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EX-99.1 - CODE OF ETHICS - FORCE MINERALS CORPexhibit99-1.htm
EX-31.1 - CERTIFICATION - FORCE MINERALS CORPexhibit31-1.htm
EX-32.1 - CERTIFICATION - FORCE MINERALS CORPexhibit32-1.htm
EX-10.14 - FORM OF SUBSCRIPTION AGREEMENT - FORCE MINERALS CORPexhibit10-14.htm
EX-10.15 - AMENDMENT TO ADDENDUM TO PARTICIPATION AGREEMENT - FORCE MINERALS CORPexhibit10-15.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended November 30, 2009

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

For the transition period from ______________to________________

Commission file number 000-52494

FORCE ENERGY CORP.
(Exact name of registrant as specified in its charter)

Nevada 98-0462664
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
708 11th Ave SW Suite 219  
Calgary, Alberta, Canada T2R 0E4
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code 403-457-3672

Securities registered under Section 12(b) of the Act:

None N/A
Title of each class Name of each exchange on which registered

Securities registered under Section 12(g) of the Act:

Common Stock, $0.001 par value
(Title of class)

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes[ ] No[ x ]

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes[ ] No [ x ]

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


Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes[ ] No[ ]

     Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and 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
[ x ].

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

Large accelerated filer [ ]

Non-accelerated filer [ ]


(Do not check if a smaller reporting company)
Accelerated filer [ ]

Smaller reporting company [ x ]

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $13,871,104 based on a price of $0.416 per share, being the average bid and asked price of such common equity as of May 29, 2009.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes[ ] No[ ] N/A

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 47,344,000 shares of common stock as of March 1, 2010.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). N/A

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PART I

Forward Looking Statements.

This annual report contains forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Financial information contained in this annual report and in our audited annual financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our audited annual financial statements and the related notes that appear elsewhere in this annual report.

As used in this annual report, the terms “Force”, the “Company”, “we”, “us” and “our” means Force Energy Corp. and its subsidiaries, unless otherwise indicated.

ITEM 1. BUSINESS

Corporate History

Prior to December 29, 2006, our business plan was focused on proceeding with the exploration of the Snippaker mineral claims to determine whether there are commercially exploitable mineral reserves. In 2006, our management was presented with a business opportunity by the management of a private company named Nuance Resources, Corp. that upon evaluation proved more interesting than our previous business plan. As a result, our management suspended its efforts in relation to the exploration of the Snippaker mineral claims at the time and entered into negotiations with Nuance Resources, Corp. After conducting our due diligence and concluding negotiations it was determined that a reverse acquisition of Nuance Resources, Corp. potentially presented greater benefits for our company than the unproven Snippaker mineral claims. In order to pursue this new business opportunity, we terminated our exploration activities and entered into negotiations for an agreement of merger and plan of reorganization.

On December 29, 2006, we consummated an agreement of merger and plan of reorganization with Nuance Resources, Corp. and Farrier Acquisition, Inc. (“Farrier Acquisition”), our wholly-owned Nevada subsidiary formed for the purpose of effecting the transaction. In connection with the closing of the merger transaction, Farrier Acquisition merged with and into Nuance Resources, Corp., and Nuance Resources, Corp. became a wholly-owned subsidiary of Farrier Resources Corp. named “Nuance Resources Corp.”. In accordance with the agreement of merger and plan of reorganization, the stockholders of Nuance Resources, Corp. received the right to receive one share of our common stock for each issued and outstanding share of Nuance Resources, Corp.’s common stock. As a result, at closing, in exchange for 100% of the outstanding capital stock of Nuance Resources, Corp., the former stockholders of Nuance Resources, Corp. received 23,000,000 shares of our common stock.

Effective January 4, 2007, we completed the merger with our subsidiary, Nuance Resources, Corp., a Nevada corporation. As a result, we changed our name from “Farrier Resources Corp.” to “Nuance Resources Corp.”.

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Effective February 12, 2008, we completed a merger with our subsidiary, Force Energy Corp., a Nevada corporation. As a result, we changed our name from “Nuance Resources Corp.” to “Force Energy Corp.”.

Our Current Business

We are currently engaged in the business of identifying, evaluating, and qualifying potential natural gas and oil wells; investing in interests in those wells with the goal of producing commercially marketable quantities of oil and natural gas. The majority of our business is derived from projects identified by our principals. Our strategy is to identify low to moderate risk oil and natural gas reserves by reviewing and reprocessing previously recorded seismic data with a view to a deeper target in our analysis than when the data was originally recorded. This approach allows us to evaluate potential oil and natural gas sites for development without the operational and financial commitment which would be required to record new seismic data on comparable sites. By entering into participation agreements with companies which have possession of such seismic data, our operational costs are limited to the cost of analysis until such time as we have identified reserves for development. We intend to expand our operations into these areas of activity should we establish sufficient cash flows in the next twelve months to support these activities. We presently hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well located in Alberta, Canada, and a 75% working interest in the Diamond Springs Prospect located within the Wind River Basin, Wyoming.

County Line Energy Corp. is the operator of the Hayter well. As of the date of this annual report, the Hayter well has been cased and cemented in anticipation of the completion of the drill program. County Line plans to enter the Hayter well, perforate the potential pay zone(s) and conduct regular production testing of the zone(s). Should the testing confirm adequate oil reserves and potential economic flow rates, County Line is expected to install adequate pumping equipment and other surface facilities in anticipation of the projected flow rates. Currently, there are no known oil reserves on the Hayter well.

We are the operator of the Diamond Springs Prospect being the largest working interest partner. Continental Production Co. has been sub contracted by us to be our operator in the field. Continental has been hired to permit two wells in section nine of the property. Once the new geothermal work is complete by Hawkeye Geosensing Ltd., the Company may stake wells in other sections. Once the well locations are staked, the Company intends to apply for drilling permits to be ready for this summer’s drilling season.

We did not earn any revenues during the year ended November 30, 2009. We do not anticipate earning revenues until identifiable reserves are discovered and exploited from the Hayter well, the Diamond Springs Prospect, or from any other properties or projects in which we hold a working or direct interest.

Recent Corporate Developments

Since the commencement of our fourth quarter ended November 30, 2009 we have experienced the following significant corporate developments:

1.

Effective September 16, 2009 we completed the acquisition of a further 25% interest in the Diamond Springs Prospect in accordance with the terms of an assignment agreement with G2 Petroleum, LLC dated effective September 16, 2009. Pursuant to the terms of the assignment agreement, in consideration of the purchase of a 25% working interest in the Diamond Springs Prospect we agreed to issue G2 Petroleum 450,000 common shares at a price of $0.32 per common share for total consideration of $144,000. Following completion of the acquisition, we currently hold a 75% working interest in the Diamond Springs Prospect located within the Wind River Basin, Wyoming.

   
2.

On September 18, 2009 Force entered into an agreement with Continental Production Company, LLC of Casper, Wyoming, to perform all drilling and field operations of the Diamond Springs prospect. Continental Production Company, LLC (Formerly Continental Industries, LLC) is a Wyoming based operating company dedicated to providing expertise in professional and administrative services for all functions of petroleum energy development.

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3.

On October 16, 2009 we entered into an amendment to our participation agreement with County Line Energy Corp. pursuant to which we acquired an additional 30% working interest in the Hayter Well in consideration of a release by Force from all amounts owed by County Line to Force. Following our entry into the amended participation agreement we now hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well. The addendum was subsequently amended by the parties on February 1, 2010 to replace the reference to the Company in the agreement with Nuance Exploration Ltd., the Company’s wholly owned subsidiary.

   
4.

On October 30, 2009 the Company completed a private placement of 900,000 shares of the Company’s common stock to one subscriber at a price of $0.28 per share for gross proceeds of $252,000. The shares were issued pursuant to Regulation S of the Securities Act of 1933 on the basis that the subscriber represented that they were not a US person as such term is defined in Regulation S.

   
5.

On November 16, 2009 we entered into a share issuance agreement with Villa Atmu S.A., pursuant to which Villa Atmu agreed to advance to us up to $5,000,000 in exchange for shares of common stock of our Company. Under the terms of the agreement, any cash advances requested by us must be in the minimum amount of $100,000. In consideration of each advance, we agree to issue common shares in the capital of our company at a price equal to 80% of the volume weighted average of the closing price of common stock, for the (10) ten banking days immediately preceding the date of the notice requesting the advance, as quoted on Yahoo! Finance or such other source as may be agreed to by us and Villa Atmu. The issuance of the shares is subject to the parties entering into a subscription agreement in a form acceptable to both parties and in compliance with applicable securities laws. We agreed to use the capital from advances to fund exploration activities and for general corporate purposes. Also, pursuant to the terms of the agreement, we agreed that during the two year period following execution of the agreement, we would not discuss, negotiate or engage any investment or corporate finance agreements without the consent of Villa Atmu, subject to Villa Atmu’s decision not to exercise this right due to market conditions. We further agreed not to engage in any debt financings during the two year term following execution of the agreement without the consent of Villa Atmu.

Competition

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

Compliance with Government Regulation

We are required to obtain licenses and permits from various governmental authorities. We anticipate that we will be able to obtain all necessary licenses and permits to carry on the activities which we intend to conduct, and that we intend to comply in all material respects with the terms of such licenses and permits.

If we proceed with the development of our current and future properties, we anticipate that we will be subject to increased governmental regulation. Matters subject to regulation include discharge permits for drilling operations, drilling and abandonment bonds, reports concerning operations, the spacing of wells, and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and gas wells below actual production capacity in order to conserve supplies of oil and gas. The production, handling, storage, transportation and disposal of oil and gas, byproducts thereof, and other substances and materials produced or used in connection with oil and gas operations are also subject to regulation under federal, state, local and foreign laws and regulations relating primarily to the protection of human health and the environment. As we have not proceeded to the development of our properties, we have not incurred any expenditures related to complying with such laws, or for remediation of existing environmental contamination. The requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.

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Employees

Currently our only employee is our sole director and officer. We do not expect any material changes in the number of employees over the next twelve month period. We anticipate that we will be conducting most of our business through agreements with consultants and third parties.

Subsidiaries

We have two wholly owned subsidiaries, FRC Exploration Ltd. (a British Columbia Corporation) and Nuance Exploration Ltd. (a British Columbia Corporation).

ITEM 1A. RISK FACTORS

Much of the information included in this annual report includes or is based upon estimates, projections or other forward-looking statements. Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other forward-looking statements involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward-looking statements. Prospective investors should consider carefully the risk factors set out below.

We have had negative cash flows from operations.

To date we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements and have incurred losses totaling $403,082 for the year ended November 30, 2009. As of November 30, 2009, we had a working capital deficit of $8,674. We do not expect positive cash flow from operations in the near term. Our independent auditors have noted in their report concerning our annual financial statements for the fiscal year ended November 30, 2009 that we have incurred substantial losses since inception, which raises substantial doubt about our ability to continue as a going concern. In the event we are not able to continue operations you will likely suffer a complete loss of ann investors investment in our securities. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that:

  • drilling and completion costs increase beyond our expectations; or

  • we encounter greater costs associated with general and administrative expenses or offering costs.

Due to our being an exploration stage company and not having generated revenues, in their report on our audited financial statements for the year ended November 30, 2009, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.

