ~~and~~these ~~also provides~~or other ~~merchandise~~conflicts atof interest ~~this~~has ~~facility~~been devised.

~~These~~12 arrangements create inherent conflicts of interest, although we believe that the terms we receive from Mr. Osborne’s companies are competitive with those we would receive from unaffiliated companies. In addition, members of our management team are participating in other affiliated oil and natural gas drilling enterprises or organizations or associations formed for the development of oil and natural gas properties, some of which may be competitive with the Company. The Company may compete with these other companies for drill sites and customers to purchase their products, creating further conflicts of interest. Management is not restricted in the conduct of any of these additional activities. No specific method for the resolution of these or other conflicts of interest has been devised.

Item 2. PropertiesTable of Contents

~~The Company’s~~Item principal executive offices are located at 8500 Station Street, Suite 345, Mentor, Ohio 44060. These offices are leased from OsAir, Inc., a company owned by Mr. Osborne. The lease was extended for a three year term on March 26, 2009 at $2~~,000 per month from $1,350 per month, through April 1, 2012~~. Properties

~~Oil~~The Company’s principal executive offices are located at 8500 Station Street, Suite 345, Mentor, ~~and~~Ohio ~~Natural~~44060. ~~Gas~~These ~~Wells~~offices are leased from OsAir, Inc., a company owned by Mr. Osborne. The lease was extended for a three year term on March 26, 2009 at $2,000 per month from $1,350 per month, through April 1, 2012.

~~At December 31, 2009, the Company had fifty-eight wells in production. The wells are mostly operator-owned by John D.~~ Oil and ~~Gas~~ ~~Company,~~Natural ~~although~~Gas ~~there are a limited number of wells in which we own a~~Wells joint interest. All of our wells are located in Northeast Ohio. Reports were filed in 2009 to federal authorities providing total proved net oil and natural gas reserves and production, although no reports were filed in 2008.

~~The following~~At ~~table~~December 31, ~~presents~~2010, the ~~net~~Company ~~oil~~had ~~and~~fifty-eight ~~natural~~producing ~~gas~~wells. ~~production,~~The ~~net~~wells ~~sales~~are mostly operator-owned by John D. Oil and Gas Company, although there are a limited number of wells in ~~average~~which ~~sale~~we ~~price~~own a joint interest. All of our wells are located in Northeast Ohio. Reports were filed in 2010 and ~~average~~2009 ~~unit~~to ~~costs~~federal ~~per~~authorities ~~mcfe~~providing ~~for~~total ~~the~~proved ~~periods~~net oil and natural gas reserves and ~~indicated:~~production.

	2009		2008
Net Production
Natural Gas (mcf)		698,731		515,106
Oil (bbl)		9,186		9,685
Natural Gas Equivalent (mcfe)		753,847		573,216
Net Sales
Natural Gas	$	3,348,750	$	3,915,208
Oil		362,918		652,879
Total Sales	$	3,711,668	$	4,568,087
Average Sale Price
Natural Gas (mcf)	$	4.79	$	7.60
Oil (bbl)	$	39.51	$	67.41
Natural Gas Equivalent (mcfe)	$	4.92	$	7.97
Average Unit Costs per mcfe
Well operating expenses	$	687,182	$	575,675
Average Cost/mcfe	$	0.91	$	1.00

The following table presents the net oil and natural gas production, net sales, average sale price and average unit costs per mcfe for the periods indicated:


	2010		2009
Net Production
Natural Gas (mcf)		383,503		698,731
Oil (bbl)		8,876		9,186

Natural Gas Equivalent (mcfe)		436,757		753,847


Net Sales
Natural Gas	$	1,647,951	$	3,348,750
Oil		455,898		362,918

Total Sales	$	2,103,849	$	3,711,668


Average Sale Price
Natural Gas (mcf)	$	4.30	$	4.79
Oil (bbl)	$	51.36	$	39.51
Natural Gas Equivalent (mcfe)	$	4.82	$	4.92

Average Unit Costs per mcfe
Well operating expenses	$	664,699	$	687,182
Average Cost/mcfe	$	1.52	$	0.91

Estimated Proved Reserves. The preparation of our natural gas and oil reserve estimates were completed in accordance with our prescribed internal control procedures, which include verification of input data delivered to our third-party reserve specialist, as well as a multi-functional ~~management~~ management review.

The following table presents the Company’s estimated gross proved oil and natural gas reserves, which are all located in the continental United States, based on reserve reports prepared by Schlumberger Data and Consulting Services in ~~2009~~ 2010 and ~~Wright & Company, Inc~~2009. ~~in 2008.~~ The reserves calculated at ~~December~~ December 31, ~~2009~~2010 and 2009 were impacted by lower pricing ascompared ~~was~~to ~~true~~the inprevious ~~the~~few ~~prior year~~years. Effective for the year end 2009, SEC reporting rules require that year-end reserve calculations and future cash inflows be based on the simple average of the first day of the month price for the previous twelve month period. The ~~prices~~12-month average pricing for ~~2009~~2010 used in the above table ~~were~~for ~~$3.867~~natural ~~per~~gas sold at the ~~MMBTU~~Henry ~~and~~Hub, Louisiana was $614.18376 ~~per~~and ~~BBL~~Ergon West Virginia Oil was $73. 73. The ~~prices~~12-month ~~used~~average pricing for ~~2008~~2009 ~~were~~used ~~based~~in on the ~~spot~~ ~~price~~above attable ~~December~~for ~~31,~~natural ~~2008~~gas ofsold ~~$5.710~~at ~~per~~the ~~MMBTU~~Henry ~~and~~Hub, ~~$44.60~~Louisiana ~~per~~was ~~BBL~~$3. ~~Additionally~~867 ~~production~~and ~~was~~West upTexas inIntermediate ~~2009~~oil ~~with~~at 5Cushing, ~~wells~~Oklahoma ~~going~~was ~~online in~~$61.18. ~~2009~~Additionally ~~and~~five ~~one~~wells went ~~very~~online ~~strong producing well~~ in ~~late 2008~~2009.

~~The~~13 technical person responsible for review of our reserve estimates at Schlumberger Data and Consulting Services and Wright & Company, Inc. meets the requirements regarding qualifications, independence, objectivity and confidentiality set forth in the Standards Pertaining to Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. Neither of these firms own an interest in our properties or is employed on a contingent fee basis. The Schlumberger report was prepared in accordance with generally accepted petroleum engineering and evaluation principles and is attached as Exhibit 99.1 to this Annual Report on Form 10-K.

	2009						2008
	Natural Gas			Oil			Natural Gas			Oil
	(MCF)			(BBLs)			(MCF)			(BBLs)
Proved developed and undeveloped reserves:
Beginning of year		2,146,600			17,500			2,646,000			37,300
Revision of previous estimates, extensions and other additions		792,000			17,600			(699,900	)		(13,900	)
Net reserve additions		272,900			2,900			715,600			3,800
Production		(698,700	)		(9,200	)		(515,100	)		(9,700	)
End of year		2,512,800			28,800			2,146,600			17,500
Proved developed reserves:
Beginning of year		2,146,600			17,500			2,646,000			37,300
End of year		2,512,800			28,800			2,146,600			17,500

~~Productive Wells.~~ The ~~following~~ ~~table~~technical ~~presents~~person ~~the~~responsible ~~information~~for ~~relating~~review toof ~~the~~our ~~productive~~reserve ~~wells~~estimates inat Schlumberger Data and ~~which~~Consulting weServices ~~owned~~meets athe ~~working~~requirements ~~interest~~regarding ~~during~~qualifications, ~~the~~independence, ~~periods~~objectivity ~~indicated. Productive~~and ~~wells~~confidentiality ~~consist~~set offorth ~~producing~~in ~~wells~~the Standards Pertaining to Estimating and ~~wells~~Auditing of Oil and Gas ~~capable~~Reserves Information promulgated by the Society of ~~production~~Petroleum Engineers. ~~The~~ ~~Company’s~~This ~~wells~~firm ~~are~~does ~~drilled~~not toown ~~produce~~an ~~natural~~interest ~~gas~~in ~~with~~our ~~oil~~properties ~~being~~or ais ~~by-product. Gross~~employed ~~wells~~on ~~are~~a ~~the~~contingent ~~total number~~fee ofbasis. ~~producing~~The ~~wells~~Schlumberger report was prepared in ~~which~~accordance wewith ~~have~~generally anaccepted ~~interest,~~petroleum engineering and ~~net~~evaluation ~~wells~~principles and ~~are~~is ~~the sum~~attached ofas ~~our~~Exhibit 99.1 ~~fractional~~to ~~working~~this ~~interests~~Annual ~~owned~~Report inon ~~gross~~Form ~~wells~~10-K.

	2009						2008
	2010						2009
	Gross			Net			Gross			Net
	Natural Gas			Oil			Natural Gas			Oil
Productive Wells:
	(MCF)			(BBLs)			(MCF)			(BBLs)
Operated		53			51			49			47
Proved developed and undeveloped reserves:
Non-Operated Properties		5			2			5			2
Beginning of year		2,512,800			28,800			2,146,600			17,500
Total		58			53			54			49
Revision of previous estimates, extensions and other additions		347,800			13,400			792,000			17,600
Net reserve additions		—			—			272,900			2,900
Production		(383,500	)		(8,900	)		(698,700	)		(9,200	)
End of year		2,477,100			33,300			2,512,800			28,800
Proved developed reserves:
Beginning of year		2,512,800			28,800			2,146,600			17,500
End of year		2,477,100			33,300			2,512,800			28,800

~~Drilling~~Productive ~~Activity~~Wells. The ~~Company~~ ~~began~~following ~~its~~table ~~drilling~~presents ~~activity~~the information relating to the productive wells in ~~2006,~~which ~~concentrating~~we ~~its~~owned ~~efforts~~a onworking interest during the years ended December 31, 2010 and 2009. ~~development~~Productive ~~properties~~wells consist of producing wells and wells capable of production. The ~~following~~Company’s ~~table~~wells are ~~presents~~drilled ~~information~~to produce natural gas with oil being a by-product. Gross wells are the total number ~~relating~~of toproducing wells ~~completed~~in ~~during~~which we have an interest, and net wells are the ~~periods~~sum ~~indicated:~~of our fractional working interests owned in gross wells.

	2009				2008
	Gross		Net
	Gross		Net		Gross		Net
Productive Wells:
Gross wells:
Operated		53		51
Productive		4		4		12		12
Non-Operated Properties		5		2
Dry		1		1		1		1
Total		58		53
Total		5		5		13		13

Drilling Activity. The Company’s began its drilling activity ~~significantly declined~~ in ~~2009~~2006, ~~due~~concentrating toits ~~less~~efforts ~~available~~on ~~cash~~development properties. ~~The~~ ~~Company~~During ~~anticipates~~2010, athe ~~continued~~Company ~~slowing~~ceased of its drilling ~~program~~ ~~in 2010~~program. The ~~decline~~Company’s drilling inactivity ~~the~~significantly ~~current~~declined ~~market~~in ~~price~~2009 ~~severely affects~~due to the ~~viability~~lack of ~~drilling,~~availability ~~and~~of ~~our~~cash ~~lower~~resources. The ~~cash~~following ~~flow~~table ~~makes~~presents itinformation ~~economically difficult~~relating to ~~incur~~wells ~~the~~completed ~~high~~during ~~costs~~the ofyear ~~drilling~~ended ~~a well.~~2009:


	2009
	Gross		Net
Gross wells:
Productive		4		4
Dry		1		1

Total		5		5

~~Developed and Undeveloped~~14 Acreage. The following presents information relating to developed and undeveloped acreage that the Company currently has leased. Developed are those properties that are currently drilled and undeveloped acreage relates to lease acres on which wells have not been drilled or completed.

Developed Acreage

Undeveloped Acreage

Gross

Net

Gross

Net

Geographic Area:

Ohio

2,806

2,914

~~Present~~The ~~Activities. As of~~decline ~~December~~in ~~31,~~the ~~2009,~~overall market price over the ~~Company’s~~last ~~drilling~~couple ~~activities~~of ~~have~~years ~~become~~severely ~~minimal until~~affected itthe ~~has~~viability of drilling, and our lower cash flow makes it economically difficult to ~~handle~~incur the ~~drilling~~high costs of drilling a well. The Company anticipates commencing the drilling program as soon as cash resources are available for drilling.

~~Leases. The~~Developed ~~rights to drill an oil~~ and ~~natural~~Undeveloped ~~gas~~Acreage. ~~well~~The onfollowing apresents ~~parcel~~information ofrelating ~~property~~to ~~are~~developed ~~dependent on~~and ~~the~~undeveloped ~~producer~~acreage ~~securing~~that ~~a land lease for~~ the ~~mineral~~Company ~~rights~~currently tohas ~~drill for the oil and natural gas~~leased. ~~Typically~~ ~~the~~Developed ~~lease~~are ~~agreement~~those ~~will~~properties ~~rent~~that ~~the rights~~are tocurrently ~~the~~drilled ~~minerals~~and onundeveloped ~~the~~acreage ~~property~~relates ~~for a specific time frame, varying from one~~ to ~~ten~~ ~~years. An executed~~ lease ~~with~~acres aon ~~producer~~which ~~gives~~wells ~~exclusive~~have ~~rights~~not ~~for drilling~~been ondrilled ~~the~~or ~~property and another agreement cannot be signed until it has expired~~completed.

Insurance. The Company has purchased a commercial liability policy to cover its oil and natural gas activities. The Company’s management uses its discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to acquiring appropriate insurance on the Company’s investments at a reasonable cost and on suitable terms.

Developed Acreage

Undeveloped Acreage

Gross

Net

Gross

Net

Geographic Area:

Ohio

2,558

2,745

~~Depreciation~~Present Activities. ~~Development costs~~ As of ~~proved oil and natural gas properties~~December 31, ~~including estimated dismantlement~~2010, ~~restoration~~the ~~and~~Company’s ~~abandonment~~drilling ~~costs~~activities ~~and~~have ~~acquisition~~become ~~costs, are~~minimal ~~depreciated~~until ~~and~~it ~~depleted~~has oncash aflow ~~well~~to byhandle ~~well basis by~~ the ~~units-of-production method~~drilling ~~using estimated proved developed reserves~~costs.

~~Item~~Leases. The rights to drill an oil and natural gas well on a parcel of property are dependent on 3the producer securing a land lease for the mineral rights to drill for the oil and natural gas. ~~Legal~~ Typically ~~Proceedings~~the lease agreement will rent the rights to the minerals on the property for a specific time frame, varying from one to ten years. An executed lease with a producer gives exclusive rights for drilling on the property and another agreement cannot be signed until it has expired.

OnInsurance. ~~August 20,~~The ~~2009, the~~ Company ~~received~~has purchased a ~~declaration~~commercial ofliability ~~default~~policy ~~with~~to ~~respect~~cover toits ~~the~~oil ~~$9.5~~and natural ~~million~~gas ~~line~~activities. ofThe ~~credit~~Company’s ~~under~~management ~~the~~uses ~~Loan~~its ~~and~~discretion ~~Security~~in ~~Agreement,~~determining ~~as amended~~amounts, ~~dated~~coverage ~~March~~limits ~~28,~~and ~~2008~~deductibility provisions of insurance, bywith ~~and~~a ~~among~~view to acquiring appropriate insurance on the Company,’s ~~Richard~~investments M.at ~~Osborne~~a reasonable cost and ~~Charter~~on ~~One (the~~suitable ~~“Loan~~terms ~~Agreement”). The~~that ~~notice~~are ofat ~~default~~or ~~demanded~~above ~~immediate~~the ~~payment~~current ofstate ~~all~~requirement ~~amounts~~listed ~~outstanding~~in ~~under~~State ~~the~~Senate ~~Loan~~Bill ~~Agreement~~165 which was passed in 2010.

~~In addition, on August 20, 2009, Charter One received a judgment in its favor against the Company, Mr~~Depreciation. ~~Osborne~~Development ~~and~~costs ~~the Richard M. Osborne Trust (~~of ~~which~~ ~~Mr.~~proved ~~Osborne~~oil ~~is the sole trustee), jointly~~ and ~~severally,~~natural ~~for~~gas ~~the amount of $9.5 million plus interest as of August 14~~properties, ~~2009~~including ~~in the amount of $7,026, plus~~estimated ~~interest at the rate of $543 per diem from August 14~~dismantlement, ~~2009,~~restoration ~~plus~~and ~~late~~abandonment ~~charges~~costs ~~in the~~and ~~amount~~acquisition ~~of $475~~costs,~~842~~ asare ofdepreciated ~~August 14, 2009, plus attorneys’ fees, costs~~ and ~~other~~depleted ~~amounts~~on ~~payable~~a ~~under~~well ~~the~~by ~~Loan~~well ~~Agreement. Additional information~~basis isby ~~available in~~ the ~~Company’s Form 8~~units-K,of-production ~~dated~~method ~~August~~using ~~20,~~estimated ~~2009,~~proved ~~and~~developed ~~filed with the SEC on August 26, 2009~~reserves.

~~The~~Item ~~Loan Agreement is guaranteed by Richard M~~3. ~~Osborne,~~Legal ~~the Company’s Chairman of the Board and Chief Executive Officer~~Proceedings. ~~As of December 31, 2009, the Company was current with its interest payments on the line of credit.~~

~~The Company~~As ispreviously ~~still~~reported, ~~negotiating~~on ~~with~~August 20, ~~Charter~~2009, ~~One~~the ~~with~~Company received a declaration of default with respect to ~~the~~its $9.5 million line of credit with RBS Citizens, N. ~~However~~A. dba Charter One. On August 24, 2009, ifCharter One received a judgment in its favor against the Company, isMr. Osborne, ~~unsuccessful~~and inthe ~~refinancing~~Richard ~~the~~M. ~~line~~Osborne Trust (of ~~credit~~which orMr. Osborne ifis the ~~Company~~sole istrustee), ~~unsuccessful~~jointly inand ~~obtaining~~severally, for the ~~substitute~~amount ~~financing,~~of ~~there~~$9.5 million isplus ~~substantial~~interest ~~doubt~~and ~~about~~late ~~the~~charges ~~Company~~as well as attorneys’s ~~ability~~fees, tocosts and other ~~continue~~amounts aspayable aunder ~~going~~the ~~concern~~loan agreement.

InOn June 18, 2010, the Company, along with Mr. Osborne, the Richard M. Osborne Trust, Great Plains ~~addition~~Exploration, LLC and Oz Gas Ltd. (companies owned by Mr. Osborne), entered into a Forbearance Agreement with Charter One ~~has~~pursuant ~~asked~~to which Charter One agreed to forbear from enforcing its rights and remedies under the ~~court~~Company’s fully-drawn $9.5 million line of credit as well as the other parties’ loan agreements until July 1, 2011, subject to ~~appoint~~no further events of default including the payments due under the Forbearance Agreement. Pursuant to the Forbearance Agreement and during the forbearance period, the parties must pay Charter One $400,000 per month, including a $40,000 ~~receiver~~per ~~for~~month forbearance fee, until all amounts under the loan agreements have been paid in ~~Company~~full. A ~~hearing~~See isNote ~~currently~~5 ~~scheduled~~“Line ~~for~~of ~~April~~Credit ~~16,~~and Long-Term Debt” to the Company’s consolidated financial ~~2010~~statements for more information.

Charter OneTable also received a judgment in its favor against Great Plains Exploration, LLC, Oz Gas, Ltd. and Richard M. Osborne, jointly and severally, for the amount of $21,211,495, plus interest and late charges as well as attorneys’ fees, costs and other amounts payable under those loan agreements. Great Plains Exploration, LLC and OzGas, Ltd are companies owned or controlled by Mr. Osborne. The Company has an agreement, dated January 1, 2006, with Great Plains Exploration, LLC for well operations and to sell natural gas and oil production net of pipeline transportation costs.Contents

~~Additionally, LSS~~PART ~~I received a letter dated August 24, 2009 from First Merit Bank, N.A., the~~II holder of the $1.2 million mortgage on the Painesville self-storage property in which the Company has 29.9% minority interest. The letter from First Merit Bank, N.A. constituted formal notice to LSS I that, pursuant to cross-default provisions contained in the mortgage documents, certain defaults, including defaults under Mr. Osborne’s debt with First Merit and the Charter One judgments discussed above, must be cured within five days or the mortgage would become accelerated, without further notice or demand, and fully due and payable. LSS I has been current with its payments on the mortgage. LSS I is still negotiating with First Merit but does not have the available cash to repay the mortgage. If the defaults with the First Merit mortgage are not cured, the Company could lose its investment in LSS I including the Painesville property.

~~PART II~~Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

~~Item~~Market 5Information. ~~Market~~The ~~for Registrant~~Company’s ~~Common~~shares ~~Equity~~of common stock, ~~Related~~$0.001 ~~Stockholder~~par ~~Matters~~value ~~and~~per ~~Issuer~~share, ~~Purchases~~trade ofon ~~Equity~~the Over-the-Counter ~~Securities~~Bulletin Board Market, or OTCBB, under the symbol “JDOG.”

~~Market Information.~~ The following table sets forth the high and low closing sale prices as reported on the OTCBB for the Company’s ~~shares of~~ common stock, $0for each quarter within the Company’s last two fiscal years.~~001~~ ~~par~~Because the ~~value~~Company’s ~~per~~common ~~share,~~stock ~~trade~~is traded on the ~~Over~~ OTCBB, these quotations reflect inter-~~the-Counter~~dealer ~~Bulletin~~prices, without ~~Board~~retail ~~Market~~mark-up, mark-down or ~~OTCBB~~commission, ~~under~~and ~~the~~may ~~symbol “JDOG~~not represent actual transactions.”

The following table sets forth the high and low closing sale prices as reported on the OTCBB for the Company’s common stock for each quarter within the Company’s last two fiscal years. Because the Company’s common stock is traded on the OTCBB, these quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.


2010	HIGH		LOW
First Quarter	$	0.15	$	0.04
Second Quarter		0.06		0.03
Third Quarter		0.06		0.03
Fourth Quarter		0.10		0.03

2009	HIGH		LOW
First Quarter	$	0.40	$	0.15
Second Quarter		0.20		0.10
Third Quarter		0.20		0.05
Fourth Quarter		0.18		0.07
2008	HIGH		LOW
First Quarter	$	0.89	$	0.57
Second Quarter		1.50		0.57
Third Quarter		1.10		0.60
Fourth Quarter		0.85		0.17

Holders. As of ~~February~~ 22February 18, ~~2010~~2011, the Company’s shares of common stock were held of record by approximately 1,~~622~~595 shareholders. We ~~estimate~~Since ~~that~~the anCompany ~~additional~~has ~~700~~not recently mailed a proxy requesting a reply from the stockholders, ~~own~~the ~~stock~~number inof ~~their~~additional ~~accounts~~stockholders atowning ~~brokerage~~stock held by brokerage firms and other financial institutions is difficult to determine at this time.

Dividends. The Company paid no cash distributions to its stockholders during ~~2009~~2010 and ~~2008~~ 2009. However, the Company declared and paid $108,000 ~~and $85,140~~ in preferred stock dividends for ~~the~~each ~~year~~of the years ended December 31, ~~2009~~2010 and ~~2008, respectively~~2009. The Company is restricted by its loan agreement with ~~RBS~~ ~~Citizens d/b/a~~ Charter One from paying dividends on its common stock or making cash distributions to its stockholders and from paying dividends in excess of those regularly accruing on not more than two million dollars of preferred stock.

16Issuance of Common Stock. The Company did not issue common stock to its directors or employees during 2010 or 2009.

Issuance of ~~Common~~ Preferred Stock. In ~~December of 2008, the Board of Directors of the Company granted each of its five outside board members 9,615 shares of common stock valued at $0.26 per share.~~ The ~~total shares awarded of 48,075 were issued as partial compensation for their board participation in 2008. The~~ Company did not issue ~~common~~preferred ~~stock~~shares toduring ~~its~~2010 ~~directors~~or ~~during~~ 2009.

~~Issuance~~Purchases of ~~Preferred~~ Common Stock. The Company ~~sold~~did annot ~~aggregate~~purchase ofany ~~1,350~~ shares of its ~~Series~~ Acommon ~~Convertible~~stock ~~Preferred Shares~~ in a2010 private placement to a total of nine accredited investors during the first six months of 2008. All Series A Preferred Shares were sold at a price of $1,000 per share for a total of $1,350,000 with no underwriting discounts or ~~commissions, as no underwriters~~ ~~were used to facilitate the transactions. The Company did not issue Preferred Shares during~~ 2009.

~~Warrant to Purchase~~16 Stock. On June 20, 2008, the Company granted a warrant to purchase 50,000 shares of common stock to Richard M. Osborne in return for Mr. Osborne providing collateral for the Company’s credit facility with Charter One.

PurchasesTable of Common Stock. The Company did not purchase any shares of its common stock in 2009 or 2008.Contents

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

John D. Oil and Gas Company, formerly Liberty Self-Stor, Inc. is a corporation organized under the laws of the State of Maryland.

The Company ~~was~~entered ~~originally~~into athe ~~self-storage~~business ~~company~~of ~~from~~extracting ~~1999~~and toproducing ~~2005~~oil ~~when~~and itnatural ~~sold~~gas ~~all~~products ~~but~~during 2006. The Company currently has two ofsegments: ~~its~~one ~~facilities. By~~that ~~May~~is ~~2007,~~drilling and operating natural gas wells with oil as a by-product in Northeast Ohio and one composed of the remaining self-storage facility located in Painesville, ~~remained~~Ohio. ~~which~~The ~~generates~~Company ~~revenue~~cannot ~~through~~guarantee ~~self~~success under its business plan as drilling wells for oil and natural gas is a high-~~storage~~risk ~~rentals~~enterprise and there is no guarantee ~~retail~~the ~~leases~~Company will become profitable. InTo ~~2006~~date, the Company’s ~~entered~~oil ~~into~~and ~~the~~gas ~~business~~operations ofhave not been ~~extracting~~profitable. ~~and~~The ~~producing~~decline ~~oil~~in ~~and~~the overall market price of natural gas ~~products,~~over the last couple of years severely affected the viability of any future drilling ~~oil~~because ~~and~~our ~~natural~~lower cash flow makes it economically difficult to incur the ~~gas~~high ~~wells~~costs inof ~~Northeast~~drilling ~~Ohio~~a well. ~~The~~ ~~Company~~Additionally, ~~currently~~our ~~has~~production ~~two~~will ~~segments:~~continue to decline if the ~~one~~Company ~~composed~~is ofnot drilling any new wells. Although the ~~remaining~~oil ~~self-storage~~production ~~facility~~is ~~located~~profitable inwith ~~Painesville,~~the ~~Ohio~~higher ~~and~~oil ~~one~~market ~~that~~pricing, this revenue is ~~drilling~~not ~~oil~~enough ~~and~~to offset the lower natural gas ~~wells~~production ~~in Northeast~~and ~~Ohio~~operating expenses.

~~The Company~~Without ~~anticipates~~additional ~~continuing~~wells tobeing ~~slow~~drilled ~~its~~and ~~drilling program in 2010. The decline in~~ the ~~current~~Company’s ~~market~~substantial ~~price~~debt ~~severely~~financing, ~~affects~~ the Company ~~viability~~will ofcontinue ~~our~~to ~~drilling~~show ~~because~~losses ~~our~~and ~~lower~~be ~~cash~~unprofitable. ~~flow~~Therefore, ~~makes it economically difficult to incur~~ the ~~high~~Company ~~costs~~is ofconcerned ~~drilling~~about ~~a well. The Company~~its ~~cannot~~ ~~guarantee~~viability ~~success under our business plan~~ as ~~drilling wells for oil and natural gas is~~ a ~~high-risk~~going ~~enterprise and there is no guarantee the Company will become profitable~~concern.

~~The~~ As previously disclosed in the Company’s ~~recorded~~Form a8-K ~~loss~~filed on ~~its~~June 25, ~~books~~2010 ofwith ~~$588~~the Securities and Exchange Commission,~~309~~ toon June 18, 2010, the ~~Kykuit~~Company, ~~equity~~along with Mr. Osborne, the Richard M. Osborne ~~investment~~Trust, Great Plains and Oz Gas Ltd. ~~This~~ ~~loss~~(companies ~~represents~~owned anby ~~85%~~Mr. Osborne), ~~impairment~~have ofentered ~~the~~into ~~exploratory~~a ~~wells~~Forbearance onAgreement ~~Kykuit’s~~with ~~books~~Charter ~~with~~One pursuant to which Charter One agreed to forbear from enforcing its rights and remedies under the Company’s ~~partnership~~fully-drawn ~~percentage~~$9.5 million ~~applied~~line ~~before~~of credit as ~~tax~~well as the other parties’ loan agreements until July 1, 2011, subject to no further events of default including the payments due under the Forbearance Agreement. ~~The~~ ~~Company~~Pursuant ~~believes~~to ~~that~~the Forbearance Agreement and during the ~~Kykuit~~forbearance ~~investment~~period, ~~may~~the beparties must pay Charter One $400,000 per month, ~~profitable~~including a $40,000 ~~and~~per itmonth ~~could~~forbearance ~~recoup~~fee, ~~this~~until ~~write~~all amounts under the loan agreements have been paid in full. At December 31, 2010, the Loan Parties were in compliance with the required payments. See Note 5 “Line of Credit and Long-~~down~~Term Debt” to the Company’s consolidated financial statements for more information.

~~The Company~~Discussions ~~has~~with ~~been~~Charter One are ongoing and ~~still~~there is inno ~~the~~certainty ~~process~~that ofthese ~~attempting~~discussions towill result ~~renegotiate~~in ~~its $9.5~~satisfactory ~~million~~terms ~~and~~of ina ~~default~~revised ~~line~~loan ofagreement ~~credit~~or ~~for~~a ~~the~~revised loan agreement at all. If Charter One ~~loan~~demands ~~that~~repayment ~~matured August~~of 1,the ~~2009. However,~~outstanding asamounts ~~discussed~~payable inat ~~“Legal~~the ~~Proceedings”~~end inof ~~this~~the forbearance ~~Form~~period, ~~10-K~~the ~~and~~Company indoes ~~Note~~not 5have ~~“Line~~the available cash to repay the line of ~~Credit~~credit and ~~Long~~will ~~Term~~need financing ~~Debt”~~from toother ~~the~~sources ~~Consolidated Financial~~to ~~Statements,~~repay Charter One. ~~has~~If ~~received~~alternative afinancing ~~judgment~~is ~~against~~not available, the Company will default and may be unable to continue operations.

~~Critical~~During August 2009, Liberty Self Stor, LTD defaulted on its $1.2 million loan from First Merit ~~Accounting~~Bank, ~~Policies~~N.A. On May 11, 2010, Liberty Self Stor, LTD and First Merit Bank signed a loan modification agreement which waived the prior defaults. The terms of the mortgage include a five year term, maturing on June 1, 2014, with a ten year amortization period at a variable rate of the 30 day LIBOR plus 250 basis points. Monthly payments include principal of $10,370 plus interest.

~~The Company’s~~Critical ~~discussion~~Accounting ~~and analysis of its financial condition and results of~~Policies operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. A “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company believes the following critical accounting policies present our more significant judgments and estimates used in the preparation of our consolidated financial statements.

17The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. A “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company believes the following critical accounting policies present our more significant judgments and estimates used in the preparation of our consolidated financial statements.

~~Principles of~~17 ~~Consolidation~~

Pursuant toTable the terms of the partnership agreement of LSS I, the Company, as sole general partner, controls LSS I. Accordingly, the Company accounts for its investment in LSS I utilizing the consolidation method. The investment in an unconsolidated affiliate, Kykuit, is accounted for using the equity method. All significant inter-company transactions and balances have been eliminated.Contents

~~Accounts~~Principles of Consolidation ~~Receivable~~

~~The Company~~Pursuant ~~has~~to ~~certain~~the ~~trade~~terms ~~receivables consisting~~ of ~~oil~~the ~~and~~partnership ~~natural~~agreement ~~gas~~of ~~sale obligations~~LSS ~~due~~I, ~~under~~the ~~normal trade terms. The~~ Company, ~~currently~~as ~~sells its~~sole ~~production~~general ~~to a related party through an oil and natural gas agreement~~partner, ~~extending~~controls ~~credit~~LSS ~~on an unsecured basis to them~~I. In ~~evaluating its allowance for possible losses~~Accordingly, the Company ~~performs~~accounts afor ~~review~~its ofinvestment ~~outstanding receivables. The~~in ~~trade~~LSS ~~receivables~~I ~~outstanding~~utilizing ~~are typically three~~the ~~months~~consolidation ofmethod. ~~natural~~The ~~gas~~investment ~~production~~in ~~due~~an tounconsolidated ~~the~~affiliate, ~~timing~~Kykuit, ~~and~~is ~~accounting~~accounted ~~treatment by~~for using the ~~main~~equity ~~distribution~~method. ~~pipeline~~All significant inter-company intransactions ~~Northeast Ohio. At December 31, 2009~~ and ~~2008,~~balances ~~the~~have ~~Company’s~~been eliminated. ~~credit~~The ~~evaluation~~well ~~indicated~~in ~~that~~Lucky itBrothers ~~has~~is noaccounted ~~need~~ for anas ~~allowance~~a ~~for~~joint ~~possible~~interest ~~losses~~venture.

~~The Company’s~~Accounts ~~accounts receivable, arising from the self-storage business, are due~~Receivable from individuals as well as business entities. Tenants are required to pay their rent on the first of each month. Past due amounts are those that are outstanding longer than the contractual payment terms. If an account is more than 75 days past due, the Company generally writes off the balance directly to expense. For such past due accounts, the Company has the right to auction the contents of the rented space, which allows for recovery of written-off balances. Any such recoveries are credited to income when received.

~~Property~~The Company has certain trade receivables consisting of oil and natural gas sale obligations due ~~Equipment~~under normal trade terms. The Company currently sells its production to a related party through an oil and natural gas agreement, extending credit on an unsecured basis to them. In evaluating its allowance for possible losses, the Company performs a review of outstanding receivables. The trade receivables outstanding are typically three months of natural gas production due to the timing and accounting treatment by the main distribution pipeline company in Northeast Ohio and related party accounting treatments. At December 31, 2010 and 2009, the Company’s credit evaluation indicated that it has no need for an allowance for possible losses and had no such losses in 2010 and 2009.

~~All property~~The ~~and~~Company’s ~~equipment~~accounts isreceivable, ~~depreciated~~arising ~~using~~from the ~~straight~~self-~~line~~storage ~~method~~business, ~~over~~are due from individuals ~~estimated~~as ~~useful~~well ~~lives~~as business entities. Tenants are required to pay their rent on the first of ~~twenty~~each ~~five~~month. Past ~~years~~due ~~for~~amounts ~~buildings~~are ~~and~~those ~~improvements~~that ~~and~~are outstanding longer than the contractual payment terms. If an ~~five~~account is more than 75 days past due, the Company generally writes off the balance directly to expense. ~~seven~~For ~~years~~such past due accounts, the Company has the right to auction the contents of the rented space, which allows for ~~furniture~~recovery of written-off balances. Any such recoveries are credited to income when received. Approximately, $2,000 of bad debt expense was incurred in 2010 and ~~equipment~~2009.

~~The Company~~Property ~~uses the successful efforts method of accounting for oil~~ and ~~natural gas~~Equipment producing activities. Under this method, acquisition costs for proved and unproved properties are capitalized when incurred. Exploration costs, including geological and geophysical costs, the costs of carrying and retaining unproved properties and exploratory dry hole drilling costs, are expensed. Development costs, including the costs to drill and equip development wells and successful exploratory drilling costs to locate proved reserves, are capitalized. Upon sale or retirement of a proved property, the cost and accumulated depreciation and depletion and amortizations are eliminated from property accounts and the resultant gain or loss is recognized.

