FOX PETROLEUM INC. - FORM 10-Q/A

Attached files

file	filename
EX-31.2 - 302 CERTIFICATION OF THE CFO - FOX PETROLEUM INC.	ex-31_2.htm
EX-32.1 - 906 CERTIFICATION OF THE CEO - FOX PETROLEUM INC.	ex-32_1.htm
EX-31.1 - 302 CERTIFICATION OF THE CEO - FOX PETROLEUM INC.	ex-31_1.htm
EX-32.2 - 906 CERTIFICATION OF THE CEO - FOX PETROLEUM INC.	ex-32_2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1 to

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2011

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

For the transition period from ______ to ______.

Commission File Number: 000-52721

Fox Petroleum Inc.

(Exact name of registrant as specified in its charter)

Nevada			27-1885936
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

545 Eighth Avenue, Suite 401 New York, NY			10018
(Address of principal executive offices)			(Zip Code)

(212) 560-5195

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 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 o No o

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

Large Accelerated Filer o	Accelerated Filer o
Non-Accelerated Filer o	Smaller Reporting Company x

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

As of as of August 31, 2011 the registrant had 2,917,397,966 shares of its Common Stock, $0.001 par value, outstanding.

EXPLANATORY NOTE

Fox Petroleum Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment No. 1”) to reflect the effects of accounting and reporting errors resulting from a deficiency in its accounting and financial statement preparation process. This error and the related adjustments resulted in an understatement of net loss of $211,175 for the three months ended May 31, 2011 and the understatement of $1,621,548 of deficits accumulated during the development stage, and the overstatement of $2,176,379 of total current liabilities, as of May 31, 2011 as reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2011, which was originally filed with the SEC on July 15, 2011. The restatement is discussed in more detail in Note 1 to the “Consolidated Financial Statements” contained in this Amendment No. 1.

For ease of reference, this Amendment No. 1 amends and restates the Original Filing in its entirety. In addition, as required by Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, the Company's principal executive officer and principal financial officer have provided new Rule 13a-14(a) certifications and Section 1350 certifications in connection with this Amendment No. 1.

FOX PETROLEUM INC.

FORM 10-Q

MAY 31, 2011

INDEX

PART I – FINANCIAL INFORMATION		Page

Item 1.	Financial Statements
	Consolidated Balance Sheets as of May 31, 2011 (unaudited) and February 28, 2011	3
	Consolidated Statements of Operations for the Three Months Ended May 31, 2011 and 2010 and for the Period November 4, 2004 (Inception) to May 31, 2011 (unaudited)	4
	Consolidated Statements of Cash Flows for the Three Months Ended May 31, 2011 and 2010 and for the Period November 4, 2004 (Inception) to May 31, 2011 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 1.A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	(Removed & Reserved)	40
Item 5.	Other Information	40
Item 6.	Exhibits	41

SIGNATURE

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Fox Petroleum Inc. and Subsidiaries (An Development Stage Company) Consolidated Balance Sheets
	May 31,			February 28,
	2011			2011
	Restated			Restated
	(Unaudited)
ASSETS

Current assets
Cash	$	-		$	-
Due from affiliate		22,500			22,500
Total current assets		22,500			22,500

Property and equipment, net		30,609			35,991

Total assets	$	53,109		$	58,491


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable and accrued expenses	$	14,432,928		$	14,432,928
Accrued interest		1,355,942			1,234,651
Accrued interest, related parties		148,241			143,228
Due to officer		9,561			3,789
Notes payable		5,354,820			5,343,932
Notes payable, related parties		194,708			196,468
Total current liabilities		21,496,200			21,354,996

Fees payable in stock and warrants		-			4,364

Stockholders' deficit
Preferred stock, $0.001 par value, 50,000,000 shares authorized
no shares issued and outstanding		-			-
Common stock, $.001 par value, 450,000,000 and 90,000,000 shares
authorized, 120,424,997 and 111,924,997 shares issued and
outstanding at May 31 and February 28, 2011, respectively		120,425			111,925
Additional paid-in capital		22,815,215			22,738,715
Accumulated other comprehensive income (loss)		(17,930	)		(17,883	)
Deficit accumulated during the development stage		(44,360,801	)		(44,133,626	)
Total stockholders' deficit		(21,443,091	)		(21,300,869	)

Total liabilities and stockholders' deficit	$	53,109		$	58,491

See accompanying notes to unaudited consolidated financial statements.

Fox Petroleum Inc. and Subsidiaries (An Development Stage Company) Consolidated Statements of Operations (Unaudited)

							For the Period
							November 4, 2004
							(Inception) to
	For the Three Months Ended May 31,						May 31,
	2011			2010			2011
	Restated			Restated			Restated

Sales revenue	$	-		$	-		$	-

Operating expenses:
General and administrative expenses		11,172			-			4,298,478
Consulting fees		45,636			-			4,221,890
Finance Fees		-			(514,500	)		9,218,304
Impairment of oil and gas assets		-			-			10,046,683
Loss on failure to perform obligations under
oil and gas commitments		-			-			12,910,000
Management fees		-			-			1,380,186
Total operating expenses		56,808			(514,500	)		42,075,541

Income (loss) from operations		(56,808	)		514,500			(42,075,541	)

Other income (expense):
Gain on recovery of VAT receivable		-			-			78,451
Gain on recovery of payables		-			-			3,309,763
Interest and other income		-			-			9,986
Interest expense		(126,229	)		(117,557	)		(1,931,341	)
Impairment of Goodwill		-			-			(397,575	)
Accretion of convertibe note discounts		(10,888	)		-			(2,605,644	)
Loss on conversion of debt		(33,250	)		-			(748,900	)
Total other income (expense)		(170,367	)		(117,557	)		(2,285,260	)

Income (loss) before income taxes		(227,175	)		396,943			(44,360,801	)

Provision for income taxes		-			-			-

Net income (loss)	$	(227,175	)	$	396,943		$	(44,360,801	)


Net income (loss) per share - basic and diluted	$	(0.00	)	$	0.01

Weighted average number of shares
outstanding - Basic and Diluted		116,321,736			33,235,093


Net income (loss)	$	(227,175	)	$	396,943		$	(44,360,801	)

Foreign currency translation gain (loss)		(47	)		-			(8,169	)

Total Comprehensive income (loss)	$	(227,222	)	$	396,943		$	(44,368,970	)

See accompanying notes to unaudited consolidated financial statements.

Fox Petroleum Inc. and Subsidiaries (An Development Stage Company) Consolidated Statements of Cash Flows (Unaudited)
							For the Period
							November 4, 2004
							(Inception) to
	For the Three Months Ended May 31,						May 31,
	2011			2010			2011
	Restated			Restated			Restated
Cash flows from operating activities:
Net income (loss)	$	(227,175	)	$	396,943		$	(44,360,801	)
Adjustments to reconcile net income (loss) to net cash from (used in) operations:
Donated services and rent		-			-			21,000
Depreciation		5,400			-			17,461
Accretion of convertible debt discount		10,888			-			2,605,644
Loss on debt conversion		33,250						748,900
Fees payable in stock and warrants		(4,364	)		-			(7,374	)
Finance fees paid in stock and warrants		-			(514,500	)		7,755,794
Gain on settlement of accounts payable		-			-			(3,309,763	)
Impairment of oil and gas assets		-			-			10,046,683
Impairment of goodwill		-			-			397,575
Gain of VAT receivable written off		-			-			(78,451	)
Stock issued for services		50,000			-			3,509,612
Changes in operating assets and liabilities:
VAT Refund and other receivables		-			-			78,451
Accounts payable and accrued expenses		-			-			18,306,988
Accrued interest		121,291			117,557			1,325,883
Accrued interest, related parties		4,938			-			16,115
Net cash from (used) in operating activities		(5,772	)		-			(2,926,283	)

Cash flows from investing activities:
Cash acquired from acquisitions		-			-			9
Advances to related entities		-			-			(22,500	)
Proceeds (investment) in oil and gas interests		-			-			(7,702,687	)
Net cash from (used in) investing activities		-			-			(7,725,178	)

Cash flows from financing activities:
Proceeds from issuance of common stock		-			-			6,196,900
Proceeds from issuance of notes payable		-			-			4,445,000
Advances from officer		5,772			-			9,561
Advances from related parties					-			34,000
Repayments of advances from related parties		-			-			(34,000	)
Net cash from (used in) financing activities		5,772			-			10,651,461

Net increase in cash		-			-			-

Cash at beginning of period		-			-			-

Cash at end of period	$	-		$	-		$	-

See accompanying notes to unaudited consolidated financial statements.