We have historically incurred losses, and through November 30, 2009 have incurred losses of $1,278,292 since our inception. Because of these historical losses, we will require additional working capital to develop our business operations. On November 16, 2009 to address our working capital concerns we entered into a share issuance agreement with Villa Atmu S.A., pursuant to which Villa Atmu agreed to advance to us up to US$5,000,000 in exchange for shares of common stock of our Company. We intend to raise any additional working capital we require through private placements, public offerings, bank financing and/or advances from related parties or stockholder loans.

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The continuation of our business is dependent upon obtaining further financing and achieving a break even or profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current or future stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations. These conditions raise substantial doubt about our ability to continue as a going concern.

We depend on outside capital to pay for the exploration and development of our properties

We depend almost exclusively on outside capital to pay for the continued exploration and development of our properties. Such outside capital may include the sale of additional stock and/or commercial borrowing. Capital necessary to meet these continuing exploration and development costs may not continue to be available or, if the capital is available, it may not be available on terms acceptable to us. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.

A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because our operations have been primarily financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our liquidity and our continued operations. Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

We have a history of losses and fluctuating operating results.

From inception through to November 30, 2009, we have incurred aggregate losses of approximately $1,278,292. Our net loss for the year ended November 30, 2009 was $403,082 and $786,407 for the year ended November 30, 2008. There is no assurance that we will operate profitably or will generate positive cash flow in the future. In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the general economic cycle, the market price of oil and gas and exploration and development costs. If we cannot generate positive cash flows in the future, or raise sufficient financing to continue our normal operations, then we may be forced to scale down or even close our operations.

Until such time as we generate revenues, we expect an increase in development costs and operating costs. Consequently, we expect to incur operating losses and negative cash flow until our properties enter commercial production, if any.

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We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations.

We have no history of revenues from operations and have no significant tangible assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Our company has a limited operating history and must be considered in the development stage. The success of our company is significantly dependent on a successful acquisition, drilling, completion and production program. Our company’s operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to locate recoverable reserves or operate on a profitable basis. We are in the development stage and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.

Due to the speculative nature of the exploration of oil and gas properties, there is substantial risk that our business will fail.

The business of oil and gas exploration and development is highly speculative involving substantial risk. There is generally no way to recover any funds expended on a particular property unless reserves are established and unless we can exploit such reserves in an economic manner. We can provide investors with no assurance that any property interest that we may acquire will provide commercially exploitable reserves. Any expenditure by our company in connection with locating, acquiring and developing an interest in a mineral or oil and gas property may not provide or contain commercial quantities of reserves.

Because of the early stage of development and the nature of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of our development. We are engaged in the business of exploring and, if warranted, developing commercial reserves of oil and gas. Our properties are in the exploration stage only and are without known reserves of oil and gas. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon locating and developing economic reserves of oil and gas, which itself is subject to numerous risk factors as set forth herein. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.

The potential profitability of oil and gas ventures depends upon factors beyond the control of our company.

The oil and gas industry in general is cyclical in nature. It tends to reflect and be amplified by general economic conditions, both domestically and abroad. Historically, in periods of recession or periods of minimal economic growth, the operations of oil and gas companies have been adversely affected. Certain end-use markets for oil and petroleum products experience demand cycles that are highly correlated to the general economic environment which is sensitive to a number of factors outside our control.

The current global financial crisis that began in 2008 has had a material adverse effect on our financial results and proposed plan of operations due to a significant reduction in the demand and pricing for oil and gas. A continued recession in 2010 may lead to further significant fluctuations in demand and pricing for oil and gas. If we elect to proceed with the development of any of our property interests, our profitability may be significantly affected by decreased demand. We are not able to predict the timing, extent and duration of the economic cycles in the markets in which we operate.

The potential profitability of oil and gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments.

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Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect our financial performance.

Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. The marketability of oil and gas which may be acquired or discovered will be affected by numerous factors beyond our control. These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. These factors cannot be accurately predicted and the combination of these factors may result in our company not receiving an adequate return on invested capital.

Competition in the oil and gas industry is very intense and there is no assurance that we will be successful in acquiring additional property interests.

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

We are required to obtain licenses and permits from various governmental authorities. We anticipate that we will be able to obtain all necessary licenses and permits to carry on the activities which we intend to conduct, and that we intend to comply in all material respects with the terms of such licenses and permits. However, there can be no guarantee that we will be able to obtain and maintain, at all times, all necessary licenses and permits required to undertake our proposed exploration and development or to place our properties into commercial production. In the event that we proceed with our operation without necessary licenses and permits, we may be subject to large fines and possibly even court orders and injunctions to cease operations.

The acquisition of oil and gas interests involves many risks and disputes as to the title of such interests will result in a material adverse effect on our company.

The acquisition of interests in oil and gas properties involves certain risks. Title to such interests and the borders of such interests may be disputed. Such interests may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects. If it is determined that any of our company's interests are based upon an invalid title, a disputed border, or subject to a prior right, the balance sheet of our company will be adversely affected and we may not be able to recover damages without incurring expensive litigation costs.

The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable.

The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control. These factors include market fluctuations in oil and gas pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of oil and gas and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable.

Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.

Oil and gas operations are subject to federal, state, local, and foreign laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to federal, state, local, and foreign laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment.

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Various permits from government bodies are required for drilling operations to be conducted, and no assurance can be given that such permits will be received. Environmental standards imposed by federal, state, local or foreign authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. To date, we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in the future and this may affect our ability to expand or maintain our operations.

Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations.

In general, our exploration and production activities are subject to certain federal, state, local, and foreign laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of governmental authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.

We believe that our operations comply, in all material respects, with all applicable environmental regulations. However, we are not fully insured against all possible environmental risks.

Any future operations will involve many risks and we may become liable for pollution or other liabilities which may have an adverse effect on our financial position.

In the course of the exploration, acquisition and development of oil and gas properties, several risks and, in particular, unexpected or unusual geological or operating conditions may occur. Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or adequate machinery, equipment or labor, and other risks are involved. We may become subject to liability for pollution. It is not always possible to fully insure against such risks, and we do not currently have any insurance against such risks nor do we intend to obtain such insurance in the near future due to high costs of insurance. Should such liabilities arise, they could reduce or eliminate any future profitability and result in an increase in costs and a decline in value of the securities of our company.

We are not insured against most environmental risks. Insurance against environmental risks (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) has not been generally available to companies within the industry. We will periodically evaluate the cost and coverage of such insurance. If we became subject to environmental liabilities and do not have insurance against such liabilities, the payment of such liabilities would reduce or eliminate our available funds and may result in bankruptcy. Should we be unable to fully fund the remedial cost of an environmental problem, we might be required to enter into interim compliance measures pending completion of the required remedy.

Resource exploration involves many risks, regardless of the experience, knowledge and careful evaluation of the property by our company. These hazards include unusual or unexpected formations, formation pressures, fires, power outages, labour disruptions, flooding, explosions and the inability to obtain suitable or adequate machinery, equipment or labour.

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Operations in which we will have a direct or indirect interest will be subject to all the hazards and risks normally incidental to the exploration, development and production of oil and gas properties, any of which could result in damage to or destruction of mines and other producing facilities, damage to life and property, environmental damage and possible legal liability for any or all damage. We do not currently maintain liability insurance and may not obtain such insurance in the future. The nature of these risks is such that liabilities could represent a significant cost to our company, and may ultimately force our company to become bankrupt and cease operations.

Any change to government regulation/administrative practices may have a negative impact on our ability to operate and/or our profitability.

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

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

We may be unable to retain key employees or consultants.

We may be unable to retain key employees or consultants or recruit additional qualified personnel. Our extremely limited personnel means that we would be required to spend significant sums of money to locate and train new employees in the event any of our employees resign or terminate their employment with us for any reason. Due to our limited operating history and financial resources, we are entirely dependent on the continued service of Mr. Rahim Rayani, our chief executive officer. Further, we do not have key man life insurance on Mr. Rayani. We may not have the financial resources to hire a replacement if Mr. Rayani were to die. The loss of service of Mr. Rayani could therefore significantly and adversely affect our operations.

Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

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Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a stockholder's ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not Applicable.

ITEM 2. PROPERTIES.

Executive Offices

Our executive offices are located at 708 11th Ave SW Suite 219, Calgary, Alberta, Canada. We lease our head office in Calgary, Alberta at a rate of CDN$1,856 per month. Our head office is approximately 232sq/ft. Our current premises are adequate for our current operations and we do not anticipate that we will require additional premises in the foreseeable future.

Purchase of Interest in the Hayter Well

On August 1, 2006, County Line Energy Corp. (“County Line”) signed a participation agreement with Black Creek Resources Ltd. (“BCR”) in which County Line acquired the right to become the operator and drill the Hayter well (10D Hayter 10-8-40-1 W4M) located in Alberta, Canada. In order to exercise that interest and acquire the rights to drill the Hayter well, County Line agreed to pay 100% of all costs associated with the seismic option agreement and pay 100% of the funds required to purchase rights to any existing seismic on the property which may be for sale and or shoot additional 2D and 3D on the property as required, pursuant to standard industry costs and practices.

Pursuant to a Participation Agreement dated December 21, 2006 between Black Creek Resources Ltd (“BCR”) and Nuance Exploration Ltd. (“NEL”), a wholly owned subsidiary of the Company, we acquired a 100% ownership in the interpretation of 3D seismic data covering four sections of certain land located in the province of Alberta, Canada by paying $82,650 for the purpose of acquiring and interpreting the seismic data. On October 15, 2007, prior to the evaluation of the 3D seismic data, County Line sold to BCR its 100% interest in the subject property and received as consideration a non-interest bearing promissory note for $111,144 (CDN$110,000) to be repaid by November 30, 2007.

On November 30, 2007, County Line did not repay the amounts owing pursuant to the promissory note and NEL and County Line entered into a Participation Agreement whereby NEL accepted a 20% interest of the Grantor’s working interest in the County Line 10D Hayter 10-8-40-1 W4M well as full and final settlement of the promissory note. Pursuant to the terms of the Participation agreement NEL agreed to assume 20% of all revenues, costs and expenses associated with the project.

During our first fiscal quarter of 2009 we advanced $23,938 (CDN$29,000) to County Line Energy Corp for costs and expenses associated with the Hayter Well as an unsecured loan. On October 16, 2009 we entered into an amendment to our participation agreement with County Line pursuant to which we acquired an additional 30% working interest in the Hayter Well in consideration of a release by Force from all amounts owed by County Line to Force. Following our entry into the amended participation agreement we now hold a 50% working interest in the County Line Energy Corp. interest in the Hayter Well.

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Location of Hayter Well

Force Energy Corp. has a 50% working interest of the County Line Energy Corp. interest in the Hayter Well (10D Hayter 10-8-40-1 W4M) located in Alberta, Canada. The well was spudded in January 2007 and drilled to a total depth. The well logs revealed a gas zone of 4 to 5 meters of thickness in a shallow zone and a heavy oil pay zone of 2 meters of thickness in the target Dina Sand zone.


County Line completed a $650,000 3D seismic program covering nine sections of land in pursuit of a potential multi well heavy oil drilling opportunity. The geological model was based on interpretation from a previous well, which produced 16,000 barrels of heavy oil. The seismic program was designed to determine whether the structure found in this well existed to a larger extent on the subject property. The 3D seismic revealed an extremely large anomaly with similar characteristics. The nature of this large anomaly suggested that a multi well drilling opportunity might exist.