~~Exploratory drilling~~All ~~costs~~property ~~are~~and ~~capitalized~~equipment ~~when incurred pending the determination of whether a well has found proved reserves. If a well~~ is ~~determined~~depreciated tousing ~~be successful,~~ the ~~capitalized~~straight-line ~~drilling~~method ~~costs~~over ~~will~~estimated ~~be reclassified as part of the~~useful ~~cost~~lives of ~~the~~twenty ~~well.~~five Ifyears afor ~~well~~buildings isand ~~determined~~improvements toand befive ~~unsuccessful, the capitalized drilling costs will be charged~~ to ~~expense~~seven inyears ~~the~~for ~~period~~furniture the determination is made. The Company is involved in exploratory drilling only to the extent that it is a partner of Kykuit, which is doing exploratory drilling in Montana. The Company is an owner and ~~managing member of Kykuit, an~~ ~~unconsolidated affiliate~~equipment.

~~Development~~The ~~costs~~Company uses the successful efforts method of ~~proved~~accounting for oil and natural gas producing activities. Under this method, acquisition costs for proved and unproved properties are capitalized when incurred. Exploration costs, including ~~estimated~~geological ~~dismantlement,~~and ~~restoration~~geophysical costs, ~~abandonment~~ the costs of carrying and ~~acquisition~~retaining unproved properties and exploratory dry hole drilling costs, are ~~depreciated~~expensed. Development ~~and~~costs, ~~depleted~~including onthe acosts ~~well by~~to ~~well~~drill ~~basis~~and byequip ~~the~~development ~~units-of-production~~wells ~~method~~and ~~using~~successful exploratory ~~estimated~~drilling costs to locate proved ~~developed~~ reserves, are capitalized. ~~The~~ ~~costs~~Upon sale or retirement of a ~~oil~~proved property, the cost and ~~natural~~accumulated ~~gas~~depreciation ~~properties~~and depletion and amortizations are ~~periodically~~eliminated ~~assessed~~from ~~for~~property ~~impairment~~accounts and the resultant gain or loss is recognized.

~~Asset~~Exploratory drilling costs are capitalized when incurred pending the determination of whether a ~~Impairment~~well has found proved reserves. If a well is determined to be successful, the capitalized drilling costs will be reclassified as part of the cost of the well. If a well is determined to be unsuccessful, the capitalized drilling costs will be charged to expense in the period the determination is made. The Company is involved in exploratory drilling only to the extent that it is a partner of Kykuit, which is doing exploratory drilling in Montana. The Company is an owner and managing member of Kykuit, an unconsolidated affiliate.

~~The Company~~Development ~~reviews~~costs ~~its~~of ~~self-storage~~proved ~~property~~oil and ~~capitalized~~natural ~~well~~gas ~~costs for impairment when events or changes in circumstances indicate the carrying amounts of the~~ properties, ~~may~~including ~~not~~estimated ~~be recoverable. When such conditions exist~~dismantlement, ~~management~~restoration, ~~estimates~~abandonment ~~future~~costs ~~cash flows from operations~~ and ~~ultimate~~acquisition ~~disposition of~~costs, ~~the individual properties. If the estimated undiscounted future cash flows~~ are ~~less~~depreciated ~~than~~and ~~the~~depleted ~~carrying~~on ~~amount~~a ofwell ~~the asset, an adjustment to~~by ~~reduce~~well ~~the~~basis ~~carrying~~by ~~amount to~~ the ~~related~~units-of-production ~~property’s~~method using estimated ~~fair~~proved ~~market~~developed ~~value would be recorded and an impairment loss would be recognized~~reserves. The ~~Company~~ ~~wrote off the~~ costs of ~~related~~oil ~~to one well amounting to $145,444 in 2009~~ and ~~two~~natural ~~wells~~gas ~~amounting~~properties toare ~~$491,224~~periodically inassessed ~~2008~~for impairment.

18Asset Impairment

~~Asset~~The ~~Retirement~~Company reviews its self-storage property and capitalized well costs for impairment when events ~~Obligation~~or changes in circumstances indicate the carrying amounts of the properties may not be recoverable. When such conditions exist, management estimates future cash flows from operations and ultimate disposition of the individual properties. This income approach to determine the fair value of these assets is based on level 3 inputs, including estimated reserve quantities, gas prices, operating costs and discount rates. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related property’s estimated fair market value would be recorded and an impairment loss would be recognized. The Company wrote off $-0- in 2010 and the costs related to one well amounting to $145,444 in 2009.

~~The~~18 Company accounts for its asset retirement obligations in accordance with generally accepted accounting principles in the United States of America (“GAAP”) which requires the fair value of an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. For the Company, asset retirement obligations primarily relate to the abandonment, dismantling and plugging of oil and natural gas wells. The present value of the estimated asset retirement cost is capitalized as part of the long-lived asset. The capitalized asset retirement cost is depreciated and the asset retirement obligation is accreted over the estimated life of the well. The current portion of the asset retirement obligation as of December 31, 2009 and 2008, was $0 and $30,000, respectively and is included in accrued expenses. The Company plugged two wells during 2009 and four wells during 2008.

Revenue RecognitionTable of Contents

~~The Company~~Asset ~~recognizes~~Retirement ~~revenue from its oil and natural gas interests in producing~~Obligation wells as oil and natural gas is sold to a purchaser at a fixed or determinable price when delivery has occurred, title and risk of loss have transferred to the purchaser and the collectability of revenue is reasonably assured. The Company has a management agreement with a related party to transport the Company’s natural gas production through the related party’s pipeline and include this natural gas with the related party’s natural gas in order to fulfill production contracts they currently have in place. The actual funds are typically received within three months due to the accounting treatment by the main distribution pipeline company in Northeast Ohio.

~~Income~~The Company accounts for its asset retirement obligations in accordance with generally accepted ~~Taxes~~accounting principles in the United States of America (“GAAP”) which requires the fair value of an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. For the Company, asset retirement obligations primarily relate to the abandonment, dismantling and plugging of oil and natural gas wells. The present value of the estimated asset retirement cost is capitalized as part of the long-lived asset. The capitalized asset retirement cost is depreciated and the asset retirement obligation is accreted over the estimated life of the well. The Company plugged no wells in 2010 and two wells during 2009.

~~Effective January~~Revenue ~~1, 2006, the Company became a “C” Corporation for tax~~Recognition ~~purposes.~~

InThe Company recognizes revenue from its oil and natural gas interests in producing wells as oil and ~~establishing~~natural gas is sold to a ~~provision~~purchaser ~~for~~at ~~income~~a ~~taxes~~fixed or determinable price when delivery has occurred, title and risk of loss have transferred to the purchaser and the collectability of revenue is reasonably assured. The Company ~~must~~has ~~estimate~~a ~~when~~management inagreement with a related party to transport the ~~future~~Company’s ~~certain~~natural ~~items~~gas ~~will~~production ~~affect~~through ~~taxable~~the ~~income. Deferred~~related ~~taxes~~party’s ~~are recorded~~pipeline ~~for~~and ~~future~~include ~~tax~~this ~~consequences~~natural ofgas with ~~events~~the ~~that~~related ~~have~~party’s ~~been~~natural ~~recognized~~gas in ~~the~~order to fulfill production volume contracts they currently ~~financial~~have ~~statements~~in orplace. ~~tax~~The ~~returns,~~Company ~~based~~utilizes ~~upon~~the ~~enacted~~sales ~~tax~~method ~~laws~~to ~~and~~account for gas production volume ~~rates~~imbalances. ~~Deferred~~ ~~tax~~Under ~~assets~~this ~~are~~method, revenue is recognized ~~subject~~only towhen ~~management~~gas is produced and sold on the Company’s ~~judgment~~ ~~that~~behalf. ~~realization~~The isCompany ~~more~~had ~~likely~~no ~~than~~material ~~not~~gas imbalances at December 31, 2010.

~~The Company~~Income ~~has net operating loss carry forwards (NOLS) and a valuation allowance~~Taxes to offset any tax effects. The Company has no unrecognized tax benefits and therefore, there was no effect on the Company’s effective tax rate. Any tax penalties or interest expense will be recognized in income tax expense. No interest and penalties were accrued as of December 31, 2009 or 2008, or paid during the periods then ended. The Company does not anticipate a significant change over the next twelve months to any tax liability.

~~The Company~~Effective isJanuary 1, ~~open to federal and state tax audits until the applicable statute of limitations expire. There are currently no federal or state income tax examinations underway for the Company. The tax years~~ 2006 ~~through 2009 remain open to examination by the major taxing jurisdictions in which we operate~~, ~~although no material changes to unrecognized tax positions are expected within~~ the ~~next twelve months. The~~ Company ~~does,~~became ~~however,~~a ~~have~~“C” ~~prior year~~Corporation ~~net operating losses which remain open~~ for ~~examination~~tax purposes.

~~Liquidity~~In establishing a provision for income taxes, the Company must estimate when in the future certain items will affect taxable income. Deferred taxes are recorded for future tax consequences of events that have been recognized in the financial statements or tax returns, based upon enacted tax laws and ~~Capital~~rates. ~~Resources~~Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not.

~~Liquidity~~The Company has net operating loss carry forwards (NOLS) and a valuation allowance to offset any ~~represents~~tax effects. The Company has no unrecognized tax benefits and therefore, there was no effect on the Company'’s ~~ability~~effective totax ~~generate~~rate. ~~sufficient~~Any ~~amounts~~tax ofpenalties ~~cash~~or tointerest ~~meet~~expense will be recognized in ~~its~~income ~~financial~~tax ~~commitments~~expense. ~~The~~ ~~Company~~No ~~believes~~interest ~~that~~and ~~cash~~penalties ~~flow~~were ~~from~~accrued as of December 31, 2010 or 2009, or ~~operating~~paid ~~and~~during ~~financing~~the ~~activities~~periods ~~will~~then ended. The Company does not beanticipate ~~sufficient~~a tosignificant ~~meet~~change ~~its~~over the ~~anticipated~~next ~~operating~~twelve ~~requirements~~months onto aany ~~short-term~~tax ~~basis~~liability.

The Company ~~requires~~is ~~substantial~~open ~~capital expenditures~~ to ~~maintain~~federal and~~/or~~ ~~grow production~~state ~~and~~tax ~~reserves. We~~audits ~~depend~~until onthe ~~debt~~applicable orstatute ~~equity~~of ~~financing~~limitations expire. toThere ~~pay for~~are ~~exploration~~currently ~~and~~no ~~operations. The~~federal ~~current~~or ~~economic~~state ~~environment makes~~income ittax ~~more~~examinations ~~difficult~~underway tofor ~~obtain~~the ~~debt~~Company. The ortax ~~equity~~years ~~financing~~after on2007 ~~acceptable~~remain ~~terms~~ open to ~~address~~examination ~~our~~by ~~liquidity~~the ~~issues. Capital~~major ~~may~~taxing ~~not~~jurisdictions ~~continue~~in towhich bewe ~~available~~operate, ifalthough ~~necessary~~no material changes to ~~meet~~unrecognized ~~these~~tax ~~continuing~~positions ~~costs,~~are orexpected ifwithin ~~capital~~the isnext ~~available~~twelve months. The Company does, ithowever, ~~may~~have ~~not~~prior beyear onnet ~~terms~~operating ~~acceptable~~losses towhich usremain open for examination.

19Liquidity and Capital Resources

~~The Company’s~~Liquidity ~~$9.5~~represents ~~million line of credit with Charter One matured on August 1, 2009. On August 20, 2009, Charter One received a judgment in its favor against~~ the Company,’s ~~Mr.~~ability ~~Osborne~~to ~~and~~generate ~~the~~sufficient ~~Richard~~amounts ~~M. Osborne Trust, jointly and severally for $9.5 million plus interest and late charges. If the Company is unsuccessful in refinancing the line~~ of ~~credit~~cash orto ifmeet ~~it is~~its ~~unsuccessful~~financial incommitments. ~~obtaining~~The ~~substitute financing, there is substantial doubt about the~~ Company’s ~~ability~~cash toflow ~~continue~~from asoperating aand ~~going~~financing ~~concern. Charter~~activities ~~One~~will ~~has~~not ~~requested~~be ~~that~~sufficient ~~the~~to ~~court~~meet ~~appoint~~its aanticipated ~~receiver~~operating ~~for~~requirements ~~the~~in ~~Company. A hearing on~~ the ~~appointment~~ offoreseeable ~~a receiver is currently scheduled for April 16, 2010~~future.

~~Additionally, the~~The Company ~~received~~requires asubstantial ~~letter~~capital ~~dated~~expenditures ~~August~~to ~~24,~~maintain ~~2009~~and/or ~~from~~grow ~~First~~production ~~Merit Bank, N.A.,~~and ~~the holder of the $1~~reserves.2 ~~million~~We ~~mortgage~~depend on ~~the~~debt ~~Painesville~~or ~~self-storage~~equity ~~property owned~~financing byto ~~LSS~~pay Ifor inexploration ~~which~~and ~~the Company has 29~~operations.9% ~~minority interest.~~ The ~~letter~~current ~~from~~economic ~~First~~environment ~~Merit~~makes ~~Bank,~~it ~~N.A.~~more ~~constituted formal notice to LSS I that,~~difficult ~~pursuant~~ to ~~cross-default~~obtain ~~provisions~~debt ~~contained~~or inequity ~~the~~financing ~~mortgage~~on ~~documents, certain~~acceptable ~~defaults,~~terms ~~including~~to ~~defaults~~address ~~under~~our Mrliquidity issues. ~~Osborne’s debt with First Merit~~Capital ~~and~~may ~~the~~not ~~Charter One judgment discussed above, must~~ be ~~cured~~available ~~within~~to ~~five~~meet ~~days~~these ~~or the~~continuing ~~mortgage would become accelerated~~costs, ~~without~~or ~~further~~if ~~notice~~capital oris ~~demand~~available, ~~and fully~~it ~~due~~may ~~and~~not ~~payable. LSS~~be ~~I had been current with its payments~~ on ~~the~~terms ~~mortgage. However,~~acceptable ~~LSS I does not have the available cash~~ to ~~repay~~ ~~the mortgage~~us.

~~The~~19 Company is still negotiating with Charter One and First Merit. However, if the defaults with the First Merit mortgage are not cured, the Company could lose its investment in LSS I, including the Painesville property. If the Company is unsuccessful in refinancing the line of credit or if the Company is unsuccessful in obtaining substitute financing, there is substantial doubt about the Company’s ability to continue as a going concern.

TheTable items affecting operating cash flow and cash and cash equivalents are discussed more fully in the “Material Changes in Results of Operations” section.Contents

The Company’s ~~current assets decreased~~ $~~1,030,934 or 64~~9.~~7%,~~5 million toline ~~$562,127~~of atcredit ~~December~~with ~~31,~~Charter ~~2009~~One ~~from~~matured $on August 1,~~593,061~~ ~~at December 31, 2008~~2009. ~~Current~~ ~~assets~~On ~~at December 31~~August 20, 2009 ~~were lower than at December 31~~, ~~2008~~Charter ~~largely~~One ~~due~~received toa ~~the~~judgment ~~decrease~~ in ~~accounts~~its ~~receivable~~favor ~~from~~against ~~related~~the ~~parties which~~Company, ~~was~~Mr. Osborne ~~affected~~and by the Richard ~~lower~~M. ~~pricing~~Osborne ofTrust, ~~natural~~jointly ~~gas~~ and ~~oil~~severally ~~production~~for ~~in 2009~~$9.5 million ~~and~~plus ~~the~~interest ~~receipt~~and oflate ~~advance funds from Great Plains toward production receivables~~charges.

~~The Company’s~~On ~~current~~June 18, ~~liabilities~~2010, ~~decreased~~the ~~$767~~Company,~~247,~~ oralong 6with Richard M.4% ~~to $11~~Osborne,~~261~~ the Trust,~~976~~ atGreat ~~December~~Plains ~~31,~~and ~~2009~~Oz Gas Ltd. (companies owned by Mr. Osborne), have entered into a Forbearance Agreement with Charter One pursuant to which Charter One will forbear from ~~$12~~enforcing its rights and remedies under the Company’s line of credit as well as the other parties’ loan agreements until July 1,~~029~~ 2011,~~223~~ atsubject ~~December~~to ~~31,~~no ~~2008. The~~further ~~decrease~~events isof ~~largely~~default including the ~~result~~payments ofdue ~~payment~~under ~~of outstanding~~the ~~accounts~~Forbearance ~~payable~~Agreement.

The Company, ~~had a positive cash flow from operating activities of $865~~Mr. Osborne,~~896~~ ~~for~~ the ~~year ended December 31~~Trust, ~~2009~~ ~~compared~~Great toPlains aand ~~positive~~Oz ~~cash~~Gas ~~flow~~are ofcollectively ~~$1,920,860~~referred ~~for~~to ~~the year ended December 31, 2008. The decrease~~ in ~~cash flow provided by operating activities was largely~~the ~~due~~Forbearance toAgreement ~~payment~~and ofherein ~~outstanding~~as ~~accounts~~the ~~payable~~“Loan Parties.”

~~The~~Under ~~Company had a negative cash flow from investing activities of $696,252 for~~ the ~~year~~Forbearance ~~ended December 31~~Agreement, ~~2009~~Charter ~~compared~~One’s agreement to aforbear ~~negative~~is ~~cash~~conditioned ~~flow~~upon ofand ~~$2,994,016 for the year~~subject ~~ended December 31, 2008. The year ended 2008 was higher due~~ to ~~higher expenditures~~the ~~for~~following ~~drilling new oil and natural gas wells.~~conditions:

~~The Company~~• ~~had~~Payment aby ~~negative~~the ~~cash~~Loan ~~flow~~Parties ~~from financing activities~~ of ~~$225,873 for the year ended December 31, 2009 compared to~~ a ~~positive~~forbearance ~~cash~~fee ~~flow~~ of $140,~~120,978~~000 ~~for~~per ~~the year~~month ~~ended~~during ~~December 31, 2008. The positive cash flow for~~ the ~~year~~forbearance ~~ended December 31, 2008 was largely due to the receipt of proceeds from a private stock offering.~~period;

~~The following~~• ~~table~~No ~~sets~~material ~~forth~~adverse ~~the~~change ~~maturity~~in ~~dates and~~ the ~~total~~condition of the ~~Company’s long-term~~Loan ~~debt and line of credit as of December 31, 2009, as well as future commitments under the Company’s office space lease.~~Parties;

	Payments Due by Period
Contractual Obligations	Less than 1 year		1-3 years		4-5 years		Total
Long-Term Debt	$	1,145,174	$	-	$	-	$	1,145,174
Line of Credit		9,497,024		-		-		9,497,024
Operating Lease*		24,000		30,000		-		54,000
Total Contractual Cash Obligations	$	10,666,198	$	30,000	$	-	$	10,696,198

•

An assignment and grant of a security interest by the Company and Great Plains of each of their ownership interests in the Alpha and Panzica wells;

20• A pledge by the Loan Parties of their ownership interests in Kykuit Resources LLC ; and

*The operating• ~~lease~~A ~~for~~pledge ~~office space is leased from OsAir, Inc., a company owned~~ by Mr. Osborne~~. The~~ ~~lease~~of ~~was~~not ~~extended~~less ~~for~~than a800,000 ~~three~~shares ~~year~~of ~~term~~common onstock ~~March 26,~~of ~~2009~~Gas atNatural ~~$2,000~~Inc. ~~per~~with ~~month~~such ~~from~~stock ~~$1,350~~having ~~per~~a ~~month,~~market ~~through~~value ~~April~~of 1,not ~~2012,~~less ~~which is~~than ~~reflected~~$9.6 inmillion ~~the~~pursuant ~~above~~to ~~table~~a pledge agreement.

In addition, commencing July 1, 2010 and each month thereafter until all amounts under the judgments and loan agreements have been paid in full, the Loan Parties shall pay Charter One $400,000, including the $40,000 forbearance fee. The ~~items~~Company had previously felt they would pay ~~affecting~~one ~~operating~~third of the $400,000, but due to lack of cash, ~~flow~~they have decided to accrue interest and ~~cash~~one third of the $40,000 monthly fee and ~~cash~~legal ~~equivalents~~fees. ~~are~~The ~~discussed~~monthly ~~more~~$400,000 is being paid by the other ~~fully~~Loan Parties. Such payments by the Loan Parties shall be applied first to Charter One’s fees and expenses, second to accrued but unpaid interest due under the judgments, and third to principal amounts due under the judgments. Charter One has applied a default rate to the loan from January 4, 2010 thru June 18, 2010. The Company does not agree with the default rate and therefore has not booked approximately $171,000 of additional interest expense. It is the Company’s position that the interest for the period from judgment date to forbearance date should remain at the original contract rate at the date of judgment, based upon the per diem interest amount expressly stated in that judgment. Attorneys for the ~~“Material~~Company ~~Changes~~also support that position and have so stated in ~~Results~~letters to Charter One and for purposes of ~~Operations”~~the ~~section~~annual audit. Charter One contends that the judgments will bear interest at LIBOR plus 1.75% with a LIBOR floor of 3.00%. The Company believes that there is an interest rate cap of 3.00%. The parties are in discussions regarding the applicable interest rate. If the Loan Parties repay $10 million and if after application of such repayment the outstanding balance of the judgments does not exceed 65% of the current producing reserve value (as that term is defined in the Loan Agreements) of the Company, Great Plains and Oz Gas, then the pledge of Mr. Osborne’s Kykuit interests and his Gas Natural Inc. shares shall be released. In addition, the Company must deposit all proceeds of its operations into accounts maintained by Charter One but during the forbearance period Charter One will not take any action to set off funds in any such account.

~~Material~~The forbearance period is effective until July 1, 2011, subject to the earlier termination upon the ~~Changes~~occurrence inof ~~Results~~any events of ~~Operations~~default by any of the Loan Parties, including non-payment of any amounts due by any of the Loan Parties under the Forbearance Agreement. See Note 5 “Line of Credit and Long-Term Debt” to the Company’s consolidated financial statements for more information.

~~Revenues~~Discussions with Charter One are ongoing but there is no certainty that these discussions will ~~from~~result ~~Operations~~in satisfactory terms for a revised loan agreement.

~~Total~~20 revenues from operations decreased $838,268, or 17.2%, to $4,045,245 for the year ended December 31, 2009, compared to $4,883,513 for the same period in 2008. Although the Company has contracts for prices higher than the current market, the current contracts are lower than the previous year’s contracts. Therefore, the decrease is due to lower prices for natural gas and oil production in 2009 offset partially by increased production from more wells going on line.

Expenses fromTable Operationsof Contents

~~Total operating~~Because ~~expenses decreased $352,630, or 5.0%, to $6,741,490 for~~ the ~~year~~Company ~~ended December~~does ~~31,~~not ~~2009~~have ~~from $7,094,120 for~~ the ~~same~~available ~~period~~cash ~~in 2008. This decrease is primarily attributable~~ to arepay ~~decrease~~the inline ~~depreciation~~of credit, ~~depletion~~if ~~and amortization and impairment expenses compared to~~ the ~~same period in~~required ~~2008. Additionally~~payments ~~interest~~are ~~expense~~not ~~decreased~~made ~~with~~by the ~~swap~~Company ~~maturing and~~or ~~lower~~any ~~interest~~of ~~rates~~the inother ~~2009~~Loan ~~than 2008~~Parties, asor ~~well~~other ~~as,~~events ~~salary~~of ~~expense~~default ~~decreasing~~occur, inunder ~~general~~the ~~and~~Forbearance ~~administrative~~Agreement ~~expenses~~or ~~due~~if prior to ~~staff~~the ~~reductions~~end ~~in 2009. These~~of ~~decreases~~the ~~were~~forbearance ~~partially~~period ~~offset~~the ~~by increased legal and~~Company ~~professional~~is ~~expense~~unsuccessful in ~~2009~~refinancing ~~compared~~its toline ~~2008~~of ~~due~~credit towith ~~the payment to~~ Charter One of ~~$50,000~~or ~~for~~if ~~a third party to review~~ the ~~books~~Company ~~and~~is unsuccessful ~~operations~~in ofobtaining ~~the~~substitute ~~Company and~~financing, ~~legal~~there ~~fees~~is assubstantial ~~part~~doubt ofabout the ~~line of credit loan negotiations. Also,~~Company’s ~~the~~ability ~~loss~~to ~~for~~continue ~~the~~as ~~unconsolidated affiliate, Kykuit, included~~ a ~~write-down~~going ~~on the equity investment of $588,309~~concern.

~~Interest expense~~During ~~decreased $133~~August 2009,~~396,~~ orLiberty ~~22.9%,~~Self ~~to $448~~Stor,~~558~~ ~~for~~LTD ~~the~~defaulted ~~year~~on ~~ended~~its ~~December 31, 2009 compared to~~ $~~581,954 for the same period in 2008~~1. ~~Interest~~2 million ~~expense was~~loan ~~lower~~from inFirst ~~2009 partially due to the maturity of the swap agreement in August~~Merit ~~2009~~Bank, ~~and lower interest rates in 2009 compared to 2008~~N.A.

~~Accretion~~On May 11, 2010, Liberty and First Merit signed a loan modification agreement which waived the ~~expense~~prior ~~for~~defaults and continued the ~~year~~terms ~~ended~~set ~~December~~forth 31under the original loan commitment letter dated March 25, 2009 ~~was~~for ~~$45,905~~the ~~compared~~Painesville tofacility. ~~$44~~Those terms include a five year term,~~742~~ ~~for~~maturing on ~~the~~June 1, ~~same~~2014, with a ten year amortization period inat ~~2008~~a variable rate of the 30 day LIBOR plus 250 basis points. Monthly payments include principal of $10,370 plus interest.

~~Oil~~The ~~and natural~~items ~~gas~~affecting ~~production~~operating ~~costs~~cash ~~increased~~flow ~~$111,507,~~and orcash ~~19.4%,~~and tocash ~~$687,182~~equivalents ~~for~~are ~~the year~~discussed ~~ended~~more ~~December~~fully ~~31, 2009 compared to $575,675 for the same period~~ in ~~2008. The increase is primarily~~ the ~~result~~“Material ofChanges ~~an increase~~ in ~~water hauling~~Results ~~and payment~~ of ~~county~~Operations” ~~production taxes in 2009 compared to 2008~~section.

~~Legal~~The ~~and professional~~Company’s ~~fees~~current ~~increased~~assets decreased $~~122~~46,~~912,~~487 or 508.23%, to $~~367~~515,~~854~~640 ~~for~~at ~~the year ended~~ December 31, ~~2009~~2010 ~~compared to~~ from $~~244~~562,~~942~~127 ~~for~~at ~~the~~December 31, ~~same period in 2008~~2009. ~~The~~ ~~increase~~Current ~~is partially~~assets ~~due~~at toDecember 31, ~~the~~2010 ~~payment~~were tolower ~~Charter~~than ~~One~~at ~~of $50~~December 31,~~000 for a third party to~~ ~~review~~2009 ~~the~~largely ~~books and operations of the Company as part of the line of credit loan audit and partially~~ due to ~~additional legal expenses relating to~~ the ~~Charter~~ ~~One~~decrease ~~loan~~in ~~negotiations~~accounts receivable.

~~Property taxes~~The ~~and~~Company’s ~~insurance~~current ~~expenses~~liabilities decreased $22955,~~109~~755, or 138.95%, to $~~137~~10,~~492~~306,221 ~~for~~at ~~the~~December 31, 2010, ~~year~~from ~~ended~~$11,261,976 ~~December~~at December 31, 2009. ~~compared~~The todecrease ~~$159,601~~is ~~for~~primarily ~~the~~due ~~same~~to ~~period~~moving ~~in 2008. While~~the Painesville property ~~taxes~~loan ~~increased,~~from ~~insurance~~current ~~expense~~liabilities ~~decreased when~~to ~~the~~long ~~Company~~term ~~did~~debt ~~not~~after ~~renew~~settling ~~its~~with ~~Directors~~First ~~and~~Merit ~~Officers~~Bank ~~insurance plan in 2009~~N.A..

~~General and~~The ~~administrative~~Company ~~expenses~~had ~~decreased~~a ~~$122,754,~~positive orcash ~~13.9%,~~flow tofrom operating activities of $~~762~~426,~~982~~710 for the year ended December 31, ~~2009~~2010 compared to a positive cash flow of $~~885~~865,~~736~~896 for the ~~same~~year ~~period~~ended ~~in 2008.~~December 31, 2009. The ~~decrease~~decreased inpositive ~~general and~~cash ~~administrative~~flow ~~expenses~~ is ~~largely~~a ~~due~~result toof aless ~~decrease~~cash incollected ~~employees,~~on ~~although~~accounts receivable ~~corporate~~in ~~office~~2010 ~~rent~~as compared to 2009, ~~meals~~net ~~and~~of ~~entertainment~~fewer ~~and~~accounts ~~travel~~payable ~~expense~~paid ~~increased slightly~~in 2010 than in 2009.

OnThe ~~June 20, 2008, the~~ Company ~~granted~~had a ~~warrant~~negative tocash ~~purchase~~flow ~~50,000~~from ~~shares~~investing activities of ~~common stock~~$223,160 (for the ~~“Warrant”)~~year toended December 31, ~~Richard~~2010 M.compared ~~Osborne~~to ina ~~return~~negative ~~for~~cash ~~Mr.~~flow ~~Osborne~~of ~~providing collateral~~$696,252 for the ~~Company’s~~year ~~credit~~ended ~~facility with Charter One~~December 31, 2009. The ~~Warrant~~ ~~has~~year anended ~~exercise~~2010 ~~price~~improved ofcompared ~~$1.00~~to ~~per~~2009 ~~share~~largely ~~and~~due ato ~~term~~reduced ofcash ~~five~~investments in ~~years. The~~Kykuit ~~fair~~and ~~value~~in ofoil ~~the~~and ~~warrant~~natural ~~was~~gas ~~approximately $48~~wells,~~000~~ atnet ~~the date~~ of ~~grant,~~additional ~~estimated~~property ~~using~~and ~~the~~equipment ~~Black-Scholes-Merton~~purchases ~~option~~in ~~pricing model.~~2010 ~~The~~as ~~Company~~compared ~~has~~to ~~not granted any other warrants during~~ 2009.

21The Company had a negative cash flow from financing activities of $205,606 for the year ended December 31, 2010 compared to a negative cash flow of $225,873 for the year ended December 31, 2009. The negative cash flow for the year ended December 31, 2010 decreased largely due to the receipt of loan funds for a new vehicle.

~~Loss~~The ~~from unconsolidated~~following ~~affiliate~~table ~~expense~~sets ~~increased~~forth ~~$621,793~~the tomaturity ~~$650,420~~dates ~~for~~and the ~~year ended~~total ~~December~~of ~~31,~~the ~~2009~~Company’s ~~compared~~long-term todebt ~~$28,627~~and line ~~for~~of ~~the~~credit ~~same~~as ~~period~~of ~~in 2008. Kykuit expenses~~December 31, ~~increased $33~~2010,~~484~~ ~~largely~~as ~~due~~well toas ~~expensing~~future ~~expired~~commitments ~~leases~~under ~~in Montana. The remainder of~~ the ~~increase~~Company’s ~~was due to recording a loss on~~office ~~the~~space ~~investment of $588,309~~lease.

Bad debt expense for the year ended December 31, 2009 was $2,157 compared to $43,517 for the same period in 2008. The Company typically writes off a minimal amount of receivables in the self-storage business. However, the Company wrote off a receivable of $40,027 for a retail lease in the Painesville facility in the second quarter of 2008 that appeared unlikely the Company would be able to collect.


	Payments Due by Period
	Less than 1
Contractual Obligations	Year		1-3 years		4-5 years		Total
Long-Term Debt	$	136,812	$	274,709	$	652,884	$	1,064,405
Line of Credit		9,480,187		—		—		9,480,187
Operating Lease*		24,000		6,000		—		30,000


Total Contractual Cash Obligations	$	9,640,999	$	280,709	$	652,884	$	10,574,592

~~Impairment and~~* ~~dry~~The ~~well~~operating ~~costs~~lease ~~from operations~~ for ~~the~~office ~~year~~space ~~ended~~is ~~December~~leased ~~31,~~from ~~2009 was $145~~OsAir,~~444~~ ~~compared to $491~~Inc.,~~224~~ ~~for~~a ~~the~~company ~~same~~owned ~~period~~by inMr. ~~2008~~Osborne. The ~~Company~~ ~~wrote~~lease ~~off~~was ~~the~~extended ~~costs~~for ~~related~~a tothree ~~one~~year ~~well~~term ~~amounting~~on toMarch ~~$145~~26,~~444~~ in 2009 ~~and~~ ~~two~~at ~~wells amounting to~~ $~~491~~2,~~224~~000 inper ~~2008. Impairments~~month ~~and~~from ~~dry wells~~$1,350 ~~could~~per ~~happen~~month, inthrough ~~future~~April ~~years~~1, ~~particularly~~2012, inwhich ~~an aggressive drilling program or when market prices of production~~ is ~~very~~reflected ~~low,~~in ~~as is~~ the ~~current case~~above table.

~~Depreciation, depletion~~The ~~and~~items ~~amortization~~affecting ~~expenses~~operating ~~decreased~~cash ~~$493,744,~~flow orand ~~12.7%, to~~cash ~~$3,381,114~~and ~~for~~cash ~~the~~equivalents ~~year~~are ~~ended~~discussed ~~December~~more ~~31,~~fully ~~2009 compared to $3,874,858 for~~in the ~~same~~“Material ~~period~~Changes in ~~2008. The~~Results ~~decrease is partially the result~~ of ~~new~~Operations” ~~increased reserve remaining life information calculated by a third party petroleum engineer~~section.

~~Net~~21 ~~Loss~~

The CompanyTable had a net loss from operations of $2,696,245, for the year ended December 31, 2009 compared to a net loss of $2,210,607 for the same period in 2008. Although production quantities were higher in 2009 with more wells on line, the net loss increased partially due to lower prices for production and partially due to the decrease in the value of the Kykuit investment.Contents

~~Net Loss~~Material ~~attributable~~Changes toin ~~Non-Controlling~~Results ~~Interest~~of Operations

~~The Company~~Revenues ~~had~~from ~~a net loss attributable to its non-controlling interest in LSS I of~~Operations $81,544 for the year ended December 31, 2009 and a net loss of $170,567 for the same period in 2008. The self storage facility typically has a loss due to its difficulty in renting units that have limited access through the use of an elevator. In 2008 the Company had a bad debt write-off of $40,027. In 2009, the Company increased revenue by approximately $21,000 with new retail renters and renewed lease contracts. Additionally the Company reduced staff, lowering payroll expense by approximately $46,000. Lower interest rates on the First Merit Loan decreased interest expense by $38,000, only slightly offsetting the lower expenses were $19,000 of higher legal expenses relating to the Charter One loan negotiations.

~~Net~~Total revenues from operations decreased $1,408,463, or 34.8%, to $2,636,782 for the year ended ~~Loss~~December 31, ~~attributable~~2010, compared to ~~John~~$4,045,245 Dfor the same period in 2009. ~~Oil~~The decrease is due to lower natural gas production, since new wells are not being drilled and ~~Gas~~production ~~Company~~from existing wells is decreasing, and lower contract pricing in 2010, offset by the real estate property tax refund received.