Fox Petroleum Inc. and Subsidiaries (An Development Stage Company) Consolidated Statements of Cash Flows (Continued) (Unaudited)
					For the Period
					November 4, 2004
					(Inception) to
	For the Three Months Ended May 31,				May 31,
	2011		2010		2011
	Restated		Restated		Restated
Supplemental disclosure of cash flow information:

Cash paid for interest	$	-	$	-	$	16,667

Cash paid for taxes	$	-	$	-	$	-

Non-cash investing and financing activities:

Common stock issued in conversion of notes payable, related parties	$	35,000	$	-	$	789,400

Cancellation of subscriptions for 52,000,000 shares of common stock	$	-	$	26,000,000	$	26,000,000

Issuance of 1,750,000 shares of common stock for acquisition
of 1536692 Ontario, Inc.	$	-	$	-	$	96,250

Benefical conversion feature on convertible debt	$	-	$	-	$	2,608,157

Issuance of 52,000,000 common stock subscriptions	$	-	$	-	$	26,000,000

Issuance of 4,080,000 shares of common stock for oil and gas interests	$	-	$	-	$	1,965,702

See accompanying notes to unaudited consolidated financial statements.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 1 – Restatement of Consolidated Financial Statements

The Company restated its previously issued unaudited consolidated financial statements included in the Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the quarter ended May 31, 2011 to reflect the effects of accounting and reporting errors resulting from a deficiency in its accounting and financial statement preparation process. This error and the related adjustments resulted in an understatement of net loss of $211,175 for the three months ended May 31, 2011 and the understatement of $1,621,548 of deficits accumulated during the development stage, and the overstatement of $2,176,379 of total current liabilities, as of May 31, 2011. The revisions applied to the affected individual line items in the consolidated financial statements are as follows:

Consolidated Balance Sheet

	May 31, 2011
	As previously						As
	reported			Adjustments			restated
ASSETS
Current assets
Cash	$	-		$	-		$	-
Due from affiliate		-			22,500			22,500
Total current assets		-			22,500			22,500

Property and equipment, net		-			30,609			30,609

Total assets	$	-		$	53,109		$	53,109


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable and accrued expenses	$	18,360,246		$	(3,927,318	)	$	14,432,928
Accrued interest		-			1,355,942			1,355,942
Accrued interest, related parties		-			148,241			148,241
Due to officer		-			9,561			9,561
Notes payable		5,312,333			42,487			5,354,820
Notes payable, related parties		-			194,708			194,708
Total current liabilities		23,672,579			(2,176,379	)		21,496,200

Fees payable in stock and warrants		44,461			(44,461	)		-

Stockholders' deficit
Preferred stock		-			-			-
Common stock		84,818			35,607			120,425
Additional paid-in capital		44,937,395			(22,122,180	)		22,815,215
Subscriptions receivable		(26,000,000	)		26,000,000			-
Accumulated other comprehensive income (loss)		-			(17,930	)		(17,930	)
Deficit accumulated during the development stage		(42,739,253	)		(1,621,548	)		(44,360,801	)
Total stockholders' deficit		(23,717,040	)		2,273,949			(21,443,091	)

Total liabilities and stockholders' deficit	$	-		$	53,109		$	53,109

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 1 – Restatement of Consolidated Financial Statements (Continued)

Consolidated Statements of Operations

	Three Months ended May 31, 2011
	As previously						As
	reported			Adjustments			restated

Sales revenue	$	-		$	-		$	-

Operating expenses:
General and administrative expenses		-			11,172			11,172
Consulting fees		16,000			29,636			45,636
Total operating expenses		16,000			40,808			56,808

Loss from operations		(16,000	)		(40,808	)		(56,808	)

Other income (expense):
Interest expense		-			(126,229	)		(126,229	)
Accretion of convertibe note discounts		-			(10,888	)		(10,888	)
Loss on conversion of debt		-			(33,250	)		(33,250	)
Total other income (expense)		-			(170,367	)		(170,367	)

Loss before income taxes		(16,000	)		(211,175	)		(227,175	)

Provision for income taxes		-			-			-

Net loss	$	(16,000	)	$	(211,175	)	$	(227,175	)

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 1 – Restatement of Consolidated Financial Statements (Continued)

Consolidated Statements of Cash Flows

	Three Months ended May 31, 2011
	As previously					As
	reported		Adjustments			restated

Cash flows from operating activities:
Net loss	$	-	$	(227,175	)	$	(227,175	)
Adjustments to reconcile net loss to
net cash used in operations:
Depreciation		-		5,400			5,400
Accretion of convertible debt discount		-		10,888			10,888
Loss on debt conversion		-		33,250			33,250
Fees payable in stock and warrants		-		(4,364	)		(4,364	)
Stock issued for services		-		50,000			50,000
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		-		-			-
Accrued interest		-		121,291			121,291
Accrued interest, related parties		-		4,938			4,938
Net cash used in operating activities		-		(5,772	)		(5,772	)

Cash flows from investing activities:
Cash acquired from acquisitions		-		-			-
Advances to related entities		-		-			-
Net cash used in investing activities		-		-			-

Cash flows from financing activities:
Proceeds from issuance of common stock		-		-			-
Proceeds from issuance of notes payable		-		-			-
Advances from officer		-		5,772			5,772
Net cash from financing activities		-		5,772			5,772

Net increase in cash		-		-			-

Cash at beginning of period		-		-			-

Cash at end of period	$	-	$	-		$	-

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 1 – Restatement of Consolidated Financial Statements

Consolidated Balance Sheet

	February 28, 2011
	As previously						As
	reported			Adjustments			restated
ASSETS
Current assets
Cash	$	-		$	-		$	-
Due from affiliate		-			22,500			22,500
Total current assets		-			22,500			22,500

Property and equipment, net		-			35,991			35,991

Total assets	$	-		$	58,491		$	58,491


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable and accrued expenses	$	18,360,246		$	(3,927,318	)	$	14,432,928
Accrued interest		-			1,234,651			1,234,651
Accrued interest, related parties		-			143,228			143,228
Due to officer		-			3,789			3,789
Notes payable		5,312,333			31,599			5,343,932
Notes payable, related parties		-			196,468			196,468
Total current liabilities		23,672,579			(2,317,583	)		21,354,996

Fees payable in stock and warrants		44,461			(40,097	)		4,364

Stockholders' deficit
Preferred stock		-			-			-
Common stock		84,818			27,107			111,925
Additional paid-in capital		44,937,395			(22,198,680	)		22,738,715
Subscriptions receivable		(26,000,000	)		26,000,000			-
Accumulated other comprehensive income (loss)		-			(17,883	)		(17,883	)
Deficit accumulated during the development stage		(42,739,253	)		(1,394,373	)		(44,133,626	)
Total stockholders' deficit		(23,717,040	)		2,416,171			(21,300,869	)

Total liabilities and stockholders' deficit	$	-		$	58,491		$	58,491

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 1 – Restatement of Consolidated Financial Statements (Continued)

The Company restated its previously issued unaudited consolidated financial statements included in the Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the quarter ended May 31, 2010 in its Amendment No. 2 to Form 10-Q on August 19, 2011 to reflect the effects of accounting and reporting errors resulting from a deficiency in its accounting and financial statement preparation process. This error and the related adjustments resulted in an understatement of net income of $412,943 for the three months ended May 31, 2010 and the overstatement of $396,943 of deficits accumulated during the development stage, and the understatement of $117,557 of total current liabilities. The revisions applied to the affected individual line items in the consolidated financial statements are as follows:

Consolidated Balance Sheet – May 31, 2010

	May 31, 2010
	As previously						As
	reported			Adjustments			restated
ASSETS
Current assets
Cash	$	-		$	-		$	-
Total current assets		-			-			-

Oil and gas interests		-			-			-

Total assets	$	-		$	-		$	-


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable and accrued expenses	$	18,360,246		$	(757,698	)	$	17,602,548
Accrued interest		-			875,255			875,255
Notes payable		5,312,333			-			5,312,333
Total current liabilities		23,672,579			117,557			23,790,136

Fees payable in stock and warrants		44,461			-			44,461

Stockholders' deficit
Common stock		84,818			(52,150	)		32,668
Additional paid-in capital		44,937,395			(26,462,350	)		18,475,045
Subscriptions receivable		(26,000,000	)		26,000,000			-
Deficit accumulated during the development stage		(42,739,253	)		396,943			(42,342,310	)
Total stockholders' deficit		(23,717,040	)		(117,557	)		(23,834,597	)

Total liabilities and stockholders' deficit	$	-		$	-		$	-

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 1 – Restatement of Consolidated Financial Statements (Continued)

Consolidated Statements of Operations – Three Months ended May 31, 2010

	Three Months ended May 31, 2010
	As previously						As
	reported			Adjustments			restated