County Line Energy Corp. is the operator of the Hayter well. As of the date of this report, the Hayter well has been cased and cemented in anticipation of the completion of the drill program. County Line plans to enter the Hayter well, perforate the potential pay zone(s) and conduct regular production testing of the zone(s). Should the testing confirm adequate oil reserves and potential economic flow rates, County Line is expected to install adequate pumping equipment and other surface facilities in anticipation of the projected flow rates. Currently, there are no known oil reserves on the Hayter well.

On March 9, 2009, Force received a report on reserves data for the Hayter Well prepared by its independent engineers. The reserves data are estimates of proved reserves and probable reserves and related future net revenue as at November 30, 2008.

On October 16, 2009 we entered into an amendment to our participation agreement with County Line Energy Corp. pursuant to which we acquired an additional 30% working interest in the Hayter Well in consideration of a release by Force from all amounts owed by County Line to Force. Following our entry into the amended participation agreement we now hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well.

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Purchase of Interest in Diamond Spring Prospect

The Diamond Springs Prospect is located within the Wind River Basin, Wyoming. The Diamond Springs Prospect is comprised of three independent but geologically similar prospective locations within the 3,300 acre track and is situated in close proximity to productive oil and gas fields. The Northwest, North, and West Diamond Springs are shallow drilling prospects of 200’ to 1,100’ in depth, with a possible 72 drilling sites between the three locations based on 40 acre spacing.

On March 11, 2008, we entered into a letter agreement with G2 Petroleum, LLC, a Delaware corporation, whereby we: (i) agreed to purchase a 5% working interest in G2 Petroleum’s Diamond Springs Prospect; and (ii) acquired the option to purchase an additional 20% working interest in G2 Petroleum’s Diamond Springs Prospect.

As consideration, we issued a $50,000 promissory note due without interest due on or before April 30, 2008 (settled April 16, 2008), and agreed to pay $300,000 within 90 days of the execution of a definitive acquisition agreement, at which time we will earn a 75% net revenue interest in the initial well. During the term of the Agreement we are responsible for 100% of the costs of the drilling and testing of the initial well on the Prospect.

Upon drilling of the initial well, we agreed to issue to G2 Petroleum 250,000 shares of our common stock as payment in full for a 5% working interest in all subsequent wells drilled on the Prospect. G2 Petroleum further granted us the option to purchase up to an additional 20% working interest in all subsequent wells drilled on the Prospect for $100,000 per 1% of working interest. We did not subsequently exercise the option which expired on December 15, 2008 and the shares were not issued to G2 Petroleum. On March 11, 2009 we entered into a loan agreement with G2 Petroleum, LLC. The loan is intended to form part of the purchase price for our acquisition of a working interest in the Diamond Springs Prospect. Pursuant to the terms of the loan agreement we advanced US$175,000 to G2 Petroleum, LLC. As consideration for the advance of the loan, G2 Petroleum agreed that the US$50,000 paid by us under the prior letter agreement between the parties would be included as part of the purchase price of a new agreement between the parties respecting the acquisition of G2 Petroleum’s working interest in the Diamond Springs Prospect.

On July 9, 2009 we completed the acquisition of a 50% interest in the Diamond Springs Prospect in accordance with the terms of an assignment agreement with G2 Petroleum, LLC dated effective June 20, 2009. Pursuant to the terms of the assignment agreement, in consideration of the transfer of the 50% interest in the Diamond Springs Prospect we agreed to set-off $50,000 of G2’s indebtedness to us under the prior letter agreement between the parties and we agreed to set-off $175,000 against G2’s indebtedness under the loan agreement between the parties dated March 11, 2009. In connection with the assignment agreement we agreed to sign a release in favour of G2, releasing them from all further obligations under the loan agreement and the letter agreement.

Effective September 16, 2009 we completed the acquisition of a further 25% interest in the Diamond Springs Prospect in accordance with the terms of an assignment agreement with G2 Petroleum, LLC dated effective September 16, 2009. Pursuant to the terms of the assignment agreement, in consideration of the purchase of a 25% working interest in the Diamond Springs Prospect we agreed to issue G2 Petroleum 450,000 common shares at a price of $0.32 per common share for total consideration of $144,000. Following completion of the acquisition, we currently hold a 75% working interest in the Diamond Springs Prospect located within the Wind River Basin, Wyoming.

We are the operator of the Diamond Springs Prospect being the largest working interest partner. Continental Production Co. has been sub contracted by us to be our operator in the field. Continental has been instructed to stake two wells in section nine of the property. Once the new geothermal work is complete by Hawkeye Geosensing Ltd., the Company may stake wells in other sections. Once the well locations are staked, the Company intends to apply for drilling permits to be ready for this summer’s drilling season.

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Oil and Gas Properties and Wells

On March 9, 2009, Force received a report on reserves data for the Hayter Well prepared by its independent engineers, Chapman Petroleum Engineering Ltd.

The following table sets forth the number of wells in which the Company held a working interest as at November 30, 2009:


The Company has not since the beginning of its most recently completed fiscal year, filed any annual estimates of proved oil and gas reserves with any federal agencies. As at November 30, 2009, the Company had a 50% working interest in one well in the Hayter Area of Alberta.

ITEM 3. LEGAL PROCEEDINGS.

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 4. (REMOVED AND RESERVED).

Not Applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Securities

Our common shares are quoted on the Over-The-Counter Bulletin Board under the trading symbol “FROC”. Our shares of common stock were initially approved for quotation on the Over-The-Counter Bulletin Board under the name Nuance Resources Corp. under the symbol, “NUNC.OB”. Effective February 12, 2008, we completed a merger with our subsidiary, Force Energy Corp., a Nevada corporation. As a result, we changed our name from “Nuance Resources Corp.” to “Force Energy Corp.”.

The following table shows the quarterly range of high and low bid information for our common stock over the fiscal quarters for the last two fiscal years as quoted on the OTC Bulletin Board. We obtained the following high and low bid information from OTC Bulletin Board. Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions. Investors should not rely on historical prices of our common stock as an indication of its future price performance.

Quarter Ended High Low
02/28/2008 $0.51 $0.00
05/31/2008 $2.35 $0.51
08/31/2008 $2.92 $0.60
11/30/2008 $1.36 $0.41
02/29/2009 $0.66 $0.30
05/31/2009 $0.58 $0.35
08/31/2009 $0.47 $0.22
11/30/2009 $0.54 $0.21

Transfer Agent

Our transfer agent is Island Stock Transfer, of 100 2nd Avenue, S, Suite 104N, St. Petersburg, FL 33701, telephone number 727-289-0010, facsimile: 727.289.0069.

Holders of our Common Stock

As of February 25, 2010, there were 28 registered stockholders holding 47,344,000 shares of our issued and outstanding common stock.

Dividend Policy

We have never declared or paid any cash dividends or distributions on our capital stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future.

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

  1.

We would not be able to pay our debts as they become due in the usual course of business; or

     
  2.

Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

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Recent Sales of Unregistered Securities

During the fiscal year ended November 30, 2009, we completed the following sales of our equity securities that were not registered:

1.

Effective September 16, 2009 we completed the acquisition of a 25% interest in the Diamond Springs Prospect in accordance with the terms of an assignment agreement with G2 Petroleum, LLC dated effective September 16, 2009. Pursuant to the terms of the assignment agreement, in consideration of the purchase of a 25% working interest in the Diamond Springs Prospect we agreed to issue G2 Petroleum 450,000 common shares at a price of $0.32 per common share for total consideration of $144,000.

   
2.

On October 30, 2009 the Company completed a private placement of 900,000 shares of the Company’s common stock to one subscriber at a price of $0.28 per share for gross proceeds of $252,000. The shares were issued pursuant to Regulation S of the Securities Act of 1933 on the basis that the subscriber represented that they were not a US person as such term is defined in Regulation S.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during our fiscal year ended November 30, 2009.

Securities Authorized for Issuance Under Equity Compensation Plans

We do not have any equity compensation plans.

ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

This annual report contains forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Financial information contained in this annual report and in our audited annual financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our audited annual financial statements and the related notes that appear elsewhere in this annual report.

As used in this annual report, the terms “Force”, the “Company”, “we”, “us” and “our” means Force Energy Corp. and its subsidiaries, unless otherwise indicated.

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Plan of Operation

Discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements and the notes thereto included elsewhere in this annual report prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.

We are currently engaged in the business of identifying, evaluating, and qualifying potential natural gas and oil wells; investing in interests in those wells with the goal of producing commercially marketable quantities of oil and natural gas. The majority of our business is derived from projects identified by our principals. Our strategy is to identify low to moderate risk oil and natural gas reserves by reviewing and reprocessing previously recorded seismic data with a view to a deeper target in our analysis than when the data was originally recorded. This approach allows us to evaluate potential oil and natural gas sites for development without the operational and financial commitment which would be required to record new seismic data on comparable sites. By entering into participation agreements with companies which have possession of such seismic data, our operational costs are limited to the cost of analysis until such time as we have identified reserves for development. We intend to increase our staff and expand our operations into these areas of activity should we establish sufficient cash flows in the next twelve months to support these activities. We presently hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well located in Alberta, Canada, and a 75% working interest in the Diamond Springs Prospect located within the Wind River Basin, Wyoming.

County Line Energy Corp. is the operator of the Hayter well. As of the date of this annual report, the Hayter well has been cased and cemented in anticipation of the completion of the drill program. County Line plans to enter the Hayter well, perforate the potential pay zone(s) and conduct regular production testing of the zone(s). Should the testing confirm adequate oil reserves and potential economic flow rates, County Line is expected to install adequate pumping equipment and other surface facilities in anticipation of the projected flow rates. Currently, there are no known oil reserves on the Hayter well.

We are the operator of the Diamond Springs Prospect being the largest working interest partner. Continental Production Co. has been sub contracted by us to be our operator in the field. Continental has been instructed to stake two wells in Section nine of the property. Once the new geothermal work is complete by Hawkeye Geosensing Ltd., the Company may stake wells in other sections. Once the well locations are staked, the Company intends to apply for drilling permits to be ready for this summer’s drilling season. As of the date of this annual report the status of our agreements respecting our oil and gas properties is as follows:

(i)

Hayter Well. During our first fiscal quarter of 2009 we advanced $23,938 (CDN$29,000) to County Line Energy Corp for costs and expenses associated with the Hayter Well as an unsecured loan. On October 16, 2009 we entered into an amendment to our participation agreement with County Line pursuant to which we acquired an additional 30% working interest in the Hayter Well in consideration of a release by Force from all amounts owed by County Line to Force. Following our entry into the amended participation agreement we now hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well.

   

On March 9, 2009, Force received a report on reserves data for the Hayter Well prepared by its independent engineers. The report was prepared in accordance with the standards set out in the Canadian Oil and Gas Evaluation Handbook (COGE handbook). The reserves data are estimates of proved reserves and probable reserves and related future net revenue as at November 30, 2008.

   
(ii)

Diamond Springs Prospect. On March 11, 2009 we entered into a loan agreement with G2 Petroleum, LLC pursuant to which we advanced to G2 Petroleum, LLC $175,000. The loan was intended to form part of the purchase price for our acquisition of a working interest in the Diamond Springs Prospect. As consideration for the advance of the loan, G2 Petroleum agreed that the $50,000 paid by us under the prior letter agreement between the parties would be included as part of the purchase price of a new agreement between the parties respecting the acquisition of G2 Petroleum’s working interest in the Diamond Springs Prospect. The loan is unsecured and payable on demand.