~~The Company~~Expenses ~~had~~from ~~a net loss attributable to John D. interests of $2,614,701 for the~~Operations year ended December 31, 2009 compared to a net loss of $2,040,040 for the same period in 2008. The net loss for both years was significant due to the market price for natural gas steadily decreasing, causing revenues to drop and reserve calculations to increase depletion expense. The loss in 2009 was also increased due to the loss incurred on the Kykuit equity investment.

~~Interest~~Total operating expenses decreased $2,720,865, or 40.4%, to $4,020,625 for the year ended December ~~Rate~~31, ~~Risk~~2010 from $6,741,490 for the same period in 2009. This decrease is primarily attributable to a decrease in depreciation, depletion and amortization and impairment expenses on our wells and a decrease in loss from our unconsolidated affiliate compared to the same period in 2009.

Interest ~~rate~~ ~~risk~~expense isincreased $24,744, or 5.5%, to $473,302 for the ~~risk~~year ~~that~~ended ~~interest~~December 31, ~~rates~~2010 compared ~~will~~to ~~increase~~$448,558 ~~which~~for ~~will~~the ~~result~~same period in ~~an increase~~2009. Interest expense was slightly higher in 2010 due to the ~~Company’s~~higher ~~interest~~default ~~expense~~rate onbeing ~~its~~charged ~~variable~~during ~~rate~~part of the year, while 2009 was also high due to ~~loans~~eight months of charges for a swap agreement which matured in August 2009.

~~The~~Accretion ~~loan on~~expense ~~the~~for ~~Painesville facility and~~ the ~~Charter~~year ~~One~~ended ~~line of credit~~December 31, ~~totaling approximately~~2010 ~~$10.6~~was ~~million~~$24,580 ~~are~~compared ~~tied~~ to ~~variable interest rates. If the Company’s interest rates on the loans were to increase by 1% per year, the Company’s interest expense would increase approximately~~ $~~106~~45,~~000~~905 onfor anthe ~~annual~~same ~~basis. The~~period ~~Company’s~~in ~~line of credit was previously fixed through the use of an interest rate swap until August~~ 2009 ~~which had minimized the risk~~. ~~However if interest rates increase, the Company’s results of~~ ~~operations may be materially and adversely affected.~~

Oil and natural gas production costs decreased $22,483, or 3.3%, to $664,699 for the year ended December 31, 2010 compared to $687,182 for the same period in 2009. The decrease is primarily the result of a decrease in water hauling, service rig rental and well repairs and maintenance, partially offset by higher payments and accruals for county production taxes and telemeter charges.

~~Off~~Self-~~Balance~~storage property operating expenses increased $23,985, or 20.9%, to $138,524 for the year ~~Sheet~~ended ~~Arrangements~~December 31, 2010 compared to $114,539 for the same period in 2009. The increase is largely due to repairs, utility payments and snowplowing expenses.

~~The Company~~Legal ~~had~~and ~~one~~professional ~~off-balance~~fees ~~sheet~~decreased ~~arrangement~~$11,196, ator ~~December 31~~3.0%, ~~2009~~to $356,658 ~~with~~for ~~respect~~the year ended December 31, 2010 compared to ~~its~~$367,854 ~~investment~~for the same period in ~~Kykuit~~2009. ~~While~~ Although the ~~Company~~legal isand ~~not~~professional ~~liable~~fees decreased for the ~~contribution~~ ~~obligations~~year ofended ~~other~~December 31, ~~members~~2010 ofcompared ~~Kykuit,~~to the ~~Company~~same isperiod ~~investing~~in 2009, both years are ~~additional~~significantly ~~funds~~higher ~~since~~than ~~other~~is ~~members~~usual for the Company. The large expenses are ~~not~~directly ~~investing~~related atto ~~this~~the ~~time. During~~forbearance ~~2009~~settlement ~~and~~on ~~2008~~June 18, ~~the~~2010 ~~Company~~with ~~invested~~RBS ~~$514~~Citizens,~~414~~ ~~and $466,950,~~N.A. ~~respectively,~~whereby inthe ~~Kykuit~~Company ashas ~~part~~had ofto ~~their~~pay its ~~cash~~attorney ~~calls~~expenses and tothe ~~make~~bank’s upas ~~the difference~~part ~~for~~of ~~members~~the ~~not~~court ~~investing~~settlement.

~~Forward~~Property taxes and insurance expenses decreased $61,262, or 44.6%, to $76,230 for the year ended December 31, 2010 compared to $137,492 for the same period in 2009. The decrease is due to a reduction in the property values, and consequently the property taxes, on two parcels at the Painesville storage facility and the non-~~Looking~~renewal of the Directors and Officers insurance plan ~~Statements~~during 2009. The reduction in property values and property taxes resulted from a reassessment requested by the Company.

~~Statements that~~General ~~are~~and ~~not~~administrative ~~historical~~expenses ~~facts~~decreased $157,959, ~~including~~or ~~statements~~20.7%, ~~about~~to $605,023 for the ~~Company’s~~year ended ~~confidence~~December 31, in2010 ~~its~~compared ~~prospects~~to ~~and~~$762,982 ~~strategies~~for ~~and~~the ~~its~~same ~~expectations~~period ~~about~~in ~~growth, are~~2009. ~~forward-looking~~The ~~statements~~decrease ~~that~~in ~~involve~~general ~~risks~~ and ~~uncertainties. These~~administrative ~~risks~~expenses ~~and~~for ~~uncertainties~~the year ended December 31, ~~many~~2010 ofis ~~which~~largely ~~are~~due to a decrease in ~~beyond~~employees ~~our~~and ~~control~~benefits, ~~may~~director ~~include~~meeting ~~statements~~expense, ~~about~~and ~~our:~~fewer expenditures in most categories.

~~· our ability to continue as a going concern;~~22

·Table liquidityof and our ability to meet our debt obligations;Contents

·Loss ~~business~~from ~~strategy;~~unconsolidated affiliate expense decreased $474,908 for the year ended December 31, 2010 compared to for the same period in 2009. The Company recorded impairment losses of $143,197 and $588,309 in 2010 and 2009, respectively.

·Impairment ~~financial~~and ~~strategy;~~dry well costs from operations for the year ended December 31, 2010 was $0 compared to $145,444 for one well during the same period in 2009. Impairments and dry wells could happen in future years, particularly in an aggressive drilling program or when market prices of production is very low, as is the current case.

·Depreciation, ~~drilling~~depletion ~~locations;~~and amortization expenses decreased $1,875,017, or 55.5%, to $1,506,097 for the year ended December 31, 2010 compared to $3,381,114 for the same period in 2009. The current depletion expense is lower than the same period in 2009 largely due to the reduction in the Company’s depletable base from prior year expense.

·Net ~~natural gas and oil reserves;~~Loss

·The ~~realized~~Company ~~natural~~had ~~gas~~a net loss from operations of $1,383,843, for the year ended December 31, 2010 compared to a net loss of $2,696,245 for the same period in 2009. The large reduction in the net loss was due to decreased depreciation, depletion, and ~~oil~~amortization ~~prices~~expenses, that were partially offset by a reduction in production revenue; decreased impairment loss on Kykuit; a refund of real estate taxes in 2010; and lower operating expenses as compared to 2009.

·Net ~~production~~Loss ~~volumes;~~attributable to Non-Controlling Interest

·The ~~lease~~Company ~~operating~~had ~~expenses~~net income attributable to its non-controlling interest in LSS I of $103,972 ~~general~~for the ~~and~~year ~~administrative~~ended ~~expenses~~December 31, 2010 and ~~finding~~a ~~and~~net ~~development~~loss ~~costs;~~of $81,544 for the same period in 2009. Although LSS I has usually recorded a loss in prior periods, during the year ended December 31, 2010, it had income due to the decrease in the property values on the Painesville property in which a refund payment was received.

·Net ~~future~~Loss ~~operating~~attributable ~~results;~~to John D. Oil and Gas Company

·The ~~plans~~Company had a net loss attributable to John D. interests of $1,487,815 ~~objectives~~for the year ended December 31, ~~expectations~~2010 compared to a net loss of $2,614,701 for the same period in 2009. The loss in 2010 is less compared to 2009 largely due to reduced operating expenses and ~~intentions~~depletion expense, while 2010 also had reduced natural gas production revenue from decreased production volumes and lower pricing than 2009.

~~All~~Interest ~~of these~~Rate ~~types of statements, other than statements of historical fact, included in~~Risk this report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of these terms or other comparable terminology.

~~The forward-looking~~Interest ~~statements~~rate ~~contained~~risk inis ~~this~~the ~~report~~risk ~~are~~that ~~largely~~interest ~~based~~rates onwill ~~our expectations~~increase, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe these estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. We caution all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that such statements will beresult ~~realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied~~ in ~~the~~an ~~forward-looking statements due to factors listed in the “Risk~~increase ~~Factors” section and elsewhere~~ in ~~this report. All forward-looking statements speak only as of~~ the ~~date~~Company’s ofinterest ~~this~~expense ~~report. We~~on doits ~~not~~variable ~~intend to~~rate ~~publicly update or revise any forward-looking statements as a result of new information, future events or otherwise~~loans. ~~These cautionary statements~~ ~~qualify all forward-looking statements attributable to us or persons acting on our behalf.~~

~~Income~~The loan on the Painesville facility and the Charter One line of credit, totaling approximately ~~Taxes~~$10.5 million, are tied to variable interest rates. If the Company’s interest rates on the loans were to increase by 1% per year, the Company’s interest expense would increase approximately $105,000 on an annual basis. The Company’s line of credit was previously fixed through the use of an interest rate swap until August 2009 which had minimized the risk. Additionally the line of credit interest rate is fixed at 4.75% for one year until July 2011. However if interest rates increase, the Company’s results of operations may be materially and adversely affected.

~~Effective January~~Off-Balance 1,Sheet ~~2006, the Company became a “C” Corporation for tax~~Arrangements ~~purposes.~~

23The Company had one off-balance sheet arrangement at December 31, 2010, with respect to its investment in Kykuit. While the Company is not liable for the contribution obligations of other members of Kykuit, the Company is investing additional funds since other members are not investing at this time. During 2010 and 2009, the Company invested cash of $93,440 and $514,414, respectively, in Kykuit as part of their cash calls and to make up the difference for other members not investing.

At23 December 31, 2009 and 2008, the Company had net operating loss carry forwards (NOLS) for future years of approximately $15.9 million and $15.4 million, respectively. These NOLS will expire at various dates through 2028. Utilization of the NOLs could be limited if there is a substantial change in ownership of the Company and is contingent on future earnings. In addition, the Company has a $41,187 alternative minimum tax (AMT) credit that carries forward indefinitely.

The CompanyTable has provided a valuation allowance equal to 100% of the total net deferred asset in recognition of the uncertainty regarding the ultimate amount of the net deferred tax asset that will be realized.Contents

~~Recently~~Forward-Looking ~~Issued Accounting~~Statements ~~Pronouncements~~

~~Accounting~~Statements that are not historical facts, including statements about the Company’s confidence in ~~Standards~~its ~~Codification~~prospects and strategies and its expectations about growth, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties, many of which are beyond our control, may include statements about our:

In• ~~June 2009,~~ability ~~the~~to ~~Financial~~continue ~~Accounting Standards Board (“FASB”) approved the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“the Codification”) or (“ASC”)~~ as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants (“AICPA”), Emerging Issues Task Force (“EITF”), and other related accounting literature have been superseded by the Codification. Rules and interpretive releases of the United States Securities and Exchange Commission (“SEC”) under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. The Codification reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a ~~consistent~~going ~~structure. The FASB will not issue new standards in the form of Statements, FASB Staff Position, or Emerging Issues Task Force Abstracts~~concern; instead, it will issue Accounting Standards Updates. The FASB will not consider Accounting Standards Updates as authoritative in their own right; these updates will serve only to update the Codification, provide background information about the guidance, and provide the basis for conclusions on the change(s) in the Codification. The switch to the ASC affects the way companies refer to GAAP in financial statements and accounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure. This Codification is effective for financial statements issued for reporting periods that ended after September 15, 2009. At this time the Company has decided to present new accounting pronouncements with no standard references.

~~Oil~~ • liquidity and ~~Gas~~our ~~Reporting~~ability to meet our debt obligations;

~~In December~~• ~~2008,~~business the SEC released a final rule, "Modernization of Oil and Gas Reporting," which amends the oil and gas reporting requirements. The key revisions to the reporting requirements include: using a 12-month average price to determine reservesstrategy; including nontraditional resources in reserves if they are intended to be upgraded to synthetic oil and gas; ability to use new technologies to determine and estimate reserves; and permitting the disclosure of probable and possible reserves. In addition, the final rule includes the requirements to report the independence and qualifications of the reserve preparer or auditor; file a report as an exhibit when a third party is relied upon to prepare reserve estimates or conduct reserve audits; and to disclose the development of any proved undeveloped reserves (PUDs), including the total quantity of PUDs at year-end, material changes to PUDs during the year, investments and progress toward the development of PUDs and an explanation of the reasons why material concentrations of PUDs have remained undeveloped for five years or more after disclosure as PUDs. The accounting changes resulting from changes in definitions and pricing assumptions should be treated as a change in accounting principle that is inseparable from a change in accounting estimate, which is to be applied prospectively. The final rule is effective for annual reports for fiscal years ending on or after December 31, 2009. Early adoption was not permitted. The adoption of this standard had an impact on the Company’s financial position and results of operations. The 12-month average pricing for the year for natural gas sold at the Henry Hub, LA was $3.867 and West Texas Intermediate oil at Cushing, OK was $61.18, where the previous calculations would have been higher based on the last day of December 2009. The lower pricing increased our depletion expense in 2009. The Company’s depletion rate continues to be extremely high.

~~Effective upon~~• its issuance in September 2009, the Company adopted an accounting standards update on “Extractive Activities – Oil and Gas”. This accounting standards update represents a technical correction to an existing SEC Observer comment regarding “Accounting for Gas-Balancing Arrangements”. The adoption of this accounting standard update did not have a material impact on the Company’s financial ~~statements.~~strategy;

24• drilling locations;

~~In January~~• ~~2010, an accounting standard update was issued on “Oil and Gas Estimations and Disclosures”. This update aligns the current oil and~~ natural gas ~~reserve estimation~~ and disclosure requirements of the Extractive Activities for Oil and Gas with the changes required by the SEC final rule, as discussed above. This update expands the disclosures required for equity method investments, revises the definition of oil ~~and natural gas producing activities to include nontraditional resources in~~ reserves unless not intended to be upgraded into synthetic oil or natural gas producing activities. This update also amends the definition of proved oil and natural gas reserves to require 12-month average pricing in estimating reserves, amends and adds definitions in the Master glossary that is used in estimating proved oil and natural gas quantities and provides guidance on geographic area with respect to disclosure of information about significant reserves. It is effective for entities with annual reporting periods ending on or after December 31, 2009. The Company adopted this update on December 31, 2009.;

~~Other-Than-Temporary Impairments~~• realized natural gas and oil prices;

In• ~~April 2009,~~production a new accounting standard was issued regarding the recognition of other-than-temporary impairments of investments in debt securities, as well as financial statement presentation and disclosure requirements, for when to recognize a write-down through earnings versus other comprehensive income. The standard was effective for interim and annual periods ending after June 15, 2009. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.volumes;

~~Consolidation of~~• ~~Variable~~lease ~~Interest~~operating ~~Entities~~expenses, general and administrative expenses and finding and development costs;

In• ~~June 2009,~~future aoperating new accounting standard was issued in order to change financial reporting by enterprises involved with variable interest entities (“VIEs”). The standard replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a VIE with an approach focused on identifying which enterprise has the power to direct the activities of a VIE and the obligation to absorb losses of the entity or the right to receive the entity’s residual returns. This standard is effective for fiscal years beginning after November 15, 2009. The adoption of this standard did not have a material impact on the Company’s financial position, results; ~~of operations or cash flows.~~and

~~Measuring Liabilities~~• atplans, ~~Fair~~objectives, ~~Value~~expectations and intentions.

InAll ~~August 2009,~~of athese ~~new~~types ~~accounting~~of ~~standard~~statements, ~~was~~other ~~issued~~than ~~concerning~~statements ~~measuring~~of ~~liabilities~~historical ~~at fair~~fact, ~~value. The~~included ~~new~~in ~~standard~~this ~~provides clarification that in~~report ~~circumstances~~are inforward-looking ~~which~~statements. aIn ~~quoted~~some ~~price~~cases, inyou ancan ~~active~~identify ~~market~~forward-looking ~~for~~statements ~~the identical~~by ~~liability~~terminology issuch ~~not~~as ~~available~~“may,” a“will,” ~~reporting~~“could,” ~~entity~~“should,” is“expect,” ~~required~~“plan,” to“project,” ~~measure fair value~~“intend,” ~~using~~“anticipate,” ~~certain~~“believe,” ~~valuation~~“estimate,” ~~techniques. Additionally~~“predict,” it“potential,” ~~clarifies~~“pursue,” ~~that~~“target,” ~~a reporting~~“continue,” ~~entity is not required to adjust~~ the ~~fair value of a liability for the~~ ~~existence~~negative of athese ~~restriction~~terms ~~that~~or ~~prevents~~other ~~the~~comparable ~~transfer of the liability~~terminology. ~~This new guidance is effective for the first reporting~~ period after its issuance, however earlier application is permitted. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.

The forward-looking statements contained in this report are largely based on our expectations, ~~Company~~which ~~reviewed~~reflect ~~all~~estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other ~~recently~~factors. ~~issued,~~Although we ~~but~~believe ~~not~~these ~~yet~~estimates ~~effective~~and assumptions to be reasonable, ~~accounting~~they are inherently uncertain and ~~pronouncements~~involve a number of risks and ~~does~~uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. We caution all readers that the forward-looking statements contained in this report are not ~~believe~~guarantees of future performance, and we cannot assure any reader that such ~~pronouncements~~statements will ~~have~~be arealized ~~material~~or the forward-looking events and ~~impact~~circumstances onwill occur. Actual results may differ materially from those anticipated or implied in the ~~financial~~forward-looking statements due to factors listed in the “Risk Factors” section and elsewhere in this report. All forward-looking statements speak only as of the date of this report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

~~Item 8. Financial~~Income ~~Statements and Supplementary Data~~Taxes

~~The Company’s~~Effective ~~Report~~January 1, of2006, ~~Independent~~the ~~Registered~~Company ~~Public~~became ~~Accounting~~a ~~Firm~~“C” ~~and Consolidated~~Corporation ~~Financial~~for ~~Statements~~tax ~~are filed as part of this report~~purposes.

~~Item 9A~~At December 31, 2010 and 2009, the Company had net operating loss carry forwards (TNOLS) for future years of approximately $16. ~~Controls~~6 million and ~~Procedures~~$15.9 million, respectively. These NOLS will expire at various dates through 2028. Utilization of the NOLs could be limited if there is a substantial change in ownership of the Company and is contingent on future earnings. In addition, the Company has a $41,187 alternative minimum tax (AMT) credit that carries forward indefinitely.

~~Evaluation~~The Company has provided a valuation allowance equal to 100% of the total net deferred asset in recognition of ~~Disclosure~~the ~~Controls~~uncertainty ~~and~~regarding ~~Procedures~~the ultimate amount of the net deferred tax asset that will be realized.

2524

AsTable of December 31, 2009, the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our chief executive officer and chief financial officer each concluded that the Company’s disclosure controls and procedures were not effective in light of the identification of a material weakness in the Company’s internal controls over financial reporting as discussed below.Contents

~~Management’s Report~~Recently onIssued ~~Internal~~Accounting ~~Control over Financial Reporting~~Pronouncements

~~The management~~Disclosures ofabout the ~~Company~~Credit isQuality ~~responsible for establishing and maintaining an adequate system~~ of ~~internal~~Financing ~~control~~Receivables over financial reporting as such term is defined in Exchange Act Rule 13a-15(f) . The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the ~~preparation~~Allowance ~~of our Consolidated Financial Statements~~ for ~~external~~Credit ~~purposes in~~Losses ~~accordance with generally accepted accounting principles defined in the Exchange Act.~~

~~A material~~In ~~weakness~~July 2010, isthe aFASB ~~deficiency~~issued ASU No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” This ASU amends disclosure requirements with respect to the credit quality of financing receivables and the related allowance for credit losses. Entities will be required to disaggregate by portfolio segment or ~~combination~~class certain existing disclosures and provide certain new disclosures about their financing receivables and related allowance for credit losses. Disclosures to be made as of ~~deficiencies,~~the inend ~~internal~~of a reporting period are ~~control~~effective ~~over~~for ~~financial~~the Company’s reporting, ~~such~~period ~~that~~ending ~~there~~December 31, is2010; aand ~~reasonable~~the ~~possibility~~disclosures about activity that occurs during a ~~material~~reporting ~~misstatement~~period ofwill be effective for the ~~registrant~~Company’s ~~annual~~reporting orperiod ending ~~interim~~March 31, ~~financial statements~~2011. Since this ASU will only amend disclosure requirements, not beaccounting practice, ~~prevented~~the oradoption ~~detected~~of onthis ASU did not have a ~~timely~~material ~~basis~~impact on the Company’s financial position, results of operations or cash flows.

~~We carried~~The ~~out~~Company anreviewed ~~evaluation~~all ~~under~~other ~~the~~recently ~~direction of our chief executive officer and chief financial officer~~issued, ofbut ~~the~~not ~~effectiveness~~yet ~~of our internal control over financial reporting. In making this assessment~~effective, ~~management~~accounting ~~used the criteria set~~pronouncements ~~forth~~and bydoes ~~the~~not ~~Committee~~believe ofany ~~Sponsoring~~such ~~Organizations~~pronouncements ofwill ~~the~~have ~~Treadway~~a ~~Commission~~material ~~in “Internal~~impact ~~Control over Financial Reporting - Guidance for Smaller Public Companies (2006).” Based~~ on ~~that~~the ~~evaluation, our management concluded that our internal controls over~~ financial ~~reporting were not effective as of~~ ~~December 31, 2009 due to control deficiencies that constitute a material weakness~~statements.

~~In connection~~Item ~~with~~8. ~~management’s~~Financial ~~assessment~~Statements ofand ~~our~~Supplementary ~~internal control over financial reporting described above, management has identified the following material weakness in our internal control over financial reporting as of December 31, 2009:~~Data

The Company’s ~~size~~Report ~~and staff limitations have prevented it from being able to employ sufficient resources to enable the Company to have an adequate level~~ of ~~supervision~~ ~~and~~Independent ~~segregation~~Registered ofPublic ~~duties~~Accounting ~~within~~Firm ~~the internal control system. At times, the Company has one person responsible for processing transactions~~ and ~~reporting~~Consolidated ~~them. This creates certain~~Financial ~~incompatible~~Statements ~~duties~~are ~~and~~filed aas ~~lack~~part of review over the financial reporting process that would likely fail to detect errors in spreadsheets, calculation or other documentation. Existing management attempts to provide oversight for most functions but lack of personnel makes the task virtually impossible in some situations. In addition this lack of segregation of duties led management to conclude that the Company’s disclosure controls and procedures were not effective to give reasonable assurance that the information required to be disclosed in reports that the Company files under the Exchange Act are recorded, processed and reported as and when requiredreport. ~~These control~~ ~~deficiencies could result in a material misstatement in our interim or annual financial statements that would not be prevented or detected on a timely basis.~~

InItem ~~order to mitigate this material weakness, all financial reports are reviewed by two of the Company’s Board members for reasonableness~~9A. ~~All~~ ~~unexpected results~~Controls ~~are investigated. As soon as our finances allow, we anticipate hiring additional accounting staff~~ and ~~implementing appropriate procedures for monitoring and reviewing the work performed by the Chief Financial Officer.~~Procedures

~~Because~~ Evaluation of ~~its~~Disclosure ~~inherent~~Controls ~~limitations, internal control over financial reporting may not prevent or detect misstatements~~ and ~~even when determined to be effective, can~~Procedures only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~Notwithstanding~~ As of December 31, 2010, the ~~material~~Company’s ~~weakness~~principal ~~described~~executive ~~above~~officer and principal financial officer, toevaluated the ~~best~~effectiveness of ~~their~~the ~~knowledge,~~design and operation of the Company’s ~~management~~disclosure controls ~~believes~~and ~~that~~procedures as defined in Rule 13a-15(e) under the ~~financial~~Securities ~~statements~~Exchange ~~included~~Act inof ~~this~~1934, as ~~Annual~~amended. ~~Report~~Based on ~~Form~~this ~~10-K~~evaluation, ~~fairly~~our ~~present,~~chief inexecutive ~~all~~officer ~~material~~and ~~respects,~~chief ~~the~~financial officer each concluded that the Company’s ~~financial~~disclosure ~~condition,~~controls ~~results~~and ofprocedures ~~operations~~were ~~and~~not ~~cash~~effective ~~flows~~in ~~for~~light of the ~~periods~~identification ~~presented~~of a material weakness in ~~conformity~~the ~~with~~Company’s ~~U.S.~~internal ~~generally~~controls ~~accepted~~over ~~accounting~~financial reporting ~~principles~~as discussed below.

26Management’s Report on Internal Control over Financial Reporting

~~Changes~~The management of the Company is responsible for establishing and maintaining an adequate system of internal control over financial reporting as such term is defined in ~~Internal~~Exchange ~~Control~~Act Rule 13a-15(f). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our Consolidated Financial ~~Reporting~~Statements for external purposes in accordance with generally accepted accounting principles defined in the Exchange Act.

~~During the~~A ~~quarter~~material ~~ended~~weakness ~~December~~is ~~31,~~a ~~2009~~deficiency, ~~the~~or ~~Company~~combination ~~reduced~~of ~~office~~deficiencies, ~~staff~~in ~~which~~internal control over ~~hampered~~financial ~~the~~reporting, ~~Company’s~~such ~~ability~~that tothere ~~maintain~~is ~~adequate~~a ~~segregation~~reasonable ofpossibility ~~duties~~that ~~which~~a material misstatement of ~~led~~the toregistrant’s ~~control~~annual ~~deficiencies~~or ~~that~~interim ~~constitute~~financial astatements ~~material~~will ~~weakness~~not inbe ~~our~~prevented ~~internal control~~or ~~over~~detected ~~financial~~on ~~reporting~~a timely basis.

~~Attestation~~We carried out an evaluation under the direction of our chief executive officer and chief financial ~~Report~~officer, of ~~Independent~~the ~~Registered~~effectiveness of our internal control over financial reporting. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control over Financial Reporting — Guidance for Smaller Public Companies ~~Accounting~~(2006).” ~~Firm~~Based on that evaluation, our management concluded that our internal controls over financial reporting were not effective as of December 31, 2010 due to control deficiencies that constitute a material weakness.

~~This~~25 annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Item 9B. OtherTable Informationof Contents

~~None.~~In connection with management’s assessment of our internal control over financial reporting described above, management has identified the following material weakness in our internal control over financial reporting as of December 31, 2010:

~~PART~~The Company’s size and staff limitations have prevented it from being able to employ ~~III~~sufficient resources to enable the Company to have an adequate level of supervision and segregation of duties within the internal control system. At times, the Company has one person responsible for processing transactions and reporting them. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely fail to detect errors in spreadsheets, calculations or other documentation. Existing management attempts to provide oversight for most functions but lack of personnel makes the task virtually impossible in some situations. In addition this lack of segregation of duties led management to conclude that the Company’s disclosure controls and procedures were not effective to give reasonable assurance that the information required to be disclosed in reports that the Company files under the Exchange Act are recorded, processed and reported as and when required. These control deficiencies could result in a material misstatement in our interim or annual financial statements that would not be prevented or detected on a timely basis.

~~Item~~In order to mitigate this material weakness, all financial reports are reviewed by two of the 10Company’s board members for reasonableness. ~~Directors,~~ ~~Executive~~All ~~Officers~~unexpected ~~and~~results ~~Corporate~~are investigated. ~~Governance~~

~~The information~~Because ~~required~~of byits ~~this~~inherent ~~Item~~limitations, 10internal iscontrol ~~incorporated~~over ~~herein~~financial byreporting ~~reference~~may tonot ~~the~~prevent or ~~Registrant’s~~detect ~~definitive~~misstatements ~~Proxy~~and ~~Statement,~~even ~~relating~~when determined to ~~its~~be ~~2010~~effective, ~~Annual~~can ~~Meeting~~only provide reasonable ~~(“Proxy~~assurance ~~Statement,”)~~with ~~under~~respect ~~the~~to ~~captions~~financial ~~“Board~~statement ofpreparation ~~Directors,”~~and ~~“Executive Officers~~presentation. Also,” ~~“Section~~projections ~~16(a)~~of any ~~Beneficial~~evaluation ~~Ownership~~of ~~Reporting~~effectiveness ~~Compliance,”~~to ~~“Code~~future ~~of Ethics,”~~periods ~~and~~are ~~“Audit~~subject ~~Committee~~to ~~Report.” The~~the ~~Proxy~~risk ~~Statement~~that ~~will~~controls bemay become ~~filed~~inadequate ~~with~~because of changes in conditions, or that the ~~SEC~~degree noof ~~later~~compliance ~~than~~with ~~April~~the ~~30,~~policies ~~2010~~or procedures may deteriorate.

~~Item~~Notwithstanding the material weakness described above, to the best of their knowledge, the 11Company’s management believes that the financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows for the periods presented in conformity with U. ~~Executive~~S. ~~Compensation~~generally accepted accounting principles.

~~The information~~Changes ~~required by Item 11 is contained under the caption “Executive and Director Compensation”~~ in ~~the~~Internal ~~Proxy~~Control ~~Statement~~over ~~and~~Financial ~~is incorporated herein by~~Reporting ~~reference.~~

~~Item 12. Security~~The ~~Ownership~~Company has reduced its office staff which hampers the Company’s ability to maintain adequate segregation of ~~Certain~~duties ~~Beneficial~~which ~~Owners~~led ~~and~~to ~~Management~~control deficiencies that constitute a material weakness in our ~~and~~internal ~~Related~~control ~~Stockholder~~over ~~Matters~~financial reporting.

~~The information~~Attestation ~~required~~Report byof ~~Item~~Independent 12Registered isPublic ~~contained~~Accounting ~~under the caption “Equity~~Firm ~~Compensation Plan Information” and “Principal Stockholders” in the Proxy Statement and is incorporated herein by reference.~~

~~Item~~This annual report does not include an attestation report of the Company’s registered public 13accounting firm regarding internal control over financial reporting. ~~Certain~~ ~~Relationships~~Management’s ~~and~~report ~~Related~~is ~~Transactions,~~not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and ~~Director~~Exchange Commission that require the Company to provide only management’s report in ~~Independence~~this annual report.

~~The information required by~~ Item 139B. isOther ~~contained under the caption “Certain Relationships and Related Transactions” and “Director Independence” in the Proxy Statement and is incorporated herein by reference.~~Information

~~Item 14~~None. ~~Principal Accountant Fees and Services~~

~~The~~26 information required by Item 14 is contained under the caption “Principal Accounting Firm Fees” and “Audit Committee Pre-approval Policies and Procedures” in the Proxy Statement and is incorporated herein by reference.

27Table of Contents

PART III IV

Item 15 10. ~~Exhibits~~ ~~and~~Directors, ~~Financial~~Executive ~~Statement~~Officers ~~Schedules~~and Corporate Governance

Exhibit No.		Description
2.1		Agreement and Plan of Merger, dated as of December 28, 1999, by and among Meridian Point Realty Trust ‘83, the Company and Liberty Self-Stor Limited Partnership (Exhibits A and B to the Agreement and Plan of Merger are Exhibits 3.1 and 3.2, respectively) (Filed as Exhibit 2.1 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)
3.1		Articles of Incorporation of the Company (Filed as Exhibit 3.1 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)
3.2		Articles of Amendment of Articles of Incorporation of the Company dated June 27, 2005(Filed as Exhibit 3.1 to Registrant’s Form 8-K dated July 1, 2005 and incorporated herein by reference.)
3.3		Articles Supplementary to John D. Oil and Gas Company’s Articles of Incorporation, as amended, restated and supplemented dated February 12, 2008 (Filed as Exhibit 3.1 to Registrant’s Form 8-K dated February 12, 2008 and incorporated herein by reference.)
3.4		Bylaws of the Company (Filed as Exhibit 3.2 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)
4.1		Registration Rights Agreement between the Company and the Richard M. Osborne Trust dated February 28, 2006 (Filed as Exhibit 4.1 to Registrant’s Form 8-K dated February 24, 2006 and incorporated herein by reference.)
9.1		Voting Trust Agreement between the Company, Richard M. Osborne and Gregory J. Osborne dated February 16, 2006 (Filed as Exhibit 7.1 to Registrant’s Form SC 13D/A dated April 11, 2006 and incorporated herein by reference.)
10.1†		Amended and Restated 1999 Stock Option and Award Plan of the Company (Filed as Annex A to Registrant’s Definitive Proxy Statement filed on April 30, 2009 and incorporated herein by reference.)
10.2		Lease between OsAir, Inc. and the Company (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)
10.3		Lease between OsAir, Inc and the Company dated March 26, 2009 (Filed as Exhibit 10.4 to Registrant’s Form 10-K dated December 31, 2008 and incorporated herein by reference.)
10.4		Agreement of Limited Partnership of LSS I Limited Partnership, dated December 29, 1999. (Filed as Exhibit 10.3 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)
10.5		Cost Sharing Agreement, by and between Liberty Self-Stor, Ltd. and Liberty Self-Stor II, Ltd. dated December 28, 1999 (Filed as Exhibit 10.7 to Registrant’s Form 10-KSB, dated March 15, 2000 and incorporated herein by reference.)
10.6		Contract among Acquiport/Amsdell I Limited Partnership and/or its nominee, Liberty Self-Stor, Ltd. and Liberty Self-Stor II, Ltd dated September 7, 2004 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated September 10, 2004 and incorporated herein by reference.)

Directors and Executive Officers. Below are the names, ages, positions and certain other information concerning our current directors and executive officers:

28Richard M. Osborne, 65, has been chairman, chief executive officer and a director of John D. Oil and Gas since September 1999. He has been a director since 2003, chairman of the board since 2005 and chief executive officer since November 2007 of Gas Natural Inc., a publicly-held public utility company. He is the president and chief executive officer of OsAir, Inc., a company he founded in 1963, which operates as a property developer and manufacturer of industrial gases for pipeline delivery. From 2006 to February 2009 he was a director of Corning Natural Gas Corporation, a publicly-held public utility company in Corning, New York and from September 2008 to January 2009 he was a director of PVF Capital Corp., a publicly-held holding company for Park View Federal Savings Bank in Solon, Ohio. Richard Osborne’s background as chairman and chief executive officer of various public companies and many years of experience owning and managing companies in energy and utility related industries provides the board with invaluable management and operational direction.