Sales revenue	$	-		$	-		$	-

Operating expenses:
Consulting fees		16,000			(16,000	)		-
Finance Fees		-			(514,500	)		(514,500	)
Total operating expenses		16,000			(530,500	)		(514,500	)

Income (loss) from operations		(16,000	)		530,500			514,500

Other income (expense):
Interest expense		-			(117,557	)		(117,557	)
Total other income (expense)		-			(117,557	)		(117,557	)

Income (loss) before income taxes		(16,000	)		412,943			396,943

Provision for income taxes		-			-			-

Net income (loss)	$	(16,000	)	$	412,943		$	396,943


Net income (loss) per share - basic and diluted	$	(0.00	)				$	0.01

Weighted average number of shares
outstanding - Basic and Diluted		24,063,670			9,171,423			33,235,093

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 1 – Restatement of Consolidated Financial Statements (Continued)

Consolidated Statements of Operations

	Three Months ended May 31, 2010
	As previously						As
	reported			Adjustments			restated

Sales revenue	$	-		$	-		$	-

Operating expenses:
Consulting fees		16,000			(16,000	)		-
Finance Fees		-			(514,500	)		(514,500	)
Total operating expenses		16,000			(530,500	)		(514,500	)

Income (loss) from operations		(16,000	)		530,500			514,500

Other income (expense):
Interest expense		-			(117,557	)		(117,557	)
Total other income (expense)		-			(117,557	)		(117,557	)

Income (loss) before income taxes		(16,000	)		412,943			396,943

Provision for income taxes		-			-			-

Net income (loss)	$	(16,000	)	$	412,943		$	396,943

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 1 – Restatement of Consolidated Financial Statements (Continued)

Consolidated Statements of Cash Flows

	Three Months ended May 31, 2010
	As previously					As
	reported		Adjustments			restated

Cash flows from operating activities:
Net income (loss)	$	-	$	396,943		$	396,943
Adjustments to reconcile net loss to
net cash used in operations:
Finance fees paid in stock and warrants		-		(514,500	)		(514,500	)
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		-		-			-
Accrued interest		-		117,557			117,557
Net cash used in operating activities		-		-			-

Cash flows from investing activities:
Proceeds (investment) in oil and gas interests		-		-			-
Advances to related entities		-		-			-
Net cash used in investing activities		-		-			-

Cash flows from financing activities:
Proceeds from issuance of common stock		-		-			-
Proceeds from issuance of notes payable		-		-			-
Net cash from financing activities		-		-			-

Net increase in cash		-		-			-

Cash at beginning of period		-		-			-

Cash at end of period	$	-	$	-		$	-

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 2 – Nature of Business, Presentation, and Going Concern

Organization

Fox Petroleum, Inc., the “Company”, was incorporated in Nevada on November 4, 2004 with the intent to engage in the business of oil and gas exploration. The Company has oil and gas interests in the North Sea and Texas and has not yet determined whether these properties contain reserves that are economically recoverable. The recoverability of amounts from the properties is dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying properties, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property agreements and to complete the development of the properties and upon future profitable production or proceeds for the sale thereof.

On April 17, 2007, we incorporated a wholly owned subsidiary, Fox Petroleum (Alaska) Inc. (“Fox Petroleum Alaska”) under the laws of the State of Alaska in order to carry out our Alaska operations after completing a lease purchase and sale agreement with Fox Petroleum LLC. In order to hold Alaska oil and gas leases, we either had to be registered in Alaska or operate through an Alaska subsidiary.

On May 17, 2007, we incorporated a wholly owned subsidiary, Fox Energy Exploration Limited (“Fox Energy Exploration Limited”), in England and Wales to hold assets in the United Kingdom under a farm-in agreement with Granby Enterprises Limited and Atlantic Petroleum UK Limited.

On June 9, 2010, Richard Moore, the Company’s President / Chief Executive Officer, Secretary, Treasurer, Chief Financial Officer and a member of the Board of Directors, resigned from all positions. Also on June 9, 2010, the Company’s Board of Directors elected Mr. William Lieberman as a member of the Board of Directors and appointed Mr. Lieberman as the Company’s President / Chief Executive Officer, Secretary, Treasurer and Chief Financial Officer.

On July 15, 2010, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with 1536692 Ontario, Inc. (“Ontario”), a Canadian corporation, and the shareholders of Ontario (“Ontario Shareholders”). Ontario owns a scrap plastic processing plant with certain equipment, fixtures and improvements and assets located in Hamilton, Ontario, Canada with the intent of engaging in the business of recycling plastics. Pursuant to the Share Exchange Agreement, the Company acquired, from the Ontario Shareholders, all of the capital stock of Ontario in exchange for an aggregate of 1,750,000 000 newly issued shares of its restricted common stock, par value $0.001 per share. The purchase price was determined by the total market value of the newly issued shares on July 15, 2010, totaling $96,250, which was based on the closing market price of the Company’s common stock on the acquisition date. The acquisition has been accounted for under the purchase method. The excess of the purchase price paid over the fair value of the assets acquired and liabilities assumed has been classified as goodwill as of the acquisition date. None of the goodwill is expected to be deductible for income tax purposes.

On July 15, 2010, the Company entered into a Share Exchange Agreement (the “Resource Share Exchange Agreement”) with Resource Polymers Inc. (“Resource”), a Canadian corporation, and the shareholders of Ontario (“Ontario Shareholders”) to acquire 100% of the capital stock of Resource. As of the date of this report, the acquisition has not been completed as Resource has not satisfied its conditions precedent to closing the exchange. There is no assurance that Resource will complete its requirements required to close.

The Company is currently exploring new acquisition opportunities.

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America (“U.S. GAAP”) for interim financial statement presentation and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

These unaudited financial statements should be read in conjunction with our 2011 annual financial statements included in our Amendment No. 1 to Form 10-K, filed with the SEC on August 9, 2011.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 2 – Nature of Business, Presentation, and Going Concern (Continued)

Going Concern

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As reflected in the accompanying unaudited consolidated financial statements, the Company had no cash and an accumulated deficit during the development stage of $44,360,801 at May 31, 2011 and a net loss and net cash used in operations of $227,175 and $5,772, respectively, for the three months ended May 31, 2011. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company’s to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate revenues, and continue to raise additional investment capital. No assurance can be given that the Company will be successful in these efforts.

The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

Note 3 – Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in the accompanying unaudited consolidated financial statements include the valuation of share-based payments and the valuation allowance on deferred tax assets. Actual results could differ from those estimates and would impact future results of operations and cash flows.

Principles of Consolidation

The consolidated financial statements include the accounts of Fox Petroleum Inc. and its wholly-owned subsidiaries, 1536692 Ontario, Inc., Fox Petroleum (Alaska) Inc. and Fox Energy Exploration Limited. All significant inter-company balances and transactions have been eliminated in consolidation.

Reclassifications

Certain items on the 2010 statement of operations, and statement of cash flows have been reclassified to conform to the current period presentation.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At May 31 and February 28, 2011, respectively, the Company had no cash equivalents.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives of 10 years. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 3 – Summary of Significant Accounting Policies (Continued)

Development Stage and Mineral Property and Exploration Costs

The Company has been in the development stage since November 4, 2004, as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities”, and has not yet realized revenues from its planned operations. It is primarily engaged in the acquisition, exploration, and development of oil and gas mineral properties.

Mineral property exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing probable and then proven reserves, then the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable-proven reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations. The Company has incurred $17,000 of exploration and acquisition costs and $0 of development costs from inception through May 31, 2011.

Goodwill and other intangible assets

Goodwill represents the excess of acquisition consideration paid over the fair value of identifiable net tangible and identifiable intangible assets acquired. Goodwill and other indefinite-lived intangible assets are not amortized, but are reviewed for impairment at least annually, in the third quarter, or earlier upon the occurrence of certain triggering events.

Goodwill is allocated among and evaluated for impairment at the reporting unit level. Management evaluates goodwill for impairment using a two-step process provided by ASC Topic 350 “Intangibles — Goodwill and Other”. The first step is to compare the fair value of each of our reporting units to their respective book values, including goodwill. If the fair value of a reporting unit exceeds its book value, reporting unit goodwill is not considered impaired and the second step of the impairment test is not required. If the book value of a reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the reporting unit’s goodwill with the book value of that goodwill. If the book value of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The Company determined that the goodwill resulting from the acquisition of 1536692 Ontario Inc. of $397,575 was fully impaired as of February 28, 2011 and charged the impairment to operations.

Impairment or Disposal of Long-Lived Assets

The Company accounts for the impairment or disposal of long-lived assets according to ASC 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimate fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.