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On July 9, 2009 we completed the acquisition of a 50% interest in the Diamond Springs Prospect in accordance with the terms of an assignment agreement with G2 Petroleum, LLC dated effective June 20, 2009. Pursuant to the terms of the assignment agreement, in consideration of the transfer of the 50% interest in the Diamond Springs Prospect we agreed to set-off $50,000 of G2’s indebtedness to us under the prior letter agreement between the parties and we agreed to set-off $175,000 against G2’s indebtedness under the loan agreement between the parties dated March 11, 2009. In connection with the assignment agreement we agreed to sign a release in favor of G2, releasing them from all further obligations under the loan agreement and the letter agreement.

Effective September 16, 2009 we completed the acquisition of a further 25% interest in the Diamond Springs Prospect in accordance with the terms of an assignment agreement with G2 Petroleum, LLC dated effective September 16, 2009. Pursuant to the terms of the assignment agreement, in consideration of the purchase of a 25% working interest in the Diamond Springs Prospect we agreed to issue G2 Petroleum 450,000 common shares at a price of $0.32 per common share for total consideration of $144,000. Following completion of the acquisition, we currently hold a 75% working interest in the Diamond Springs Prospect located within the Wind River Basin, Wyoming.

We did not earn any revenues during the year ended November 30, 2009. We do not anticipate earning revenues until identifiable reserves are discovered and exploited from the Hayter well, Diamond Springs Prospect, or from any other properties or projects in which we hold a working or direct interest.

Anticipated Cash Requirements

We estimate that our general operating expenses for the next twelve month period to be as follows:

Estimated Funding Required During the Next Twelve Months
Expenses Amount
Management fees $180,000
Exploration expenses $700,000
Professional fees $80,000
General administrative expenses $40,000
Total $1,000,000

To date, we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We expect this situation to continue for the foreseeable future. We anticipate that we will have negative cash flows during the next twelve month period.

Results of Operations

The following summary of our results of operations should be read in conjunction with our audited financial statements for the year ended November 30, 2009 which are included herein.

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Our operating results for the years ended November 30, 2009 and 2008 are summarized as follows:

    Years Ended  
    November 30,  
    2009     2008  
             
Revenue $  -   $  -  
Operating Expenses   393,845     787,501  
Net Loss $  403,082   $  786,407  

Revenues

We have not earned any revenues to date, and do not anticipate earning revenues until such time as we encounter commercially productive oil or gas reservoirs on our oil and gas prospects. All of our oil and gas prospects are undeveloped. The significant reduction in the price of oil following the global economic crises has materially affected our anticipated revenue stream from our property interests. As a result of the current low price of oil, our company will continue to incur expenses in excess of the revenues generated from our properties. We anticipate that we will have to address the cash shortfall through additional equity financings in the future. We can offer no assurance, however, that such financings will be available on terms acceptable to our company. We also intend to generate additional funds in the future through increased output following our company’s plan to increase the number of wells on our producing properties.

Expenses

Our expenses for the years ended November 30, 2009 and 2008 are outlined in the table below:

    Years Ended  
    November 30,  
    2009     2008  
Accounting and audit fees   90,936     46,333  
Accretion Expense   1,328     -  
Bank charges   1,061     514  
Consulting fees   -     408,500  
Depreciation   2,328     582  
Exploration Expenses   15,000     -  
Investor relations   18,284     33,159  
Legal fees   45,190     41,982  
Management fees   189,000     157,500  
Office expenses   16,599     6,651  
Rent   18,836     15,108  
Tax penalties and interest   (50,000 )   50,000  
Transfer and filing fees   22,877     20,914  
Travel   2,406     6,258  
Write-off of Oil and Gas Costs   20,000     -  
Total Expenses $  393,845   $  787,501  

Our expenses decreased by 50% in fiscal 2009 as compared to fiscal 2008. The decrease in our expenses for the year ended November 30, 2009 was due mainly to decreased consulting fees associated with the development of our business; we did not renew expired consulting contracts in the current year. As well, the accounting and audit fees increased primarily as a result of US tax compliance work undertaken in the current year.

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Liquidity And Capital Resources

Working Capital                  
                   
                Percentage  
    As at     As at November     Increase /  
    November 30, 2009     30, 2008     (Decrease)  
Current Assets $  163,674   $  472,725     (65.4% )
Current Liabilities $  172,348   $  148,410     16.1%  
Working Capital (deficit) $  (8,674 ) $  324,315     (102.6% )

Cash Flows                  
                   
                Percentage  
    Year Ended     Year Ended     Increase /  
    November 30, 2009       November 30, 2008     (Decrease)  
                   
                   
Cash used in Operating Activities $  (342,919 ) $  (253,593 )   35.2%  
Cash used in Investing Activities $  (205,563 ) $  (74,651 )   175.4%  
Cash provided by Financing Activities $  252,000   $  750,000     (66.4% )
Net Increase (Decrease) in Cash $  (296,482 ) $  421,756     (29.7% )

We anticipate that we will incur approximately $1,000,000 for operating expenses, including, legal, accounting and audit expenses associated with our reporting requirements as a public company under the Exchange Act during the next twelve months.

Cash Used In Operating Activities

We used cash in operating activities in the amount of $342,919 during the year ended November 30, 2009 and $253,593 during the year ended November 30, 2008. Cash used in operating activities was funded by cash from financing activities.

Cash From Investing Activities

Net cash used in investing activities totaled $205,563 during the year ended November 30, 2009 as compared to cash used in investing activities of $74,651 during the year ended November 30, 2008.

Cash from Financing Activities

We generated $252,000 cash from financing activities during the year ended November 30, 2009 compared to cash from financing activities in the amount of $750,000 during the year ended November 30, 2008. Cash generated by financing activities is attributable to a private placement we completed in October, 2009 consisting of 900,000 shares of our common stock at a price of $0.28 per share for gross proceeds of $252,000.

Going Concern

Due to our being an exploration stage company and not having generated revenues, in their report on our audited financial statements for the year ended November 30, 2009, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.

We have historically incurred losses, and through November 30, 2009 have incurred losses of $1,278,292 since our inception. Because of these historical losses, we will require additional working capital to develop our business operations. We intend to raise additional working capital through private placements, public offerings, bank financing and/or advances from related parties or shareholder loans.

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The continuation of our business is dependent upon obtaining further financing and achieving a break even or profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current or future stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to either achieve a level of revenues adequate to generate sufficient cash flow from operations, or obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations or continue with our exploration or development plan.

These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Future Financings

To date we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements and have incurred a net loss of $403,082 for the year ended November 30, 2009. As of November 30, 2009, we had working capital deficit of $8,674 and our estimated expenses over the next twelve months are $1,000,000. We do not expect positive cash flow from operations in the near term. Accordingly we will be required to obtain additional financing to fund our operations for the next twelve months.

We will depend almost exclusively on outside capital to pay for the continued exploration and development of our properties. Such outside capital may include the sale of additional stock and/or commercial borrowing. Capital may not continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.

On November 16, 2009 the Company entered into a share issuance agreement for gross proceeds of up to $5,000,000 which expires on November 9, 2010. Pursuant to the agreement the Company can request advances in amounts not less than $100,000 from the subscriber, and the subscriber will receive within 5 days of the advance being received common shares of the Company. The deemed issue price of the shares shall be 80% of the volume weighted average of the closing price of the common stock for the ten banking days immediately prior to the date advance was requested. The Company has not yet drawn any funds under this agreement.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

- 22 -


Critical Accounting Policies

The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.

The Company’s significant accounting policies are outlined in Note 2 to the audited financial statements of the Company accompanying this report. While not all of the significant accounting policies require difficult, subjective or complex judgments, the Company considers that the following accounting policies should be considered its most critical accounting policies:

Development Stage Activities

The Company is a development stage company as it is devoting substantially all of its efforts to establish a new business and planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

The Company is subject to several categories of risk associated with its development stage activities. Natural gas and oil exploration and production is a speculative business, and involves a high degree of risk. Among the factors that have a direct bearing on the Company’s prospects are uncertainties inherent estimating natural gas and oil reserves, future hydrocarbon production, and cash flows, particularly with respect to wells that have not been fully tested and with wells having limited production histories; access to additional capital; changes in the price of natural gas and oil; availability and cost of services and equipment; and the presence of competitors with greater financial resources and capacity.

Financial Instruments

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

Foreign Currency Translation

The Company’s functional currency is the Canadian dollar as substantially all of the Company’s operations are in Canada. The Company uses the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission (“SEC”).Assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the Accumulated Other Comprehensive Income account in Stockholder’s Equity, if applicable.

Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any exchange gains and losses are included in the Statement of Operations.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 2 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of its property and equipment or whether the remaining balance of property and equipment should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

- 23 -


Oil and Gas Properties

The Company follows the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by-country (cost centre) basis. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities.

Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. Petroleum products and reserves are converted to a common unit of measure, using 6 MCF of natural gas to one barrel of oil.

Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations.

If capitalized costs, less related accumulated amortization and deferred income taxes, exceed the “full cost ceiling” the excess is expensed in the period such excess occurs. The “full cost ceiling” is determined based on the present value of estimated future net revenues attributed to proved reserves, using current prices less estimated future expenditures plus the lower of cost and fair value of unproven properties within the cost centre.

Proceeds from a sale of petroleum and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost centre.

Impairment of Long-lived Assets

The carrying value of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. Impairment on the properties with unproved reserves is evaluated by considering criteria such as future drilling plans for the properties, the results of geographic and geologic data related to the unproved properties and the remaining term of the property leases. Asset Retirement Obligations

The Company recognizes asset retirement obligations (“ARO”) associated with the retirement of a tangible long-lived asset, including natural gas and oil properties, be recognized as liabilities in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated assets. The cost of tangible long-lived assets, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the assets. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted are accreted to the expected settlement value.

The fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free interest rate. As at November 30, 2009, the Company has determined it has no assets retirement obligations.

Recent Accounting Pronouncements

In December 2007, the FASB issued ASC 805, “Business Combinations”. Among other things, ASC 805 establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired business; (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. ASC 805 was effective for fiscal years beginning on or after December 15, 2008. This standard will affect the Company’s accounting treatment for any future business combinations.

- 24 -


In March 2008, the FASB issued guidance, included in ASC 815-10 “Derivatives and Hedging,” which seeks to enhance disclosure about how and why a company uses derivatives; how derivative instruments are accounted for and how derivatives affect a company’s financial position, financial performance and cash flows. This Statement was effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The adoption of this statement did not have a material effect on the Company’s reported financial position or results of operations.

In June 2008, the FASB ratified guidance which is now part of ASC 815-40, “Contracts in Entity’s Own Equity”. The objective of this issue is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock. This issue applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative instrument or an instrument which may be potentially settled in an entity’s own stock regardless of whether the instrument possess derivative characteristics. This issue provides a two-step approach to assist in making these determinations and is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company is currently evaluating what effects the adoption of ASC 815-40 will have on its consolidated financial statements.

In December 2008, the SEC issued revised reporting requirements for oil and natural gas reserves that a company holds. Included in the new rule entitled -Modernization of Oil and Gas Reporting Requirements”, are the following changes: 1) permitting use of new technologies to determine proved reserves, if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volumes; 2) enabling companies to additionally disclose their probable and possible reserves to investors, in addition to their proved reserves; 3) allowing previously excluded resources, such as oil sands, to be classified as oil and natural gas reserves rather than mining reserves; 4) requiring companies to report the independence and qualifications of a preparer or auditor, based on current Society of Petroleum Engineers criteria; 5) requiring the filing of reports for companies that rely on a third party to prepare reserve estimates or conduct a reserve audit; and 6) requiring companies to report oil and natural gas reserves using an average price based upon the prior 12-month period, rather than year-end prices. The new requirements are effective for registration statements filed on or after January 1, 2010, and for annual reports on Form 10K for fiscal years ending on or after December 31, 2009. Early adoption is not permitted. The Company is currently assessing the impact that adoption of this rule will have on its financial disclosures.