10.7		Amended and Restated First Amendment to Agreement of Limited Partnership of LSS I Limited Partnership dated March 29, 2006 (Filed as Exhibit 10.9 to Registrant’s form 10-KSB, dated March 31, 2006 and incorporated herein by reference)
10.8		Stock Subscription Agreement between the Company and the Richard M. Osborne Trust dated February 28, 2006 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated March 2, 2006 and incorporated herein by reference.)
10.9		Stock Subscription Agreement between the Company and Terence P. Coyne dated February 28, 2006 (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated March 2, 2006 and incorporated herein by reference.)
10.10		Common Stock Purchase Warrant granted to Richard M. Osborne dated June 20, 2008 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated June 20, 2008 and incorporated herein by reference.)
10.11		Letter agreement between the Company and Great Plains Exploration, LLC relating to the transfer of oil and natural gas wells dated as of January 1, 2006 (Filed as Exhibit 10.1 to Registrant’s Form 10-QSB dated March 31, 2006 and incorporated herein by reference.)
10.12		Oil and Gas Operations and Sale Agreement between the Company and Great Plains Exploration, LLC dated as of January 1, 2006 (Filed as Exhibit 10.2 to Registrant’s Form 10-QSB dated March 31, 2006 and incorporated herein by reference.)
10.13		Amendment No 1 to Oil and Gas Operations and Sale Agreement between the Company and Great Plains Exploration, LLC dated as of November 14, 2006 (Filed as Exhibit 10.4 to Registrant’s Form 10-QSB dated September 30, 2006 and incorporated by reference.)
10.14		Amendment No. 2 to Oil and Gas Operations and Sale Agreement dated as of January 12, 2009 by and between the Company and Great Plains Exploration, LLC (Filed as Exhibit 10.1 to the Registrant’s 8-K dated January 12, 2009 and incorporated herein by reference.)
10.15		Revolving Demand Note of the Company payable to the Richard M. Osborne Trust dated as of January 1, 2006 (Filed as Exhibit 10.3 to Registrant’s Form 10-QSB dated March 31, 2006 and incorporated herein by reference.)
10.16		Purchase and Sale Agreement between the Company and Buckeye Storage of Gahanna LLC dated as of October 5, 2006 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated October 12, 2006 and incorporated herein by reference.)
10.17		First Amended and Restated Loan and Security Agreement between RBS Citizens, N.A., d/b/a Charter One, Richard M. Osborne and the Company, dated as of March 28, 2008 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated March 28, 2008 and incorporated herein by reference.)
10.18		Revolving Credit Note of the Company and Richard M. Osborne in favor of RBS Citizens, N.A., d/b/a Charter One, dated as of March 28, 2008 (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated March 28, 2008 and incorporated herein by reference.)
10.19		Loan Amendment Agreement between the Company, Great Plains Exploration, LLC and Richard M. Osborne dated March 28, 2008 (Filed as Exhibit 10.1 to Registrant’s Form 10-Q dated March 28, 2008 and incorporated herein by reference.)
10.20		Assignment and Assumption of Lease Purchase and Sale Agreement and First Amendment of Lease Purchase and Sale Agreement entered into as of August 3, 2007 between Great Plains Exploration, LLC and Kykuit Resources, LLC (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by reference.)

Gregory J. Osborne, 32, has been president and chief operating officer of John D. Oil and Gas since April 2006 and a director since February 2006. From 2003 until joining John D. Oil and Gas, he was president of Great Plains Exploration LLC, an oil and gas exploration company based in Mentor, Ohio that owns and operates oil and gas wells. From 2001 until joining Great Plains, he served as executive vice president of Orwell Natural Gas Company, a regulated gas public utility company operating in Ohio. He is a director of Gas Natural Inc., a publicly-held public utility company. He is the son of Richard Osborne, our chairman and chief executive officer. Gregory Osborne’s managerial experience and service on the board of various energy related companies provides the board with a wide range of industry specific knowledge.

29Thomas J. Smith, 66, has been a director of John D. Oil and Gas since 1998. In November 2007, he was appointed vice president and chief financial officer of Gas Natural Inc., a publicly-held public utility company. He also served as Gas Natural Inc.’s interim president from August 2007 to November 2007 and has been a director of Gas Natural Inc. since 2003. From 1999 to 2006, he served as our president and chief operating officer. Mr. Smith’s financial and disclosure experience gained as the chief financial officer of publicly-held companies, as well as his experience as a director of energy and utility related companies provides extensive specialized knowledge and expertise to our board.

10.21		Lease Purchase and Sale Agreement dated March 21, 2007 between Hemus, Ltd. and Great Plains Exploration, LLC and First Amendment to Lease Purchase and Sale Agreement dated July 24, 2007 (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by reference.)
10.22		Joint Venture Development Agreement between Kykuit Resources, LLC and Hemus, Ltd, effective August 3, 2007 (Filed as Exhibit 10.3 to Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by reference.)
10.23		Assignment of Oil, Gas and Mineral Leases dated May 1, 2008 between Hemus, Ltd. and Kykuit Resources, LLC (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)
10.24		Transfer and Acceptance of Membership Interest dated May 29, 2008 between the Company and Geis Coyne Oil and Gas, LLC (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)
10.25		Second Amended and Restated Operating Agreement of Kykuit Resources, LLC dated May 29, 2008 (Filed as Exhibit 10.3 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)
10.26		Purchase and Sale Agreement dated June 11, 2008 between Macum Energy, Inc., Harold and Eva Holden Living Trust dated 1995, Harold and Eva Holden, Trustees, Winifred Gas Partnership, Goodridge Resources, Inc., Vincent T. Larse, Dr. David T. Larsen, Pic Productions, Inc., Stanley and Beverly Stott Living Trust dated 4/30/96, Stanley and Beverly Stott, Trustees, Faith Drilling Inc., and Kykuit Resources, LLC (Filed as Exhibit 10.4 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)
10.27		Cognovit Promissory Note of the Company dated August 3, 2007 (Filed as Exhibit 10.4 to Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by reference.)
10.28		Cognovit Promissory Note of the Company dated August 28, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated August 28, 2007 and incorporated herein by reference.)
10.29		Cognovit Promissory Note of the Company dated September 12, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated September 12, 2007 and incorporated herein by reference.)
10.30		Cognovit Promissory Note of the Company dated October 10, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated October 10, 2007 and incorporated herein by reference.)
10.31		Cognovit Promissory Note of the Company dated November 20, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated November 20, 2007 and incorporated herein by reference.)
10.32		Cognovit Promissory Note of the Company dated November 30, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated November 30, 2007 and incorporated herein by reference.)
10.33		Cognovit Promissory Note of the Company dated May 23, 2008 (Filed as Exhibit 10.5 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)
10.34		Cognovit Promissory Note of the Company dated May 27, 2008 (Filed as Exhibit 10.6 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)
10.35		Cognovit Promissory Note of the Company dated February 13, 2009 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated February 13, 2009 and incorporated herein by reference.)

Carolyn Coatoam, 65, was appointed chief financial officer and assistant secretary of John D. Oil and Gas on December 31, 2010. Ms. Coatoam has been employed as a consultant to Richard M. Osborne, the Company’s Chief Executive Officer, since June 2009. From 1996 to 2009, she worked for the consulting firm of Niche Systems & Support, Inc., on an assignment to a publicly-held distributor of industrial products. Ms. Coatoam began her career with Deloitte & Touche. Subsequently, she served as the chief financial officer for Mr. Concrete Inc. and Coatoam & Co. Inc. until 2005. She is an inactive certified public accountant.

30Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of our common stock, to file with the Securities and Exchange Commission (SEC) initial reports of ownership and reports of changes in ownership of our common stock. Our officers, directors and greater than 10% stockholders are required by the SEC to furnish us with copies of all Section 16(a) forms they file. Based solely on review of copies of reports furnished to us or written representations that no reports were required, we believe that all Section 16(a) filing requirements were met timely in 2010.

10.36		Letter from Richard M. Osborne guaranteeing Charter One loan debt dated March 26, 2009 (Filed as Exhibit 10.37 to Registrant’s Form 10-K dated December 31, 2008 and incorporated herein by reference.)
10.37		Cognovit Promissory Note of John D Oil and Gas Company dated April 7, 2009 (Filed as Exhibit 10.38 to Registrant’s Form 10-K dated December 31, 2008 and incorporated herein by reference.)
10.38		Cognovit Promissory Note of John D Oil and Gas Company (amended) dated May 22, 2009 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated May 27, 2009 and incorporated herein by reference.)
10.39		Purchase and Sale Agreement effective as of January 30, 2008 between Liberty Self Stor, Ltd. and Richard M. Osborne, Trustee (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated December 28, 2007 and incorporated herein by reference.)
10.40		Operating Agreement of Lucky Brothers, LLC dated October 7, 2008 (Filed as Exhibit 10.1 to Registrant’s Form 10-Q dated September 30, 2008 and incorporated herein by reference.)
10.41		Operating Contract between the Company, Lucky Brothers, LLC and Great Plains Exploration, LLC dated October 7, 2008 (Filed as Exhibit 10.2 to Registrant’s Form 10-Q dated September 30, 2008 and incorporated herein by reference.)
10.42		Drilling Contract between the Company and Great Plains Exploration, LLC dated October 7, 2008 (Filed as Exhibit 10.3 to Registrant’s Form 10-Q dated September 30, 2008 and incorporated herein by reference.)
31.1*		Section 302 Certification of Chairman of the Board and Chief Executive Officer (principal executive officer) pursuant to the Sarbanes-Oxley Act of 2002
31.2*		Section 302 Certification of Chief Financial Officer (principal financial officer) pursuant to the Sarbanes-Oxley Act of 2002
32.1*		Certification of Chairman of the Board and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*		Letter from Schlumberger Data & Consulting Services about Reserve Economics

Code of Business Conduct and Ethics. The Company has adopted a code of conduct and ethics that applies to all officers, directors and employees of John D. Oil and Gas, including our principal executive officer, principal financial officer, principal accounting officer, and any person performing similar functions. A copy of the code is available on our website at www.johndoilandgas.com. Any amendments or waivers to our code of conduct and ethics that apply to our chief executive officer or chief financial officer will be promptly disclosed to our stockholders.

*Audit ~~Filed~~Committee. Following the resignations of the audit committee members and most of the ~~herewith~~remaining directors on August 26, 2009, the Company was left with only three directors (Richard M. Osborne, Gregory J. Osborne and Thomas J. Smith), none of whom are independent pursuant to applicable laws and regulations and listing standards of NASDAQ. Currently, our board does not have a separately-designated audit committee and the entire board acts as the audit committee. Mr. Smith would qualify as an “audit committee financial expert” but he is not independent.

†27 ~~Management agreement or compensatory plan or arrangement~~

31Table of Contents

~~SIGNATURES~~Item 11. Executive Compensation

~~Pursuant~~Director and Executive Officer Compensation Decisions. Our chairman and chief executive officer togenerally determines the ~~requirements~~compensation offor ~~Section~~our 13executive orofficers ~~15(d)~~and ofcompensation is then approved by the ~~Securities~~full ~~Exchange~~board. ~~Act~~We ofdo not have a compensation committee. Our board believes a compensation ~~1934,~~committee is not necessary because of the ~~Registrant~~level ~~has~~and ~~duly~~type ~~caused~~of ~~this~~compensation ~~report~~paid to beour ~~signed~~executive officers onand ~~its~~because ~~behalf~~executive officer compensation is approved by our full board. The ~~the~~compensation ~~undersigned,~~of ~~thereunto~~our ~~duly~~outside ~~authorized~~directors was also approved by our full board. The board also administers our Amended and Restated 1999 Stock Option and Award Plan.

Dated: March 26, 2010	JOHN D. OIL AND GAS COMPANY
	By: /s/ Richard M. Osborne
	Richard M. Osborne
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

Summary Compensation Table. The following table summarizes the compensation paid by us to our chairman and chief executive officer and any other executive officer receiving more than $100,000 in total compensation annually. We do not believe that our compensation practices are reasonably likely to have a material adverse effect on the Company.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


							All Other
Name and			Salary		Bonus		Compensation		Total
Principal Position	Year		($)		($)		($)		($)
Richard M. Osborne, Chairman and Chief Executive Officer*		2010		—		—		—		—
Richard M. Osborne, Chairman and Chief Executive Officer*		2009		—		—		—		—
Gregory J. Osborne, President and Chief Operating Officer		2010		110,000		—		—		110,000
Gregory J. Osborne, President and Chief Operating Officer		2009		110,000		2,000		—		112,000

/s/ Richard M. Osborne		Dated: March 26, 2010
Richard M. Osborne
Chairman, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ C. Jean Mihitsch		Dated: March 26, 2010
C. Jean Mihitsch
Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/Gregory J. Osborne		Dated: March 26, 2010
Gregory J. Osborne, President and Director
/s/Thomas J. Smith		Dated: March 26, 2010
Thomas J. Smith, Director


*		Richard Osborne does not receive compensation for serving as our chairman and chief executive officer.

32Executive Officer Outstanding Equity Awards at December 31, 2010. None of our executive officers had any outstanding equity awards at December 31, 2010.

~~Report~~ Executive Officer Employment Agreements. None of ~~Independent~~our ~~Registered~~executive ~~Public~~officers ~~Accounting~~has ~~Firm~~an employment agreement with us.

ToDirector ~~the Shareholders~~Compensation. Richard M. Osborne, Gregory J. Osborne and ~~Board~~Thomas ofJ. ~~Directors~~Smith ofdid not receive compensation for serving on our board during 2010.

~~John~~Item D12. ~~Oil~~ Security Ownership of Certain Beneficial Owners and ~~Gas~~Management ~~Company~~and Related Stockholder Matters

WeThe ~~have audited~~following ~~the~~table ~~accompanying~~sets ~~consolidated~~forth ~~balance~~the ~~sheets~~amount ofand ~~John~~nature D.of ~~Oil~~the ~~and~~beneficial ~~Gas Company~~ownership (aof ~~Maryland~~our ~~corporation)~~common stock ~~and Subsidiary~~ as of ~~December 31~~March 29, ~~2009~~2010 ~~and 2008,~~by ~~and~~each ~~the~~person ~~related~~known ~~consolidated~~by ~~statements~~us ofto ~~operations~~own ~~and~~more ~~comprehensive loss,~~than ~~shareholders'~~5% ~~equity, and cash flows for each~~ of the ~~two years in the~~outstanding ~~period~~shares, ~~ended~~each ~~December 31~~director, ~~2009. These~~each ~~financial~~executive ~~statements~~officer ~~are~~in ~~the responsibility~~our ofsummary ~~the~~compensation ~~Company's~~table, ~~management. Our~~and ~~responsibility~~all ~~is to~~our ~~express~~current andirectors ~~opinion~~and onexecutive ~~these~~officers ~~financial~~as ~~statements~~a ~~based on our audits~~group.

We conducted our audits 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


	Beneficial Ownership⁽¹⁾
Name and Address⁽²⁾	Shares			Convertible Securities			Total			Percent
Richard M. Osborne		3,654,541	⁽³⁾		1,021,966	⁽⁴⁾		4,676,507	⁽⁵⁾		46.4	%
Richard A. Bonner		500,000	⁽⁶⁾		250,000	⁽⁷⁾		750,000	⁽⁶⁾⁽⁷⁾		8.0	%
PO Box 1359 Middlefield, Ohio 44062
S&A Investments		—			500,000	⁽⁸⁾		500,000	⁽⁸⁾		5.2	%
10474 Broadview Road Broadview Heights, Ohio 44147
Gregory J. Osborne		151,000			—			151,000			1.7	%
Thomas J. Smith		62,000			6,852	⁽⁹⁾		68,852	⁽⁹⁾		*
All directors and officers as a group (4 individuals)

In* ~~our opinion,~~less ~~the~~than consolidated financial statements referred to above present fairly, in all material respects, the financial position of John D. Oil and Gas Company and Subsidiary as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.1%

~~As more~~28 fully described in Note 2, to the financial statements, the Company has suffered recurring losses and has $10.6 million of debt currently due and in default that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MaloneyTable +of Novotny LLCContents

Cleveland, Ohio


(1)		Unless otherwise indicated, we believe that all persons named in the table have sole investment and voting power over the shares of common stock owned.

(2)		Unless otherwise indicated, the address of each of the beneficial owners identified is c/o John D. Oil and Gas Company, 8500 Station Street, Suite 345, Mentor, Ohio 44060.

(3)		Includes (1) 3,503,541 shares owned by the Richard M. Osborne Trust, an Ohio trust of which Richard Osborne is the sole trustee, and (2) 151,000 shares owned by Gregory Osborne which Richard Osborne has the right to vote.

(4)		Includes (1) 5,188,528 limited partnership interests of LSS I Limited Partnership, a Delaware limited partnership, owned by Richard Osborne that are presently convertible into 714,537 shares of our common stock, (2) 1,869,292 limited partnership interests of LSS I owned by Retirement Management Company, of which Richard Osborne is the sole stockholder, that are presently convertible into 257,429 shares of our common stock and (3) 50,000 warrants to purchase 50,000 shares of common stock that are presently exercisable.

(5)		Includes (1) 3,503,541 shares owned by the Richard M. Osborne Trust, (2) 151,000 shares owned by Gregory Osborne which Richard Osborne has the right to vote, (3) limited partnership interests of LSS I owned by Richard Osborne that are presently convertible into 714,537 shares of our common stock, (4) limited partnership interests of LSS I owned by Retirement Management Company that are presently convertible into 257,429 shares of our common stock, and (5) warrants to purchase 50,000 shares of common stock that are presently exercisable.

(6)		Based solely on information in the Schedule 13D filed with the SEC on May 11, 2006.

(7)		Includes 250 shares of our Series A convertible preferred stock that are presently convertible into 250,000 shares of our common stock.

(8)		Includes 500 shares of our Series A convertible preferred stock that are presently convertible into 500,000 shares of our common stock. Based solely on information in the Schedule 13D filed with the SEC on February 21, 2007.

(9)		Includes 49,753 limited partnership interests of LSS I owned by Mr. Smith that are presently convertible into 6,852 shares of our common stock.

~~March~~Equity ~~26,~~Compensation Plan Information ~~2010~~

33The following table summarizes information, as of December 31, 2010, relating to our Amended and Restated 1999 Stock Option and Award Plan. The plan provides for the issuance of up to 300,000 shares of common stock to key employees, officers and directors. As of December 31, 2010, there were 35,000 shares of restricted stock and no options outstanding and the maximum number of shares available for future grant under the plan was 265,000 shares. Under the plan, the option price may not be less than 100% of the common stock fair market value on the date of grant (in the event of incentive stock options, 110% of the fair market value if the employee owns more than 10% of our outstanding common stock).

John D. Oil and Gas Company and Subsidiary

Number of

securities

Weighted-

remaining available

to be issued upon

average

for future issuance

exercise of

exercise price of

under equity

outstanding

compensation plans

options, warrants

(excluding securities

Plan category

and rights

reflected in column (a))

Equity compensation plans approved by security holders

35,000

0.65

265,000

Equity compensation plans not approved by security holders

—

Total

35,000

0.65

265,000

~~Consolidated~~29 ~~Balance Sheets~~

	December 31, 2009			December 31, 2008
ASSETS
Current Assets:
Cash	$	22,072		$	78,301
Accounts Receivable		44,197			40,879
Accounts Receivable from Related Parties		478,135			1,417,679
Other Current Assets		17,723			56,202
Total Current Assets		562,127			1,593,061
Property and Equipment, Net		8,985,937			12,173,673
Investment in Unconsolidated Affiliate		705,965			989,258
Other Assets		5,495			60,624
TOTAL ASSETS	$	10,259,524		$	14,816,616
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Line of Credit	$	9,497,024		$	9,500,000
Current Maturities of Long Term Debt		1,145,174			100,504
Accounts Payable		370,675			1,332,504
Accounts Payable to Related Parties		47,144			697,377
Accrued Expenses		201,959			398,838
Total Current Liabilities		11,261,976			12,029,223
Long Term Debt, Net of Current Maturities		-			1,159,567
Asset Retirement Obligation		680,056			644,517
Commitments and Contingencies		-			-
Shareholders’ Equity:
Serial Preferred Stock - $.001 par value: 2,000,000 shares authorized, 1,350 shares issued and outstanding		1			1
Common Stock - $.001 par value: 50,000,000 shares authorized; 9,067,090 shares issued and outstanding		9,067			9,067
Paid-in Capital		30,273,239			30,268,691
Accumulated Deficit		(31,151,171	)		(28,428,470	)
Accumulated Other Comprehensive Loss		-			(133,880	)
Total John D. Oil and Gas Company Shareholders’ Equity		(868,864	)		1,715,409
Non-Controlling Interest		(813,644	)		(732,100	)
Total Shareholders’ Equity		(1,682,508	)		983,309
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	10,259,524		$	14,816,616

~~The~~Item ~~accompanying~~13. ~~notes~~Certain toRelationships ~~consolidated financial~~and ~~statements~~Related ~~are~~Transactions, anand ~~integral~~Director ~~part of these statements.~~Independence

34Richard M. Osborne, our chairman and chief executive officer, is the sole manager of Liberty Self-Stor II, Ltd., an Ohio limited liability company, which owns a truck rental business that provides trucks for short-term rental to the general public, including tenants of our self-storage facility, and provides for the retail sale of locks, boxes, packing materials, propane gas and related merchandise at the self-storage facility. John D. Oil and Gas has a cost sharing agreement with Liberty Self-Stor II with respect to the sharing of employees and space at the offices of the self-storage facility for the benefit of both companies. As of December 31, 2010, Liberty Self-Stor II owed us $3,806 associated with these transactions, as well as for cash advances between the companies.

~~John~~On DDecember 28, 1999, our stockholders approved the lease of our executive offices from OsAir, Inc., a company owned by Mr. Osborne. The lease had a three year term maturing on March 31, 2009 ~~Oil~~for ~~and~~$1,350 ~~Gas~~per ~~Company~~month. The lease was extended on March 25, 2009 for a three year term at $2,000 per month. As of December 31, 2010, $24,000 of this expense is included in our general and administrative ~~Subsidiary~~expenses.

~~Consolidated~~On September 28, 2006, the Company entered into an unsecured loan agreement for a line of credit ~~Statements~~with a one year term with Mr. Osborne and Charter One Bank for up to $5.0 million dollars in total borrowings with interest at a rate of ~~Operations~~1.75% over LIBOR adjusted monthly. The Charter One liability was jointly loaned, so the Company and ~~Comprehensive~~Mr. Osborne ~~Loss~~were each liable for the debt of the other.

~~For~~The loan was subsequently revised several times until on March 28, 2008, the Company entered into the First Amended and Restated Loan and Security Agreement (the “Loan Agreement”) between the Company, Mr. Osborne (the Company and Mr. Osborne together, the “Borrowers”), and Charter One. The ~~Years~~Loan ~~Ended~~Agreement ~~December~~extended 31the maturity date to August 1, 2009, continuing with the original interest rate calculation of 1.75% over LIBOR adjusted monthly. Under the agreement, only the Company could borrow on the line of credit when any amounts are paid down against the $9.5 million outstanding on the loan. The Company and Great Plains Exploration LLC, a company owned by Mr. Osborne (“Great Plains”), agreed that the related party loan of $3.8 million from Great Plains was satisfied in full and terminated upon the Company’s entry into the new Charter One loan and assumption of the $3.8 million portion of the line of credit drawn by Mr. Osborne. Therefore, the Company had $9.5 million in outstanding debt to Charter One and $0 in outstanding debt to Great Plains at March 31, 2008. As part of this loan agreement, Mr. Osborne has pledged several real estate properties that he personally owns, to provide sufficient collateral allowing the Company to enter into the loan agreement. The Company did not meet the reserve collateral requirements for a $9.5 million loan without additional collateral.

	2009			2008
Revenues
Oil and Natural Gas Sales	$	3,711,668		$	4,568,087
Self-Storage Operation Revenues		333,569			312,108
Interest and Other		8			3,318
Total Revenues		4,045,245			4,883,513
Operating Expenses
Interest		448,558			581,954
Accretion		45,905			44,742
Oil and Natural Gas Production Costs		687,182			575,675
Self-Storage Property Operating Expense		112,382			115,671
Legal and Professional Fees		367,854			244,942
Property Taxes and Insurance		137,492			159,601
General and Administrative		762,982			885,736
Warrant		-			47,573
Loss from Unconsolidated Affiliate		650,420			28,627
Bad Debt		2,157			43,517
Impairments		145,444			491,224
Depreciation, Depletion and Amortization		3,381,114			3,874,858
Total Operating Expenses		6,741,490			7,094,120
Net Loss		(2,696,245	)		(2,210,607	)
Net Loss attributable to Non-controlling Interest		(81,544	)		(170,567	)
Net Loss attributable to John D. Oil and Gas Company	$	(2,614,701	)	$	(2,040,040	)
Other Comprehensive Income (Loss):
Change in Fair Value of Cash Flow Hedge		133,880			(133,880	)
Comprehensive Loss	$	(2,562,365	)	$	(2,344,487	)
Weighted Average Basic and Diluted Shares Outstanding		9,067,090			9,020,859
Loss per Common Share – Basic and Diluted	$	(0.31	)	$	(0.25	)

The Company’s $9.5 million line of credit with Charter One matured on August 1, 2009. On August 20, 2009, Charter One received a judgment in its favor against the Company and Mr. Osborne, related to the $9.5 million line of credit. The average balance during 2010 was $9.5 million and the weighted average interest rate was 3.55%. The average balance during 2009 was $9.5 million and the weighted average interest rate was 2.12%.

On June 18, 2010, the Company, Mr. Osborne, the Richard M. Osborne Trust (the “Trust”), Great Plains, and Oz Gas, Ltd. (companies owned by Mr. Osborne) entered into a Forbearance Agreement with Charter One regarding the Company’s $9.5 million line of credit under the Loan Agreement and regarding the $25.0 million loan agreement between Great Plains, Oz Gas and Mr. Osborne and Charter One, dated August 2, 2007 (together, the “Loan Agreements”). The Company, Mr. Osborne, the Trust, ~~accompanying~~Great ~~notes~~Plains and Oz Gas are collectively referred to ~~consolidated~~in ~~financial~~the ~~statements~~Forbearance ~~are~~Agreement anand ~~integral~~herein ~~part~~as ofthe ~~these~~“Loan ~~statements~~Parties.”

35Pursuant to the Forbearance Agreement and during the forbearance period, Charter One agreed to, among other things, forbear from exercising its rights and remedies arising out of the judgments and the Loan Agreements and to stay any action on its motion for the appointment of a receiver.

~~John D.~~30 ~~Oil and Gas Company and Subsidiary~~

Consolidated StatementsTable of Shareholders’ EquityContents

~~For~~Under ~~The Years~~the ~~Ended~~Forbearance ~~December 31~~Agreement, ~~2009~~Charter One’s agreement to forbear is conditioned upon and ~~2008~~subject to the following conditions:

	Preferred Stock		Common Stock		Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Non- Controlling Interest			Total
Balance at December 31, 2007	$	-	$	9,019	$	28,871,616	$	(26,303,290	)	$	-		$	(561,533	)	$	2,015,812
Preferred Stock Issued in Private
Placement, Net of Offering Costs		1				1,332,503											1,332,504
Common Stock Issued for Director Compensation				48		12,451											12,499
Restricted Common Stock Award						4,548											4,548
Dividends Declared								(85,140	)								(85,140	)
Director Warrant Issued						47,573											47,573
Net Loss								(2,040,040	)					(170,567	)		(2,210,607	)
Change in Fair Value of Cash Flow Hedge											(133,880	)					(133,880	)
Balance at December 31, 2008	$	1	$	9,067	$	30,268,691	$	(28,428,470	)	$	( 133,880	)	$	(732,100	)	$	983,309
Restricted Common Stock Award						4,548											4,548
Dividends Declared								(108,000	)								(108,000	)
Net Loss								(2,614,701	)					(81,544	)		(2,696,245	)
Change in Fair Value of Cash Flow Hedge											133,880						133,880
Balance at December 31, 2009	$	1	$	9,067	$	30,273,239	$	(31,151,171	)	$	-		$	(813,644	)	$	(1,682,508	)

•

Payment by the Loan Parties of a forbearance fee of $40,000 per month during the forbearance period;

~~The accompanying~~• ~~notes~~No tomaterial ~~consolidated~~adverse ~~financial~~change ~~statements~~in ~~are~~the ancondition ~~integral~~of ~~part~~the ~~of these~~Loan ~~statements.~~Parties;

36• An assignment and grant of a security interest by the Company and Great Plains Exploration of each of their ownership interests in the Alpha and Panzica wells;

~~John~~• ~~D. Oil~~A ~~and~~pledge ~~Gas~~by ~~Company~~the ~~and~~Loan ~~Subsidiary~~Parties of their ownership interests in Kykuit Resources LLC; and

~~Consolidated Statements~~• A pledge by Mr. Osborne of ~~Cash~~not ~~Flows~~less than 800,000 shares of common stock of Gas Natural Inc. with such stock having a market value of not less than $9.6 million pursuant to a pledge agreement.

	For The Years Ended December 31,
	2009			2008
Cash Flows from Operating Activities:
Net Loss	$	(2,696,245	)	$	(2,210,607	)
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities
Accretion		45,905			44,742
Loss from Unconsolidated Affiliate		650,420			28,627
Bad Debt		2,157			43,517
Impairments		145,444			491,224
Depreciation, Depletion and Amortization		3,381,114			3,874,858
Gain on Sale of Equipment		-			(199	)
Common Stock Issued as Compensation		-			12,499
Restricted Common Stock Award		4,548			4,548
Director Warrant Issued		-			47,573
Changes in Operating Assets and Liabilities:
Accounts Receivable		938,738			(518,794	)
Other Current Assets		38,479			182,633
Other Assets		55,129			(46,730	)
Accounts Payable		(1,612,062	)		(57,385	)
Accrued Expenses		(87,731	)		24,354
Net Cash Provided By Operating Activities		865,896			1,920,860
Cash Flows from Investing Activities:
Purchases of Property and Equipment		-			(1,437	)
Proceeds from Sale of Equipment		-			830
Proceeds from Sale of Interest in Unconsolidated Affiliate		-			731,747
Expenditures for Unconsolidated Affiliate		(367,127	)		(480,222	)
Expenditures for Oil and Natural Gas Wells		(329,125	)		(3,244,934	)
Net Cash Used In Investing Activities		(696,252	)		(2,994,016	)
Cash Flows from Financing Activities:
Proceeds from Preferred Stock Private Placement		-			1,332,504
Dividends Paid to Preferred Stockholders		(108,000	)		(85,140	)
Proceeds from Related Party Note Payable		600,000			500,000
Principal Payments on Related Party Debt		(600,000	)		(500,000	)
Principal Payments on Long Term Debt		(117,873	)		(126,386	)
Net Cash (Used In) Provided By Financing Activities		(225,873	)		1,120,978
Net (Decrease) Increase in Cash		(56,229	)		47,822
Cash, Beginning of Period		78,301			30,479
Cash, End of Period	$	22,072		$	78,301
Supplemental Disclosure of Cash flow Information:
Interest Paid on Borrowings	$	443,549		$	562,083

In addition, commencing July 1, 2010 and each month thereafter until all amounts under the judgments and loan agreements have been paid in full, the Loan Parties shall pay Charter One $400,000, including the $40,000 forbearance fee. The Company had previously planned to pay one third of the $400,000, but due to lack of cash, they have decided to accrue interest and one third of the $40,000 monthly fee and legal fees. The monthly $400,000 is being paid by the other Loan Parties. Such payments by the Loan Parties shall be applied first to Charter One’s fees and expenses, second to accrued but unpaid interest due under the judgments, and third to principal amounts due under the judgments. Charter One contends that the judgments will bear interest at LIBOR plus 1.75% with a LIBOR floor of 3.00%. The Company believes that there is an interest rate cap of 3.00%. The parties are in discussions regarding the applicable interest rate. If the Loan Parties repay $10 million and if after application of such repayment the outstanding balance of the judgments does not exceed 65% of the current producing reserve value (as that term is defined in the Loan Agreements) of the Company, Great Plains and Oz Gas, then the pledge of Mr. Osborne’s Kykuit interests and his Gas Natural Inc. shares shall be released. In addition, the Company must deposit all proceeds of its operations into accounts maintained by Charter One but during the forbearance period Charter One will not take any action to set off funds in any such account.

The ~~accompanying~~ ~~notes~~forbearance period is effective until July 1, 2011, subject to ~~consolidated~~the ~~financial~~earlier ~~statements~~termination ~~are~~upon anthe occurrence ~~integral~~of ~~part~~any events of default by any of the Loan Parties, including non-payment of any ~~these~~amounts ~~statements~~due by any of the Loan Parties under the Forbearance Agreement.

37Because the Company does not have the available cash to repay the line of credit, if the required payments are not made by the Company or any of other Loan Parties, or other events of default occur, under the Forbearance Agreement or if prior to the end of the forbearance period the Company is unsuccessful in refinancing the line of credit with Charter One or if the Company is unsuccessful in obtaining substitute financing, there is substantial doubt about the Company’s ability to continue as a going concern.

~~John~~Discussions Dwith Charter One are ongoing but there is no certainty that these discussions will result in satisfactory terms of a revised loan agreement or a revised loan agreement at all. If ~~Oil~~Charter ~~and~~One ~~Gas~~demands repayment of the outstanding amounts payable at the end of the forbearance period, the Company does not have the available cash to repay the line of credit and ~~Subsidiary~~will need financing from other sources to repay Charter One.

~~Notes~~Effective toJanuary 1, 2006, the Company entered into a contract with Great Plains for well ~~Consolidated~~operations ~~Financial~~and ~~Statements~~sale of natural gas and oil production, net of pipeline costs. The term of the agreement was one year from the effective date. It was extended as of January 1, 2007 and shall be extended for consecutive one year periods unless terminated earlier.

~~For~~ The Company is a fifty percent partner and the operating manager of Lucky Brothers LLC, a company ~~Years~~whose ~~Ended~~other ~~December~~partners are almost all related to Mr. Osborne. The partnership owned one well at December 31, ~~2009~~2010. The purpose of Lucky Brothers LLC is to engage in a joint venture for drilling wells. The Company has invested $174,392 in well tangibles and ~~2008~~intangibles at December 31, 2010 and 2009.

~~1. Summary~~The ~~of Significant~~Company ~~Accounting~~purchases ~~Policies~~well supplies from Big Oats Oilfield Supply Company, a company owned by Mr. Osborne.

~~General~~At December 31, 2010, the Company had a $12,000 invoice outstanding to Oz Gas Ltd., a company owned by Mr. Osborne, for payments made on the Company’s behalf to Charter One during 2010.

~~John~~The ~~D. Oil and Gas~~ Company, ~~formerly~~paid ~~Liberty~~Orwell ~~Self-Stor~~Trumbull Pipeline, ~~Inc. (the “Company”)~~LLC, is a ~~corporation~~ ~~organized~~company ~~under~~owned ~~the~~by ~~laws~~Mr. Osborne, offor ~~the~~telemeter charges ~~State~~in ~~of Maryland~~2010.

~~The~~31 Company was originally a self-storage company from 1999 to 2005 when it sold all but two of its facilities. By May 2007, one self-storage facility in Painesville remained which generates revenue through self-storage rentals and retail leases. The self-storage facility is operated through a partnership agreement between Liberty Self-Stor Ltd. (“Ltd”) and the Company. Ltd has a 70.1% equity interest and the Company has a 29.9% equity interest in the operating partnership of LSS I Limited Partnership (“LSS I”). The members of Ltd consist of Richard M. Osborne, Chairman and Chief Executive Officer of the Company, Thomas J. Smith, a director and the former President and Chief Operating Officer of the Company, and Retirement Management Company, an Ohio corporation owned by Mr. Osborne. These members have Class A limited partnership interests that are redeemable for cash or, at the election of the Company, convertible into shares of the Company’s stock based on an exchange factor. The current exchange factor is .1377148 of a share for each unit.