Fair Value of Financial Instruments

FASB ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 states that a fair value measurement should be determined based on the assumptions the market participants would use in pricing the asset or liability. In addition, ASC 820 specifies a hierarchy of valuation techniques based on whether the types of valuation information (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three broad levels defined by ASC 820 hierarchy are as follows:

Level 1 – quoted prices for identical assets or liabilities in active markets.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 3 – Summary of Significant Accounting Policies (Continued)

Level 2 – pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date.

Level 3 – valuations derived from methods in which one or more significant inputs or significant value drivers are unobservable in the markets.

These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Valuations based on unobservable inputs are highly subjective and require significant judgments. Changes in such judgments could have a material impact on fair value estimates. In addition, since estimates are as of a specific point in time, they are susceptible to material near-term changes. Changes in economic conditions may also dramatically affect the estimated fair values.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of May 31, 2011. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include amounts due from affiliate, accounts payable and accrued expenses and amounts due to officer. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with ASC Topic 605, “Revenue Recognition” (“ASC Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. Revenue is recognized when the products are received and accepted by the customer.

Stock Based Compensation

The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 is a revision to SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50 “Equity-Based Payments to Non-Employees” ("ASC 505-50"). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options issued to non-employees are recorded in expense and additional paid-in capital in shareholders' equity/(deficit) over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options at the end of each period.

The Company has not adopted a stock option plan and has not granted any stock options as of May 31, 2011.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 3 – Summary of Significant Accounting Policies (Continued)

Income Taxes

Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized.

The FASB has issued ASC 740 “Income Taxes” (formerly, Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” – An Interpretation of FASB Statement No. 109 (FIN 48)). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of May 31, 2011.

Foreign Currency Translation

The unaudited consolidated financial statements are presented in United States dollars. In accordance with ASC 830 ‘‘Foreign Currency Matters’’, foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations. Translation adjustments are included in Accumulated Other Comprehensive Income (Loss).

Basic and Diluted Income (Loss) Per Share

The Company computes income (loss) per share in accordance with ASC 260, "Earnings per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of May 31, 2011 and 2010, there were 2,000,000 and 2,970,888 warrants outstanding, respectively, and $3,500,000 of convertible debentures payable which are convertible at the option of the note holder at the rate of the lesser of i) 100% of the volume weighted average stock price (“VWAP”) on the date of issuance and ii) at 85% of the lowest daily closing VWAP as quoted by Bloomberg L.P. during the 5 trading days immediately preceding the conversion date. However, these potentially dilutive shares are considered to be anti-dilutive and are therefore not included in the calculation of net loss per share.

Segment Information

In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company operates in only one operating segment as of May 31, 2011.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 3 – Summary of Significant Accounting Policies (Continued)

Accounting Standards Codification

In September 2009, the Financial Accounting Standards Board (“FASB”) issued ASC 105, formerly FASB Statement No. 168, the FASB Accounting Standards Codification (“Codification”) and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”), a replacement of FASB Statement No. 162 (“SFAS 168”). SFAS 168 establishes the Codification as the single source of authoritative GAAP in the United States, other than rules and interpretive releases issued by the SEC. The Codification is a reorganization of current GAAP into a topical format that eliminates the current GAAP hierarchy and establishes instead two levels of guidance — authoritative and non-authoritative. All non-grandfathered, non-SEC accounting literature that is not included in the Codification will become non-authoritative. The FASB’s primary goal in developing the Codification is to simplify user access to all authoritative GAAP by providing all the authoritative literature related to a particular accounting topic in one place. The Codification was effective for interim and annual periods ending after September 15, 2009. As the Codification was not intended to change or alter existing GAAP, it did not have a material impact on the Company’s consolidated financial statements.

Effect of Recent Accounting Pronouncements

The Company reviews new accounting standards as issued. No new standards had any material effect on these consolidated financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements, if adopted, will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to May 31, 2011 through the date these financial statements were issued.

Note 4 – Property and Equipment

Property and equipment consisted of the following at May 31 and February 28, 2011:

	May 31,			February 28,
	2011			2011

Plant and machinery	$	216,056		$	215,945
Less: accumulated depreciation		(185,447	)		(179,954	)

Property and equipment, net	$	30,609		$	35,991

Depreciation expense for the year three months ended May 31, 2011 and 2010 was $5,400 and $0, respectively.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 5 – Oil and Gas Interests

The Company has oil and gas interests in the North Sea and the United States and has not yet determined whether these properties contain reserves that are economically recoverable. Oil and gas interests consisted of the following at May 31 and February 28, 2011:

	May 31 and February 28, 2011
	United			United
	States			Kingdom			Total

Unproved properties:
acquisition costs	$	3,701,871		$	23,439		$	3,725,310
exploration costs		2,347,394			4,084,668			6,432,062

		6,049,265			4,108,107			10,157,372

Less: Write-down of oil & gas interests		(5,938,576	)		(4,108,107	)		(10,046,683	)
Less: Incidental revenue		(110,689	)		-			(110,689	)

	$	-		$	-		$	-

During the quarter ended August 31, 2010, the Company decided to no longer continue with exploration activities in these interests and is exploring alternatives of disposing of its existing interests in the North Sea and the United States.

North Slope, Alaska, United States

On May 29, 2007, the Company entered into a Lease Purchase and Sale Agreement with a company to acquire a combined 100% working interest in 12 state-issued oil and gas leases in the North Slope of Alaska. These leases are subject to a royalty of 16.66667% to the State of Alaska and a private royalty equal to 5% of net revenue. In consideration for the oil and gas leases, the Company issued 4,000,000 restricted common shares of the Company valued at $1,001,702, the transferor’s historical cost. The valuation is based the SEC Staff Accounting Bulletin, Topic 5, G.

Pursuant to underlying agreements on the property, the Company is obligated to drill one test well to at least 10,000 feet on or before November 14, 2011, four test wells to at least 4,000 feet on or before February 20, 2012, and one test well to at least 4,000 feet on or before January 16, 2012. The Company is currently unable to quantify an estimate of the cost of these wells.

By a purchase agreement dated October 10, 2007 and amended November 2, 2007, the Company acquired 8 additional oil and gas leases in the North Slope of the State of Alaska for $850,000 including cash of $250,000 and $600,000 paid by the issuance of 80,000 common shares of the Company. The fair value of the shares issued was $964,000 (based on the quoted market price of the Company’s common shares on the transaction date) and consequently a further $364,000 has been recorded for this portion of the purchase agreement. These leases are subject to a royalty of 16.66667% to the State of Alaska and a private royalty equal to 5%. Two of the leases acquired pursuant to this agreement are part of the Cook Inlet project described below.

On January 30, 2009, the Company entered into an agreement with the original lease vendors (the “Payers”) regarding twelve of the North Slope oil and gas leases (the “Twelve Leases”). Under the terms of the Agreement, the Payers agreed to use their best efforts to make, on the Company's behalf, annual rental payments for the Twelve Leases totaling up to $64,980 on or before the February 1, 2009 due date.

The Company agreed to repay to the Payers by March 2, 2009 any portion of the Payments made by the Payers (the "Repayment Amount"). The Repayment Amount is subject to an 18% interest rate per annum. The Company also granted the Payers a security interest in the Company's right, title, and interest in the Twelve Leases. The Company further agreed to transfer and assign its right, title, and interest in the Twelve Leases to the Payers in the event of the Company's failure to pay the Repayment Amount in a timely manner.

The Company failed to pay the Repayment Amount and by an agreement dated May 14, 2009, the Payers agreed to extend the repayment date until August 14, 2009 in return for the lease assignment documents for the Twelve Leases being executed and delivered into escrow.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 5 – Oil and Gas Interests (Continued)

North Slope, Alaska, United States (Continued)

The Company entered into an agreement dated May 16, 2009 with the Payers in respect of five of the remaining North Slope oil and gas leases (the “Five Leases”). Pursuant to this agreement, the Payers made annual lease payments totaling $25,126 for the Five Leases on behalf of the Company. The amount paid on behalf of the Company is subject to an 18% interest rate per annum. The Company also executed an assignment to the Payers of the Company's right, title, and interest in the Five Leases to be delivered into escrow in the event the Company fails to repay the payers by August 14, 2009.

The Company could provide no assurance that it would be able to obtain financing arrangements to repay the Payers by August 14, 2009 and consequently, all costs incurred of $2,401,282 were written off on the statement of operations during the year ended February 28, 2009. During the years ended February 28, 2010, the Company failed to repay the Payers by the due date and assignment of the related leases to the Payers was triggered. Consequently, the fees were no longer payable and outstanding lease fees and accrued interest of $98,400 were recorded as a gain on recovery of payables.