In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-03 - “Oil and Gas Reserve Estimation and Disclosures.” The ASU aligns the current oil and gas reserve estimation and disclosure requirements of FASB Accounting Standards Codification Topic 932, Extractive Activities — Oil and Gas, with those in SEC Final Rule Release No. 33-8995, Modernization of Oil and Gas Reporting. The ASU will be effective for reporting periods ending on or after December 31, 2009. The Company is currently assessing the impact that adoption of this rule will have on our financial statements.

In April 2009, the FASB issued additional disclosure requirements related to fair values, which are included in ASC 820, “Interim Disclosures about Fair Value of Financial Instruments.” The provisions require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The required disclosures were effective for interim reporting periods ending after June 15, 2009. The adoption of the provisions did not have a material impact on the Company’s statements of financial position, results of operations and cash flows.

In May 2009, the FASB issued FASB ASC 855, “Subsequent Events”. FASB ASC 855 incorporates accounting and disclosure requirements related to subsequent events into U.S. GAAP. The requirements of FASB ASC 855 for subsequent-events accounting and disclosure are not significantly different from those in existing auditing standards, which the Company has historically followed for financial reporting purposes. As a result, the adoption of this guidance did not have any material impact on the financial statements.

- 25 -


In July 2009, the FASB issued new guidance relating to the FASB Accounting Standards Codification at FASB ASC 105, as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The codification is effective for interim periods ending after September 15, 2009. All existing accounting standards were superseded as described in ASC 105. All other accounting literature not included in the Codification is non-authoritative. The adoption of ASC 105 did not impact the Company’s results of operations, financial position or cash flows.

In August 2009, the FASB issued ASU No. 2009-05, “Measuring Liabilities at Fair Value,” or ASU 2009-05, which amends ASC 820 to provide clarification of a circumstances in which a quoted price in an active market for an identical liability is not available. A reporting entity is required to measure fair value using one or more of the following methods: 1) a valuation technique that uses a) the quoted price of the identical liability when traded as an asset or b) quoted prices for similar liabilities (or similar liabilities when traded as assets) and/or 2) a valuation technique that is consistent with the principles of ASC 820. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to adjust to include inputs relating to the existence of transfer restrictions on that liability. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.

- 26 -


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

FORCE ENERGY CORP.

(formerly Nuance Resources Corp)

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2009 and 2008

(Stated in US Dollars)

 

 

- 27 -


FORCE ENERGY CORP.

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2009 and 2008

(Stated in US Dollars)


Tel: 604  688 5421
Fax: 604  688 5132
www.bdo.ca

BDO Canada LLP
600 Cathedral Place
925 West Georgia Street
Vancouver BC  V6C 3L2  Canada

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders,
Force Energy Corp
(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of Force Energy Corp. (the “Company”), (a Development Stage Company) and its subsidiaries as of November 30, 2009 and 2008 and the related consolidated statements of operations and comprehensive loss, cash flows and stockholders' equity for the years then ended and for the period from November 1, 2006 (Date of Inception) to November 30, 2009.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an 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.

In our opinion, these consolidated financial statements referred to above present fairly, in all material respects, the financial position of  Force Energy Corp. (a Development Stage Company) and its subsidiaries as of November 30, 2009 and 2008  and the results of their operations and their cash flows for the years then ended and for the period from November 1, 2006 (Date of Inception) to November 30, 2009, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company is in the development stage, has a working capital deficiency, has yet to achieve profitable operations, has accumulated losses since its inception, and expects to incur further losses in the development of its business.  These factors, along with other matters as set forth in Note 1, raise substantial doubt that the Company will be able to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

(signed) “BDO Canada LLP”

Chartered Accountants

Vancouver, Canada
March 10, 2010



FORCE ENERGY CORP.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
November 30, 2009 and 2008
(Stated in US Dollars)

ASSETS   2009     2008  
             
Current            
     Cash $  162,458   $  458,940  
     Deposits   -     13,517  
     Prepaid expenses   1,216     268  
             
    163,674     472,725  
             
Property and equipment – Note 4   1,741     4,069  
Oil and gas properties, full cost method of accounting            
     Unproved Properties – Note 5   504,162     165,702  
             
  $  669,577   $  642,496  
             
LIABILITIES            
             
Current            
     Accounts payable and accrued liabilities $  58,798   $  84,160  
     Due to related parties – Note 6   113,550     64,250  
             
    172,348     148,410  
             
Asset retirement obligation – Note 7   10,225     -  
             
    182,573     148,410  
             
STOCKHOLDERS’ EQUITY            
             
Preferred stock, $0.001 par value
     10,000,000 shares authorized, none outstanding
 
   
 
Common stock, $0.001 par value – Note 8
     270,000,000 shares authorized
     47,344,000 shares issued (November 30, 2008, - 45,994,000
     shares issued)
 


47,344
   


45,994
 
Additional paid in capital   1,717,952     1,323,302  
Deficit accumulated during the development stage   (1,278,292 )   (875,210 )
             
    487,004     494,086  
             
  $  669,577   $  642,496  

Nature of Operations and Ability to Continue as a Going Concern – Note 1
Commitments – Note 10

SEE ACCOMPANYING NOTES
F-1



FORCE ENERGY CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
for the years ended November 30, 2009 and 2008 and
for the period from November 1, 2006 (Date of Inception)
to November 30, 2009
(Stated in US Dollars)

                Period from  
                November 1,  
                2006 (Date of
                Inception) to  
                November 30  
    2009     2008     2009  
                (cumulative)  
                   
Expenses                  
     Accounting and audit fees $  90,936   $  46,333   $  174,030  
     Accretion expense   1,328     -     1,328  
     Bank charges   1,061     514     2,096  
     Consulting fees   -     408,500     408,500  
     Depreciation   2,328     582     2,910  
     Exploration expenses   15,000     -     15,000  
     Investor relations   18,284     33,159     51,443  
     Legal fees   45,190     41,982     140,182  
     Management fees – Note 6   189,000     157,500     346,500  
     Office expenses   16,599     6,651     23,612  
     Rent – Note 6   18,836     15,108     33,944  
     Tax penalties and interest   (50,000 )   50,000     -  
     Transfer and filing fees   22,877     20,914     59,434  
     Travel   2,406     6,258     9,502  
     Write-off of oil and gas costs – Note 5 (b)   20,000     -     20,000  
                   
Loss before other items   (393,845 )   (787,501 )   (1,288,481 )
                   
Other items:                  
     Debt forgiveness   -     -     610  
     Foreign exchange gain (loss)   (9,237 )   1,094     9,579  
                   
    (9,237 )   1,094     10,189  
                   
Net loss and comprehensive loss for the period $  (403,082 ) $  (786,407 ) $  (1,278,292 )
                   
Basic loss per share $  (0.01 ) $  (0.02 )      
                   
Weighted average number of shares outstanding   46,162,904     45,503,315        

SEE ACCOMPANYING NOTES
F-2



FORCE ENERGY CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended November 30, 2009 and 2008 and
for the period from November 1, 2006 (Date of Inception) to November 30, 2009
(Stated in US Dollars)

                Period from  
                November 1,  
                2006 (Date of
                Inception) to  
                November 30  
    2009     2008     2009  
                (cumulative)  
Cash Flows used in Operating Activities                  
     Net loss for the period $  (403,082 ) $  (786,407 ) $  (1,278,292 )
   Adjustments to reconcile net loss to net cash                  
           used in operating activities:                  
           Consulting fees paid in stock   -     405,000     405,000  
           Debt forgiveness   -     -     (610 )
           Accretion expense   1,328     -     1,328  
           Depreciation   2,328     582     2,910  
           Write-off of oil and gas costs   20,000     -     20,000  
   Changes in non-cash working capital items                  
           related to operations:                  
           Deposits   13,517     (13,517 )   -  
           Prepaid expenses   (948 )   (268 )   (1,216 )
           Accounts payable and accrued liabilities   (25,362     76,767     19,646  
           Due to related parties   49,300     64,250     113,550  
                   
Net cash used in operating activities   (342,919 )   (253,593 )   (717,684 )
                   
Cash Flows used in Investing Activities                  
     Acquisition of property and equipment   -     (4,651 )   (4,651 )
   Acquisition and development costs of oil and                  
           gas properties   (205,563 )   (70,000 )   (358,213 )
                   
Net cash used in investing activities   (205,563 )   (74,651 )   (362,864 )
                   
Cash Flows provided by Financing Activities                  
     Capital stock issued   252,000     750,000     1,219,000  
     Cash acquired on reverse acquisition   -     -     37,058  
                   
Net cash provided by financing activities   252,000     750,000     1,256,058  
                   
Effect of foreign currency translation   -     -     (13,052 )
                   
Increase (decrease) in cash during the period   (296,482 )   421,756     162,458  
                   
Cash, beginning of the period   458,940     37,184     -  
                   
Cash, end of the period $  162,458   $  458,940   $  162,458  
                   
Supplemental disclosure of cash flow information                  
Interest paid $  -   $  -   $  -  
Income taxes paid $  -   $  -   $  -  

Non-cash Transactions – Note 11

SEE ACCOMPANYING NOTES
F-3



FORCE ENERGY CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
for the period from November 1, 2006 (Date of Inception) to November 30, 2009
(Stated in US Dollars)

                            Deficit        
                        Accumulated        
                  Additional     During the        
      Common Shares     Paid-in     Development        
      Number     Par Value     Capital     Stage     Total  
                                 
Capital stock issued for cash – at $0.005     23,000,000   $  23,000   $  92,000   $  -   $  115,000  
Less: commissions     -     -     (8,000 )   -     (8,000 )
Net loss and comprehensive loss for the period     -     -     -     (8,944 )   (8,944 )
                                 
Balance, November 30, 2006     23,000,000     23,000     84,000     (8,944 )   98,056  
Pursuant to agreement of merger and plan of reorganization     21,354,000     21,354     (24,058 )   -     (2,704 )
Capital stock issued for cash – at $0.25     240,000     240     59,760     -     60,000  
– at $0.50     100,000     100     49,900     -     50,000  
Net loss and comprehensive loss for the year     -     -     -     (79,859 )   (79,859 )
                                 
Balance November 30, 2007     44,694,000     44,694     169,602     (88,803 )   125,493  
Capital stock issued for cash – at $0.75     1,000,000     1,000     749,000     -     750,000  
Pursuant to consulting service agreements – Note 9                                
– at $1.35     300,000     300     404,700     -     405,000  
Net loss and comprehensive loss for the year     -     -     -     (786,407 )   (786,407 )
                                 
Balance November 30, 2008     45,994,000     45,994     1,323,302     (875,210 )   494,086  
                                 
Capital stock issued for cash - at 0.28     900,000     900     251,100     -     252,000  
Capital stock issued for oil and gas property – Note 5(b)     450,000     450     143,550     -     144,000  
Net loss and comprehensive loss for the year     -     -     -     (403,082 )   (403,082 )
                                 
Balance November 30, 2009     47,344,000   $  47,344   $  1,717,952   $  (1,278,292 ) $  487,004  

SEE ACCOMPANYING NOTES
F-4



FORCE ENERGY CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2009 and 2008
(Stated in US Dollars)

Note 1 Nature of Operations and Ability to Continue as a Going Concern
   

The Company was incorporated in the state of Nevada, United States of America on November 1, 2006. The Company was formed for the purpose of acquiring exploration and development stage natural resource properties. The Company’s year-end is November 30.