InTable 2006, the Company entered into the business of extracting and producing oil and natural gas products, drilling oil and natural gas wells in Northeast Ohio. The Company currently has fifty-eight producing wells. The Company cannot guarantee success under the new business plan as drilling wells for oil and natural gas is a high-risk enterprise and there is no guarantee the Company will become profitable.Contents

~~Principles~~On August 3, 2007, Kykuit Resources, LLC purchased from Hemus, Ltd. a 75% interest in certain oil, natural gas and mineral rights located in the Montana Breaks area of Montana. At the same time, ~~Consolidation~~Kykuit and Hemus executed a joint venture development agreement pursuant to which Kykuit agreed to develop and operate all of their joint leasehold interests in the Montana Breaks. On May 1, 2008, Kykuit entered into an assignment pursuant to which Hemus assigned all of its remaining rights, title and interest in certain oil and natural gas and mineral leases located in Montana to Kykuit for $250,000. John D. Oil and Gas is the managing member of Kykuit and currently owns 21.79% of Kykuit. The current investment by John D. Oil and Gas in this venture was $736,953 at December 31, 2010.

~~Pursuant to~~Richard ~~the~~Osborne ~~terms~~owns ofinterests ~~the~~in ~~partnership~~Kykuit. ~~agreement~~Gas ofNatural, ~~LSS~~Inc., Ia ~~Limited~~publicly-held ~~Partnership~~public ~~(“LSS~~utility ~~I”),~~company ~~the~~of ~~Company,~~which asRichard ~~sole~~Osborne ~~general~~is ~~partner, controls LSS I. Accordingly,~~ the ~~Company~~chairman ~~accounts~~and ~~for~~chief ~~its~~executive ~~investment~~officer inand ~~LSS~~a Isignificant ~~utilizing~~stockholder, ~~the~~also ~~consolidation~~owns ~~method. The~~an ~~investment~~interest in ~~an unconsolidated~~Kykuit. ~~affiliate~~Thomas J. Smith, ~~Kykuit~~a ~~Resources~~director ~~LLC~~of ~~(Kykuit)~~John isD. ~~accounted~~Oil ~~for~~and ~~using~~Gas, ~~the~~is ~~equity~~also ~~method. All~~vice ~~significant~~president, ~~inter-company~~chief ~~transactions~~financial officer and ~~balances~~ ~~have~~a ~~been~~director ~~eliminated~~of Gas Natural, Inc.

~~Accounts~~On February 28, 2006, we entered into a registration rights agreement with the Richard M. Osborne ~~Receivable~~Trust, of which Richard Osborne is the sole trustee, and any other stockholders who become parties to the agreement pursuant to its terms, which provides, among other things, certain piggyback registration rights to the stockholders who are parties to the agreement and that we will file a registration statement with the SEC upon the demand of the Osborne Trust.

The ~~Company~~ ~~has~~following ~~certain~~tables ~~trade~~summarize ~~receivables~~the ~~consisting~~related party transactions for accounts receivable of oil and natural gas ~~sale obligations~~production, ~~due~~capitalized ~~under~~costs ~~normal~~for ~~trade~~wells, ~~terms. The~~outstanding ~~Company~~accounts ~~currently~~payable, ~~sells~~revenues ~~its~~received ~~production to a related party through an oil~~ and ~~natural~~payments ~~gas~~paid ~~agreement, extending~~for ~~credit~~expenses onto anrelated ~~unsecured~~parties ~~basis~~for tothe ~~them~~periods indicated. In ~~evaluating~~The ~~its~~accounts ~~allowance~~receivable ~~for~~from ~~possible~~various ~~losses,~~companies ~~the~~owned ~~Company~~by ~~performs~~Mr. Osborne ain ~~review~~the ofaccompanying ~~outstanding~~consolidated balance ~~receivables. The~~sheets ~~trade~~represent ~~receivables~~amounts ~~outstanding~~owed ~~are~~to ~~typically~~the ~~three months~~Company offor ~~natural~~minor ~~gas~~cost ~~production~~sharing ~~due~~transactions ~~to the timing~~ and ~~accounting~~are ~~treatment~~listed byin the ~~main~~following ~~distribution~~table ~~pipeline~~for ~~company~~the inyears ~~Northeast~~ended ~~Ohio. At~~ December 31, ~~2009~~2010 and ~~2008, the Company’s credit evaluation indicated that it has no need for an allowance for possible losses~~2009.

The Company’s accounts receivable, arising from the self-storage business, are due from individuals as well as business entities. Tenants are required to pay their rent on the first of each month. Past due amounts are those that are outstanding longer than the contractual payment terms. If an account is more than 75 days past due, the Company generally writes off the balance directly to expense. For such past due accounts, the Company has the right to auction the contents of the rented space, which allows for recovery of written-off balances. Any such recoveries are credited to income when received.


	2010		2009
Accounts Receivable Oil and Gas Sales:
Great Plains Exploration, LLC.	$	435,268	$	423,566
Liberty Self Stor II		3,806		727
Lucky Brothers		—		38,983
Various Related Companies		4,628		1,308

	$	443,702	$	464,584


Accounts Payable:
Great Plains Exploration, LLC.	$	14,012	$	47,144
Big Oats Oilfield Supply Company		23,111		—
Kykuit Resources LLC		160,391
Orwell Natural Gas		1,296
Osair, Inc.		11,922		—
OzGas Ltd.		12,000		—

	$	222,732	$	47,144

Property and Equipment


	2010		2009
Great Plains Exploration, LLC:
Capitalized Costs for Well Property and Equipment	$	—	$	140,410
Revenues
Revenue From the Sale of Oil and Natural Gas Production, net of pipeline transportation costs	$	1,828,647	$	3,519,851
Operating expenses
Well Management, Water Hauling and Service Rig	$	395,892	$	506,337
Big Oats Oilfield Supply Company:
Purchases	$	22,193	$	—
Orwell Trumbull Pipeline, LLC
Operating expenses	$	2,000	$	—

~~All~~32 property and equipment is depreciated using the straight-line method over estimated useful lives of twenty five years for buildings and improvements and five to seven years for furniture and equipment.

38Table of Contents

~~John~~We ~~D. Oil~~believe that the terms of the transactions and ~~Gas~~the ~~Company~~agreements described above are on terms at least as favorable as those which we could have obtained from unrelated parties. On-going and future ~~Subsidiary~~transactions with related parties will be:

~~Notes~~• ~~to Consolidated~~on ~~Financial~~terms ~~Statements~~at least as favorable as those that we could obtain from unrelated parties,

~~For~~• ~~The Years~~for ~~Ended~~bona ~~December~~fide 31business purposes, ~~2009~~ and ~~2008~~

~~The Company~~• ~~uses~~approved ~~the~~by ~~successful~~a ~~efforts~~majority ~~method~~ of ~~accounting~~disinterested ~~for oil~~ and ~~natural~~non-employee ~~gas producing activities. Under this method~~directors, ~~acquisition~~if ~~costs for proved and unproved properties are capitalized when incurred~~any. Exploration costs, including geological and geophysical costs, the costs of carrying and retaining unproved properties and exploratory dry hole drilling costs, are expensed. Development costs, including the costs to drill and equip development wells and successful exploratory drilling costs to locate proved reserves, are capitalized. Upon sale or retirement of a proved property, the cost and accumulated depreciation and depletion and amortizations are eliminated from property accounts and the resultant gain or loss is recognized.

~~Exploratory drilling~~Director ~~costs~~Independence. ~~are~~Following ~~capitalized when incurred pending~~ the ~~determination~~resignations of ~~whether~~ athe ~~well~~audit ~~has~~committee ~~found~~members ~~proved~~and ~~reserves.~~most Ifof athe remaining ~~well~~directors ison ~~determined~~August 26, ~~to be successful~~2009, the ~~capitalized~~Company ~~drilling~~was ~~costs~~left ~~will~~with beonly ~~reclassified~~three asdirectors ~~part~~(Richard ~~of the~~M. ~~cost~~Osborne, ofGregory ~~the well~~J. IfOsborne aand ~~well~~Thomas isJ. ~~determined to be unsuccessful~~Smith), ~~the~~none ~~capitalized drilling~~of ~~costs~~whom ~~will~~are beindependent ~~charged~~pursuant to applicable ~~expense~~laws inand ~~the~~regulations ~~period~~and ~~the~~listing ~~determination~~standards ~~is made~~of NASDAQ. ~~The~~ ~~Company~~Currently, isour ~~involved~~board indoes ~~exploratory drilling only to the~~not ~~extent~~have ~~that~~a itseparately-designated isaudit acommittee ~~partner~~and ofthe ~~Kykuit,~~entire ~~which~~board isacts ~~doing~~as ~~exploratory~~the ~~drilling~~audit ~~in Montana~~committee. ~~The~~ ~~Company~~Mr. Smith iswould qualify as an ~~owner~~“audit ~~and~~committee ~~managing~~financial ~~member~~expert” ofbut ~~Kykuit,~~he ~~an unconsolidated~~is ~~affiliate~~not independent.

~~Development~~Item costs of proved oil and natural gas properties, including estimated dismantlement, restoration, abandonment costs and acquisition costs, are depreciated and depleted on a well by well basis by the units-of-production method using estimated proved developed reserves14. ~~The~~ ~~costs~~Principal ofAccountant ~~oil~~Fees and ~~natural gas properties are periodically assessed for impairment.~~Services

~~Asset~~Maloney + Novotny, our independent auditors, billed $91,520 in 2010 and $96,648 in 2009 for audit ~~Impairment~~fees for the audit of our annual consolidated financial statements, the review of financial statements included in our quarterly reports on Form 10-Q, and services that are typically rendered in connection with statutory and regulatory filings or engagements. Maloney + Novotny did not render any other services to us in 2010 and 2009.

~~The Company~~Audit ~~reviews~~Committee ~~its self~~Pre-~~storage~~Approval ~~property~~Policies and ~~capitalized~~Procedures. ~~well~~The ~~costs~~Company’s ~~for impairment~~directors ~~when~~approved ~~events or changes in circumstances indicate~~ the ~~carrying amounts~~ engagement of the ~~properties~~auditors ~~may~~engaged ~~not~~by beJohn ~~recoverable~~D. ~~When~~ ~~such~~Oil ~~conditions~~and ~~exist, management~~Gas ~~estimates~~to ~~future~~render ~~cash~~audit ~~flows~~or ~~from~~permissible ~~operations and ultimate disposition~~non-audit ofservices ~~the~~for ~~individual properties. If~~ the ~~estimated~~year ~~undiscounted~~ended ~~future cash~~December 31, ~~flows~~2010. ~~are~~The ~~less~~directors ~~than~~also reviewed the ~~carrying~~scope ~~amount~~ of ~~the~~any ~~asset, an adjustment to~~audit ~~reduce~~and ~~the~~other ~~carrying~~assignments ~~amount~~given to ~~the~~our ~~related~~auditors ~~property’s~~to ~~estimated~~assess ~~fair~~whether ~~market~~these ~~value would~~assignments ~~be recorded and an impairment loss~~ would beaffect ~~recognized. The~~their ~~Company~~independence. ~~wrote~~In ~~off~~2010, the ~~costs~~Company’s ~~related~~directors toreviewed ~~one~~all ~~well~~services ~~amounting~~provided toby ~~$145,444~~Maloney in+ ~~2009~~Novotny ~~and~~to ~~two~~ensure ~~wells~~that ~~amounting~~they towere ~~$491,224~~within inthe ~~2008~~scope previously approved.

~~Asset~~PART ~~Retirement~~IV ~~Obligation~~

~~The Company~~Item accounts for its asset retirement obligations in accordance with generally accepted accounting principles in the United States of America (“GAAP”) which requires the fair value of an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made15. ~~For~~ ~~the~~Exhibits ~~Company, asset retirement obligations primarily relate to the abandonment, dismantling~~ and ~~plugging~~Financial ofStatement oil and natural gas wells. The present value of the estimated asset retirement cost is capitalized as part of the long-lived asset. The capitalized asset retirement cost is depreciated and the asset retirement obligation is accreted over the estimated life of the well.Schedules

The following table presents the Company’s asset retirement obligation activity for the years ended December 31:


Exhibit No.		Description

	2.1	Agreement and Plan of Merger, dated as of December 28, 1999, by and among Meridian Point Realty Trust ‘83, the Company and Liberty Self-Stor Limited Partnership (Exhibits A and B to the Agreement and Plan of Merger are Exhibits 3.1 and 3.2, respectively) (Filed as Exhibit 2.1 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)

	3.1	Articles of Incorporation of the Company (Filed as Exhibit 3.1 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)

	3.2	Articles of Amendment of Articles of Incorporation of the Company dated June 27, 2005(Filed as Exhibit 3.1 to Registrant’s Form 8-K dated July 1, 2005 and incorporated herein by reference.)

	3.3	Articles Supplementary to John D. Oil and Gas Company’s Articles of Incorporation, as amended, restated and supplemented dated February 12, 2008 (Filed as Exhibit 3.1 to Registrant’s Form 8-K dated February 12, 2008 and incorporated herein by reference.)

	3.4	Bylaws of the Company (Filed as Exhibit 3.2 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)

	2009			2008
Asset retirement obligations, beginning of the year	$	674,517		$	241,777
Liabilities incurred during the year		-			169,623
Revisions in estimated cash flows		(14,366	)		243,375
Liabilities settled during the year		(26,000	)		(25,000	)
Accretion expense		45,905			44,742
Asset retirement obligations, end of the year		680,056			674,517
Less current liabilities		-			30,000
Asset retirement obligations, net of current maturities	$	680,056		$	644,517

At DecemberTable 31, 2009 and December 31, 2008, the Company’s current portion of the asset retirement obligations was $0 and $30,000, respectively and is included in accrued expenses. The Company plugged two wells during 2009 and plugged four wells during 2008.Contents


Exhibit No.			Description

	4.1		Registration Rights Agreement between the Company and the Richard M. Osborne Trust dated February 28, 2006 (Filed as Exhibit 4.1 to Registrant’s Form 8-K dated February 24, 2006 and incorporated herein by reference.)

	9.1		Voting Trust Agreement between the Company, Richard M. Osborne and Gregory J. Osborne dated February 16, 2006 (Filed as Exhibit 7.1 to Registrant’s Form SC 13D/A dated April 11, 2006 and incorporated herein by reference.)

	10.1	†	Amended and Restated 1999 Stock Option and Award Plan of the Company (Filed as Annex A to Registrant’s Definitive Proxy Statement filed on April 30, 2009 and incorporated herein by reference.)

	10.2		Lease between OsAir, Inc. and the Company (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)

	10.3		Lease between OsAir, Inc and the Company dated March 26, 2009 (Filed as Exhibit 10.4 to Registrant’s Form 10-K dated December 31, 2008 and incorporated herein by reference.)

	10.4		Agreement of Limited Partnership of LSS I Limited Partnership, dated December 29, 1999. (Filed as Exhibit 10.3 to Registrant’s Form 8-K dated January 12, 2000 and incorporated herein by reference.)

	10.5		Cost Sharing Agreement, by and between Liberty Self-Stor, Ltd. and Liberty Self-Stor II, Ltd. dated December 28, 1999 (Filed as Exhibit 10.7 to Registrant’s Form 10-KSB, dated March 15, 2000 and incorporated herein by reference.)

	10.6		Contract among Acquiport/Amsdell I Limited Partnership and/or its nominee, Liberty Self-Stor, Ltd. and Liberty Self-Stor II, Ltd dated September 7, 2004 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated September 10, 2004 and incorporated herein by reference.)

	10.7		Amended and Restated First Amendment to Agreement of Limited Partnership of LSS I Limited Partnership dated March 29, 2006 (Filed as Exhibit 10.9 to Registrant’s form 10-KSB, dated March 31, 2006 and incorporated herein by reference)

	10.8		Stock Subscription Agreement between the Company and the Richard M. Osborne Trust dated February 28, 2006 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated March 2, 2006 and incorporated herein by reference.)

	10.9		Stock Subscription Agreement between the Company and Terence P. Coyne dated February 28, 2006 (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated March 2, 2006 and incorporated herein by reference.)

	10.10		Common Stock Purchase Warrant granted to Richard M. Osborne dated June 20, 2008 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated June 20, 2008 and incorporated herein by reference.)

	10.11		Letter agreement between the Company and Great Plains Exploration, LLC relating to the transfer of oil and natural gas wells dated as of January 1, 2006 (Filed as Exhibit 10.1 to Registrant’s Form 10-QSB dated March 31, 2006 and incorporated herein by reference.)

	10.12		Oil and Gas Operations and Sale Agreement between the Company and Great Plains Exploration, LLC dated as of January 1, 2006 (Filed as Exhibit 10.2 to Registrant’s Form 10-QSB dated March 31, 2006 and incorporated herein by reference.)

	10.13		Amendment No 1 to Oil and Gas Operations and Sale Agreement between the Company and Great Plains Exploration, LLC dated as of November 14, 2006 (Filed as Exhibit 10.4 to Registrant’s Form 10-QSB dated September 30, 2006 and incorporated by reference.)

~~John D.~~34 ~~Oil and Gas Company and Subsidiary~~

NotesTable to Consolidatedof Financial StatementsContents

For The Years Ended December 31, 2009 and 2008


Exhibit No.		Description

	10.14	Amendment No. 2 to Oil and Gas Operations and Sale Agreement dated as of January 12, 2009 by and between the Company and Great Plains Exploration, LLC (Filed as Exhibit 10.1 to the Registrant’s 8-K dated January 12, 2009 and incorporated herein by reference.)

	10.15	Revolving Demand Note of the Company payable to the Richard M. Osborne Trust dated as of January 1, 2006 (Filed as Exhibit 10.3 to Registrant’s Form 10-QSB dated March 31, 2006 and incorporated herein by reference.)

	10.16	Purchase and Sale Agreement between the Company and Buckeye Storage of Gahanna LLC dated as of October 5, 2006 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated October 12, 2006 and incorporated herein by reference.)

	10.17	First Amended and Restated Loan and Security Agreement between RBS Citizens, N.A., d/b/a Charter One, Richard M. Osborne and the Company, dated as of March 28, 2008 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated March 28, 2008 and incorporated herein by reference.)

	10.18	Revolving Credit Note of the Company and Richard M. Osborne in favor of RBS Citizens, N.A., d/b/a Charter One, dated as of March 28, 2008 (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated March 28, 2008 and incorporated herein by reference.)

	10.19	Loan Amendment Agreement between the Company, Great Plains Exploration, LLC and Richard M. Osborne dated March 28, 2008 (Filed as Exhibit 10.1 to Registrant’s Form 10-Q dated March 28, 2008 and incorporated herein by reference.)

	10.20	Assignment and Assumption of Lease Purchase and Sale Agreement and First Amendment of Lease Purchase and Sale Agreement entered into as of August 3, 2007 between Great Plains Exploration, LLC and Kykuit Resources, LLC (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by reference.)

	10.21	Lease Purchase and Sale Agreement dated March 21, 2007 between Hemus, Ltd. and Great Plains Exploration, LLC and First Amendment to Lease Purchase and Sale Agreement dated July 24, 2007 (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by reference.)

	10.22	Joint Venture Development Agreement between Kykuit Resources, LLC and Hemus, Ltd, effective August 3, 2007 (Filed as Exhibit 10.3 to Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by reference.)

	10.23	Assignment of Oil, Gas and Mineral Leases dated May 1, 2008 between Hemus, Ltd. and Kykuit Resources, LLC (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)

	10.24	Transfer and Acceptance of Membership Interest dated May 29, 2008 between the Company and Geis Coyne Oil and Gas, LLC (Filed as Exhibit 10.2 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)

	10.25	Second Amended and Restated Operating Agreement of Kykuit Resources, LLC dated May 29, 2008 (Filed as Exhibit 10.3 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)

~~Revenue~~35 ~~Recognition~~

The CompanyTable recognizes revenue from its oil and natural gas interests in producing wells as oil and natural gas is sold to a purchaser at a fixed or determinable price when delivery has occurred, title and risk of loss have transferred to the purchaser and the collectability of revenue is reasonably assured. The Company has a management agreement with a related party to transport the Company’s natural gas production through the related party’s pipeline and include this natural gas with the related party’s natural gas in order to fulfill production contracts they currently have in place. The company uses the sales method to account for any gas imbalances recognizing revenue based on gas delivered rather than its working interest of the gas produced. Gas imbalances at December 31, 2009 and 2008 were not significant.Contents

The Company’s revenue from self-storage operations is derived primarily from monthly rentals of self-storage units. Rental revenue is recognized in the period the rent is earned which is typically on a monthly basis.


Exhibit No.		Description

	10.26	Purchase and Sale Agreement dated June 11, 2008 between Macum Energy, Inc., Harold and Eva Holden Living Trust dated 1995, Harold and Eva Holden, Trustees, Winifred Gas Partnership, Goodridge Resources, Inc., Vincent T. Larse, Dr. David T. Larsen, Pic Productions, Inc., Stanley and Beverly Stott Living Trust dated 4/30/96, Stanley and Beverly Stott, Trustees, Faith Drilling Inc., and Kykuit Resources, LLC (Filed as Exhibit 10.4 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)

	10.27	Cognovit Promissory Note of the Company dated August 3, 2007 (Filed as Exhibit 10.4 to Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by reference.)

	10.28	Cognovit Promissory Note of the Company dated August 28, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated August 28, 2007 and incorporated herein by reference.)

	10.29	Cognovit Promissory Note of the Company dated September 12, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated September 12, 2007 and incorporated herein by reference.)

	10.30	Cognovit Promissory Note of the Company dated October 10, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated October 10, 2007 and incorporated herein by reference.)

	10.31	Cognovit Promissory Note of the Company dated November 20, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated November 20, 2007 and incorporated herein by reference.)

	10.32	Cognovit Promissory Note of the Company dated November 30, 2007 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated November 30, 2007 and incorporated herein by reference.)

	10.33	Cognovit Promissory Note of the Company dated May 23, 2008 (Filed as Exhibit 10.5 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)

	10.34	Cognovit Promissory Note of the Company dated May 27, 2008 (Filed as Exhibit 10.6 to Registrant’s Form 8-K dated May 1, 2008 and incorporated herein by reference.)

	10.35	Cognovit Promissory Note of the Company dated February 13, 2009 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated February 13, 2009 and incorporated herein by reference.)

	10.36	Letter from Richard M. Osborne guaranteeing Charter One loan debt dated March 26, 2009 (Filed as Exhibit 10.37 to Registrant’s Form 10-K dated December 31, 2008 and incorporated herein by reference.)

	10.37	Cognovit Promissory Note of John D Oil and Gas Company dated April 7, 2009 (Filed as Exhibit 10.38 to Registrant’s Form 10-K dated December 31, 2008 and incorporated herein by reference.)

	10.38	Cognovit Promissory Note of John D Oil and Gas Company (amended) dated May 22, 2009 (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated May 27, 2009 and incorporated herein by reference.)

	10.39	Forebearance Agreement dated June 18, 2010 between RBS Citizens, N.A., dba Charter One, the Company, Great Plains Exploration, LLC, OzGas LTD., Richard M. Osborne and The Richard M. Osborne Trust (Filed as Exhibit 10.1 to the Registrant’s Form 8-K dated June 25, 2010 and incorporated herein by reference.)

	10.40	Assignment & Security Agreement dated June 18, 2010 between RBS Citizens, N.A., dba Charter One, the Company and Great Plains Exploration, LLC (Filed as Exhibit 10.2 to the Registrant’s Form 8-K dated June 25, 2010 and incorporated herein by reference.)

~~The~~36 Company also leases certain commercial space in its Painesville property under long-term lease agreements through December 31, 2019. Total lease revenue related to these leases was $199,029 and $172,998 for the years ended December 31, 2009 and 2008, respectively. Revenue under these long-term lease agreements is recognized on a straight-line basis over the respective lease terms. In June of 2008, the Company decided to write-off an outstanding receivable of $40,027 for a leased vacant space to bad debt expense. While the Company has received a court judgment against the lease holder, as of December 31, 2009, the Company had not collected the outstanding receivable.

Future minimumTable lease revenue from operations under non-cancelable leases excluding options to renew for each of the five succeeding annual periods ending December 31 and thereafter are as follows:Contents

2010		$	215,286
Exhibit No.				Description
2011			220,506
	10.41			Pledge Agreement dated June 18, 2010 between RBS Citizens, N.A., dba Charter One, the Company and Richard M. Osborne (Filed as Exhibit 10.3 to the Registrant’s Form 8-K dated June 25, 2010 and incorporated herein by reference.)
2012			208,972
	10.42			Purchase and Sale Agreement effective as of January 30, 2008 between Liberty Self Stor, Ltd. and Richard M. Osborne, Trustee (Filed as Exhibit 10.1 to Registrant’s Form 8-K dated December 28, 2007 and incorporated herein by reference.)
2013			202,980
	10.43			Operating Agreement of Lucky Brothers, LLC dated October 7, 2008 (Filed as Exhibit 10.1 to Registrant’s Form 10-Q dated September 30, 2008 and incorporated herein by reference.)
2014			184,584
	10.44			Operating Contract between the Company, Lucky Brothers, LLC and Great Plains Exploration, LLC dated October 7, 2008 (Filed as Exhibit 10.2 to Registrant’s Form 10-Q dated September 30, 2008 and incorporated herein by reference.)
Thereafter			300,782
	10.45			Drilling Contract between the Company and Great Plains Exploration, LLC dated October 7, 2008 (Filed as Exhibit 10.3 to Registrant’s Form 10-Q dated September 30, 2008 and incorporated herein by reference.)
		$	1,333,110
	31.1	*		Section 302 Certification of Chairman of the Board and Chief Executive Officer (principal executive officer) pursuant to the Sarbanes-Oxley Act of 2002
	31.2	*		Section 302 Certification of Chief Financial Officer (principal financial officer) pursuant to the Sarbanes-Oxley Act of 2002
	32.1	*		Certification of Chairman of the Board and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	99.1	*		Letter from Schlumberger Data & Consulting Services about Reserve Economics

~~Comprehensive Income~~* Filed herewith † Management agreement or compensatory plan or arrangement

~~The~~37 Company accounts for its comprehensive income in accordance with GAAP which requires disclosure of comprehensive income and its components in a full set of financial statements. Comprehensive income is defined as changes in shareholders’ equity from non-owner sources and, for the Company, includes gains and losses recognized on derivative instruments accounted for as cash flow hedges.

Stock-Based CompensationTable of Contents

~~On June~~SIGNATURES ~~16, 2009 at the Company’s Annual Meeting, of the stockholders who voted, 81.7% voted to approve amendments to the Company’s stock option plan. The plan was extended another ten years.~~

AsPursuant ~~of December~~to ~~31,~~the ~~2008,~~requirements ~~25,000~~of ~~stock~~Section 13 ~~options~~or 15(d) of the ~~300,000~~Securities ~~that~~Exchange ~~may~~Act ~~be granted were outstanding. No stock options were outstanding as~~ of ~~December 31~~1934, ~~2009. Stock~~ ~~options totaling 10,000 were terminated in~~ the ~~third~~ ~~quarter~~Registrant ofhas ~~2008~~duly ~~and~~caused ~~25,000~~this ~~were~~report ~~terminated~~to inbe ~~the~~signed ~~second~~on ~~quarter~~its ofbehalf ~~2009 when the employees were no longer employed~~ by the ~~Company. Additionally~~undersigned, ~~the~~ ~~former President and Chief Operating Officer of the Company was granted~~thereunto ~~35,000~~duly ~~restricted shares that amortize ratably over a five year vesting period until August of 2011~~authorized. ~~The compensation expense recorded for the~~ ~~restricted shares for the years ended December 31, 2009 and 2008 was $4,548.~~


Dated: March 31, 2011	JOHN D. OIL AND GAS COMPANY
	By:	/s/ Richard M. Osborne
		Richard M. Osborne
		Chairman and Chief Executive Officer (Principal Executive Officer)

~~John~~Pursuant D.to the requirements of the Securities Exchange Act of 1934, this report has been signed ~~Oil~~below by the following persons on behalf of the Registrant and ~~Gas~~in ~~Company~~the capacities and ~~Subsidiary~~on the dates indicated.

Notes to Consolidated Financial Statements


/s/ Richard M. Osborne Richard M. Osborne Chairman, Chief Executive Officer and Director (Principal Executive Officer)		Dated: March 31, 2011

/s/ Carolyn Coatoam Carolyn Coatoam Chief Financial Officer (Principal Financial and Accounting Officer)		Dated: March 31, 2011

/s/ Gregory J. Osborne Gregory J. Osborne, President and Director		Dated: March 31, 2011

/s/ Thomas J. Smith Thomas J. Smith, Director		Dated: March 31, 2011

~~For The~~38 ~~Years Ended December 31, 2009 and 2008~~

The followingTable tableof presents the stock options outstanding at December 31:Contents

	2009				2008
	Shares		Weighted Average Price		Shares		Weighted Average Price
Outstanding at beginning of year		25,000	$	0.56		35,000	$	0.56
Granted		-				-
Exercised		-				-
Forfeited		25,000		0.56		10,000		0.56
Outstanding at end of year		-	$	0.56		25,000	$	0.56
Options available for grant		300,000				275,000
Exercisable at end of year		-		-		25,000	$	0.56

Report of Independent Registered Public Accounting Firm

OnTo ~~June 20, 2008,~~ the ~~Company~~Shareholders granted a warrant to purchase 50,000 shares of common stock to Richard M. Osborne in return for Mr. Osborne providing collateral for the Company’s credit facility with RBS Citizens, N.A., d/b/a Charter One (“Charter One”). The warrant has an exercise price of $1.00 per share and aBoard ~~term~~ of ~~five~~Directors ~~years. The fair value~~ of ~~the warrant was~~ ~~approximately~~John ~~$48,000 at the date of grant, estimated using the Black-Scholes-Merton option pricing model~~D. ~~Determining~~ ~~the~~Oil ~~fair value of the warrant charge requires us to make highly subjective assumptions, including expected contractual life of the warrant~~ and ~~the~~Gas ~~price volatility of~~Company ~~the underlying shares. We estimate stock price volatility based on~~ the historical volatility of our stock. The assumptions used in calculating the fair value of the warrant represent our management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment.

~~Use~~We have audited the accompanying consolidated balance sheets of John D. Oil and Gas Company (a ~~Estimates~~Maryland corporation) and Subsidiary as of December 31, 2010 and 2009, and the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

~~The preparation~~We ofconducted ~~these~~our ~~financial~~audits ~~statements~~in ~~requires~~accordance with the ~~Company~~standards toof ~~make~~the ~~estimates~~Public Company Accounting Oversight ~~and~~Board ~~judgments~~(United States). Those standards require that ~~affect~~we plan and perform the ~~reported~~audit ~~amounts~~to obtain reasonable assurance about whether the financial statements are free of ~~our~~material ~~assets,~~misstatement. ~~liabilities,~~The ~~revenues,~~Company ~~costs~~is ~~and~~not ~~expenses~~required to have, ~~and~~nor ~~related~~were ~~disclosure~~we engaged to perform, an audit of ~~contingent~~its ~~assets~~internal ~~and~~control ~~liabilities~~over financial reporting. On anOur ~~on-going~~audit ~~basis,~~included ~~the~~consideration ~~Company~~of ~~evaluates~~internal ~~all~~control ofover ~~these~~financial ~~estimates,~~reporting ~~including~~as ~~those~~a ~~related~~basis tofor ~~the~~designing ~~provision~~audit ~~for~~procedures ~~possible~~that ~~losses, deferred~~are ~~tax~~appropriate ~~assets~~in ~~and~~the ~~liabilities~~circumstances, ~~depreciation~~but not ~~and~~for ~~depletion,~~the ~~and~~purpose ~~certain accrued~~of ~~liabilities. We~~expressing ~~base~~an ~~estimates~~opinion on ~~historical~~the ~~experience~~effectiveness ~~and on~~of ~~various~~the ~~other~~Company’s ~~assumptions~~internal ~~that~~control over financial reporting. Accordingly, we ~~believe~~express ~~reasonable~~no ~~under~~such ~~the~~opinion. ~~circumstances, the~~An ~~results~~audit ofalso ~~which~~includes examining, ~~form~~on ~~the~~a test basis, ~~for~~evidence ~~making~~supporting ~~judgments~~the ~~about~~amounts and disclosures in the ~~carrying~~financial ~~values~~statements, ofassessing ~~assets~~the ~~and~~accounting ~~liabilities~~principles ~~that~~used ~~are~~and ~~not~~significant ~~readily~~estimates ~~apparent~~made ~~from~~by ~~other~~management, ~~sources. Actual~~as ~~results~~well ~~may~~as ~~differ~~evaluating ~~from~~the ~~these~~overall ~~estimates~~financial ~~under~~statement presentation. We believe that our audits ~~different~~provide ~~assumptions~~a orreasonable ~~conditions~~basis for our opinion.

~~The Company’s~~In ~~financial~~our ~~statements~~opinion, ~~are~~the ~~based~~consolidated onfinancial astatements ~~number~~referred ofto ~~significant~~above ~~estimates~~present fairly, ~~including~~ ~~collectability~~in ofall material ~~receivables~~respects, ~~selection~~the offinancial ~~useful~~position ~~lives~~of ~~for~~John ~~property and~~D. ~~equipment~~Oil and ~~timing~~Gas Company and ~~costs~~Subsidiary ~~associated~~as ~~with its retirement~~of ~~obligations. Estimates~~December 31, of2010 ~~economically~~and ~~recoverable~~2009, ~~oil~~ and ~~natural gas~~the ~~reserve~~results ~~quantities~~of ~~and~~their ~~future~~operations ~~net~~and their cash flows ~~depend~~for oneach ~~a number~~ of ~~variable~~ ~~factors~~the ~~and~~two ~~assumptions~~years ~~that~~in ~~are~~the ~~hard~~period toended ~~predict~~December 31, ~~and~~2010, ~~may~~in ~~vary~~conformity ~~considerably from actual results. In addition reserve estimates for wells~~ with ~~limited or~~accounting ~~new production history are less reliable than those based on actual~~principles ~~production. Estimated~~generally ~~reserve~~accepted ~~quantities~~in ~~are~~ the ~~basis~~United ~~for~~States ~~the calculation~~ of ~~depreciation, depletion and impairment of oil and natural gas properties~~America.

~~The Company’s~~As ~~oil~~more ~~and~~fully ~~natural~~described ~~gas~~in ~~business~~Note ~~makes~~2, itto ~~vulnerable~~the toconsolidated ~~changes~~financial ~~in wellhead~~statements, ~~prices~~the ofCompany ~~crude~~has suffered ~~oil~~recurring losses and ~~natural~~has ~~gas~~$9. ~~Such~~5 million ~~prices~~of ~~have~~debt ~~been~~currently due and subject to a ~~volatile~~forbearance inthat ~~the~~raises ~~past~~substantial ~~and~~doubt ~~can~~about beits ~~expected~~ability to continue toas ~~be volatile~~a going concern. ~~Proved~~ Management’s ~~reserves~~plans in regard to these matters are ~~based~~also ondescribed ~~current~~in ~~oil~~Note ~~and~~2. ~~natural~~The ~~gas~~consolidated ~~prices~~financial ~~and~~statements ~~estimated~~do ~~reserves,~~not ~~which~~include isany ~~considered~~adjustments athat ~~significant~~might ~~estimate~~result byfrom the ~~Company,~~ ~~and~~outcome isof ~~subject to change~~this uncertainty.