Anglesey, North Sea, United Kingdom

Pursuant to a farm-in agreement dated June 8, 2007, the Company agreed to acquire a 33.33% interest in two UK petroleum production licenses (“Licenses”). The Licenses are located in the UK North Sea and have since been merged into one traditional license. As consideration for the Licenses, the Company agreed to fund 100% of the seismic costs and its 33.33% share of the License budget costs as agreed by the parties. The Company also has the option to acquire an additional 26.67% interest in the Licenses by paying an additional 46.67% of the dry-hole costs of an exploration well.

The option is effective from completion of the transfer of the assigned interest to the Company and shall continue to be valid and exercisable until 28 days after receipt by the Company of the processed seismic data and final interpretation.

During the year ended February 28, 2010, the Company returned the Licenses to the UK government and consequently all costs incurred of $2,512,856 were written-off on the statement of operations during the year ended February 28, 2010.

Spears Gas Well, Texas, United States

Pursuant to a subscription agreement dated October 9, 2007, the Company acquired a 22.5% joint venture interest in a gas well called the Spears Gas Unit 2, Well #1 in the Gomez Field, Pecos County, Texas in consideration for US$500,000.

As at May 31 and February 28, 2011, the gas well is shut-in awaiting further financing.

Cook Inlet, Alaska, United States

By a purchase agreement dated October 10, 2007, the Company acquired 6 oil and gas leases located in Cook Inlet of the State of Alaska for $750,000, payable in installments on or before March 7, 2008. At February 28, 2008, the Company had paid $750,000. Included in these leases were 3 unissued leases that the vendors owned the rights thereto. The leases are subject to a royalty of 16.66667% to the State of Alaska and a private royalty equal to 5% of net revenue.

Subsequent to February 28, 2009, the Company entered into an agreement dated May 29, 2009 with the Payers in respect of these three oil and gas leases (the “Three Leases”). Pursuant to this agreement, the Payers made annual lease payments totaling $25,780 for the Three Leases on behalf of the Company. The amount paid on behalf of the Company is subject to an 18% interest rate per annum. The Company also executed an assignment to the Payers of the Company's right, title, and interest in the Five Leases to be delivered into escrow in the event the Company fails to repay the payers by August 14, 2009.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 5 – Oil and Gas Interests (Continued)

Cook Inlet, Alaska, United States (Continued)

The Company could provide no assurance that it would be able to obtain financing arrangements to repay the Payers by August 14, 2009 and consequently, all costs incurred of $1,061,727 were written-off on the statement of operations during the year ended February 28, 2009. During the years ended February 28, 2010, the Company failed to repay the Payers by the due date and the assignment of the related leases to the Payers was triggered. Consequently, outstanding lease fees and accrued interest of $26,743 were recorded as a gain on write off of amounts payable.

Bourbon, North Sea, United Kingdom

On November 16, 2007, the Company entered into a farm-out agreement dated November 8, 2007 wherein the Company would be assigned a total of 46% interest in a license block in the UK North Sea. In consideration for the assignment, the Company must pay for 89% of the cost of drilling and exploration well.

The Company is also required to pay for 46% of license costs. On January 24, 2008, the Company agreed to jointly participate with another company to identify a potential farm-in or acquisition opportunity and transferred a 4.6% carried interest in the license block to that company until a full development plan is approved by the U.K. government. Thereafter, that company will be responsible for its 4.6% share of the costs (10% of the Company’s interest). Subsequent to the transfer, this company became related to the Company as two of its beneficial owners became directors of the Company.

During the year ended February 28, 2009, the license holders terminated the Farm-out agreement effective February 27, 2009. Consequently, all costs incurred of $1,419,627 were written off on the statement of operations during the year ended February 28, 2009.

Geneseo-Edwards, Kansas, United States

By a letter agreement dated February 27, 2008, the Company purchased an 80% net revenue interest in three oil leases in Ellsworth County, Kansas, USA by the payment of $80,000. The leases are subject to a landowner royalty of 12.5% and an overriding royalty of 7.5% retained by vendors. The Company was required to drill at least one well on each lease before the leases expire on November 19, 2008, November 19, 2009 and November 30, 2009 or pay the vendor a penalty of $150,000.

During the year ended February 28, 2009 the Company had drilled four wells on these leases and earned incidental revenue of $90,689 from two of these wells, which was credited against oil and gas interests on the consolidated balance sheet as a result of the wells not yet reaching full commercial production. Since January 2009 production has been suspended due to the need for implementation of water disposal facilities for which further funding is not currently available.

During the year ended February 28, 2009, two trade creditors issued mechanical liens against the oil and gas leases and its facilities for non-payment of outstanding invoices totaling $528,079.

During the year period ended February 28, 2010, the Company assigned its interest in these oil and gas leases to a creditor in return for a loan rescheduling (Note 5) and entering into an agreement not to sue the Company for defaulting on a loan agreement. The creditor also received 15,000,000 common shares pledged as security from the Company’s treasury against the notes payable.

Pursuant to the above, costs incurred of $1,975,567 were written-off on the statement of operations and deficit for the year ended February 28, 2009 leaving a net book value of $20,000 recovered during the year period ended February 28, 2010 for the sale of certain furniture and equipment held for use on the property.

UK Onshore, United Kingdom

On June 3, 2008, the Company was granted a 90% interest in four UK petroleum production licenses, located in the south of England. In order to maintain the licenses, the Company must undertake seismic exploration estimated to cost $500,000 within the six year term of the license.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 5 – Oil and Gas Interests (Continued)

UK Onshore, United Kingdom (Continued)

Pursuant to a letter agreement dated September 5, 2008, the Company will pay 100% of all costs, expenses, liabilities and obligations arising in respect of operations conducted in respect of each license block until a filed development plan is formally approved by the UK Secretary of State responsible for such matters, for the development of a discovery of petroleum in the blocks. Thereafter, the Company will each be responsible for 90% of all costs, expenses, liabilities and obligations.

25 th Round License Blocks 13/17 & 210/20e, United Kingdom

Pursuant to a letter agreement dated September 5, 2008, the Company was granted a 90% interest in an application made for four UK petroleum production licenses. In order to maintain the licenses, the Company must carry out geological and seismic modeling before forming up a drilling location and must begin drilling within the four year term of the license.

Pursuant to the letter agreement, the Company will pay 100% of all costs, expenses, liabilities and obligations arising in respect of operations conducted in respect of each license block until a filed development plan is formally approved by the UK Secretary of State responsible for such matters, for the development of a discovery of petroleum in the blocks. Thereafter, the Company will each be responsible for 90% of all costs, expenses, liabilities and obligations.

On November 12, 2008, the Company was formally notified by the UK Department of Energy and Climate Change (DECC) of its success in the 25th Seaward Licensing Round Awards, the rights to explore and develop the block 13/17 concession in the North Sea by the UK government.

On May 1, 2009, the Company received notification from the UK Department of Energy and Climate Change that this Secretary of State’s offer of this license in the 25th round had been withdrawn due to fact that they consider there to have been a material change in the circumstances relating to the Company having adequate funding arrangements already in place. Consequently, all costs incurred of $87,354 were written-off on the statement of operations and deficit for the year ended February 28, 2009.

Note 6 – Notes Payable

Notes payable at May 31 and February 28, 2011 consisted of:

	May 31,		February 28,
	2011		2011

Debenture payable	$	4,412,333	$	4,412,333
Promissory notes, net of discount		492,487		481,599
Loan agreement		450,000		450,000
Notes payable, related parties		194,708		196,468

	$	5,549,528	$	5,540,400

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 6 – Notes Payable (Continued)

Debentures Payable

Debentures payable consisted of the following at May 31 and February 28, 2011:

	May 31,			February 28,
	2011			2011

Convertible debentures payable	$	3,500,000		$	3,500,000
Liquidating damages		912,333			912,333
Financing costs		(75,545	)		(75,545	)
Amortization of financing costs		75,545			75,545

	$	4,412,333		$	4,412,333

Pursuant to an Amendment to Securities Purchase Agreement, Secured Debenture, Registration Rights Agreement and Security Agreement dated October 31, 2008 ("Amendment Agreement"), the Company amended a Securities Purchase Agreement, Debentures, a Registration Rights Agreement, an Escrow Agreement and a Pledge and Escrow Agreement ("Original Agreements") all originally dated June 24, 2008. Under the Amendment Agreement the Company issued three secured convertible debentures totaling $3,500,000 consisting of two “Amended Debentures” and one “New Debenture”:

(i) Amended Debentures - $2,500,000

The Original Debenture which was a $2,500,000 senior secured convertible note was amended on November 11, 2008 into two debentures each of which are for a total principal amount of $1,250,000 (the “Amended Debentures).