 

Effective December 28, 2006, the Board of Directors authorized a 3 for 1 forward stock split on the common shares. The authorized number of common shares increased from 90,000,000 to 270,000,000 common shares with a par value of $0.001. All references in the accompanying financial statements to the number of common shares have been restated to reflect the forward stock split.

 

On February 12, 2008, the Company acquired 100% of the common shares of Force Energy Corp. an inactive company incorporated in Nevada on July 19, 2005, for $100, to effect a name change of the Company. On February 12, 2008, the Company and Force Energy Corp filed articles of merger with the Secretary of State of Nevada to effectuate a merger between the two companies. The surviving entity of the merger was the Company. Immediately thereafter the Company changed its name to Force Energy Corp.

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At November 30, 2009, the Company has a working capital deficiency of $8,674. The Company has yet to achieve profitable operations, has accumulated losses of $1,278,292 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has entered into a formal Share Issuance Agreement with a third party (Note 10(b)) to address this concern.

 

Note 2

Summary of Significant Accounting Policies

 

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which may have been made using careful judgment. Actual results may vary from these estimates.

 

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

F-5



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 2

Note 2 Summary of Significant Accounting Policies – (cont’d)

Development Stage Activities

The Company is a development exploration stage company. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

The Company is subject to several categories of risk associated with its development stage activities. Natural gas and oil exploration and production is a speculative business, and involves a high degree of risk. Among the factors that have a direct bearing on the Company’s prospects are uncertainties inherent in estimating natural gas and oil reserves, future hydrocarbon production, and cash flows, particularly with respect to wells that have not been fully tested and with wells having limited production histories; access to additional capital; changes in the price of natural gas and oil; availability and cost of services and equipment; and the presence of competitors with greater financial resources and capacity.

Principles of Consolidation

These consolidated financial statements include the accounts of the Force Energy Corp and its wholly-owned subsidiaries, FRC Exploration Ltd. (a BC Corporation) (“FRC”) and Nuance Exploration Ltd. (a BC Corporation) (“NEL”). All significant inter-company balances and transactions have been eliminated.

Foreign Currency Translation

The Company’s functional currency is the Canadian dollar as substantially all of the Company’s operations are in Canada. The Company uses the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission (“SEC”).

Assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date and share capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the Accumulated Other Comprehensive Income account in Stockholder’s Equity, if applicable. Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any exchange gains and losses are included in the Statement of Operations and Comprehensive Loss.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the assets, which are generally 2 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

F-6



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 3

Note 2 Summary of Significant Accounting Policies – (cont’d)

Oil and Gas Properties

The Company follows the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by-country (cost centre) basis. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities.

Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. Petroleum products and reserves are converted to a common unit of measure, using 6 MCF of natural gas to one barrel of oil.

Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations.

If capitalized costs, less related accumulated amortization and deferred income taxes, exceed the “full cost ceiling” the excess is expensed in the period such excess occurs. The “full cost ceiling” is determined based on the present value of estimated future net revenues attributed to proved reserves, using current prices less estimated future expenditures plus the lower of cost and fair value of unproved properties within the cost centre.

Proceeds from a sale of petroleum and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost centre.

Impairment of Long-lived Assets

The carrying value of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. Impairment on the properties with unproved reserves is evaluated by considering criteria such as future drilling plans for the properties, the results of geographic and geologic data related to the unproved properties and the remaining term of the property leases.

F-7



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 4

Note 2 Summary of Significant Accounting Policies – (cont’d)

Asset Retirement Obligations

Asset retirement obligations (“ARO”) associated with the retirement of a tangible long-lived asset, including natural gas and oil properties, are recognized as liabilities in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated assets. The cost of tangible long-lived assets, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the assets. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted fair value is accreted to the expected settlement value.

The fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free interest rate.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

Basic Loss per Share

Basic loss per share is computed using the weighted average number of shares outstanding during the period. Diluted earnings per share are computed similar to basic income per share except that the denominator is increased to include the number of common stock equivalents. Common stock equivalents represent the dilutive effect of the assumed exercise of any outstanding stock equivalents, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date. There are no common stock equivalents outstanding and, thus, diluted and basic loss per share are the same.

Comprehensive Income

The Company is required to report comprehensive income, which includes net loss as well as changes in equity from non-owner sources.

F-8



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 5

Note 2 Summary of Significant Accounting Policies – (cont’d)

New Accounting Pronouncements

In December 2007, the FASB issued ASC 805, “Business Combinations”. Among other things, ASC 805 establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired business; (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. ASC 805 was effective for fiscal years beginning on or after December 15, 2008. This standard will affect the Company’s accounting treatment for any future business combinations.

In March 2008, the FASB issued guidance, included in ASC 815-10 “Derivatives and Hedging,” which seeks to enhance disclosure about how and why a company uses derivatives; how derivative instruments are accounted for and how derivatives affect a company’s financial position, financial performance and cash flows. This Statement was effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The adoption of this statement did not have a material effect on the Company’s reported financial position or results of operations.

In June 2008, the FASB ratified guidance which is now part of ASC 815-40, “Contracts in Entity’s Own Equity”. The objective of this issue is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock. This issue applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative instrument or an instrument which may be potentially settled in an entity’s own stock regardless of whether the instrument possess derivative characteristics. This issue provides a two-step approach to assist in making these determinations and is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company is currently evaluating what effects the adoption of ASC 815-40 will have on its consolidated financial statements.

F-9



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 6

Note 2 Summary of Significant Accounting Policies – (cont’d)

New Accounting Pronouncements – (cont’d)

In December 2008, the SEC issued revised reporting requirements for oil and natural gas reserves that a company holds. Included in the new rule entitled -Modernization of Oil and Gas Reporting Requirements”, are the following changes: 1) permitting use of new technologies to determine proved reserves, if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volumes; 2) enabling companies to additionally disclose their probable and possible reserves to investors, in addition to their proved reserves; 3) allowing previously excluded resources, such as oil sands, to be classified as oil and natural gas reserves rather than mining reserves; 4) requiring companies to report the independence and qualifications of a preparer or auditor, based on current Society of Petroleum Engineers criteria; 5) requiring the filing of reports for companies that rely on a third party to prepare reserve estimates or conduct a reserve audit; and 6) requiring companies to report oil and natural gas reserves using an average price based upon the prior 12-month period, rather than year-end prices. The new requirements are effective for registration statements filed on or after January 1, 2010, and for annual reports on Form 10K for fiscal years ending on or after December 31, 2009. Early adoption is not permitted. The Company is currently assessing the impact that adoption of this rule will have on its financial disclosures.

In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-03 - “Oil and Gas Reserve Estimation and Disclosures.” The ASU aligns the current oil and gas reserve estimation and disclosure requirements of FASB Accounting Standards Codification Topic 932, Extractive Activities — Oil and Gas, with those in SEC Final Rule Release No. 33-8995, Modernization of Oil and Gas Reporting. The ASU will be effective for reporting periods ending on or after December 31, 2009. The Company is currently assessing the impact that adoption of this rule will have on our financial statements.

In April 2009, the FASB issued additional disclosure requirements related to fair values, which are included in ASC 820, “Interim Disclosures about Fair Value of Financial Instruments.” The provisions require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The required disclosures were effective for interim reporting periods ending after June 15, 2009. The adoption of the provisions did not have a material impact on the Company’s statements of financial position, results of operations and cash flows.

In May 2009, the FASB issued FASB ASC 855, “Subsequent Events”. FASB ASC 855 incorporates accounting and disclosure requirements related to subsequent events into U.S. GAAP. The requirements of FASB ASC 855 for subsequent-events accounting and disclosure are not significantly different from those in existing auditing standards, which the Company has historically followed for financial reporting purposes. As a result, the adoption of this guidance did not have any material impact on the financial statements. The Company has evaluated subsequent events through the filing date of these consolidated financial statements.

F-10



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 7

Note 2 Summary of Significant Accounting Policies – (cont’d)
   
 

New Accounting Pronouncements – (cont’d)

 

In July 2009, the FASB issued new guidance relating to the FASB Accounting Standards Codification at FASB ASC 105, as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The codification is effective for interim periods ending after September 15, 2009. All existing accounting standards were superseded as described in ASC 105. All other accounting literature not included in the Codification is non-authoritative. The adoption of ASC 105 did not impact the Company’s results of operations, financial position or cash flows.

 

In August 2009, the FASB issued ASU No. 2009-05, “Measuring Liabilities at Fair Value,” or ASU 2009-05, which amends ASC 820 to provide clarification of a circumstances in which a quoted price in an active market for an identical liability is not available. A reporting entity is required to measure fair value using one or more of the following methods: 1) a valuation technique that uses a) the quoted price of the identical liability when traded as an asset or b) quoted prices for similar liabilities (or similar liabilities when traded as assets) and/or 2) a valuation technique that is consistent with the principles of ASC 820. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to adjust to include inputs relating to the existence of transfer restrictions on that liability. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.

 

Note 3

Financial Instruments

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non- performance risk including our own credit risk.

 

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:


Level 1-

inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

   

Level 2 –

inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

F-11



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 8

Note 3 Financial Instruments – (cont’d)

Level 3-

inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The carrying value of the Company’s financial assets and liabilities consisting of cash and accounts payable and accrued liabilities, in management’s opinion, approximate their fair value due to the short maturity of such instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.

Note 4 Property and Equipment

Property and equipment consists of the following:

      November 30     November 30  
      2009     2008  
  Computer equipment and software $  4,275   $  4,275  
       Less: Accumulated depreciation   (2,675 )   (535 )
      1,600     3,740  
  Office equipment   376     376  
       Less: Accumulated depreciation   (235 )   (47 )
      141     329  
    $  1,741   $  4,069  

Note 5 Oil and Gas Properties

      November 30, 2009  
      United              
      States     Canada     Total  
                     
  Unproved properties                  
         - acquisition costs $  369,000   $  119,640   $  488,640  
         - development costs   -     7,100     7,100  
         - asset retirement obligation   -     8,422     8,422  
                     
    $  369,000   $  135,162   $  504,162  

F-12



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 9

Note 5 Oil and Gas Properties – (cont’d)

      November 30, 2008  
      United              
      States     Canada     Total  
  Unproved properties                  
         - acquisition costs $  50,000   $  95,702   $  145,702  
         - development costs   20,000     -     20,000  
                     
    $  70,000   $  95,702   $  165,702  

  a)

Hayter Prospect, Alberta, Canada

     
 

By a participation agreement dated December 21, 2006, Nuance Exploration Ltd. (“NEL”), a wholly owned subsidiary of the Company acquired a 100% ownership in the interpretation of 3D seismic data covering four sections of certain land, known as the Hayter Prospect, located in the province of Alberta, Canada by paying $82,650 (CDN$95,000) in costs of acquiring and interpreting the seismic data.

     
 

On October 15, 2007, prior to the evaluation of the 3D seismic data, NEL sold to the original grantor (the Grantor) its 100% interest in the subject property and received as consideration a non-interest bearing promissory note for $111,144 (CDN$110,000) to be repaid by November 30, 2007.