~~Fair~~/s/ ~~Value~~Maloney of+ ~~Financial~~Novotny LLC ~~Instruments~~

The fair value of the Company’s financial instruments is determined by using available market information and appropriate valuation methodologies. The Company’s principal financial instruments are cashCleveland, ~~accounts receivable, accounts payable~~Ohio and debt. Cash, accounts receivable and accounts payable, due to their short maturities and liquidity, are carried at amounts which reasonably approximate fair value. Based upon rates available for similar borrowings, the Company’s book value approximated the fair value of its debt at December March 31, ~~2009 and~~2011 ~~December 31, 2008.~~

4139

JohnTable D. Oilof and Gas Company and SubsidiaryContents

~~Notes~~John toD. Oil and Gas Company and Subsidiary Consolidated ~~Financial~~Balance ~~Statements~~Sheets

For The Years Ended December 31, 2009 and 2008


	December 31, 2010			December 31, 2009
ASSETS
Current Assets:
Cash	$	20,016		$	22,072
Accounts Receivable		47,312			57,748
Accounts Receivable from Related Parties		443,702			464,584
Other Current Assets		4,610			17,723

Total Current Assets		515,640			562,127

Property and Equipment, Net		7,465,911			8,985,937
Investment in Unconsolidated Affiliate		736,953			705,965
Other Assets		—			5,495


TOTAL ASSETS	$	8,718,504		$	10,259,524


LIABILITIES AND EQUITY
Current Liabilities:
Line of Credit		9,480,187			9,497,024
Current Maturities of Long Term Debt		136,812			1,145,174
Accounts Payable		276,452			370,675
Accounts Payable to Related Parties		222,732			47,144
Accrued Expenses		190,038			201,959

Total Current Liabilities		10,306,221			11,261,976

Long Term Debt, Net of Current Maturities		927,593			—
Asset Retirement Obligation		654,493			680,056
Commitments and Contingencies		—			—

Equity:
Serial Preferred Stock — $.001 par value: 2,000,000 shares authorized, 1,350 shares issued and outstanding		1			1
Common Stock — $.001 par value: 50,000,000 shares authorized; 9,067,090 shares issued and outstanding		9,067			9,067
Paid-in Capital		30,277,787			30,273,239
Accumulated Deficit		(32,746,986	)		(31,151,171	)

Total John D. Oil and Gas Company Equity		(2,460,131	)		(868,864	)
Non-Controlling Interest		(709,672	)		(813,644	)

Total Equity		(3,169,803	)		(1,682,508	)


TOTAL LIABILITIES AND EQUITY	$	8,718,504		$	10,259,524

~~GAAP defines~~The ~~fair~~accompanying ~~value~~notes ~~as the price that would be received~~ to ~~sell~~consolidated anfinancial ~~asset~~statements orare ~~paid to transfer a liability (~~an ~~exit~~integral ~~price)~~part inof ~~the principal or most advantageous~~these ~~market for the asset or liability in an orderly transaction between market participants on the measurement date~~statements.

~~GAAP~~40 ~~establishes a three-level hierarchy for disclosure to show the extent and level of judgment used to estimate fair value measurements.~~

LevelTable 1 – Uses unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.Contents

~~Level~~John 2D. ~~– Uses~~Oil ~~inputs~~and ~~other~~Gas ~~than~~Company ~~Level~~and ~~1 that are either directly or indirectly observable~~Subsidiary ~~as of the reporting date through correlation with market data, including quoted~~ ~~prices~~Consolidated ~~for~~Statements ~~similar~~of ~~assets~~Operations and ~~liabilities~~Comprehensive ~~in active markets and quoted prices in~~Income ~~markets that are not active. Level 2 also includes assets and~~ ~~liabilities~~For ~~that~~The ~~are~~Years ~~valued~~Ended ~~using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models~~December 31, ~~such~~ as2010 ~~interest rates~~ and ~~volatility factors, are corroborated by readily~~2009 ~~observable data. Instruments in this category include non-exchange-traded derivatives, including interest rate swaps.~~

Level 3 – Uses inputs that are unobservable and are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.


	2010			2009
Revenues
Oil and Natural Gas Sales	$	2,103,849		$	3,711,668
Self-Storage Operation Revenues		339,345			333,569
Interest and Other		193,588			8

Total Revenues		2,636,782			4,045,245

Operating Expenses
Interest		473,302			448,558
Accretion		24,580			45,905
Oil and Natural Gas Production Costs		664,699			687,182
Self-Storage Property Operating Expense		138,524			114,539
Legal and Professional Fees		356,658			367,854
Property Taxes and Insurance		76,230			137,492
General and Administrative		605,023			762,982
Loss from Unconsolidated Affiliate		175,512			650,420
Impairment		—			145,444
Depreciation, Depletion and Amortization		1,506,097			3,381,114

Total Operating Expenses		4,020,625			6,741,490

Net Loss		(1,383,843	)		(2,696,245	)
Net Income (Loss) attributable to Non-controlling Interest		103,972			(81,544	)

Net Loss attributable to John D. Oil and Gas Company	$	(1,487,815	)	$	(2,614,701	)


Other Comprehensive Income All attributable to John D. Oil and Gas Company:
Change in Fair Value of Cash Flow Hedge		—			133,880


Comprehensive Loss	$	(1,487,815	)	$	(2,480,821	)


Weighted Average Shares Outstanding- Basic and Diluted		9,067,090			9,067,090

Loss per Common Share — Basic and Diluted	$	(0.16	)	$	(0.31	)

The ~~tables~~ ~~below~~accompanying ~~set~~notes ~~forth~~to ~~the~~consolidated ~~Company’s~~ financial ~~assets~~statements ~~and~~are ~~liabilities~~an ~~that~~integral ~~were accounted~~part ~~for at fair value as~~ of ~~December 31, 2009 and December 31,~~these ~~2008~~statements. ~~The tables do not include cash on hand or assets and~~ ~~liabilities that are measured at historical cost or any basis other than fair value.~~

	Fair Value at December 31, 2009
	Level 1		Level 2		Level 3
Item measured at fair value on a recurring basis:
Interest rate swap	$	0	$	0	$	0

	Fair Value at December 31, 2008
	Level 1		Level 2			Level 3
Item measured at fair value on a recurring basis:
Interest rate swap	$	0	$	(133,880	)	$	0

~~The Company’s~~John ~~derivative~~D. ~~financial~~Oil ~~instrument~~and isGas ~~an interest rate cash flow hedge in which the~~ Company ~~pays a fixed rate~~ and ~~receives~~Subsidiary Consolidated aStatements ~~variable~~of ~~interest~~Shareholders’ ~~rate that~~Equity is For ~~observable~~The ~~based~~Years ~~upon~~Ended aDecember 31, ~~forward~~2010 ~~interest rate curve~~ and ~~is therefore~~2009 ~~considered a Level 2 input.~~

Income Taxes


										Accumulated
										Other			Non-
	Preferred		Common		Paid-in		Accumulated			Comprehensive			Controlling
	Stock		Stock		Capital		Deficit			Income (Loss)			Interest			Total

Balance at December 31, 2008	$	1	$	9,067	$	30,268,691	$	(28,428,470	)	$	(133,880	)	$	(732,100	)	$	983,309

Restricted Common Stock Award						4,548											4,548
Dividends Declared and Paid								(108,000	)								(108,000	)
Net Loss								(2,614,701	)					(81,544	)		(2,696,245	)
Change in Fair Value of Cash Flow Hedge											133,880						133,880


Balance at December 31, 2009	$	1	$	9,067	$	30,273,239	$	(31,151,171	)	$	—		$	(813,644	)	$	(1,682,508	)

Restricted Common Stock Award						4,548											4,548
Dividends Declared and Paid								(108,000	)								(108,000	)
Net Income (Loss)								(1,487,815	)					103,972			(1,383,843	)


Balance at December 31, 2010	$	1	$	9,067	$	30,277,787	$	(32,746,986	)	$	—		$	(709,672	)	$	(3,169,803	)

~~Effective January~~The 1,accompanying ~~2006,~~notes ~~the~~to ~~Company~~consolidated ~~became~~financial astatements ~~“C”~~are ~~Corporation~~an ~~for~~integral ~~tax~~part of these ~~purposes~~statements.

In42 establishing a provision for income taxes, the Company must estimate when in the future certain items will affect taxable income. Deferred taxes are recorded for future tax consequences of events that have been recognized in the financial statements or tax returns, based upon enacted tax laws and rates. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not.

The CompanyTable has net operating loss carry forwards (NOLS) and a valuation allowance to offset any tax effects. The Company has no unrecognized tax benefits and therefore, there is no anticipated effect on the Company’s effective tax rate. Any tax penalties or interest expense will be recognized in income tax expense. No interest and penalties were accrued as of December 31, 2009 or 2008, or paid during the periods then ended. The Company does not anticipate a significant change over the next twelve months to any tax liability.Contents

42John D. Oil and Gas Company and Subsidiary Consolidated Statements of Cash Flows

John D. Oil and Gas Company and Subsidiary


	For The Years Ended December 31,
	2010			2009
Cash Flows from Operating Activities:
Net Loss	$	(1,383,843	)	$	(2,696,245	)
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities
Accretion		24,580			45,905
Loss from Unconsolidated Affiliate		175,512			650,420
Loss from Uncompleted wells		93,506			—
Impairment		—			145,444
Depreciation, Depletion and Amortization		1,506,097			3,381,114
Restricted Common Stock Award		4,548			4,548
Changes in Operating Assets and Liabilities:
Accounts Receivable		31,318			940,895
Other Current Assets		13,113			38,479
Other Assets		5,495			55,129
Accounts Payable		(31,695	)		(1,612,062	)
Accrued Expenses		(11,921	)		(87,731	)

Net Cash Provided By Operating Activities		426,710			865,896

Cash Flows from Investing Activities:
Purchases of Property and Equipment		(119,642	)		—
Expenditures for Unconsolidated Affiliate		(93,440	)		(367,127	)
Expenditures for Oil and Natural Gas Wells		(10,078	)		(329,125	)

Net Cash Used In Investing Activities		(223,160	)		(696,252	)

Cash Flows from Financing Activities:
Dividends Paid to Preferred Stockholders		(108,000	)		(108,000	)
Proceeds from Related Party Note Payable		—			600,000
Proceeds from Long Term Debt		63,956			—
Payments on Line of Credit		(16,837	)		—
Principal Payments on Related Party Debt		—			(600,000	)
Principal Payments on Long Term Debt		(144,725	)		(117,873	)

Net Cash Used In Financing Activities		(205,606	)		(225,873	)


Net Decrease in Cash		(2,056	)		(56,229	)
Cash, Beginning of Period		22,072			78,301

Cash, End of Period	$	20,016		$	22,072


Supplemental Disclosure of Cash flow Information:
Interest Paid on Borrowings	$	473,576		$	443,549

~~Notes~~The accompanying notes to ~~Consolidated~~ ~~Financial~~consolidated ~~Statements~~financial statements are an integral part of these statements.

~~For The~~43 ~~Years Ended December 31, 2009 and 2008~~

The CompanyTable is open to federal and state tax audits until the applicable statute of limitations expire. There are currently no federal or state income tax examinations underway for the Company. The tax years 2006 through 2009 remain open to examination by the major taxing jurisdictions in which we operate, although no material changes to unrecognized tax positions are expected within the next twelve months. The Company does, however, have prior year net operating losses which remain open for examination.Contents

~~Recently~~John ~~Issued~~D. ~~Accounting~~Oil and Gas Company and Subsidiary ~~Pronouncements~~Notes to Consolidated Financial Statements For The Years Ended December 31, 2010 and 2009

1. Summary of Significant Accounting ~~Standards~~ ~~Codification~~Policies

~~In June~~General 2009, the Financial Accounting Standards Board (“FASB”) approved the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“the Codification”) or (“ASC”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants (“AICPA”), Emerging Issues Task Force (“EITF”), and other related accounting literature have been superseded by the Codification. Rules and interpretive releases of the United States Securities and Exchange Commission (“SEC”) under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. The Codification reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. The FASB will not issue new standards in the form of Statements, FASB Staff Position, or Emerging Issues Task Force Abstracts; instead, it will issue Accounting Standards Updates. The FASB will not consider Accounting Standards Updates as authoritative in their own right; these updates will serve only to update the Codification, provide background information about the guidance, and provide the basis for conclusions on the change(s) in the Codification. The switch to the ASC affects the way companies refer to GAAP in financial statements and accounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure. This Codification is effective for financial statements issued for reporting periods that ended after September 15, 2009. At this time the Company has decided to present new accounting pronouncements with no standard references.

John D. Oil and Gas ~~Reporting~~Company, formerly Liberty Self-Stor, Inc. (the “Company”), is a corporation organized under the laws of the State of Maryland.

~~In December~~The ~~2008,~~Company ~~the~~was ~~SEC~~originally ~~released~~ a ~~final~~self-storage ~~rule,~~company ~~"Modernization~~from of1999 ~~Oil~~to ~~and~~2005 ~~Gas Reporting,"~~when ~~which~~it ~~amends~~sold ~~the~~all ~~oil~~but ~~and~~two ~~gas~~of ~~reporting requirements~~its facilities. ~~The~~By ~~key revisions~~May 2007, toone ~~the reporting requirements include: using a 12~~self-~~month~~storage ~~average~~facility ~~price to~~in ~~determine~~Painesville ~~reserves;~~remained ~~including~~which ~~nontraditional~~generates ~~resources in reserves if they~~revenue ~~are~~through ~~intended~~self-storage torentals beand ~~upgraded~~retail toleases. ~~synthetic~~The ~~oil~~self-storage ~~and~~facility ~~gas;~~is ~~ability~~operated tothrough ~~use new~~a ~~technologies~~partnership toagreement ~~determine~~between ~~and~~Liberty ~~estimate~~Self-Stor ~~reserves;~~Ltd. (“Ltd”) and ~~permitting~~ the ~~disclosure of probable and possible reserves~~Company. InLtd ~~addition,~~has ~~the~~a ~~final rule includes the~~70.1% ~~requirements~~equity tointerest ~~report the independence~~ and ~~qualifications of~~ the ~~reserve preparer~~Company orhas ~~auditor; file~~ a ~~report~~29.9% asequity aninterest ~~exhibit~~in ~~when~~the aoperating ~~third~~partnership ~~party~~of isLSS ~~relied~~I ~~upon~~Limited toPartnership ~~prepare~~(“LSS ~~reserve~~I”). ~~estimates~~The ormembers ~~conduct~~of ~~reserve~~Ltd ~~audits;~~consist ~~and to disclose the development~~ of ~~any~~Richard ~~proved~~M. ~~undeveloped reserves (PUDs)~~Osborne, ~~including~~Chairman ~~the total~~and ~~quantity~~Chief ofExecutive ~~PUDs~~Officer atof ~~year-end~~the Company, ~~material~~Thomas ~~changes~~J. toSmith, ~~PUDs~~a ~~during~~director ~~the year, investments~~ and ~~progress toward~~ the ~~development~~former ofPresident ~~PUDs~~ and Chief anOperating ~~explanation~~Officer of the ~~reasons~~Company, ~~why~~and ~~material~~Retirement ~~concentrations~~Management ofCompany, ~~PUDs~~an ~~have~~Ohio ~~remained undeveloped for~~corporation ~~five~~owned ~~years~~by ~~or more after disclosure as PUDs~~Mr. Osborne. ~~The~~These ~~accounting~~members ~~changes~~have ~~resulting from~~Class A ~~changes~~limited inpartnership ~~definitions~~interests ~~and pricing assumptions should be treated as a change in accounting principle~~ that isare ~~inseparable from a change in accounting~~redeemable ~~estimate, which is to be applied prospectively. The final rule is effective~~ for ~~annual~~ ~~reports~~cash ~~for fiscal years ending on~~ or ~~after December 31~~, ~~2009.~~at ~~Early adoption is not permitted. The adoption of this standard had an impact on~~ the ~~Company’s~~ ~~financial~~election ~~position and results~~ of ~~operations. The 12-month average pricing for~~ the ~~year for natural gas sold at the Henry Hub~~Company, LAconvertible ~~was~~into ~~$3.867~~shares ~~and West~~of ~~Texas Intermediate oil at Cushing, OK was $61.18, where~~ the ~~previous calculations~~Company’s ~~would~~stock ~~have been higher~~ based on ~~the~~an ~~last~~exchange ~~day of December 2009~~factor. The ~~lower~~current ~~pricing~~exchange ~~increased~~factor ~~our~~is ~~depletion expense in 2009~~. ~~The~~1377148 ~~Company’s~~of ~~depletion~~a ~~rate~~share ~~continues~~for toeach ~~be extremely high~~unit.

~~Effective upon~~In ~~its issuance in September 2009~~2006, the Company ~~adopted~~entered aninto ~~accounting~~the ~~standards update~~business onof ~~“Extractive~~extracting ~~Activities~~and –producing ~~Oil~~oil and ~~Gas”. This~~natural ~~accounting standards~~gas ~~update~~products, ~~represents~~drilling aoil ~~technical~~and ~~correction~~natural togas anwells ~~existing~~in ~~SEC~~Northeast ~~Observer~~Ohio. ~~comment regarding~~The ~~“Accounting~~Company ~~for~~currently ~~Gas~~has fifty-~~Balancing~~eight ~~Arrangements”~~producing wells. The ~~adoption~~Company ofcannot guarantee success under its business plan as ~~this~~drilling ~~accounting~~wells ~~standard~~for ~~update~~oil ~~did~~and ~~not~~natural ~~have~~gas is a ~~material~~high-risk ~~impact~~enterprise onand ~~the~~there ~~Company’s~~is no guarantee the ~~financial~~Company ~~statements~~will become profitable.

43Principles of Consolidation

~~John~~Pursuant D.to the terms of the partnership agreement of LSS I Limited Partnership, the Company, as ~~Oil~~sole ~~and~~general ~~Gas~~partner, controls LSS I. Accordingly, the Company accounts for its investment in LSS I utilizing the consolidation method. The investment in an unconsolidated affiliate, Kykuit Resources LLC (“Kykuit”) is accounted for using the equity method. All significant inter-company transactions and ~~Subsidiary~~balances have been eliminated. The well in Lucky Brothers is accounted for as a joint interest venture.

~~Notes~~Use ~~to Consolidated~~of ~~Financial Statements~~Estimates

~~For~~The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues, costs and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates all of these estimates, including those related to the provision for possible losses, deferred tax assets and liabilities, depreciation and depletion, and certain accrued liabilities. The Company bases estimates on historical experience and on various other assumptions that we ~~Years~~believe ~~Ended~~reasonable ~~December~~under 31the circumstances, ~~2009~~the results of which form the basis for making judgments about the carrying values of assets and ~~2008~~liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

~~In January~~The ~~2010,~~Company’s anfinancial ~~accounting~~statements ~~standard~~are ~~update~~based ~~was issued~~ on ~~“Oil~~a ~~and~~number ~~Gas Estimations~~of ~~and~~significant ~~Disclosures”. This~~estimates, ~~update~~including ~~aligns~~collectability ~~the~~of ~~current~~receivables, ~~oil~~selection ~~and natural gas reserve estimation and disclosure requirements~~ of ~~the~~useful ~~Extractive~~lives ~~Activities~~ for ~~Oil~~property and ~~Gas~~equipment ~~with~~and ~~the~~timing ~~changes~~and ~~required~~costs byassociated ~~the~~with ~~SEC~~its ~~final~~retirement ~~rule, as discussed above~~obligations. ~~This~~ ~~update expands~~Estimates ~~the~~of ~~disclosures~~economically ~~required~~recoverable ~~for equity method investments, revises the definition of~~ oil and natural gas ~~producing~~reserve ~~activities~~quantities toand ~~include~~future ~~nontraditional resources~~net incash ~~reserves~~flows ~~unless~~depend ~~not~~on ~~intended~~a tonumber ~~be upgraded into synthetic oil or natural gas producing activities. This update also amends the definition~~ of ~~proved~~variable ~~oil~~factors and assumptions ~~natural~~that ~~gas~~are ~~reserves~~hard to ~~require~~predict ~~12-month average pricing in estimating reserves, amends~~ and ~~adds~~may ~~definitions~~vary inconsiderably ~~the~~from ~~Master glossary~~actual ~~that~~results. isEstimated ~~used in estimating proved~~ oil and natural gas reserve quantities ~~and provides~~are ~~guidance~~the onbasis ~~geographic~~for ~~area~~the ~~with~~calculation ~~respect to disclosure~~ of ~~information about significant reserves. It is effective for entities with annual reporting periods ending on or after December 31~~depreciation, ~~2009. The~~depletion ~~Company~~and ~~adopted~~impairment ~~this~~of ~~update~~oil onand ~~December~~natural ~~31,~~gas ~~2009~~properties.

~~Other-Than-Temporary~~44 ~~Impairments~~

InTable April 2009, a new accounting standard was issued regarding the recognition of other-than-temporary impairments of investments in debt securities, as well as financial statement presentation and disclosure requirements, for when to recognize a write-down through earnings versus other comprehensive income. The standard was effective for interim and annual periods ending after June 15, 2009. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.Contents

~~Consolidation~~ The Company’s oil and natural gas business makes it vulnerable to changes in wellhead prices of crude ~~Variable~~oil ~~Interest~~and ~~Entities~~natural gas. Such prices have been volatile in the past and can be expected to continue to be volatile. Proved reserves are based on current oil and natural gas prices and estimated reserves, which is considered a significant estimate by the Company, and is subject to change.

InAccounts ~~June~~Receivable 2009, a new accounting standard was issued in order to change financial reporting by enterprises involved with variable interest entities (“VIEs”). The standard replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a VIE with an approach focused on identifying which enterprise has the power to direct the activities of a VIE and the obligation to absorb losses of the entity or the right to receive the entity’s residual returns. This standard is effective for fiscal years beginning after November 15, 2009. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.

~~Measuring~~The Company has certain trade receivables consisting of oil and natural gas sale obligations due ~~Liabilities~~under atnormal ~~Fair~~trade ~~Value~~terms. The Company currently sells its production to a related party through an oil and natural gas agreement, extending credit on an unsecured basis to them. In evaluating its allowance for possible losses, the Company performs a review of outstanding receivables. The trade receivables outstanding are typically three months of natural gas production due to the timing and accounting treatment by the main distribution pipeline company in Northeast Ohio and related party accounting treatments. At December 31, 2010 and 2009, the Company’s credit evaluation indicated that it has no need for an allowance for possible losses and had no such losses in 2010 and 2009.

InThe ~~August 2009,~~Company’s aaccounts ~~new~~receivable, ~~accounting~~arising ~~standard~~from ~~was~~the ~~issued~~self-storage ~~concerning~~business, ~~measuring~~are ~~liabilities~~due atfrom individuals ~~fair~~as ~~value. The~~well ~~new~~as ~~standard~~business ~~provides~~entities. ~~clarification~~Tenants ~~that~~are ~~in circumstances~~required into ~~which~~pay atheir ~~quoted~~rent ~~price~~on inthe anfirst ~~active~~of ~~market~~each ~~for the identical~~month. ~~liability~~Past isdue ~~not~~amounts ~~available,~~are athose ~~reporting~~that ~~entity~~are isoutstanding ~~required~~longer tothan ~~measure~~the ~~fair~~contractual ~~value using~~payment ~~certain valuation techniques~~terms. ~~Additionally,~~ itIf ~~clarifies that a~~an ~~reporting~~account ~~entity~~ is ~~not~~more ~~required~~than to75 days ~~adjust~~past due, the ~~fair~~Company ~~value~~generally ofwrites aoff ~~liability~~the ~~for~~balance ~~the~~directly to ~~existence~~expense. ofFor asuch ~~restriction~~past ~~that~~due ~~prevents~~accounts, the ~~transfer~~Company ofhas the ~~liability. This~~ ~~new~~right ~~guidance~~to isauction ~~effective for~~ the ~~first~~contents ~~reporting~~of the ~~period~~rented ~~after its issuance~~space, ~~however~~which ~~earlier~~allows ~~application~~for ~~is permitted. The~~recovery ~~adoption~~ of ~~this~~written-off ~~standard~~balances. ~~did~~Any ~~not~~such ~~have~~recoveries aare ~~material~~credited ~~impact~~to onincome ~~the~~when ~~Company’s~~received. ~~financial~~Approximately ~~position~~$2,000 ~~results~~ of ~~operations~~bad ordebt ~~cash flows~~expense was incurred in 2010 and 2009.

~~The Company~~Property ~~reviewed all other recently issued, but not yet effective, accounting pronouncements~~ and ~~does not believe any such pronouncements will have a material~~Equipment ~~impact on the financial statements.~~

~~Reclassifications~~All property and equipment is depreciated using the straight-line method over estimated useful lives of twenty five years for buildings and improvements and five to seven years for furniture and equipment.

~~Certain~~The Company uses the successful efforts method of accounting for oil and natural gas producing ~~prior~~activities. ~~year~~Under ~~amounts~~this ~~have~~method, ~~been~~acquisition ~~reclassified~~costs tofor ~~conform~~proved toand ~~the~~unproved ~~December~~properties 31are capitalized when incurred. Exploration costs, ~~2009~~including geological and geophysical costs, the costs of carrying ~~presentation~~and retaining unproved properties and exploratory dry hole drilling costs, are expensed. ~~These~~ Development ~~reclassifications~~costs, ~~had~~including nothe ~~effect~~costs onto ~~net~~drill ~~loss~~and equip development wells and successful exploratory drilling costs to locate proved reserves, are capitalized. Upon sale or retirement of ~~shareholders’~~a ~~equity~~proved asproperty, ~~previously~~the ~~reported~~cost and accumulated depreciation and depletion and amortizations are eliminated from property accounts and the resultant gain or loss is recognized.

44Exploratory drilling costs are capitalized when incurred pending the determination of whether a well has found proved reserves. If a well is determined to be successful, the capitalized drilling costs will be reclassified as part of the cost of the well. If a well is determined to be unsuccessful, the capitalized drilling costs will be charged to expense in the period the determination is made. The Company is involved in exploratory drilling only to the extent that it is a partner of Kykuit, which is doing exploratory drilling in Montana. The Company is an owner and managing member of Kykuit, an unconsolidated affiliate.

~~John~~Development D.costs of proved oil and natural gas properties, including estimated dismantlement, ~~Oil~~restoration, abandonment costs and ~~Gas~~acquisition ~~Company~~costs, are depreciated and ~~Subsidiary~~depleted on a well by well basis by the units-of-production method using estimated proved developed reserves. The costs of oil and natural gas properties are periodically assessed for impairment.

~~Notes~~Asset toImpairment ~~Consolidated Financial Statements~~

~~For~~ The Company reviews its self-storage property and capitalized well costs for impairment when events ~~Years~~or ~~Ended~~changes ~~December~~in 31circumstances indicate the carrying amounts of the properties may not be recoverable. When such conditions exist, ~~2009~~management estimates future cash flows from operations and ~~2008~~ultimate disposition of the individual properties. This income approach to determine the fair value of these assets is based on level 3 inputs, including estimated reserve quantities, gas prices, operating costs and discount rates. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related property’s estimated fair market value would be recorded and an impairment loss would be recognized. The Company wrote off $-0- in 2010 and the costs related to one well amounting to $145,444 in 2009.

~~2. Going~~45 ~~Concern~~

The Company’sTable independent registered accounting firm have indicated in their audit report in an explanatory paragraph that, due to the Company’s recurring losses and outstanding debt of $10.6 million that is currently due and in default, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern. The Company has incurred substantial losses, which have strained its financial resources, and the Company’s liabilities exceed its assets at December 31, 2009. As described more fully in Note 5 “Line of Credit and Long-Term Debt”, the Company’s $9.5 million line of credit with Charter One was due August 1, 2009 and is in default and the Company does not have the available cash to repay the line of credit. The Company is still negotiating with Charter One to refinance the line of credit or obtaining substitute financing. If the Company is unsuccessful, there is substantial doubt about the Company’s ability to continue as a going concern.Contents

~~3. Property and~~Asset ~~Equipment~~Retirement Obligation

~~Property~~The Company accounts for its asset retirement obligations in accordance with generally accepted accounting principles in the United States of America (“GAAP”) which requires the fair value of an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. For the Company, asset retirement obligations primarily relate to the abandonment, dismantling and ~~equipment~~plugging ~~consists~~of oil and natural gas wells. The present value of the estimated asset retirement cost is capitalized as part of the ~~following~~long-lived atasset. ~~December~~The capitalized ~~31:~~asset retirement cost is depreciated and the asset retirement obligation is accreted over the estimated life of the well.

	2009			2008
Oil and Natural Gas Properties:
Proved Properties	$	15,667,171		$	13,859,634
Unproved Properties		2,260,896			3,652,790
Well Material Inventory		50,349			122,502
Accumulated Depletion		(10,492,751	)		(7,103,584	)
Total Oil and Natural Gas Properties		7,485,665			10,531,342
Other Property and Equipment:
Land		307,780			307,780
Building and Improvements		2,357,822			2,357,822
Furniture and Equipment		173,640			199,657
Accumulated Depreciation		(1,338,970	)		(1,222,928	)
Total Other Property and Equipment		1,500,272			1,642,331
Property and Equipment, Net	$	8,985,937		$	12,173,673

The following table presents the Company’s asset retirement obligation activity for the years ended December 31:

4. Investment in Unconsolidated Affiliates


	2010			2009

Asset retirement obligations, beginning of the year	$	680,056		$	674,517
Liabilities incurred during the year		4,551			—
Revisions in estimated cash flows		(54,694	)		(14,366	)
Liabilities settled during the year		—			(26,000	)
Accretion expense		24,580			45,905

Asset retirement obligations, end of the year	$	654,493		$	680,056

The ~~Company~~ ~~is an owner and managing member of an unconsolidated affiliate, Kykuit Resources LLC, which is accounted for using the equity method of accounting. The~~ Company ~~began~~plugged ~~investing~~no inwells ~~Kykuit during the third quarter of 2007. In 2008, the Company sold 25% of its interest~~ in ~~Kykuit~~ at2010 ~~cost~~and ~~for~~two ~~approximately~~wells ~~$1.4 million. The Company had an 18.8% ownership~~ in ~~Kykuit at December 31, 2008. Some of the Kykuit partners opted out of further cash investments during~~ 2009~~, increasing the Company’s ownership percentage at December 31, 2009 to 20~~.~~83%.~~

~~The investment~~Revenue ~~by the Company in this venture was $989,258 which included an account~~Recognition payable of $158,225 and a cumulative net book loss of $57,444 at December 31, 2008. The investment by the Company in this venture was $705,965 which included a loss in the investment of $588,309, an account payable of $10,490 and a cumulative net book loss of $119,556 at December 31, 2009. The Company recorded a loss of $588,309 on the investment representing 20.83% of an 85% reduction in the value of the exploratory wells in Kykuit. The following table displays the balance sheet of Kykuit at December 31, 2009, and 2008 and the income statement for the same years ended.

45The Company recognizes revenue from its oil and natural gas interests in producing wells as oil and natural gas is sold to a purchaser at a fixed or determinable price when delivery has occurred, title and risk of loss have transferred to the purchaser and the collectability of revenue is reasonably assured. The Company has a management agreement with a related party to transport the Company’s natural gas production through the related party’s pipeline and include this natural gas with the related party’s natural gas in order to fulfill production contracts they currently have in place. The Company uses the sales method to account for any gas production volume imbalances. Under this method, revenue is recognized only when gas is produced and sold on the Company’s behalf. The Company had no material gas imbalances at December 31, 2010 and 2009.

~~John~~The D.Company’s revenue from self-storage operations is derived primarily from monthly rentals of ~~Oil~~self-storage ~~and~~units. ~~Gas~~Rental ~~Company~~revenue ~~and~~is ~~Subsidiary~~recognized in the period the rent is earned which is typically on a monthly basis.

~~Notes~~The Company also leases certain commercial space in its Painesville property under long-term lease agreements through December 31, 2019. Total lease revenue related to these leases was $214,469 and ~~Consolidated~~$199,029 ~~Financial~~for ~~Statements~~the years ended December 31, 2010 and 2009, respectively. Revenue under these long-term lease agreements is recognized on a straight-line basis over the respective lease terms.

~~For~~Future ~~The~~minimum lease revenue from operations under non-cancelable leases excluding options to renew ~~Years~~for ~~Ended~~each ~~December~~of ~~31,~~the ~~2009~~five succeeding annual periods ending December 31 and ~~2008~~thereafter are as follows:

Kykuit Resources LLC Balance Sheet
2011	$	219,210
	December 31, 2009			December 31, 2008
2012		207,676
Current Assets	$	115,893		$	210,978
2013		201,684
Unproved Leaseholds and Development Costs		6,957,065			6,320,929
2014		183,288
Furniture and Fixtures, Net of Depreciation		31,747			37,155
2015		137,916
Other Assets		24,087			33,111
Thereafter		162,110
	$	71,~~128~~111,~~792~~884		$	~~6,602,173~~
Current Liabilities	$	832,728		$	1,129,350
Paid in Capital		6,786,675			5,658,891
Accumulated Deficit		(490,611	)		(186,068	)
	$	7,128,792		$	6,602,173

Kykuit Resources LLC Statement of Operations
	December 31,			December 31,
	2009			2008
Total Revenues	$	-		$	-
Total Expenses		304,543			120,225
Net Loss	$	(304,543	)	$	(120,225	)

5. Line Table of Credit and Long-Term DebtContents

~~On September~~Stock-Based ~~28, 2006, the Company entered into an unsecured loan agreement for a~~Compensation line of credit with a one year term with Mr. Richard Osborne and Charter One Bank for up to $5.0 million dollars in total borrowings with interest at a rate of 1.75% over LIBOR adjusted monthly. The Charter One liability was jointly loaned, so the Company and Mr. Osborne were each liable for the debt of the other.

~~The~~On ~~loan was subsequently revised several times until on March 28~~June 16, 2008, the Company entered into the First Amended and Restated Loan and Security Agreement (the “Loan Agreement”) between the Company, Richard M. Osborne (the Company and Mr. Osborne together, the “Borrowers”), and Charter One. The Loan Agreement extended the maturity date to August 1, 2009, ~~continuing~~at ~~with~~ the ~~original interest rate calculation of 1.75% over LIBOR adjusted monthly. Under the agreement, only the~~ Company could borrow on the line of credit when any amounts are paid down against the $9.5 million outstanding on the loan. The Company and Great Plains Exploration LLC a company owned by Mr. Osborne (“Great Plains”), agreed that the related party loan of $3.8 million from Great Plains was satisfied in full and terminated upon the Company’s ~~entry~~Annual ~~into~~Meeting, ~~the new Charter One loan and assumption~~ of the ~~$3.8~~stockholders ~~million~~who ~~portion of the line of credit drawn by Mr. Osborne. Therefore~~voted, ~~the Company had $9~~81.57% ~~million~~voted ~~in outstanding debt~~ to ~~Charter One and~~ $0approve inamendments ~~outstanding debt~~ to ~~Great Plains at March 31, 2008. As part of this loan agreement, Mr. Osborne has pledged several real estate properties that he personally owns, to provide sufficient collateral allowing~~ the Company’s tostock ~~enter into~~option ~~the loan agreement~~plan. The ~~Company~~plan ~~did~~was ~~not~~extended ~~meet~~another ~~the~~ten ~~reserve collateral requirements for a $9~~years.~~5 million loan without additional collateral.~~

~~The Company’s~~Of ~~line~~the of300,000 ~~credit~~stock ~~with~~options ~~Charter~~that ~~One~~may ~~was~~be ~~almost $9.5 million~~granted, ~~past~~none ~~due~~were ~~and in~~outstanding ~~default,~~as atof December 31, ~~2009~~2010 ~~at a rate of 2.06%. The average balance during 2008 was $9.5 million~~ and ~~the weighted average interest rate was~~ 62009.~~13%.~~ ~~The~~Stock ~~average~~options ~~balance~~totaling ~~during~~25,000 ~~2009~~shares ~~was~~at ~~$9.5~~a ~~million and the~~ weighted average ~~interest~~ ~~rate~~price ~~was~~of ~~2.12%. The Company’s~~ $90.556 ~~million~~were ~~line~~terminated ~~of credit~~in ~~matured~~the onsecond ~~August~~quarter 1,of 2009~~. As~~ ~~described~~when ~~more~~an ~~fully~~employee inwas ~~the~~no ~~section~~longer ~~of this~~employed ~~Form~~by ~~10-K~~the ~~entitled~~Company. ~~“Legal Proceedings”~~Additionally, the ~~Charter~~former ~~One~~President ~~received~~and aChief ~~judgment~~Operating ~~in its~~Officer ~~favor~~of ~~against~~ the Company ~~and~~was ~~Mr.~~granted ~~Osborne~~35,000 ~~related to the $9.5 million line~~restricted ofshares ~~credit. The~~that ~~Company~~amortize ~~does~~ratably ~~not~~over ~~have~~a ~~the~~five ~~available~~year ~~cash~~vesting toperiod ~~repay~~until ~~the line~~August of ~~credit~~2011. In ~~addition,~~The compensation ~~Charter~~expense ~~One~~recorded ~~has~~for ~~asked~~ the ~~court~~restricted ~~to appoint~~shares ~~a receiver~~ for the ~~Company. A~~years ~~hearing~~ended isDecember 31, ~~currently~~2010 ~~scheduled~~and ~~for~~2009 ~~April~~was 16$4, ~~2010~~548.