The Amended Debentures bear interest at 10% per annum, compounded monthly. The principal and any unpaid accrued interest owing on the debentures are convertible into common stock of the Company in the event of a default or at the option of the holder at the rate of the lesser of i) 100% of the volume weighted average stock price (“VWAP”) on the date of issuance and ii) at 85% of the lowest daily closing VWAP as quoted by Bloomberg L.P. during the 5 trading days immediately preceding the conversion date. The Amended Debentures also contain a redemption option whereby the Company can redeem the Amended Debentures provided its common stock is trading below 100% of the VWAP as quoted by Bloomberg L.P on October 31, 2008 by paying the unpaid principal and interest accrued and a prepayment premium of 15%. The Company must redeem the entire principal amount outstanding on one of the Amended Debentures on April 30, 2009 at a 15% redemption premium; however, there is no mandatory redemption premium on the second Amended Debenture.

In consideration for the holder's agreement to extend the maturity date of the original convertible debt from October 24, 2008 to April 30, 2009, the Company cancelled the original 500,000 warrants issued in connection with the Original Debenture and replaced them with 2,000,000 warrants with a term of 5 years and a decreased exercise price of $0.001 .

The exercise price is subject to an adjustment if, during the term of the warrants, the Company issues shares, options or convertible securities for consideration less than the exercise price, then the exercise price will be adjusted to 85% of such consideration. Additional warrants will be issued if the Company becomes in default under the transaction agreements.

The Company determined the allocation of the net proceeds of the Original convertible debenture based on the relative fair value of the convertible debenture, the 500,000 share purchase warrants and the 200,000 common shares. The fair value of the warrants of $910,000 and the common shares of $580,000 were determined using the Black-Scholes valuation model and the quoted market price of the shares on the date of issuance, respectively.

The resulting discount of $839,292 was being accreted over the term of the debenture. The assumptions used in the Black-Scholes calculation are as follows: expected life – 5 years; volatility – 78.26%; Dividend rate – 0%; and risk free interest rate is 0.95%.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 6 – Notes Payable (Continued)

Debentures Payable (Continued)

(i) Amended Debentures - $2,500,000 (Continued)

The Company recorded a beneficial conversion feature of $1,388,320 with respect to the Original Debentures pursuant to EITF 98-5 Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios. The conversion feature was contingently exercisable in an event of default of the debenture; which occurred on October 24, 2008 when the debenture came due but was not repaid by the Company. Therefore the amount was recorded as a financing fee during the year ended February 28, 2009.

The Company determined the allocation of the net proceeds of the Amended Debentures based on the relative fair value of the convertible debenture, the share purchase warrants and the common shares. The fair value of the warrants of $1,578,000 and the common shares of $1,975,000 were determined using the Black-Scholes valuation model and the quoted market price of the shares on the date of issuance, respectively. The resulting discount of $1,736,200 was being accreted over the term of the debentures. The assumptions used in the Black-Scholes calculation are as follows: expected life – 5 years; volatility – 78.26%; Dividend rate – 0%; and risk free interest rate is 3.52%.

The Company was required to pay to the investor at closing of the Original Agreements: $17,500 in legal costs, a $10,000 due diligence fee, a 7% commitment fee and a 2% facility fee, 500,000 share purchase warrants and 200,000 shares of common stock. Finder’s fees of $150,000 and 52,265 share purchase warrants were paid to Partners Consulting in connection with the Original Agreements pursuant to a finder agreement dated February 15, 2008. The warrants expired on February 15, 2011 and were credited to the statement of operations at that time.

At the closing of the Amended Debentures, the Company also issued 2,500,000 shares of common stock.

In no event shall the Holder be entitled to convert this Debenture for a number of shares of Common Stock in excess of that number of shares of Common Stock which, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates to exceed 9.99% of the outstanding shares of the Common Stock following such conversion without the approval of the Company.

Upon the occurrence of an Event of Default by the Company, the Holder has the option to elect that the interest due and payable be paid in cash or in stock at the rate of 85% of the lower of: (i) the VWAP on the date the interest payment is due; or (ii) if the interest payment is not made when due, the VWAP on the date the interest payment is made.

The Debentures are secured by all of the assets and property of the Company and its subsidiaries pursuant to a Security Agreement. The debentures were further secured by a Pledge and Escrow Agreement pursuant to which 15,000,000 common shares of the Company to be held in escrow on behalf of the investor.

Further, the debenture is subject to a currency adjustment clause whereby the exchange rate between the US Dollar and the Euro will be fixed at the date of closing and if the exchange rate moves unfavorably for the holder of the debenture, the Company will be required to adjust conversion and redemption rates to compensate the holder for any such loss.

The debenture also contains certain restrictions on the Company for new share or debt issuances as long as any principal or interest amount remains outstanding on the debenture.

As at May 31, 2011, the Company had not repaid the $1,250,000 debenture that matured on April 30, 2009.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 6 – Notes Payable (Continued)

Debentures Payable (Continued)

(ii) New Debenture - $1,000,000

The New Debenture and has a principal amount of $1,000,000 and matures on October 31, 2010 (the “New Debenture”). The New Debenture bears interest at a rate of 10% per annum compounded monthly. The principal and any unpaid accrued interest owing on the debentures are convertible into common stock of the Company in the event of a default or at the option of the holder at the rate of the lesser of i) 100% of the volume weighted average stock price on the date of issuance and ii) at 85% of the lowest daily closing VWAP as quoted by Bloomberg L.P. during the 5 trading days immediately preceding the conversion date.

The Company may redeem any or all of the New Debenture at any time, provided that the Common Stock is trading below the Fixed Price at the time the Company gives the Holder the redemption notice, by paying the unpaid principal and interest accrued and a prepayment premium of 15% redemption premium on the amount redeemed. In any case, the Company must redeem the $1,000,000 debenture maturing October 31, 2010 in equal monthly installments commencing January 31, 2009 until maturity at a 15% redemption premium.

At the closing of the New Debentures the Company incurred: $7,500 in legal costs, a $45,000 commitment fee, a $1,000 due diligence fee

The Company recorded a beneficial conversion feature of $1,710,300 with respect to the Original Debentures. The amount was being amortized over the term of the debentures, however after an event of default (see below), the entire amount was immediately recognized into income as a financing fee during the year ended February 28, 2009.

Pursuant to the securities purchase agreement, the Company entered into a freestanding investor registration rights agreement dated June 24, 2008 and amended October 31, 2008. Under the terms of this agreement, the Company must have registered at least three (3) times the number of shares which are anticipated to be issued upon conversion of the Debentures issued and shares of common stock issuable to the purchaser upon exercise of the warrants. The Company has the obligation to use their best efforts to keep the registration of these securities effective by the SEC until all of the securities had been sold by the purchaser. Failure to meet this obligation would result in the Company incurring liquidated damages in the amount of 2% of the liquidated value of the debentures for each 30 day period registration of the securities is not effective.

Under the provisions of FSP EITF 00-19-2 “Accounting for Registration Payment Arrangements (“EITF 00-19-2”), the Company is required to separately recognize and measure a contingent obligation in respect of the liquidating damages in accordance with FASB No.5 “Accounting for Contingencies” and FSB Interpretation No.14 “Reasonable Estimation of the Amount of a Loss”. At May 31, 2011, an amount of $912,333 (February 28, 2011 - $912,333) has been recognized as the Company has determined that a loss is probable because the Company has failed to maintain effectiveness of its registration statement.

During the year ended February 28, 2009, the Company failed to make any of the required redemption payments on the New Debenture. This triggered a default, which resulted in all of the debentures immediately becoming due and payable and the remaining discounts on the debentures were immediately recognized in income.

As consideration for entering into negotiations to effect a loan rescheduling and the holder entering into an agreement not to sue, the Company assigned its interest in certain oil and gas leases to the holder (Note 5). During the year ended February 28, 2010, the holder also received the 15,000,000 common shares pledged as security against for debentures valued at $4,650,000, based on the quoted market price of the Company’s common shares on the date they were released from escrow.

Included in accrued interest at May 31, 2011 is $887,500 (February 28, 2011 - $800,000) for accrued interest and redemption premiums on these debentures payable.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 6 – Notes Payable (Continued)

Promissory Notes

On April 2, 2008 the Company was loaned $250,000 by the issuance of a promissory note, to be paid on the earlier of (i) the date that the Company obtains equity financing from a third party in the minimum amount of $1,000,000 net to the Company, or (ii) April 1, 2009. For the period from the date of advance of the loan up to and including the date that the loan is repaid, interest will accrue on the balance of principal outstanding at the rate of 10% per annum, compounded monthly. Interest will be payable in a balloon payment on the date the loan is repaid. The note is unsecured. As at May 31, 2010, this loan has not been repaid as the lender has agreed to extend the terms of the loan until the Company is able to obtain further financing.