     
 

On November 30, 2007, the Grantor did not pay the promissory note and NEL and the Grantor entered into a Participation Agreement whereby NEL accepted a 20% interest of the Grantor’s working interest in the County Line 10D Hayter 10-8-40-1 W4M well as full and final settlement of the promissory note totalling $95,702 after considering the effects of the foreign exchange on the note.

     
 

On October 16, 2009, the Company entered into an amendment to its Participation Agreement pursuant to which it acquired an additional 30% working interest in the Hayter Well in consideration of a release by Force from an amount of $23,938 owed by the Grantor to the Company. The Company holds a 50% working interest of the Grantor’s interest in the Hayter Well. The addendum was subsequently amended by the parties on February 1, 2010 to replace the reference to the Company in the agreement with Nuance Exploration Ltd., the Company’s wholly owned subsidiary.

     
 

During the year ended November 30, 2009 the Company incurred $7,100 of development costs.

     
 

As at November 30, 2009, the 50% working interest of the Hayter Well was recorded at $135,162 (November 30, 2008:- 20% working interest - $95,702). The company also recorded $8,422 (Note 7) as an asset retirement obligation.

     
  b)

Diamond Springs Prospect, Wyoming

     
 

By a letter agreement dated March 11, 2008, the Company agreed to purchase a 5% working interest in the Diamond Springs Prospect (the “Prospect”) and acquire an option to purchase an additional 20% working interest in the Prospect.

F-13



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 10

Note 5 Oil and Gas Properties – (cont’d)

  b)

Diamond Springs Prospect, Wyoming – (cont’d)

     
 

As consideration, the Company issued a $50,000 Promissory Note without interest due on or before April 30, 2008 (settled April 16, 2008), and agreed to pay $300,000 within 90 days of the execution of an acquisition agreement (see agreement related to Diamond Springs Prospect below), at which time the Company would earn a 75% net revenue interest in the initial well. The Company is responsible for 100% of the costs of the drilling and testing of the initial well on the Prospect.

     
 

Upon drilling of the initial well, the Company would issue to the vendor 250,000 common shares of the Company as payment in full for a 5% working interest in all subsequent wells drilled on the Prospect. These shares were not issued and the commitment to issue these shares was superseded in June, 2009 as described below. The Vendor granted the Company the option to purchase up to an additional 20% working interest in all subsequent wells drilled on the Prospect for $100,000 per 1% of working interest. This option expired unexercised on December 15, 2008.

     
 

In December 2008, the Company advanced an additional $175,000, pursuant to the loan agreement dated March 11, 2009, to the vendor of the Diamond Springs Prospect with the intention that this loan, together with the original payment of $50,000, are to be included as part of the purchase price included in a definitive agreement in respect to the acquisition by the Company of a working interest in the Prospect.

     
 

In June 2009, the parties entered into the assignment agreement, which replaced and superseded all prior agreements between the parties. The Company will receive a 50% interest in the Diamond Springs Prospect for $225,000. In connection with the assignment agreement the Company agreed to sign a release in favour of the assignor, releasing them from all further obligations under the loan agreement and the letter agreement.

     
 

On September 16, 2009, the Company acquired a further 25% interest in the Diamond Springs Prospect for consideration consisting of 450,000 common shares with a fair value of $144,000.

     
 

During the year ended November 30, 2009, $20,000 in development costs relating to Diamond Springs Prospect were written off.


Note 6 Related Party Transactions

Amount due to related parties includes $113,550 (November 30, 2008 - $64,250); owing to the Company’s director and companies controlled by the Company’s director for unpaid corporate expenses of $nil (November 30, 2008 - $14,750), unpaid management fees of $111,500 (November 30, 2008 - $48,500) and rent of $2,050 (November 30, 2008 - $1,000) respectively. The amount due to related party was due to the Company’s former director and is unsecured, non interest bearing and has no specific terms for repayment.

F-14



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 11

Note 6 Related Party Transactions – (cont’d)
   

During the year ended November 30, 2009, total management fees charged by the Company’s director were $189,000 (2008 - $157,500), and rent expenses reimbursed to the company controlled by the Company’s director were $8,400 (2008 - $7,000).

 

Note 7

Asset Retirement Obligation

 

Total future asset retirement obligations were estimated by management based on the Company’s net ownership interest, estimated costs to reclaim and abandon the wells and the estimated timing of the costs to be incurred in future periods. The Company has estimated the net present value of its total assets retirement obligations at November 30, 2009 to be $10,255 (November 30, 2008 - $nil), based on a total undiscounted liability of $16,645 (Cdn$17,500) in the Hayter Prospect, Alberta, Canada. These payments are expected to be made over the next nine years, with the majority of the cost incurred between 2016 and 2019. The Company’s credit adjusted risk free rate of 15% and an inflation rate of 8% were used to calculate the present value of the asset retirement obligation.


      November 30,     November 30,  
      2009     2008  
               
  Balance, beginning of period $  -   $  -  
       Liabilities incurred   8,422     -  
       Accretion expense   1,328     -  
       Effect of foreign exchange   475     -  
               
    $  10,225   $  -  

Note 8 Capital Stock

During the period ended November 30, 2006, the Company issued 23,000,000 common shares at $0.005 for total proceeds of $115,000. The Company paid commissions of $8,000 for net proceeds of $107,000.

On December 29, 2006, the Company issued 21,354,000 common shares as a result of the reverse merger and recapitalization (Note 3).

On April 5, 2007, the Company issued 240,000 common shares at $0.25 per share for total proceeds of $60,000 pursuant to a private placement.

On November 30, 2007, the Company issued 100,000 common shares at $0.50 per share for total proceeds of $50,000 pursuant to a private placement.

On April 16, 2008, the Company agreed to issue 300,000 common shares (issued May 2008) with a fair value of $1.35 per share totalling $405,000 pursuant to three consultancy contracts.

On April 17, 2008, the Company issued 1,000,000 common shares at $0.75 per share for total proceeds of $750,000 pursuant to a private placement.

F-15



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 12

Note 8 Capital Stock – (cont’d)

On September 19, 2009, the Company issued 450,000 common shares pursuant to the Diamond Springs Prospect property agreement with a fair value of $144,000.

On October 30, 2009, the Company issued 900,000 common shares at $0.28 per share for total proceeds of $252,000 pursuant to a private placement.

Note 9 Income Taxes

At November 30, 2009, the Company has accumulated net operating losses in the United States of America totalling approximately $1,399,000 which are available to reduce taxable income in future taxation years. The carryforwards will begin expiring in 2026 unless utilized in earlier years. At November 30, 2009 the Company has accumulated Canadian oil and gas resource property expenditures aggregating $ 140,091 (CDN$148,638) which may be used to reduce taxable income in future taxation years.

The tax effects of the temporary differences that give rise to the Company's estimated deferred tax assets and liabilities are as follows:

      2009     2008  
               
  Statutory tax rate   34.00%     34.00%  
               
  Net operating loss carryforwards $  476,000   $  300,000  
  Undeducted management fees   -     23,000  
  Capital assets   1,000     -  
  Oil and gas properties   2,000     3,000  
  ARO liability   2,000     -  
  Valuation allowance for deferred tax assets   (481,000 )   (327,000 )
               
  Net deferred tax assets $  -   $  -  

The provision for income taxes differ from the amount established using the statutory income tax rate as follows:

      2009     2008  
               
  Income tax benefit at statutory rate $  (137,000 ) $  (267,000 )
  Tax penalties and interest   (17,000 )   17,000  
  Foreign exchange translation   (1,000 )   -  
  Other permanent differences   1,000     5,000  
  Increase in valuation allowance   154,000     245,000  
               
  Deferred income tax recovery $  -   $  -  

F-16



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 13

Note 9 Income Taxes – (cont’d)

The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and this causes a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current income. As management of the Company does not currently believe that it is more-likely-than-not that the Company will receive the benefit of this asset, a valuation allowance equal to the deferred tax asset has been established at both November 30, 2009 and November 30, 2008.

Uncertain Tax Positions

The Company files income tax returns in the U.S. federal jurisdiction, various state and foreign jurisdictions. The Company’s tax returns are subject to tax examinations by U.S. federal and state tax authorities, or examinations by foreign tax authorities until respective statute of limitation. It is subject to tax examinations by tax authorities for all taxation years commencing on or after 2006.

Provision has not been made for U.S. or additional foreign taxes on undistributed earnings of foreign subsidiaries. Such earnings have been and will continue to be reinvested but could become subject to additional tax if they were remitted as dividends, or were loaned to the Company affiliate. It is not practicable to determine the amount of additional tax, if any, that might be payable on the undistributed foreign earnings.

Note 10 Commitments

  a)

On September 18, 2009, the Company entered into a Management/Operations Agreement for an initial term of one month expiring October 17, 2009, whereby a company was appointed the manager and operator of the Company’s Diamond Springs Project. As compensation for manager/operator services the Company will pay the company in accordance with a specified fee schedule for operator services rendered. The contract will be automatically renewed for periods of 1 month unless 30 days written notice of termination is given. No costs pursuant to the agreement have been incurred as of the audit report date.

     
  b)

On November 16, 2009 the Company entered into a share issuance agreement for gross proceeds of up to $5,000,000 which expires on November 9, 2010. Pursuant to the agreement the Company can request advances in amounts not less than $100,000 from the subscriber, and the subscriber will receive within 5 days of the advance being received common shares of the Company. The deemed issue price of the shares shall be 80% of the volume weighted average of the closing price of the common stock for the ten banking days immediately prior to the date advance was requested.

F-17



FORCE ENERGY CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
November 30, 2009 and 2008
(Stated in US Dollars) – Page 14

Note 11 Non-cash Transactions

Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flows.

During the year ended November 30, 2009, the Company issued 450,000 common shares having a fair value of $0.32 per share for a total of $144,000 pursuant to an agreement to acquire an additional 25% working interest in the Diamond Springs Prospect -Note 5(b).

During the year ended November 30, 2008, upon the resignation of the past president, $5,018 which had been recorded as due to related party was reclassified to accounts payable and accruals. This reallocation has been excluded from the statements of cash flows.

These transactions were excluded from the Statements of Cash Flows.

F-18


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our sole chief executive officer and principal financial officer concluded that as of November 30, 2009, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to our company’s management, including our company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. Our company intends to remediate the material weaknesses as set out below.

Management’s Report on Internal Control Over Financial Reporting

Our company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our company’s internal control over financial reporting is designed to provide reasonable assurance, not absolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that our company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Our Management, including our principal executive officer and principal financial officer, conducted an evaluation of the design and operation of our internal control over financial reporting as of November 30, 2009 based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over financial reporting was not effective as at November 30, 2009 due to the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

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Our company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending November 30, 2010, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely effected in a material manner.

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

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Changes in Internal Control Over Financial Reporting.

There were no changes in the Company’s internal control over financial reporting during the quarter ended November 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

As at February 9, 2010, our directors and executive officers, their ages, positions held, and duration of such, are as follows:


Name
Position Held with the
Company

Age
Date First Elected
or Appointed
Rahim Rayani

President, Chief Executive
Officer, Chief Financial Officer,
Secretary and Director
35

March 10, 2008

Business Experience

The following is a brief account of the education and business experience of our sole director and executive officer during at least the past five years, indicating his principal occupation during the period, and the name and principal business of the organization by which he was employed.