46On June 20, 2008, the Company granted a warrant to purchase 50,000 shares of common stock to Richard M. Osborne in return for Mr. Osborne providing collateral for the Company’s credit facility with RBS Citizens, N.A., d/b/a Charter One (“Charter One”). The fair value of the warrant was expensed in 2008. The warrant has an exercise price of $1.00 per share and a term of five years.

~~John~~Income D.Taxes ~~Oil and Gas Company and Subsidiary~~

~~Notes~~Effective ~~to Consolidated~~January 1, ~~Financial~~2006, ~~Statements~~the Company became a “C” Corporation for tax purposes.

~~For~~In ~~The~~establishing a provision for income taxes, the Company must estimate when in the future certain ~~Years~~items ~~Ended~~will ~~December~~affect 31taxable income. Deferred taxes are recorded for future tax consequences of events that have been recognized in the financial statements or tax returns, ~~2009~~based upon enacted tax laws and ~~2008~~rates. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not.

The Company ~~entered~~has ~~into~~net anoperating ~~interest~~loss ~~rate~~carry ~~swap~~forwards ~~agreement~~(NOLS) and ~~for~~ a ~~cash~~valuation ~~flow~~allowance ~~hedge~~to ~~with~~offset any ~~Charter~~tax ~~One~~effects. toThe ~~mitigate~~Company ~~its~~has ~~exposure~~no tounrecognized ~~fluctuations~~tax inbenefits ~~interest rates. The~~and ~~swap~~therefore, ~~began~~there is no anticipated effect on ~~May~~the 1,Company’s ~~2008~~effective ~~and~~tax ~~ended~~rate. onAny ~~August~~tax 3,penalties ~~2009~~or ininterest expense will be ~~connection~~recognized ~~with~~in ~~the~~income $9tax expense.5 ~~million~~No ~~loan. The~~interest ~~value~~and ofpenalties ~~the~~were ~~swap~~accrued ~~at December~~as of December 31, 2010 or 2009, ~~was~~or ~~$0. The~~paid ~~estimated~~during ~~fair~~the ~~value~~periods ofthen ~~the~~ended. ~~swap~~The ~~at December~~Company ~~31,~~does ~~2008~~not ~~was~~anticipate ~~$133,880,~~ a ~~liability,~~significant change ~~which~~over isthe ~~included~~next intwelve ~~accrued expenses~~months to any tax liability.

The ~~Painesville~~ ~~facility~~Company is ~~encumbered~~open byto afederal ~~mortgage~~and instate ~~the~~tax ~~original~~audits ~~amount~~until ~~of $2,062,128,~~the ~~which~~applicable ~~matured~~statute onof ~~March 30, 2009~~limitations expire. On ~~March~~There ~~25,~~are ~~2009,~~currently ~~LSS~~no ~~I received~~federal aor ~~letter~~state ofincome ~~commitment~~tax ~~from~~examinations ~~the~~underway ~~mortgagor which stated that the loan on the Painesville facility will be extended~~ for ~~five years, maturing on May 1, 2014, using a ten year amortization period at a variable rate of~~ the ~~30 day LIBOR plus 250 basis points~~Company. ~~Monthly payments include principal of $10,370 plus~~ ~~interest.~~ The ~~principal~~tax ~~amount~~years ofafter ~~the~~2007 ~~loan~~remain asopen ofto ~~December~~examination ~~31,~~by ~~2009 and~~the ~~2008~~major ~~was~~taxing ~~$1,145,174~~jurisdictions ~~and~~in ~~$1,260,071,~~which ~~respectively. The rate on~~we ~~December 31~~operate, ~~2009~~although ~~was~~no ~~2.73%. However,~~material aschanges ~~more~~to ~~fully~~unrecognized ~~described~~tax ~~in “Legal~~positions ~~Proceedings”~~are inexpected ~~this~~within ~~Form 10-K,~~ the ~~holder~~next twelve ~~of the $1~~months.2 ~~million~~The ~~mortgage on~~Company ~~the Painesville facility gave formal notice of certain defaults on August 24~~does, ~~2009. The~~ ~~mortgage became accelerated and fully due and payable. LSS I~~however, ~~the~~have ~~owner~~prior ofyear ~~the~~net ~~Painesville~~operating ~~facility,~~losses of which ~~the Company~~remain ~~has a 29.9% minority interest, does not have the available cash to repay~~open ~~the~~for ~~mortgage~~examination.

~~The Painesville~~Fair ~~loan~~Value ~~includes~~of ~~the~~Financial ~~following principal amortization over the next~~Instruments ~~five years ending December 31:~~

2010	$	124,440
2011		124,440
2012		124,440
2013		124,440
2014		647,414
	$	1,145,174

The fair value of the Company’s financial instruments is determined by using available market information and appropriate valuation methodologies. The Company’s principal financial instruments are cash, accounts receivable, accounts payable and debt. Cash, accounts receivable and accounts payable, due to their short maturities and liquidity, are carried at amounts which reasonably approximate fair value. Based upon rates available for similar borrowings, the Company’s book value approximated the fair value of its debt at December 31, 2010 and December 31, 2009.

~~For the~~47 ~~years ended December 31, 2009 and 2008 respectively, the Company expensed $427,122 and $573,055 in interest on its debt instruments.~~

6. Notes PayableTable toof Related PartyContents

~~The Company~~Recently ~~entered~~Issued ~~into~~Accounting ~~an agreement with Mr. Osborne for an unsecured revolving~~Pronouncements demand note dated January 1, 2006. Interest is payable annually at the prime rate with principal being due on demand. The revolving demand note does not include an expiration date or a limit on the amount that the Company may borrow. The prime rate at December 31, 2009 was 3.25%. There were no outstanding balances under the note at December 31, 2009 and 2008, respectively.

~~At December~~In 31July 2010, ~~2007~~the FASB issued ASU No. 2010-20, “Disclosures about the ~~Company~~Credit ~~had~~Quality ~~entered~~of ~~into~~Financing Receivables ~~loans~~and the Allowance for Credit Losses.” This ASU amends disclosure requirements with respect ~~Great~~to ~~Plains~~the (acredit quality of financing ~~company~~receivables ~~owned~~and bythe ~~Richard~~related M.allowance ~~Osborne)~~for ~~totaling~~credit $3losses.8 ~~million~~Entities ~~evidenced~~will bybe ~~six~~required to disaggregate ~~promissory~~by ~~notes. The~~portfolio ~~loans~~segment ~~did~~or ~~not~~class ~~include~~certain anexisting ~~expiration~~disclosures ~~date~~and orprovide acertain new disclosures ~~limit~~about ontheir ~~the~~financing ~~amount~~receivables ~~that~~and ~~the~~related ~~Company~~allowance ~~could~~for ~~borrow~~credit losses. ~~The~~ ~~notes~~Disclosures ~~were~~to be made ~~payable~~as onof ~~demand~~the ~~and~~end ~~bore~~of ~~interest~~a atreporting ~~the~~period ~~rate~~are ofeffective ~~LIBOR~~for ~~plus~~the ~~1.75%~~Company’s ~~per~~reporting period ending ~~year. The~~December 31, ~~Great~~2010; ~~Plains~~and ~~notes~~the ~~were~~disclosures ~~satisfied~~about inactivity ~~full~~that ~~and~~occurs ~~terminated~~during a reporting period will be ~~when~~effective for the Company’s ~~entered~~reporting ~~into~~period ~~the~~ending ~~Charter~~March 31, ~~One~~2011. ~~Loan~~Since ~~Agreement~~this onASU ~~March~~will ~~28,~~only amend ~~2008. Therefore~~disclosure requirements, not accounting practice, the ~~Company~~adoption ~~had~~of ~~$9.5~~this ~~million~~ASU indid ~~outstanding~~not ~~debt~~have toa material ~~Charter~~impact ~~One~~on ~~and~~the $0Company’s infinancial ~~outstanding~~position, ~~debt~~results toof ~~Great~~operations ~~Plains~~or atcash ~~March 31, 2008~~flows.

~~During the~~The ~~loan~~Company ~~negotiations~~reviewed ~~with~~all ~~Charter~~other ~~One~~recently issued, itbut ~~was~~not ~~anticipated~~yet ~~that~~effective, ~~the~~accounting ~~Company~~pronouncements ~~would become responsible for the $9.5 million~~ and ~~therefore~~does ~~did~~ not ~~record~~believe any ~~related~~ ~~party~~such ~~interest~~pronouncements onwill ~~the~~have ~~Great~~a ~~Plains~~material ~~loan~~impact ~~for~~on the ~~three months ended March~~financial ~~31, 2008~~statements.

~~At June~~Reclassifications 30, 2008, the Company had $9.5 million outstanding on the Line of Credit to Charter One and had entered into loans with Great Plains totaling $500,000 evidenced by two promissory notes. The loans from Great Plains did not include an expiration date or a limit on the amount that the Company could borrow. The notes were payable on demand and bore interest at the rate of 8% per year. The Great Plains notes principal balances were fully paid by September 30, 2008. No additional borrowings occurred in the fourth quarter of 2008 from Great Plains.

47Certain reclassifications of prior year comparative amounts have been made to conform to the December 31, 2010 presentation. These reclassifications had no effect on net loss or equity as previously reported.

~~John D~~2. ~~Oil~~ ~~and~~Going ~~Gas Company and Subsidiary~~Concern

~~Notes~~The Company’s independent registered accounting firm has indicated in their audit report in an explanatory paragraph that the Company has suffered recurring losses and has $9.5 million of debt currently due and subject to a forbearance agreement that raises substantial doubt about its ~~Consolidated~~ability ~~Financial~~to ~~Statements~~continue as a going concern at December 31, 2010. The Company’s audited consolidated financial statements as of December 31, 2010 have been prepared on the assumption that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. The Company has incurred substantial losses, which have strained its financial resources, and the Company’s liabilities exceed its assets at December 31, 2010. The Company’s $9.5 million line of credit with RBS Citizens, N.A. d/b/a Charter One (“Charter One”) was due August 1, 2009 and was in default. On August 24, 2009, Charter One received a judgment in its favor against the Company and Mr. Osborne related to this debt. On June 18, 2010, the Company, and other parties, and Charter One entered into a forbearance agreement, (“the Forbearance Agreement”) pursuant to which Charter One will forbear from enforcing its rights and remedies under the Company’s line of credit as well as the other parties’ loan agreements until July 1, 2011, subject to no further events of default including the payments due under the Forbearance Agreement. The Company does not have the available cash to repay the line of credit with Charter One. The Company is meeting with Charter One on a regular basis to reach a loan agreement satisfactory to both parties. Additionally, the Company is seeking funds from other financial institutions. See Note 5 “Line of Credit and Long Term Debt” to these consolidated financial statements for more information.

~~For~~3. ~~The Years~~Property ~~Ended December 31, 2009~~ and ~~2008~~Equipment

~~On February~~Property ~~13, 2009, Great Plains loaned the Company $600,000 to fund the Company’s ongoing capital requirements. On July 25, 2009, the Note~~ and ~~interest~~equipment ~~outstanding~~consists ~~on the $600,000 loan from Great Plains were fully paid. The Company used the receipt~~ of ~~currently owed production funds and additional advance monies against~~ the ~~production~~following ~~receivable~~at ~~to make the~~December 31: ~~payment.~~

Interest expense on related party notes payable, included in total interest was $21,436 and $8,899 for the years ended December 31, 2009 and 2008, respectively.


	2010			2009
Oil and Natural Gas Properties:
Proved Properties	$	16,473,401		$	16,516,743
Unproved Properties		79,308			169,536
Well Material Inventory		50,349			50,349
Accumulated Depletion		(10,613,130	)		(9,250,963	)

Total Oil and Natural Gas Properties		5,989,928			7,485,665
Other Property and Equipment:
Land		307,780			307,780
Building and Improvements		2,402,983			2,357,822
Furniture and Equipment		248,120			173,640
Accumulated Depreciation		(1,482,900	)		(1,338,970	)

Total Other Property and Equipment		1,475,983			1,500,272

Property and Equipment, Net	$	7,465,911		$	8,985,937

~~7. Stockholder’s~~48 ~~Equity~~

Effective FebruaryTable 12, 2008, the Company filed Articles Supplementary to its Articles of Incorporation, as amended, restated and supplemented with the State Department of Assessment and Taxation of Maryland designating 5,000 Series A Preferred Shares, par value $0.001 per share. Dividends accumulate on the Series A Preferred Shares at the rate of 8% per annum and must be paid on a quarterly basis. Failure to pay dividends on a timely basis results in the imposition of a default rate of 10% per annum that continues until the default is cured by the Company by payment of all accrued dividends. Further, the initial default by the Company entitles the holders of the Series A Preferred Shares to elect, as a class, one director to the Company’s Board of Directors who shall serve until the Series A Preferred Shares are liquidated or converted.Contents

The Series A Preferred Shares have voting rights only with respect to certain extraordinary actions that would impair the rights of holders of the Series A Preferred Shares, such as a merger, reorganization or issuance of a class or series of stock on parity with or senior to the Series A Preferred Shares4. ~~Each~~ ofInvestment ~~the~~in ~~Series~~Unconsolidated ~~A Preferred Shares is convertible into~~Affiliates common shares by dividing the sum of $1,000 and any accrued but unpaid dividends on the Series A Preferred Shares by the conversion price of $1.00 (the “Conversion Price”). The Conversion Price is proportionately increased (or decreased, as the case may be) for combinations, stock splits and similar events that would affect the number of shares of the Company’s common stock outstanding. The Series A Preferred Shares have a liquidation preference of $1,000 per share, plus any accrued but unpaid dividends.

The Company ~~sold~~is an ~~aggregate~~owner ofand ~~1,350~~managing ~~shares~~member of ~~its~~an ~~Series~~unconsolidated Aaffiliate, ~~Convertible~~Kykuit ~~Preferred~~Resources ~~Shares~~LLC, inwhich ais ~~private~~accounted ~~placement~~for tousing athe ~~total~~equity method of ~~nine~~accounting. ~~accredited~~The ~~investors~~Company began investing in Kykuit during the ~~first~~ ~~six~~third ~~months~~quarter of ~~2008~~2007. ~~All~~ ~~Series~~In A2008, ~~Preferred~~the ~~Shares~~Company ~~were~~ sold at25% of its interest in Kykuit aat ~~price~~cost offor approximately $1.4 million. The Company had an 18.8% ownership in Kykuit at December 31,~~000~~ ~~per~~2008. ~~share~~Some ~~for~~of athe ~~total~~Kykuit partners opted out of ~~$1,350,000~~further ~~with~~cash noinvestments ~~underwriting~~during 2009, ~~discounts~~increasing orthe ~~commissions,~~Company’s asownership nopercentage ~~underwriters~~at ~~were~~December 31, ~~used~~2009 to ~~facilitate~~20.83%. ~~the~~The Company’s ~~transactions~~investment was further increased to 21.79% at December 31, 2010.

In At December 31, of2010, ~~2008~~the investment by the Company in this venture was $736,953 which included a loss in the ~~Board~~investment of ~~Directors~~$143,197; an account payable of $124,000; and a cumulative net book loss of $883,377. At December 31, 2009, the investment by the Company ~~granted~~in ~~each~~this ofventure ~~its~~was ~~five~~$705,965 ~~outside~~which ~~board~~included ~~members~~a 9loss in the investment of $588,~~615~~309, ~~shares~~an account payable of ~~common~~$10,490 ~~stock~~and ~~valued~~a atcumulative net book loss of $0119,556.26 ~~per~~The Company’s recorded loss of $143,197 in 2010 represented 21.79% of a ~~share~~reduction in on undrilled leases, which was also recorded by Kykuit. The ~~total~~Company ~~shares~~recorded ~~awarded~~a loss of 48$588,~~075~~309 ~~were~~on ~~issued~~the asinvestment ~~partial~~representing 20.83% of an 85% reduction in the value of the ~~compensation~~exploratory ~~for~~wells ~~their~~in ~~board~~Kykuit ~~participation~~at December 31, 2009. Kykuit recorded an impairment expense on its books at December 31, 2010 which had the same affect after the 85% reduction to the Company. The Company did not record any additional loss for this transaction in ~~2008~~2010. The following table displays the balance sheet of Kykuit at December 31, 2010, and 2009 and the income statement for the same years ended:

~~The Company~~Kykuit ~~did~~Resources ~~not~~LLC Balance ~~issue stock to its directors during 2009.~~Sheet

8. Warrant Issued


	December 31, 2010			December 31, 2009
Current Assets	$	429,656		$	115,893
Unproved Leaseholds and Development Costs		3,647,721			6,957,065
Furniture and Fixtures, Net of Depreciation		20,373			31,747
Other Assets		15,726			24,087

	$	4,113,476		$	7,128,792


Current Liabilities	$	677,331		$	832,728
Paid in Capital		7,436,674			6,786,675
Accumulated Deficit		(4,000,529	)		(490,611	)

	$	4,113,476		$	7,128,792

~~Pursuant to~~Kykuit aResources ~~warrant agreement dated June 20, 2008 between the Company and Richard M~~LLC. ~~Osborne,~~Statement ~~the Company issued a warrant to Mr. Osborne to purchase up to 50,000 shares~~ of ~~the Company’s common stock at $1.00 per share. The warrant~~Operations isFor ~~immediately exercisable.~~ The ~~fair~~Years ~~value~~Ended ~~of the warrant was approximately $48~~December 31,~~000~~ at2010 the grant date, estimated on the basis of the Black-Scholes-Merton option-pricing formula. The following assumptions were used: expected volatility of 153.15%; risk-free interest rate of 3.57%; expected dividend yield of 0.00% and ~~contractual life of the warrant as 4.5~~2009 ~~years. The fair value of the warrant has been recorded as an increase to additional paid in capital and expense accounts, which was fully recognized as of June 30, 2008.~~


	2010			2009

Total Revenues	$	—		$	—
Total Expenses		3,509,918			304,543

Net Loss	$	(3,509,918	)	$	(304,543	)

~~John D~~5. ~~Oil~~ ~~and~~Line ~~Gas~~of ~~Company~~Credit and ~~Subsidiary~~Long-Term Debt

~~Notes~~On September 28, 2006, the Company entered into an unsecured loan agreement for a line of credit with a one year term with Mr. Richard M. Osborne, the Company’s Chairman and CEO, and Charter One Bank for up to $5.0 million dollars in total borrowings with interest at a rate of ~~Consolidated~~1.75% ~~Financial~~over ~~Statements~~LIBOR adjusted monthly. The Charter One liability was jointly loaned, so the Company and Mr. Osborne were each liable for the debt of the other.

~~For The~~49 ~~Years Ended December 31, 2009 and 2008~~

9. Earnings/Loss PerTable Shareof Contents

~~Basic~~The loan was subsequently revised several times until on March 28, 2008, the Company entered into ~~income~~the First Amended and Restated Loan and Security Agreement (~~loss~~the “Loan Agreement”) ~~per~~between ~~share~~the Company, ofRichard ~~common~~M. ~~stock~~Osborne ~~for~~(the Company and Mr. Osborne together, the ~~years~~“Borrowers”), ~~ended~~and ~~December~~Charter One. 31The Loan Agreement extended the maturity date to August 1, 2009, continuing with the original interest rate calculation of 1.75% over LIBOR adjusted monthly. Under the agreement, only the Company could borrow on the line of credit when any amounts are paid down against the $9.5 million outstanding on the loan. The Company and ~~2008~~Great isPlains ~~determined~~Exploration byLLC ~~dividing~~a ~~net~~company ~~income~~owned by Mr. Osborne (~~loss~~“Great Plains”), ~~less~~agreed ~~declared~~that ~~preferred~~the related party loan of $3.8 million from Great Plains was ~~stock~~satisfied ~~dividends~~in byfull and terminated upon the ~~weighted~~Company’s ~~average~~entry ~~number~~into the new Charter One loan and assumption of ~~shares~~the $3.8 million portion of ~~common~~the ~~stock~~line of credit drawn by Mr. Osborne. Therefore, the Company had $9.5 million in outstanding ~~during~~debt to Charter One and $0 in outstanding debt to Great Plains at March 31, 2008. As part of this loan agreement, Mr. Osborne has pledged several real estate properties that he personally owns, to provide sufficient collateral allowing the ~~period~~Company to enter into the loan agreement. The Company did not meet the reserve collateral requirements for a $9.5 million loan without additional collateral.

The ~~stock options,~~Company’s ~~restricted~~$9.5 million ~~stock~~line ~~awards,~~of ~~Class~~credit Amatured ~~Limited~~on ~~Partnership~~August 1, ~~conversion~~2009. ~~and~~On August 20, 2009, Charter ~~warrants~~One ~~for~~received ~~the~~a ~~years~~judgment ~~ended~~in ~~December~~its ~~31,~~favor ~~2009~~against the Company and ~~2008~~Mr. Osborne ~~were~~related ~~anti-dilutive~~to ~~and~~the $9.5 ~~had~~million noline ~~effect~~of oncredit. ~~diluted~~The ~~earnings~~average ~~per~~balance ~~share~~during 2010 was $9. ~~The~~5 million ~~Company’s~~and ~~Class~~the Aweighted average ~~Limited~~interest ~~Partnership~~rate ~~exchange~~was ~~factor~~3.55%. isThe average balance during 2009 was $9.~~1377148~~5 million ~~per~~and ~~share~~the weighted average interest rate was 2.12%.

The Company’s ~~paid~~line noof ~~cash~~credit ~~distributions~~with toCharter ~~its~~One ~~common~~was ~~stockholders~~almost ~~during~~fully ~~2009~~drawn ~~and 2008~~for $9. ~~However~~5 million at December 31, 2010 at a rate of 4.75%. Charter One contends that the interest rate at December 31, 2010 is LIBOR plus 1.75% with a LIBOR floor of 3.00%. The Company ~~declared~~believes ~~and~~that ~~paid~~there ~~$108~~is an interest rate cap of 3.00%. The parties are in discussions regarding the applicable interest rate. Also,~~000~~ Charter One has applied a default rate to the loan from January 4, 2010 thru June 18, 2010. The Company does not agree with the default rate and therefore has not booked approximately $85171,~~140~~000 inof ~~preferred~~additional ~~stock~~interest ~~dividends~~expense. It is the Company’s position that the interest for the ~~year~~period ~~ended~~from judgment ~~December~~date 31to forbearance date should remain at the original contract rate at the date of judgment, ~~2009~~based upon the per diem interest amount expressly stated in that judgment. Attorneys for the Company also support that position and ~~2008,~~have so stated in letters to Charter One and ~~respectively~~for purposes of the annual audit.

10On June 18, 2010, the Company, Mr. ~~Income~~ Osborne, the Richard M. Osborne Trust (the “Trust”), Great ~~Taxes~~Plains, and Oz Gas, Ltd. (companies owned by Mr. Osborne) entered into a Forbearance Agreement with Charter One regarding the Company’s $9.5 million line of credit under the Loan Agreement and regarding the $25.0 million loan agreement between Great Plains, Oz Gas and Mr. Osborne and Charter One, dated August 2, 2007 (together, the “Loan Agreements”). The Company, Mr. Osborne, the Trust, Great Plains and Oz Gas are collectively referred to in the Forbearance Agreement and herein as the “Loan Parties.”

~~The reconciliation~~Pursuant ofto the ~~federal~~Forbearance ~~statutory~~Agreement ~~income~~and ~~tax~~during ~~rate~~the forbearance period, Charter One agreed to, among other things, forbear from exercising its rights and remedies arising out of the ~~Company’s~~judgments ~~effective~~and ~~income~~the ~~tax~~Loan ~~rate~~Agreements ~~applicable~~and to ~~income~~stay ~~from~~any ~~continuing~~action ~~operations~~on isits asmotion for the appointment of a receiver. ~~follows:~~

	2009						2008
	Amount			%			Amount			%
Provision (benefit) based on the federal statutory rate	$	(889,000	)		(34.0	)	$	(751,600	)		(34.0	)
Increase in valuation allowance		889,000			34.0			751,600			34.0
	$	-			-		$	-			-

Under the Forbearance Agreement, Charter One’s agreement to forbear is conditioned upon and subject to the following conditions:

~~The following~~• ~~table~~Payment ~~represents~~by the ~~Company’s~~Loan ~~significant~~Parties ~~deferred~~of ~~tax~~a ~~assets~~forbearance ~~and liabilities~~fee atof ~~December 31~~$40,000 ~~2009~~per ~~and~~month ~~2008:~~during the forbearance period;

	2009			2008
Deferred tax assets
Net operating loss carry forwards	$	5,420,000		$	5,290,000
AMT credit		41,100			41,100
Total Deferred assets		5,461,100			5,331,100
Deferred tax liabilities
Oil and natural gas properties, principally due to differences in depreciation, depletion and amortization		(1,750,000	)		(2,830,000	)
Net Deferred tax assets		3,711,100			2,501,100
Valuation allowance		(3,711,100	)		(2,501,100	)
Net Deferred tax assets	$	-		$	-

•

No material adverse change in the condition of the Loan Parties;

~~At December~~• ~~31,~~An ~~2009~~assignment and ~~2008,~~grant ~~the Company had net operating loss carry forwards (NOLS) for future years~~ of ~~approximately $15.9 and $15.4 million, respectively. These NOLS will expire at various dates through 2028. Utilization of the NOLs could be limited if there is~~ a ~~substantial~~ ~~change~~security ininterest ~~ownership~~by of the Company and isGPE ~~contingent~~of oneach ~~future earnings. In~~of ~~addition,~~their ~~the~~ownership ~~Company~~interests ~~paid $41,187 for alternative minimum tax (AMT)~~ in ~~2006,~~the ~~creating~~Alpha aand ~~tax~~Panzica ~~credit that carries forward indefinitely.~~wells;

	•		A pledge by the Loan Parties of their ownership interests in Kykuit Resources LLC; and

	•		A pledge by Mr. Osborne of not less than 800,000 shares of common stock of Gas Natural Inc. with such stock having a market value of not less than $9.6 million pursuant to a pledge agreement.

~~John D.~~50 ~~Oil and Gas Company and Subsidiary~~

NotesTable to Consolidatedof Financial StatementsContents

~~For~~In addition, commencing July 1, 2010 and each month thereafter until all amounts under the judgments and loan agreements have been paid in full, the Loan Parties shall pay Charter One $400,000, including the $40,000 forbearance fee. The Company had previously felt they would pay ~~Years~~one ~~Ended~~third ~~December~~of 31the $400,000, ~~2009~~but due to lack of cash, they have decided to accrue interest and ~~2008~~one third of the $40,000 monthly fee and legal fees. The monthly $400,000 is being paid by the other Loan Parties. Such payments by the Loan parties shall be applied first to Charter One’s fees and expenses, second to accrued but unpaid interest due under the judgments, and third to principal amounts due under the judgments. Charter One contends that the judgments will bear interest at LIBOR plus 1.75% with a LIBOR floor of 3.00%. The Company believes that there is an interest rate cap of 3.00%. The parties are in discussions regarding the applicable interest rate. If the Loan Parties repay $10 million and if after application of such repayment the outstanding balance of the judgments does not exceed 65% of the current producing reserve value (as that term is defined in the Loan Agreements) of the Company, Great Plains and Oz Gas, then the pledge of Mr. Osborne’s Kykuit interests and his Gas Natural Inc. shares shall be released. In addition, the Company must deposit all proceeds of its operations into accounts maintained by Charter One but during the forbearance period Charter One will not take any action to set off funds in any such account.

The ~~Company~~ ~~has~~forbearance ~~provided~~period ais ~~valuation~~effective ~~allowance~~until ~~equal~~July 1, to2011, ~~100%~~subject ofto the ~~total~~earlier ~~net deferred~~termination ~~asset~~upon inthe occurrence ~~recognition~~ of ~~the~~any ~~uncertainty~~events ~~regarding the ultimate amount~~ of ~~the~~default ~~net~~by ~~deferred~~any ~~tax~~of ~~asset that will be realized. In 2006,~~ the ~~Company~~ ~~began~~Loan ~~operating in the oil and natural gas business~~Parties, ~~which~~including isnon-payment ~~subject~~of toany ~~many~~amounts ~~risks. The~~due ~~Company~~by ~~also~~any ~~expects~~of tothe ~~continue~~Loan ~~generating~~Parties ~~tax losses~~under in the ~~next~~Forbearance ~~few years due to timing differences~~Agreement.

~~11. Other~~Because the Company does not have the available cash to repay the line of credit, if the required ~~Related~~payments ~~Party~~are ~~Transactions~~not made by the Company or any of other Loan Parties, or other events of default occur, under the Forbearance Agreement or if prior to the end of the forbearance period the Company is unsuccessful in refinancing the line of credit with Charter One or if the Company is unsuccessful in obtaining substitute financing, there is substantial doubt about the Company’s ability to continue as a going concern.

~~Richard M.~~Discussions ~~Osborne~~with isCharter ~~the~~One ~~sole~~are ~~manager~~ongoing ofbut ~~Liberty~~there ~~Self-Stor II, Ltd., an Ohio limited liability company, which~~ is ~~the~~no ~~owner~~certainty ofthat athese ~~truck~~discussions ~~rental business, which makes~~will ~~trucks~~result ~~available~~in ~~for~~satisfactory ~~short-term~~terms ~~rental to the general public, including tenants~~ of ~~the~~a ~~Company’s~~revised ~~self-storage~~loan ~~facility,~~agreement ~~and~~or ~~provides~~a ~~for~~revised ~~the~~loan ~~retail~~agreement ~~sale of locks, boxes, packing materials and related merchandise~~ at ~~the self-storage facility~~all. ~~The~~ ~~Company has entered into a cost sharing agreement with~~If ~~Liberty~~Charter ~~Self-Stor~~One ~~II,~~demands ~~Ltd.~~repayment ~~with~~of ~~respect to~~ the ~~sharing~~outstanding ofamounts ~~employees~~payable ~~and space~~ at the ~~office~~end of the ~~self-storage~~forbearance period, ~~facility for~~ the ~~benefit of both companies. The~~ Company ~~owed~~does ~~Liberty~~not ~~Self-Stor~~have ~~II,~~the ~~Ltd.~~available ~~funds associated with these transactions, as well as for~~ cash ~~advances~~to ~~between~~repay the ~~companies,~~line ~~which are~~of ~~included~~credit ~~in accounts receivable~~ and ~~accounts~~will ~~payable to related parties in~~need ~~the~~financing ~~accompanying~~from ~~consolidated~~other ~~balance~~sources ~~sheets~~to ~~and~~repay ~~listed~~Charter ~~in the table below~~One.

The ~~Company~~ ~~leases~~Painesville ~~its~~facility ~~executive~~was ~~offices~~encumbered ~~from~~by ~~OsAir,~~a ~~Inc.,~~mortgage awith ~~company~~First ~~owned~~Merit byBank, MrN. ~~Osborne~~A. ~~The~~ ~~lease~~by ~~was extended for a three year term on March 26,~~agreement ~~2009~~dated ~~at $2~~June 9,~~000~~ ~~per~~2009. ~~month~~The ~~from~~loan ~~$1,350~~was ~~per~~deemed ~~month,~~to ~~through~~be ~~April~~in ~~1, 2012. Rent~~default ~~expense~~by ~~totaled~~First ~~$22,050~~Merit ~~and $16~~Bank,~~200~~ ~~for~~N.A ~~the~~in ~~years ending~~August 2009 ~~December~~when ~~31,~~Charter ~~2009~~One ~~and~~sought ~~2008,~~judgments ~~respectively~~against ~~and~~the isCompany ~~included~~regarding inits ~~general~~line ~~and administrative~~of ~~expenses~~credit.

~~Effective January~~On 1May 11, ~~2006~~2010, ~~the~~Liberty ~~Company~~Self ~~entered~~Stor, ~~into~~LTD aand ~~contract~~First ~~with~~Merit ~~Great Plains~~Bank, ~~which~~N.A issigned a loan modification ~~wholly~~agreement ~~owned~~which bywaived ~~Mr.~~the ~~Osborne,~~prior ~~for~~defaults. ~~well~~The ~~operations~~terms ~~and~~of tothe ~~sell~~mortgage ~~natural~~include ~~gas~~a ~~and~~five ~~oil~~year term, ~~production~~maturing ~~net~~on ofJune 1, ~~pipeline~~2014, ~~transportation~~with ~~costs. Additionally,~~a ten year amortization period at a variable rate of the 30 day ~~Company~~LIBOR ~~has~~plus ~~non-operator~~250 ~~joint~~basis ~~venture~~points. ~~operating~~Monthly ~~agreements~~payments ~~with~~include J.principal R.of ~~Smail~~$10, ~~Inc~~370 plus interest., aThe current ~~corporation~~rate ~~owned~~on byDecember 31, ~~James~~2010 Rwas 2.76%. ~~Smail,~~The aprincipal ~~director~~amount of the ~~Company~~loan ~~until August~~as 26of December 31, 2010 and 2009 were $1,010,364 and $1,145,174, respectively.