On May 6, 2008 the Company was loaned $150,000 by the issuance of a promissory note, to be paid on the earlier of (i) the date that the Company obtains equity financing from a third party in the minimum amount of $1,000,000 net to the company, or (ii) May 1, 2009. For the period from the date of advance of the loan up to and including the date that the loan is repaid, interest will accrue on the loan on the balance of principal outstanding at the rate of 10% per annum, compounded monthly. Interest will be payable in a balloon payment on the date the loan is repaid. The note is unsecured. As at May 31, 2010, this loan has not been repaid as the lender has agreed to extend the terms of the loan until the Company is able to obtain further financing.

On May 23, 2008 the Company was loaned $50,000 by the issuance of a promissory note, to be paid on the earlier of (i) the date that the Company obtains equity financing from a third party in the minimum amount of $1,000,000 net to the company, or (ii) May 23, 2009. For the period from the date of advance of the loan up to and including the date that the loan is repaid, interest will accrue on the loan on the balance of principal outstanding at the rate of 10% per annum, compounded monthly. Interest will be payable in a balloon payment on the date the loan is repaid. The note is unsecured. As at May 31, 2010, this loan has not been repaid as the lender has agreed to extend the terms of the loan until the Company is able to obtain further financing.

On September 21, 2010 the Company was loaned $45,000 by the issuance of a promissory note to be paid on June 23, 2011. For the period from the date of advance of the loan up to and including the date that the loan is repaid, interest will accrue on the balance of principal outstanding at the rate of 8% per annum. Interest will be payable in a balloon payment on the date the loan is repaid. The note is unsecured and is convertible into shares of the Company’s restricted common stock at a conversion price equal to 58% of the average of the lowest three trading prices during the ten trading day period preceding the conversion date.

The Company recorded a beneficial conversion feature of $32,665 with respect to the loan at September 21, 2010 and has included in income amortization expense of $10,888 relating to the beneficial conversion feature during the three months ended May 31, 2011 ($19,264 during the year ended February 28, 2011), resulting in a net loan obligation of $42,487 at May 31, 2011.

Included in accrued interest at May 31, 2011 is $217,190 (February 28, 2011 - $201,991) for accrued interest on these notes payable.

Loan Agreement

On May 30, 2008 the Company was loaned $450,000 pursuant to a loan agreement. The principal and interest is to be paid on the earlier of (i) cash being available from operations, (ii) the date that the Company obtains equity or debt financing from a third party in the minimum amount of $1,000,000, or (iii) November 30, 2008. This loan bears interest at 12% per annum, calculated annually. The loan is secured by the Company’s assets. As additional compensation for the loan, the Company issued to the lender 150,000 common shares of the Company. The fair value of these shares was determined to be $514,500 based on the quoted market price of the shares on the date of issuance and was recorded as a financing fee on the consolidated statement of operations for the year ended February 28, 2009. As at May 31, 2010, this loan has not been repaid as the lender has agreed to extend the terms of the loan until the Company is able to obtain further financing.

Included in accrued interest at May 31, 2011 is $251,251 (February 28, 2011 - $232,659) for accrued interest on these notes payable.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 6 – Notes Payable (Continued)

Notes Payable, Related Parties

On November 4, 2002, the Company’s wholly-owned subsidiary, 1536692 Ontario, Inc. (“Ontario”), received $144,583 (CAD$ 225,000) from a family member of the Company’s President and Chief Executive Officer, with which the Company purchased production equipment (Note 4). Interest accrues at 6% compounded annually. Principal and interest are payable on demand. The promissory note is secured by the production equipment (Note 4), and any intangible assets developed or contract rights created by the Company in the future, pursuant to a General Security Agreement.

During the three months ended May 31, 2011, the Company issued 3,500,000 shares of its restricted common stock in conversion of $1,750 (CAD$ 1,818) of the notes payable at a price of $0.0005 per share, realizing a loss on the debt conversions of $33,250. The balance outstanding at May 31, 2011 of these notes payable is $189,682, net of foreign currency translation adjustments (CAD$ 185,243).

During the period July 15, 2010 (date of acquisition) through February 28, 2011, the Company issued 16,750,000 shares of its restricted common stock in conversion of $38,750 (CAD$ 37,939) of the notes payable at an average price of $0.045 per share, realizing a loss on the debt conversions of $715,650. The balance outstanding at February 28, 2011 of these notes payable is $191,445, net of foreign currency translation adjustments (CAD$ 187,061).

Included in accrued interest at May 31 and February 28, 2011 is $148,241 and $143,228, respectively, for accrued interest on these notes payable.

Ontario obtains advances from a family member of the Company’s President and Chief Executive Officer to provide operating capital when needed. The advances are non-interest bearing and due on demand. As of May 31 and February 28, 2011, the Company owed the individual $5,026 and $5,023, respectively, (CAD$ 4,908) net of foreign currency translation adjustments.

Note 7 – Related Party Transactions

Prior to March 1, 2010, the Company’s previous officers provided consulting and management services to the Company. From November 4, 2004 (date of Inception) through February 28, 2010, the previous officers charged consulting fees of $394,859, management fees of $1,331,798, and office and miscellaneous expenses of $7,000 to the Company.

Included in accounts payable and accrued liabilities prior to February 28, 2011 was $1,070,732 owed to previous directors of the Company and companies with directors in common for expenses incurred on behalf of the Company and for unpaid management and consulting fees. Management deemed that these unpaid management and consulting fees were not payable due to the resignations of all of the officers and directors and recognized $1,070,732 as income included in gain on recovery of payables for the year ended February 28, 2011.

The Company’s Chief Executive Officer (CEO) advances monies to the Company for payment of general and administrative expenses. The amounts owed to the CEO are $9,561 and $3,789 as of May 31 and February 28, 2011, respectively. The amounts due to related parties are unsecured, non-interest bearing and have no specific terms for repayment.

Effective May 6, 2008, the Company adopted a compensation policy for its directors pursuant to which the Company will compensate each director, as follows:

i) a fee of $1,000 per month;

ii) 1,000 restricted shares of the common stock of the Company per month;

iii) a fee of $1,000 per each quarterly board meeting attended.

The Company’s Board of Directors cancelled the above mentioned compensation policy effective March 1, 2010 and recognized the previous accrual of $65,347 for amounts owing to the previous directors of the Company pursuant to this compensation policy as income included in gain on recovery of payables for the year ended February 28, 2011.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 7 – Related Party Transactions (Continued)

On July 15, 2010, the Company issued 1,750,000 shares of its restricted common stock in exchange for 100% of the outstanding capital stock of 1536692 Ontario, Inc., a Canadian Corporation, (“Ontario”) through a share exchange transaction to Mr. Jack Lieberman, the father of the Company’s President and Chief Executive Officer.

On August 16, 2010, the Company issued 1,831,752 shares of its restricted common stock to Mr. William Lieberman, its President and Chief Executive Officer, for services rendered. The shares were values at the market price on the date of issuance of $0.035, or a total of $64,111.

On April 20, 2011, the Company issued 2,000,000 shares of its restricted common stock to Mr. James Malloy, its Secretary, for services rendered. The shares were values at the market price on the date of issuance of $0.01, or a total of $20,000.

On April 20, 2011, the Company issued 3,000,000 shares of its restricted common stock to Mr. William Lieberman, its President and Chief Executive Officer, for services rendered. The shares were values at the market price on the date of issuance of $0.01, or a total of $30,000.

Note 8 – Stockholders’ Deficit

Effective January 11, 2007 the Company effected a forward stock spilt of the authorized, issued and outstanding shares of common stock on a six new for one old basis. Authorized capital increased from 75,000,000 common shares to 450,000,000 common shares. Effective April 21, 2008 the Company effected a reverse stock split of authorized, issued and outstanding shares of common stock on a one new for five old basis. Authorized capital decreased from 450,000,000 to 90,000,000 and outstanding common stock decreased from 74,841,228 to 14,968,246 shares.

Effective August 31, 2010, the Company amended its Articles of Incorporation increasing its authorized capital structure to 500,000,000 shares, consisting of 450,000,000 shares of common stock, par value $0.001, and 50,000,000 shares of preferred stock, par value $0.001.