Rahim Rayani is our president, chief executive officer, chief financial officer, secretary and our sole director. Mr. Rayani has been our president, chief executive officer, chief financial officer, secretary and our sole director since March 10, 2008. For the past 5 years Rahim Rayani has been President and Chief Executive Officer of Gulf Coast Oil & Gas, Inc. a Houston, TX USA Venture. His responsibilities include raising capital, acquiring assets, brought the company into revenue through success on drilling 3 re-entry wells in Texas and manage all day to day operations and activities of a fully- reporting OTCBB company. Since 2003 Rahim Rayani has been President and Chief Executive Officer of R Capital Management Ltd. a Vancouver, British Columbia based company, where he is a Management/Financial and Technology consultant for public and private companies with special focus on the oil and gas and resource/mining sectors. His responsibilities include raising funds for private and public companies through a network of high net worth individuals, institutions and business contacts.

Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

Significant Employees

We have no significant employees other than the director and officer described above.

Family Relationships

There are no family relationships among our directors or officers.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:

  1.

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

     
  2.

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

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  3.

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

     
  4.

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

Audit Committee

The Company’s audit committee is composed of its sole director and officer, Rahim Rayani.

Audit Committee Financial Expert

Our board of directors has determined that it does not have an audit committee member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. We believe that the audit committee members are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated revenues to date.

Nomination Procedures For Appointment of Directors

As of February 25, 2010, we did not effect any material changes to the procedures by which our stockholders may recommend nominees to our board of directors.

Code of Ethics

We adopted a Code of Ethics applicable to all of our directors, officers, employees and consultants, which is a “code of ethics” as defined by applicable rules of the SEC. Our Code of Ethics was attached as an exhibit to this annual report filed on Form 10-K. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended November 30, 2009, all filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION.

The particulars of compensation paid to the following persons:

  (a) our principal executive officer;

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  (b)

each of our three most highly compensated executive officers who were serving as executive officers at the end of the most recently completed financial year; and

     
  (c)

up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the most recently completed financial year,

who we will collectively refer to as the “named executive officers”, for our fiscal years ended November 30, 2009, 2008 and 2007, are set out in the following summary compensation table:

   SUMMARY COMPENSATION TABLE   





Name
and Principal
Position







Year






Salary
($)






Bonus
($)





Stock
Awards
($)





Option
Awards
($) (4)

Non-
Equity
Incentive
Plan
Compensa-
tion
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)



All
Other
Compensa
-tion
($)






Total
($)
Rahim Rayani(1)
President, Chief
Executive
Officer
and Chief Financial
Officer, Secretary and
Director
2009
2008
2007



189,000
157,000
Nil



Nil
Nil
Nil



Nil
Nil
Nil



Nil
Nil
Nil



Nil
Nil
Nil



Nil
Nil
Nil



Nil
Nil
Nil



189,000
157,000
Nil



James Bunney(2)
(formerly President,
Chief Executive
Officer, Chief
Financial Officer and
Director)
2009
2008
2007


N/A
Nil
Nil


N/A
Nil
Nil


N/A
Nil
Nil


N/A
Nil
Nil


N/A
Nil
Nil


N/A
Nil
Nil


N/A
Nil
Nil


N/A
Nil
Nil



(1)

Rahim Rayani has been our president, chief executive officer, chief financial officer, and director of the Company since March 10, 2008.

(2)

James Bunney resigned as president, chief executive officer and chief financial officer of the Company on March 10, 2008 and as a director on March 17, 2008.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors from time to time. We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control.

Outstanding Equity Awards at Fiscal Year-End

As at November 30, 2009, we had not adopted any equity compensation plan and no stock, options, or other equity securities were awarded to our sole executive officer.

Aggregated Options Exercised in the Year Ended November 30, 2009 and Year End Option Values

There were no stock options exercised during the year ended November 30, 2009.

Repricing of Options/SARS

We did not reprice any options previously granted during the year ended November 30, 2009.

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Director Compensation

We do not pay our directors any fees or other compensation for acting as directors. We have not paid any fees or other compensation to any of our directors for acting as directors to date.

Employment Contracts

We have not entered into any employment agreement or consulting agreement with our directors and executive officers.  We paid Rahim Rayani our sole executive officer and director $189,000 during the year ended November 30, 2009 for certain management consulting services provided by him to the Company.   We do not have a formal employment or consulting agreement with Mr. Rayani.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As of March 1, 2010, there were 47,344,000 shares of our common stock outstanding. The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of that date by (i) each of our directors, (ii) each of our executive officers, and (iii) all of our directors and executive officers as a group. Except as set forth in the table below, there is no person known to us who beneficially owns more than 5% of our common stock.


Title of Class
Directors and Officers:
Name and Address
of Beneficial Owner
Number of Shares
Beneficially Owned (1)
Percentage of Class
(2)
Common Stock

Rahim Rayani
304 – 530 12th Avenue SW
Calgary, AB T2R 0E4
9,600,000

20.3%

Common Stock
Directors and Officers as
a group
9,600,000
20.3%
5% Shareholders:
Common Stock

James D. Bunney
203 – 3808 35th Ave
Vernon, BC V1T 2T9
4,400,000

9.3%

Common Stock

Rahim Rayani
304 – 530 12th Avenue SW
Calgary, AB T2R 0E4
9,600,000

20.3%


(1)

Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.

   
(2)

The percentage of class is based on 47,344,000 shares of common stock issued and outstanding as of March 1, 2010.

Changes in Control

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

None of the following parties has, since commencement of our fiscal year ended November 30, 2009, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us, in which our company is a participant and the amount involved exceeds the lesser of $120,000 or 1% of the average of our company’s total assets for the last three completed financial years, except for the management fees paid to our director in the amount of $189,000 for the year ended November 30, 2009 and $157,000 for the year ended November 30, 2008:

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  (i)

Any of our directors or officers;

     
  (ii)

Any person proposed as a nominee for election as a director;

     
  (iii)

Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;

     
  (iv)

Any of our promoters; and

     
  (v)

Any member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the foregoing persons.

Director Independence

Our common stock is quoted on the OTC bulletin board interdealer quotation system, which does not have director independence requirements. Under NASDAQ rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. Our sole director, Rahim Rayani, is also our president, chief executive officer, chief financial officer and secretary. As a result, we do not have any independent directors.

As a result of our limited operating history and limited resources, our management believes that we will have difficulty in attracting independent directors. In addition, we would be likely be required to obtain directors and officers insurance coverage in order to attract and retain independent directors. our management believes that the costs associated with maintaining such insurance is prohibitive at this time.

Audit Committee

The Company’s audit committee is composed of its sole director and officer, Rahim Rayani.

Audit Committee Financial Expert

Our board of directors has determined that it does not have an audit committee member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. We believe that the sole audit committee member is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated revenues to date.

Transactions with Independent Directors

Our sole director, Rahim Rayani, is also our president, chief executive officer, chief financial officer and secretary. As a result, we do not have any independent directors.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit fees

The aggregate fees billed for the two most recently completed fiscal periods ended November 30, 2009 and November 30, 2008 for professional services rendered by BDO Canada LLP, Chartered Accountants for the audit of our annual consolidated financial statements, quarterly reviews of our interim consolidated financial statements and services normally provided by the independent accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:



Year Ended
November 30,
2009
Year Ended
November 30,
2008
Audit Fees and Audit Related Fees $70,935 $38,515
Tax Fees - -
All Other Fees - -
Total $70,935 $38,515

In the above table, “audit fees” are fees billed by our company’s external auditor for services provided in auditing our company’s annual financial statements for the subject year. “Audit-related fees” are fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit review of our company’s financial statements. “Tax fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included in the foregoing categories.

Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors

The board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

The board of directors has considered the nature and amount of fees billed by BDO Canada LLP and believes that the provision of services for activities unrelated to the audit is compatible with maintaining BDO Canada LLP independent.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibit Description
Number  
   
3.1

Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2 filed on March 16, 2007).

 

3.2

Bylaws (incorporated by reference from our Registration Statement on Form SB-2 filed on March 16, 2007).

 

3.3

Certificate of Change filed with the Secretary of State of Nevada on December 28, 2006 (incorporated by reference from our Current Report on Form 8-K filed on January 4, 2007).

 

3.4

Articles of Merger filed with the Secretary of State of Nevada on January 4, 2007 (incorporated by reference from our Quarterly Report on Form 10-QSB filed on April 17, 2008).

 

3.5

Articles of Merger filed with the Secretary of State of February 12, 2008 (incorporated by reference from our Quarterly Report on Form 10-QSB filed on April 17, 2008).

 

10.1

Participation Agreement dated November 30, 2007 between County Line Energy Corp. and Nuance Exploration Ltd. (incorporated by reference from our Current Report on Form 8-K filed on December 19, 2007).

 

10.2

Letter Agreement dated March 11, 2008 with G2 Petroleum, LLC (incorporated by reference from our Current Report on Form 8-K filed on April 4, 2008).

 

10.3

Promissory Note to G2 Petroleum, LLC (incorporated by reference from our Current Report on Form 8-K filed on April 4, 2008).

 

10.4

Letter of Intent to Farm out dated April 17, 2008 between our company and Desert Mining Inc. (incorporated by reference from our Current Report on Form 8-K filed on April 23, 2008).

 

10.5

Advisory and Business Consulting Services Agreement dated April 16, 2008 with Robert B. Perry (incorporated by reference from our Current Report on Form 8-K filed on May 1, 2008).

 

10.6

Advisory and Business Consulting Services Agreement dated April 16, 2008 with Leon Hinton (incorporated by reference from our Current Report on Form 8-K filed on May 1, 2008).

 

10.7

Advisory and Business Consulting Services Agreement dated April 16, 2008 with Bourgeois Energy, Inc. (incorporated by reference from our Current Report on Form 8-K filed on May 1, 2008).

 

10.8

Loan Agreement between Force Energy Corp. and G2 Petroleum, LLC dated March 11, 2009 (incorporated by reference from our Annual Report on Form 10-K filed on March 17, 2009)

 

10.9

Lease Agreement between Force Energy Corp. and TEG Inc. dated September 11, 2008 (incorporated by reference from our Annual Report on Form 10-K filed on March 17, 2009)

 

10.10

Assignment Agreement between Force Energy Corp. and G2 Petroleum, LLC dated effective June 20, 2009 (incorporated by reference from our Quarterly Report on Form 10-Q filed on July 15, 2009)

 

10.11

Assignment Agreement between Force Energy Corp. and G2 Petroleum, LLC dated effective September 16, 2009 (incorporated by reference from our Current Report on Form 8-K filed on September 24, 2009)

 

10.12

Addendum to Participation Agreement between Force Energy Corp. and County Line Energy Corp. dated October 16, 2009 (incorporated by reference from our Quarterly Report on Form 10-Q filed on October 23, 2009)

 

10.13

Share Issuance Agreement between Force Energy Corp. and Villa Atmu S.A. dated November 16, 2009 (incorporated by reference from our Current Report on Form 8-K filed on November 24, 2009)

 

10.14*

Form of Subscription Agreement dated October 30, 2009

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Exhibit Description
Number  
   
10.15* Amendment No. 1 to Addendum to Participation Agreement between County Line Energy Corp. and Force Energy Corp. dated February 1, 2010.
   
31.1* Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1* Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
99.1* Code of Ethics

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FORCE ENERGY CORP.

By /s/ Rahim Rayani  
  Rahim Rayani  
  President, Chief Executive Officer, Chief Financial Officer,  
  Secretary and Director  
  (Principal Executive Officer, Principal Accounting Officer  
  and Principal Financial Officer)  

Date: March 10, 2010

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