The ~~following~~ ~~tables~~repayment ~~summarize~~terms ~~the related party transactions~~ for ~~accounts receivable~~the ofPainesville ~~oil~~loan ~~and~~includes ~~natural~~the ~~gas~~following ~~production,~~principal ~~capitalized costs for wells, outstanding accounts payable, revenues received and~~ payments ~~paid~~over ~~for expenses to related parties for~~ the ~~periods indicated. The accounts receivable~~ ~~from~~next ~~various~~four ~~companies~~years ~~owned~~ending byDecember 31 ~~Mr. Osborne in the accompanying consolidated balance sheets represent amounts owed to the Company for minor cost sharing transactions and~~ are ~~listed~~as ~~in the following table.~~follows:

	December 31, 2009			December 31, 2008
2011	$	124,440
Accounts Receivable Oil and Gas Sales:
2012		124,440
Great Plains Exploration, LLC.	$	462,549		$	1,386,668
2013		124,440
J.R. Smail, Inc.		13,551			30,442
2014		637,044
Liberty Self Stor II		727			-
		1,010,364
Various Related Companies		1,308			569
Less current portion		(124,440	)
	$	~~478~~885,~~135~~924		$	~~1,417,679~~
Accounts Payable:
Great Plains Exploration, LLC.	$	47,144		$	696,114
Liberty Self Stor II		-			1,263
	$	47,144		$	697,377

5051

JohnTable D. Oilof and Gas Company and SubsidiaryContents

~~Notes~~In toFebruary 2010, the Company entered into a loan for the purchase of a vehicle which matures ~~Consolidated~~in ~~Financial~~February 2015. ~~Statements~~The interest rate is fixed at 2.90%. The outstanding principal amount of the loan as of December 31, 2010 was $54,041. The future minimum loan payments over the next five years ending December 31 are as follows:

For The Years Ended December 31, 2009 and 2008


2011	$	12,372
2012		12,730
2013		13,099
2014		13,479
2015		2,361

		54,041
Less current portion		(12,372	)

	$	41,669

	For the Years Ended December 31,
	2009		2008
Capitalized Costs for Well Property and Equipment:
Great Plains Exploration, LLC.	$	170,410	$	1,422,220
J.R. Smail, Inc.		-		7,296
Revenues
Revenue From the Sale of Oil and Natural Gas Production, net of pipeline transportation costs:
Great Plains Exploration, LLC.	$	3,519,851	$	4,197,216
J. R. Smail, Inc.		84,265		188,221
Operating expenses
Well Management, Water Hauling and Service Rig:
Great Plains Exploration, LLC.	$	506,337	$	379,301
J. R. Smail, Inc.		41,708		46,058

For the years ended December 31, 2010 and 2009 respectively, the Company expensed $473,302 and $427,122 in interest on its debt instruments.

~~The Company is an owner and managing member of an unconsolidated affiliate, Kykuit Resources LLC, which is accounted for using the equity method of accounting~~6. ~~The~~ ~~Company~~Notes ~~began~~Payable ~~investing~~to inRelated ~~Kykuit during the third~~Party quarter of 2007. The Company had an 18.8% ownership in Kykuit at December 31, 2008. Some of the Kykuit partners opted out of further cash investments during 2009, increasing the Company’s ownership percentage at December 31, 2009 to 20.83%.

The ~~investment~~ ~~by the~~ Company inentered ~~this~~into ~~venture~~an ~~was~~agreement ~~$989,258~~with ~~which~~Mr. Osborne ~~included~~for an ~~account payable~~unsecured ofrevolving ~~$158,225~~demand ~~and~~note dated aJanuary 1, ~~cumulative~~2006. ~~net~~Interest ~~book~~is ~~loss~~payable ofannually ~~$57,444~~ at ~~December~~the ~~31, 2008. The~~prime ~~investment~~rate bywith ~~the~~principal ~~Company~~being indue ~~this~~on demand. ~~venture~~The ~~was~~revolving ~~$705,965 which~~demand ~~included~~note andoes ~~investment~~not ~~loss~~include ofan ~~$588,309,~~expiration andate ~~account~~or ~~payable~~a oflimit ~~$10,490~~on ~~and~~the amount athat ~~cumulative~~the ~~net~~Company ~~book~~may ~~loss~~borrow. ofThe ~~$119,556~~prime rate at December 31, ~~2009~~ 2010 was 3. ~~Additional~~25%. ~~information~~There iswere ~~disclosed~~no outstanding inbalances ~~Note~~under 4the tonote ~~these financial~~at ~~statements~~December 31, 2010 and 2009, respectively.

~~Richard M.~~On ~~Osborne~~February 13, 2009, Great Plains loaned the Company $600,000 to fund the Company’s ~~Chairman~~ongoing capital ~~and~~requirements. ~~Chief~~On ~~Executive~~July 25, ~~Officer~~2009, the Note and ~~Energy~~ ~~Inc.~~interest outstanding on the $600,000 aloan from ~~publicly-held~~Great ~~public~~Plains ~~utility~~were ~~company~~fully ofpaid. ~~which Richard~~The ~~Osborne~~Company isused the ~~chairman,~~receipt ~~chief~~of ~~executive~~currently ~~officer~~owed production funds and aadditional ~~significant stockholder,~~advance ~~own~~monies ~~interests~~against inthe ~~Kykuit~~production receivable to make the payment.

~~Marc~~Interest ~~C. Krantz,~~expense aon ~~director~~related ~~and~~party ~~secretary~~notes ofpayable, ~~the~~included ~~Company~~in ~~until~~total ~~August~~interest ~~26,~~was ~~2009,~~$0 isand ~~the managing~~$21,436 ~~partner of~~ for the ~~law~~years ~~firm~~ended ofDecember 31, ~~Kohrman~~2010 ~~Jackson~~and ~~& Krantz PLL~~2009, ~~which provides legal services to the Company~~respectively.

127. ~~Financial~~ ~~Information~~Stockholder’s ~~Relating to Industry Segments~~Equity

~~The~~ Effective February 12, 2008, the Company ~~reports~~filed ~~operating~~Articles ~~segments~~Supplementary to its Articles of Incorporation, as amended, restated and ~~reportable~~supplemented ~~segments~~with bythe ~~business~~State ~~activity~~Department of Assessment and ~~according~~Taxation toof ~~GAAP~~Maryland designating 5,000 ~~“Disclosure~~Series A ~~about~~Preferred ~~Segments~~Shares, par value $0.001 per share. Dividends accumulate on the Series A Preferred Shares at the rate of an8% ~~Enterprise~~per annum and ~~Related~~must be paid ~~Information~~on a quarterly basis.~~” The~~ Failure to pay dividends on a timely basis results in the imposition of a default rate of 10% per annum that continues until the default is cured by the Company ~~includes~~by ~~revenues~~payment of ~~from~~all ~~external~~accrued ~~customers~~dividends. Further, the initial default by the Company entitles the holders of the ~~interest~~Series A ~~revenue~~Preferred ~~and~~Shares ~~expense~~to elect, ~~depreciation~~as a class, ~~depletion~~one ~~and~~director ~~amortization~~to ~~and~~the ~~other~~Company’s Board of Directors ~~operating~~who ~~expenses~~shall inserve ~~its~~until ~~measure~~the ofSeries A ~~segment~~Preferred ~~profit~~Shares are liquidated or ~~loss~~converted.

51The Series A Preferred Shares have voting rights only with respect to certain extraordinary actions that would impair the rights of holders of the Series A Preferred Shares, such as a merger, reorganization or issuance of a class or series of stock on parity with or senior to the Series A Preferred Shares. Each of the Series A Preferred Shares is convertible into common shares by dividing the sum of $1,000 and any accrued but unpaid dividends on the Series A Preferred Shares by the conversion price of $1.00 (the “Conversion Price”). The Conversion Price is proportionately increased (or decreased, as the case may be) for combinations, stock splits and similar events that would affect the number of shares of the Company’s common stock outstanding. The Series A Preferred Shares have a liquidation preference of $1,000 per share, plus any accrued but unpaid dividends.

~~John D.~~52 ~~Oil and Gas Company and Subsidiary~~

NotesTable to Consolidatedof Financial StatementsContents

~~For~~ The ~~Years~~ ~~Ended~~Company ~~December~~sold 31an aggregate of 1,350 ~~2009~~shares ~~and~~of its Series A Convertible Preferred Shares in a private placement to a total of nine accredited investors during the first six months of 2008. All Series A Preferred Shares were sold at a price of $1,000 per share for a total of $1,350,000 with no underwriting discounts or commissions, as no underwriters were used to facilitate the transactions.

The Company’s ~~operations~~did ~~are~~not ~~classified~~issue ~~into~~stock ~~two~~in ~~principal~~2010 ~~industry segments. The~~or ~~following table presents the twelve months ended December 31,~~ 2009 ~~and 2008~~.

Twelve Months ended December 31, 2009	Oil and Gas Production			Self-Storage Facilities			Total
Revenues from external customers	$	3,711,668		$	333,569		$	4,045,237
Interest revenue		8			-			8
Total Revenue		3,711,676			333,569			4,045,245
Interest Expense		412,637			35,921			448,558
Accretion Expense		45,905			-			45,905
Property Operating Costs		687,182			112,382			799,564
Other Operating expenses		1,089,434			178,894			1,268,328
Loss from Unconsolidated Affiliate		650,420			-			650,420
Bad Debt		-			2,157			2,157
Impairments		145,444			-			145,444
Depreciation, depletion and amortization		3,260,576			120,538			3,381,114
Total Operating Expenses		6,291,598			449,892			6,741,490
Net Loss	$	(2,579,922	)	$	(116,323	)	$	(2,696,245	)
Property and Equipment additions	$	329,125		$	-		$	329,125
Total Assets	$	8,790,619		$	1,468,905		$	10,259,524

8. Earnings/Loss Per Share

Twelve Months ended December 31, 2008	Oil and Gas Production			Self-Storage Facilities			Total
Revenues from external customers	$	4,568,087		$	312,108		$	4,880,195
Interest revenue		3,318			-			3,318
Total Revenue		4,571,405			312,108			4,883,513
Interest Expense		507,754			74,200			581,954
Accretion Expense		44,742			-			44,742
Property Operating Costs		575,675			115,671			691,346
Other Operating expenses		1,117,795			220,057			1,337,852
Loss from Unconsolidated Affiliate		28,627			-			28,627
Bad Debt		-			43,517			43,517
Impairments		491,224			-			491,224
Depreciation, depletion and amortization		3,753,926			120,932			3,874,858
Total Operating Expenses		6,519,743			574,377			7,094,120
Net Loss	$	(1,948,338	)	$	(262,269	)	$	(2,210,607	)
Property and Equipment additions	$	3,244,934		$	1,437		$	3,246,371
Total Assets	$	13,246,219		$	1,570,397		$	14,816,616

Basic income (loss) per share of common stock for the years ended December 31, 2010 and 2009 is determined by dividing net income (loss) less declared preferred stock dividends by the weighted average number of shares of common stock outstanding during the period.

52The restricted stock awards, Class A Limited Partnership conversion and warrants for the years ended December 31, 2010 and 2009 were anti-dilutive and had no effect on diluted earnings per share. The Company’s Class A Limited Partnership exchange factor is .1377148 per share.

~~John~~The DCompany paid no cash distributions to its common stockholders during 2010 and 2009. However, ~~Oil~~the Company declared and ~~Gas~~paid ~~Company~~$108,000 in preferred stock dividends for both of the years ended December 31, 2010 and ~~Subsidiary~~2009.

~~Notes~~9. ~~to Consolidated~~Income ~~Financial Statements~~Taxes

~~For~~ The reconciliation of the federal statutory income tax rate to the Company’s effective income ~~Years~~tax ~~Ended~~rate ~~December~~applicable ~~31,~~to ~~2009~~income ~~and~~from ~~2008~~continuing operations is as follows:

13. Commitments and Contingencies


	2010						2009
	Amount			%			Amount			%
Provision (benefit) based on the federal statutory rate	$	(506,000	)		(34.0	)	$	(889,000	)		(34.0	)
Increase in valuation allowance		506,000			34.0			889,000			34.0

	$	—			—		$	—			—

~~Environmental~~The following table represents the Company’s significant deferred tax assets and liabilities at ~~Matters~~December 31, 2010 and 2009:

The oil and gas industry is subject, by its nature, to environmental hazards and clean-up costs. At this time, management knows of no substantial costs from environmental accidents or events for which it may be currently liable.


	2010			2009
Deferred tax assets
Net operating loss carry forwards	$	5,645,000		$	5,420,000
AMT credit		41,100			41,100

Total Deferred assets		5,686,100			5,461,100

Deferred tax liabilities
Oil and natural gas properties, principally due to differences in depreciation, depletion and amortization		(1,425,000	)		(1,750,000	)


Net Deferred tax assets		4,261,100			3,711,100
Valuation allowance		(4,261,100	)		(3,711,100	)

Net Deferred tax assets	$	—		$	—

~~Oil and Gas~~53 ~~Contracts~~

Effective JanuaryTable 1, 2006, the Company entered into a contract with Great Plains Exploration, LLC for well operations and sale of natural gas and oil production to third parties. The term of the agreement was one year from the effective date. It was extended as of January 1, 2007 and shall be extended for consecutive one year periods unless terminated earlier. The original contract was amended November 14, 2006 and filed as exhibit 10.4 to our Form 10-QSB for the quarter ended September 30, 2006. The Amendment No. 1 to the Oil and Gas Operations and Sale Agreement modified the original terms to create less cumbersome paperwork in tracking cost sharing between the companies.Contents

14At December 31, 2010 and 2009, the Company had net operating loss carry forwards (NOLS) for future years of approximately $16.6 and $15.9 million, respectively. These NOLS will expire at various ~~Subsequent~~dates ~~Events~~through 2028. Utilization of the NOLs could be limited if there is a substantial change in ownership of the Company and is contingent on future earnings. In addition, the Company paid $41,187 for alternative minimum tax (AMT) in 2006, creating a tax credit that carries forward indefinitely.

~~As previously~~The ~~disclosed,~~Company onhas ~~August~~provided ~~20, 2009, RBS Citizens, N.A., d/b/~~a ~~Charter~~valuation ~~One (“Charter~~allowance ~~One”),~~equal ~~the~~to ~~holder~~100% of the ~~Company’s~~total ~~$9.5~~net ~~million~~deferred ~~line~~asset ~~of credit,~~in ~~received~~recognition aof ~~judgment in its favor against~~ the ~~Company,~~uncertainty ~~Mr.~~regarding ~~Osborne and~~ the ~~Richard~~ M.ultimate ~~Osborne Trust, jointly and severally, for the~~ amount of ~~$9.5~~the ~~million plus~~net ~~interest~~deferred ~~and~~tax ~~late~~asset ~~charges~~that will asbe ~~well~~realized. asIn ~~attorneys’ fees~~2006, ~~costs~~the ~~and~~Company ~~other amounts~~began ~~payable~~operating ~~under~~in the ~~line~~oil ofand ~~credit. Charter~~natural ~~One~~gas ~~has~~business, ~~requested~~which ~~that~~is ~~the~~subject ~~court~~to ~~appoint~~many arisks. ~~receiver~~The ~~for the~~ Company~~. A~~ ~~hearing~~also onexpects ~~the appointment~~to ofcontinue agenerating ~~receiver~~tax ~~for~~losses in the ~~Company~~next few isyears ~~currently~~due ~~scheduled~~to ~~for~~timing ~~April 16, 2010~~differences.

During the month of February 2010, LSS I received a letter from the Lake County Board of Revision and Lake County Auditor reducing the taxable values on two parcels at the Painesville facility from 2006 through 200910. ~~The~~ ~~Company~~Other ~~will record~~Related ~~approximately~~Party ~~$157,000 of other income in 2010 from the receipt of a cash~~Transactions ~~refund and reduction in accrued real estate taxes.~~

15Mr. ~~Supplemental~~ Osborne is the sole manager of Liberty Self-Stor II, Ltd., an Ohio limited liability ~~Disclosures~~company, ~~About~~which ~~Oil~~is the owner of a truck rental business, which makes trucks available for short-term rental to the general public, including tenants of the Company’s self-storage facility, and provides ~~Natural~~for ~~Gas~~the ~~Producing~~retail ~~Activities~~sale of locks, boxes, packing materials and related merchandise at the self-storage facility. The Company has entered into a cost sharing agreement with Liberty ~~Unaudited~~Self-Stor II, Ltd. with respect to the sharing of employees and space at the office of the self-storage facility for the benefit of both companies. Liberty Self-Stor II, Ltd. owed the Company funds associated with these transactions, as well as for cash advances between the companies, which are included in accounts receivable from related parties in the accompanying consolidated balance sheets and listed in the table below.

~~Estimated~~The Company leases its executive offices from OsAir, Inc., a company owned by Mr. Osborne for ~~Proved~~$2,000 ~~Reserves~~per month. The current lease has a three year term maturing on April 1, 2012. Rent expense totaled $24,000 and $22,050 for the years ending December 31, 2010 and 2009, respectively, and is included in general and administrative expenses.

~~Users~~Effective ~~of this~~January 1, ~~information~~2006, ~~should~~the beCompany ~~aware~~entered ~~that~~into ~~the~~a ~~process~~contract ofwith ~~estimating~~Great ~~quantities~~Plains offor well ~~“proved”~~operations ~~crude~~and ~~oil~~sale ~~and~~of natural gas ~~reserves~~and isoil ~~very~~production, ~~complex. There are~~net ~~numerous~~of ~~uncertainties~~pipeline ~~inherent~~costs. inThe ~~estimating~~term ~~quantities~~ of ~~proved reserves,~~the ~~including~~agreement ~~many~~was ~~factors~~one ~~beyond~~year from the ~~control~~effective ofdate. ~~the~~It ~~Company,~~was ~~such~~extended as ~~additional development~~of ~~activity~~January 1, ~~evolving~~2007 ~~production history~~ and ~~reassessment~~shall ~~of the~~be ~~viability~~extended offor ~~production~~consecutive ~~under~~one ~~varying~~year ~~prices~~periods ~~and~~unless ~~other~~terminated ~~economic conditions~~earlier. ~~As a result, revision to existing estimates may~~ ~~occur.~~

~~There~~The ~~are~~Company ~~numerous uncertainties~~is ~~inherent~~a infifty ~~estimating~~percent ~~quantities~~partner ~~of proved reserves~~ and ~~in projecting~~the ~~future~~operating ~~rates~~manager of ~~production~~Lucky ~~and~~Brothers ~~timing of development expenditures including many factors beyond the control of the Company. In December 2008~~LLC, ~~the~~a ~~SEC announced that it had approved revisions designed to modernize the oil and gas~~ company ~~reserves reporting requirements. In addition,~~ inwhose ~~January 2010~~other ~~the~~partners ~~FASB~~are ~~issued~~almost anall ~~accounting~~related ~~standard update~~ to ~~provide consistency with the SEC rules~~Mr. ~~See Note 1~~ Osborne. ~~Summary~~The ofpartnership ~~Significant Accounting~~owns ~~Policies~~one –well ~~Recently issued Accounting Pronouncements. We adopted the~~at ~~rules effective~~ December 31, ~~2009~~2010. ~~and~~The ~~the~~purpose ~~rule~~of ~~changes,~~Lucky ~~including~~Brothers ~~those related~~LLC is to ~~pricing~~engage ~~and~~in ~~technology,~~a ~~which~~joint ~~are~~venture ~~included~~for ~~in our reserves~~drilling ~~estimates~~wells. ~~Because~~ ~~the~~The Company ~~uses~~has ~~year-end~~invested ~~reserves~~$174,392 ~~and~~in ~~add~~well ~~back current~~tangibles ~~quarter~~and ~~production~~intangibles toat ~~calculate fourth quarter depletion expense~~December 31, 2010 ~~adoption~~and ~~of these new standards had an impact on fourth quarter~~ 2009 ~~DD&A expense~~.

53The Company purchases well supplies from Big Oats Oilfield Supply Company, a company owned by Mr. Osborne.

~~John~~At DDecember 31, 2010, the Company had a $12,000 invoice outstanding to Oz Gas Ltd., a company owned ~~Oil~~by ~~and~~Mr. Osborne, ~~Gas~~for payments made on the Company’s behalf to Charter One. See Note 5 “Line of Credit and ~~Subsidiary~~Long Term Debt” to these consolidated financial statements for more information.

~~Notes~~In ~~to Consolidated~~2010, ~~Financial~~the ~~Statements~~Company paid Orwell Trumbull Pipeline, LLC, a company owned by Mr. Osborne, for telemeter charges.

~~For~~The Company is an owner and managing member of an unconsolidated affiliate, Kykuit Resources LLC (“Kykuit”), which is accounted for using the equity method of accounting. The Company had a 21.79% ~~Years~~and ~~Ended~~a ~~December~~20.83% ownership in Kykuit at December 31, 2010 and 2009, respectively. On June 18, 2010, the Company pledged its interest in Kykuit to Charter One in connection with the Forbearance Agreement. For the year ended December 31, 2010, the Company paid $93,440, including $10,940 previously recorded in accounts payable. Additionally the Company had $124,000 in accounts payable for a cash call and ~~2008~~$36,391 in accounts payable for borrowed funds owed to Kykuit. The investment by the Company in this venture is $736,953 which includes cash totaling $1,496,330, an accounts payable of $124,000 and a cumulative net book loss of $883,377 at December 31, 2010. Additional information is disclosed in Note 4 to these financial statements.

~~Application of the new~~54 rules resulted in the use of lower prices at December 31, 2009 for both oil and gas than would have resulted under the previous rules, which required use of year-end oil and gas prices. Because of the changes in assumptions, the 2009 reserve valuations below may not be comparable to those of prior years. The estimated future cash flows are determined based on the prior 12 month average prices for crude oil, current allowable prices (adjusted for periods beyond the contract period to prior 12 month average prices) applicable to expected natural gas production, estimated production of proved crude oil and natural gas reserves, estimated future production and development costs of reserves and future retirement obligations (net of salvage), based on current economic conditions, and the estimated future income tax expense, based on year-end statutory tax rates (with consideration of future tax rates already legislated) to be incurred on pretax net cash flows less the tax basis of the properties involved. Such cash flows are then discounted using a 10% rate.

The followingTable tableof presents the Company’s estimated gross proved oil and natural gas reserves, which are all located in the continental United States and all are based on reserve reports prepared by Schlumberger Data and Consulting Services for 2009 and Wright & Company, Inc. for 2008:Contents

	2009						2008
	Natural Gas			Oil			Natural Gas			Oil
	(MCF)			(BBLs)			(MCF)			(BBLs)
Proved developed and undeveloped reserves:
Beginning of year		2,146,600			17,500			2,646,000			37,300
Revision of previous estimates, extensions and other additions		792,000			17,600			(699,900	)		(13,900	)
Net reserve additions		272,900			2,900			715,600			3,800
Production		(698,700	)		(9,200	)		(515,100	)		(9,700	)
End of year		2,512,800			28,800			2,146,600			17,500
Proved developed reserves:
Beginning of year		2,146,600			17,500			2,646,000			37,300
End of year		2,512,800			28,800			2,146,600			17,500

Mr. Osborne, the Company’s Chairman and Chief Executive Officer, and Gas Natural Inc., a publicly-held public utility company of which Mr. Osborne is the Chairman, Chief Executive Officer and a significant stockholder, owns interests in Kykuit. Mr. Osborne’s personal interests in Kykuit were pledged to Charter One in connection with the Forbearance Agreement.

~~Capitalized~~The following tables summarize the related party transactions for accounts receivable of oil and ~~Costs~~natural ~~Relating~~gas production, capitalized costs for wells, outstanding accounts payable, revenues received and payments paid for expenses to ~~Oil~~related parties for the periods indicated. The accounts receivable from various companies owned by Mr. Osborne in the accompanying consolidated balance sheets represent amounts owed to the Company for minor cost sharing transactions and ~~Natural~~are ~~Gas~~listed ~~Producing~~in the ~~Activities~~following table for the years ended December 31:

	December 31,
	2010			2009
	2009			2008
Accounts Receivable Oil and Gas Sales:
Proved oil and natural gas properties	$	15,667,171		$	13,859,634
Great Plains Exploration, LLC.	$	435,268		$	423,566
Unproved oil and natural gas properties		2,260,896			3,652,790
Liberty Self Stor II		3,806			727
Well Material inventory		50,349			122,502
Lucky Brothers		—			38,983
Total		17,978,416			17,634,926
Various Related Companies		4,628			1,308
Accumulated depreciation, depletion and amortization		(10,492,751	)		(7,103,584	)
	$	443,702		$	464,584
Net capitalized costs	$	7,485,665		$	10,531,342
Accounts Payable:
Great Plains Exploration, LLC.	$	14,012		$	47,144
Big Oats Oilfield Supply Company		23,111			—
Kykuit Resources LLC		160,391
Orwell Natural Gas		1,296
Osair, Inc.		11,922			—
OzGas Ltd.		12,000			—
	$	222,732		$	47,144

Costs Incurred in Oil and Natural Gas Producing Activities


Great Plains Exploration, LLC:	2010		2009

Capitalized Costs for Well Property and Equipment	$	—	$	140,410
Revenues
Revenue From the Sale of Oil and Natural Gas Production, net of pipeline transportation costs	$	1,828,647	$	3,519,851
Operating expenses
Well Management, Water Hauling and Service Rig	$	395,892	$	506,337
Big Oats Oilfield Supply Company:
Purchases	$	22,193	$	—
Orwell Trumbull Pipeline, LLC Operating expenses	$	2,000	$	—

	December 31,
	2009		2008
Property acquisition costs	$	3,047	$	2,337
Development costs	$	340,443	$	3,242,597

Marc C. Krantz, a director and secretary of the Company until August 26, 2009, is the managing partner of the law firm of Kohrman Jackson & Krantz PLL, which provides legal services to the Company.

54J. R. Smail, a director of the Company until August 26, 2009, is the operator of five wells in which the Company has joint interest. At December 31, 2009, the consolidated financial statements included accounts receivable for oil and gas sales of $13,551; revenue from oil and gas sales of $84,265; and operating expenses of $41,708 from Smail.

~~John D.~~55 ~~Oil and Gas Company and Subsidiary~~

NotesTable to Consolidatedof Financial StatementsContents

~~For~~11. ~~The Years~~Financial ~~Ended~~Information ~~December~~Relating ~~31,~~to ~~2009~~Industry ~~and 2008~~Segments

~~Standardized~~The Company reports operating segments and reportable segments by business activity according ~~Measure~~to GAAP, “Disclosure about Segments of ~~Discounted~~an ~~Future~~Enterprise ~~Net~~and ~~Cash~~Related ~~Flows~~Information.” atThe ~~December~~Company includes 31revenues from external customers, ~~2009~~interest revenue and ~~2008(in~~expense, depreciation, depletion ~~thousands~~and amortization and other operating expenses in its measure of ~~dollars)~~segment profit or loss.

	2009			2008
Future cash inflows from sales of oil and gas	$	13,794		$	16,008
Future production and development costs		(8,207	)		(7,531	)
Future asset retirement obligations		(1,449	)		(1,385	)
Future income tax expense		(1,407	)		(2,411	)
Future net cash flows		2,731			4,681
Future net cash flows 10% annual discount for estimated timing of cash flows		(1,186	)		(1,159	)
Standardized measure of discounted future net cash flows	$	1,545		$	3,522

The Company’s operations are classified into two principal industry segments. The following table presents the twelve months ended December 31, 2010 and 2009:

Effective for the year end 2009, SEC reporting rules require that year-end reserve calculations and future cash inflows be based on the simple average of the first day of the month price for the previous twelve month period. The prices for 2009 used in the above table were $3.867 per MMBTU and $61.18 per BBL.


	Oil and Gas			Self-Storage
Twelve Months ended December 31, 2010	Production			Facilities		Total

Revenues from external customers	$	2,103,849		$	339,345	$	2,443,194
Interest and other revenue		15,670			177,918		193,588

Total Revenue		2,119,519			517,263		2,636,782

Interest Expense		437,497			35,805		473,302
Accretion Expense		24,580			—		24,580
Property Operating Costs		664,699			138,524		803,223
Other Operating expenses		933,909			104,002		1,037,911
Loss from Unconsolidated Affiliate		175,512			—		175,512
Impairments		—			—		—
Depreciation, depletion and amortization		1,384,450			121,647		1,506,097

Total Operating Expenses		3,620,647			399,978		4,020,625


Net Income (Loss)	$	(1,501,128	)	$	117,285	$	(1,383,843	)


Property and Equipment additions	$	83,173		$	46,547	$	129,720


Total Assets	$	7,346,068		$	1,372,436	$	8,718,504

The prices used for 2008 were based on the spot price at December 31, 2008 of $5.710 per MMBTU and $44.60 per BBL.


	Oil and Gas			Self-Storage
Twelve Months ended December 31, 2009	Production			Facilities			Total

Revenues from external customers	$	3,711,668		$	333,569		$	4,045,237
Interest and other revenue		8			—			8

Total Revenue		3,711,676			333,569			4,045,245

Interest Expense		412,637			35,921			448,558
Accretion Expense		45,905			—			45,905
Property Operating Costs		687,182			114,539			801,721
Other Operating expenses		1,089,434			178,894			1,268,328
Loss from Unconsolidated Affiliate		650,420			—			650,420
Impairments		145,444			—			145,444
Depreciation, depletion and amortization		3,260,576			120,538			3,381,114

Total Operating Expenses		6,291,598			449,892			6,741,490


Net Loss	$	(2,579,922	)	$	(116,323	)	$	(2,696,245	)


Property and Equipment additions	$	329,125		$	—		$	329,125


Total Assets	$	8,790,619		$	1,468,905		$	10,259,524

~~Future~~56 ~~operating expenses are based on year end costs and assume continuation of existing economic conditions.~~

Changes inTable the Standardized Measure of Discounted Future Net Cash Flow (in thousands of dollars).Contents

	2009			2008
Balance, beginning of year	$	3,522		$	5,891
Extensions, discoveries and other additions		412			2,164
Revision of quantity estimates		985			(4,177	)
Sales of oil and gas, net of production costs		(1,936	)		(2,855	)
Net change in prices and production costs		(1,668	)		(1,236	)
Net change in income taxes		1,004			2,367
Accretion of discount		352			589
Other		(1,126	)		779
Balance, end of year	$	1,545		$	3,522

12. Commitments and Contingencies

~~The methodology~~Environmental ~~and assumptions used in calculating the standardized measure are~~Matters those required by GAAP. It is not intended to be representative of the fair market value of the Company’s proved reserves. The valuation of revenues and costs does not necessarily reflect the amounts to be received or expended by the Company. In addition to the valuations used, numerous other factors are considered in evaluating known and prospective oil and gas reserves.

55The oil and gas industry is subject, by its nature, to environmental hazards and clean-up costs. At this time, management knows of no substantial costs from environmental accidents or events for which it may be currently liable.

Oil and Gas Contracts

Effective January 1, 2006, the Company entered into a contract with Great Plains Exploration, LLC for well operations and sale of natural gas and oil production to third parties. The term of the agreement was one year from the effective date. It was extended as of January 1, 2007 and shall be extended for consecutive one year periods unless terminated earlier. The original contract was amended November 14, 2006 and filed as exhibit 10.4 to our Form 10-QSB for the quarter ended September 30, 2006. The Amendment No. 1 to the Oil and Gas Operations and Sale Agreement modified the original terms to create less cumbersome paperwork in tracking cost sharing between the companies.

13. Supplemental Disclosures About Oil and Natural Gas Producing Activities — Unaudited

Estimated Proved Reserves

Users of this information should be aware that the process of estimating quantities of “proved” crude oil and natural gas reserves is very complex. There are numerous uncertainties inherent in estimating quantities of proved reserves, including many factors beyond the control of the Company, such as additional development activity, evolving production history and reassessment of the viability of production under varying prices and other economic conditions. As a result, revision to existing estimates may occur.

There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures including many factors beyond the control of the Company. In December 2008, the SEC announced that it had approved revisions designed to modernize the oil and gas company reserves reporting requirements. In addition, in January 2010 the FASB issued an accounting standard update to provide consistency with the SEC rules. We adopted the rules effective December 31, 2009 and the rule changes, including those related to pricing and technology, which are included in our reserves estimates.

Application of the new rules resulted in the use of lower prices at December 31, 2010 and 2009 for both oil and gas than would have resulted under the previous rules, which required use of year-end oil and gas prices. Because of the changes in assumptions, the 2010 and 2009 reserve valuations below may not be comparable to those of prior years. The estimated future cash flows are determined based on the prior 12 month average prices for crude oil, current allowable prices (adjusted for periods beyond the contract period to prior 12 month average prices) applicable to expected natural gas production, estimated production of proved crude oil and natural gas reserves, estimated future production and development costs of reserves and future retirement obligations (net of salvage), based on current economic conditions, and the estimated future income tax expense, based on year-end statutory tax rates (with consideration of future tax rates already legislated) to be incurred on pretax net cash flows less the tax basis of the properties involved. Such cash flows are then discounted using a 10% rate.

The following table presents the Company’s estimated gross proved oil and natural gas reserves, which are all located in the continental United States and all are based on reserve reports prepared by Schlumberger Data and Consulting Services for the years ended December 31:


	2010						2009
	Natural Gas			Oil			Natural Gas			Oil
	(MCF)			(BBLs)			(MCF)			(BBLs)
Proved developed and undeveloped reserves:
Beginning of year		2,512,800			28,800			2,146,600			17,500
Revision of previous estimates, extensions and other additions		347,800			13,400			792,000			17,600
Net reserve additions		—			—			272,900			2,900
Production		(383,500	)		(8,900	)		(698,700	)		(9,200	)

End of year		2,477,100			33,300			2,512,800			28,800


Proved developed reserves:
Beginning of year		2,512,800			28,800			2,146,600			17,500

End of year		2,477,100			33,300			2,512,800			28,800

Capitalized Costs Relating to Oil and Natural Gas Producing Activities for the years ended December 31.


	2010			2009

Proved oil and natural gas properties	$	16,473,401		$	16,516,743
Unproved oil and natural gas properties		79,308			169,536
Well Material inventory		50,349			50,349

Total		16,603,058			16,736,628
Accumulated depreciation, depletion and amortization		(10,613,130	)		(9,250,963	)

Net capitalized costs	$	5,989,928		$	7,485,665

Costs Incurred in Oil and Natural Gas Producing Activities for the years ended December 31.


	2010		2009
Property acquisition costs	$	317	$	3,047
Development costs	$	10,626	$	340,443

Standardized Measure of Discounted Future Net Cash Flows at December 31, (in thousands of dollars).


	2010			2009
Future cash inflows from sales of oil and gas	$	15,439		$	13,794
Future production and development costs		(8,661	)		(8,207	)
Future asset retirement obligations		(1,635	)		(1,449	)
Future income tax expense		(1,749	)		(1,407	)

Future net cash flows		3,349			2,731
Future net cash flows 10% annual discount for estimated timing of cash flows		(1,390	)		(1,186	)

Standardized measure of discounted future net cash flows	$	2,004		$	1,545

Effective for the year ended 2009, SEC reporting rules required that year-end reserve calculations and future cash inflows be based on the simple average of the first day of the month price for the previous twelve month period. The 12-month average pricing for 2010 used in the above table for natural gas sold at the Henry Hub, Louisiana was $4.376 and Ergon West Virginia Oil was $73.73. The 12-month average pricing for 2009 used in the above table for natural gas sold at the Henry Hub, Louisiana was $3.867 and West Texas Intermediate oil at Cushing, Oklahoma was $61.18.

Future operating expenses are based on year end costs and assume continuation of existing economic conditions.

Changes in the Standardized Measure of Discounted Future Net Cash Flow at December 31, (in thousands of dollars).


	2010			2009
Balance, beginning of year	$	1,545		$	3,522
Extensions, discoveries and other additions		—			412
Revision of quantity estimates		974			985
Sales of oil and gas, net of production costs		(445	)		(1,936	)
Net change in prices and production costs		471			(1,668	)
Net change in income taxes		(342	)		1,004
Accretion of discount		155			352
Other		(354	)		(1,126	)

Balance, end of year	$	2,004		$	1,545

The methodology and assumptions used in calculating the standardized measure are those required by GAAP. It is not intended to be representative of the fair market value of the Company’s proved reserves. The valuation of revenues and costs does not necessarily reflect the amounts to be received or expended by the Company. In addition to the valuations used, numerous other factors are considered in evaluating known and prospective oil and gas reserves.

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