On May 17, 2007, the Company entered into a share issuance agreement with a subscriber that will allow the subscriber to advance up to $8,000,000 to the Company in exchange for units of the Company. The units will be issued at a price equal to 80% of the volume-weighted average of the closing price of common share for the 10 banking days immediately preceding the date of the notice. Each unit will consist of one common share of the Company and one common share purchase warrant. Each common share purchase warrant will entitle the subscriber to purchase one additional common share at 125% of the price of the units for a period of three years. Should the Company seek alternative sources of financing this subscriber has the right to approve the terms.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 8 – Stockholders’ Deficit (Continued)

Shares issued under the agreement were as follows:

	Number of		Issue		Total
Issue Date	Units		Price		Proceeds

May 17, 2007		377,358	$	5.30	$	2,000,000
August 1, 2007		31,056	$	8.05		250,000
September 18, 2007		44,199	$	9.05		400,000
September 18, 2007		52,133	$	10.55		550,000
September 27, 2007		28,708	$	10.45		300,000
October 26, 2007		16,381	$	12.21		200,000
October 26, 2007		21,097	$	11.85		250,000
October 26, 2007		35,897	$	9.75		350,000
November 28, 2007		47,337	$	8.45		400,000
January 16, 2008		43,478	$	3.45		150,000
January 24, 2008		96,154	$	5.20		500,000
January 30, 2008		48,387	$	3.10		150,000
February 11, 2008		89,286	$	2.80		250,000
February 26, 2008		96,774	$	3.10		300,000

		1,028,245			$	6,050,000

On November 5, 2008, the Company entered into a subscription agreement with Carbon Energy Investments Limited (“Carbon Energy”) for the sale of 80,000,000 shares of common stock at a price of $0.50 per share for the aggregate price of $40,000,000. Carbon Energy agreed to pay for the shares as follows:

	●	$15,000,000 on or before November 30, 2008 (later amended to December 12, 2008);
	●	$15,000,000 on or before January 31, 2009; and
	●	$10,000,000 on or before March 31, 2009.

On November 5, 2008, the Company entered into an agreement to purchase shares in Alaska Oil & Gas Resources Limited (“Alaska Oil & Gas”) with Carbon Energy. Carbon Energy is the sole owner of Alaska Oil & Gas. Pursuant to the agreement, the Company agreed to acquire 100% of the issued shares of Alaska Oil & Gas from Carbon Energy in consideration for $57,500,000, $250,000 of which was to be paid in cash and the remainder by the issuance of 57,250,000 shares of common stock. On the same day, two of the Company’s directors were appointed as directors of Alaska Oil & Gas.

On November 28, 2008, the Company entered into an amendment agreement with Carbon Energy relating to purchase of Alaska Oil & Gas whereby it was agreed that the consideration to be paid pursuant to the agreement was varied such that the consideration would amount to $57,500,000, payable by the issuance of 2,000,000 shares of common stock within three business days of November 2008 (issued subsequently) and 55,500,000 shares on completion of the transaction.

On December 3, 2008, the Company entered into a letter agreement with Carbon Energy whereby Carbon Energy agreed to return 2,000,000 shares of common stock to the company upon demand unless certain conditions are fulfilled or waived. The conditions are, among others, that Carbon Energy must complete in full the subscription agreement dated November 5, 2008 except that the first $20,000,000 must be paid to the company on or before December 7, 2008 and that Carbon Energy must sell to the Company Alaska Oil & Gas which must own certain oil and gas leases pursuant to the agreement relating to the purchase of Alaska Oil & Gas.

On November 26, 2008, the Company issued 50,000,000 shares of restricted common stock to Carbon Energy in consideration for $25,000,000 to be received pursuant to the above-mentioned subscription agreement.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 8 – Stockholders’ Deficit (Continued)

On December 2, 2008, the Company issued an additional 2,000,000 shares of restricted common stock to Carbon Energy pursuant to the terms of the amendment agreement for $1,000,000 to be received.

The Company never received payment for the shares issued to Carbon and Carbon never completed on the sale of Alaska Oil & Gas. As a result, the shares that were previously subscribed were cancelled during the year ended February 28, 2009 along with the agreements to purchase Alaska Oil & Gas. The Company is currently reviewing its legal position and any associated remedies relating to the above.

On December 2, 2008, the Company issued an additional 2,000,000 shares of restricted common stock to Carbon Energy pursuant to the terms of the amendment agreement for $1,000,000 to be received.

During the year ended February 28, 2010, the holder of the Company’s debentures received the 15,000,000 restricted common shares pledged as security against the debentures valued at $4,650,000, based on the quoted market price of the Company’s common shares on the date they were released from escrow.

The Company never received payment for the 52,000,000 shares issued to Carbon. As a result, the shares that were previously subscribed were cancelled during the three months ended May 31, 2010.

Acquisitions

On July 15, 2010, the Company issued 1,750,000 in exchange for 100% of the outstanding capital stock of 1536692 Ontario, Inc., a Canadian Corporation, (“Ontario”) through a share exchange transaction to Mr. Jack Lieberman, the father of the Company’s President and Chief Executive Officer (Note 7).

Debt Conversions

During the period July 15, 2010 (date of acquisition) through February 28, 2011, the Company issued 16,750,000 shares of its restricted common stock in conversion of $38,750 of notes payable at an average price of $0.045 per share.

During the three months ended May 31, 2011, the Company issued 3,500,000 shares of its restricted common stock in conversion of $1,750 of notes payable at a price of $0.0005 per share.

Stock Issued for Services

During the year ended February 28, 2011, the Company issued 60,756,752 shares of its restricted common stock to various individuals and entities for services and company support. The shares were valued at the market price of the Company’s common stock at the date of issuance for a total value of $3,459,612, or an average of $0.057 per share.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 8 – Stockholders’ Deficit (Continued)

Common Stock Purchase Warrants

Changes in the Company’s common stock purchase warrants for the three months ended May 31, 2011 and the year ended February 28, 2011 are as follows:

	Three Months ended				Year ended
	May 31, 2011				February 28, 2011
			Weighted					Weighted
			Average					Average
	Number of		Exercise		Number of			Exercise
	Warrants		Price		Warrants			Price

Balance at beginning of year		2,000,000	$	2.53		3,028,246		$	2.53

Warrants issued		-	$	-		-		$	-

Warrants exercised		-	$	-		-		$	-

Warrants expired		-	$	-		(1,028,246	)	$	7.34

Balance at end of period		2,000,000	$	0.001		2,000,000		$	0.001

The remaining average life of the warrants at May 31, 2011 and February 28, 2011 was 2.41 and 2.66 years, respectively.

A finder's fee of $60,000 and 52,265 share purchase warrants exercisable at $2.87 for a period of three years from the date of issuance (6% of proceeds) were paid to Partners Consulting in connection with the Original Debenture (Note 6) pursuant to a finder agreement dated February 15, 2008. The fair value of the warrants was determined using the Black-Scholes valuation model. The assumptions used in the Black-Scholes calculation are as follows: expected life – 3 years; volatility – 192%; Dividend rate – 0%; and risk free interest rate is 1.0%. As of February 28, 2011 these warrants had not been exercised and expired. The fair value of the shares ($1,208) has been reflected as a credit to consulting fees for the year ended February 28, 2011.

A finder's fee of $60,000 and 76,923 share purchase warrants exercisable at $0.78 for a period of three years from the date of issuance (6% of additional proceeds) were paid to Partners Consulting in connection with the Amended Debentures (Note 6) pursuant to a finder agreement dated February 15, 2008. The fair value of the warrants was determined using the Black-Scholes valuation model. The assumptions used in the Black-Scholes calculation are as follows: expected life – 3 years; volatility – 192.6%; Dividend rate – 0%; and risk free interest rate is 1.0%. As of February 28, 2011 these warrants had not been exercised and expired. The fair value of the shares ($1,779) has been reflected as a credit to consulting fees for the year ended February 28, 2011.

Note 9 – Commitments

By agreements dated June 8, 2007, the Company agreed to pay three directors of the Company a total amount of $20,000 per month for an indefinite period for consulting and management services to the Company. The agreements may be terminated at any time with cause and with three months’ notice without cause. On October 19, 2007 two of these agreements were amended from $12,000 to £9,000 ($17,900) per month and from $5,000 per month to £7,000 ($13,900). Effective June 1, 2008, these agreements were amended from £9,000 to £15,000 per month and from £7,000 to £12,500 per month. All other terms remained the same. Effective June 1, 2009, the agreement for £12,500 per month was terminated. Effective March 1, 2010, the agreement for £15,000 per month was terminated.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 9 – Commitments (Continued)

On May 8, 2008 the Company entered into a consulting agreement with Partners Consulting Inc. (“PCI”), a Florida Corporation, to introduce the Company to potential new investors. The consideration payable to PCI is warrants to purchase 50,000 shares of common stock due upon signing the agreement. In addition, PCI will receive 6% of the gross proceeds from any potential financing, payable in cash and share purchase warrants equal to 6% of the gross proceeds. In the event a financing is facilitated through an investment banker introduced by PCI, PCI will instead receive 3% of the gross proceeds, payable in cash and share purchase warrants equal to 3% of the gross proceeds. All warrants will have a cashless exercise and will be priced at market value as of the date of the financing and with a minimum expiry period of three years. The consulting agreement was for a period of one year.

At February 28, 2010, the Company had not yet issued the warrants for 50,000 common shares due upon signing of the agreement but the fair value of these warrants was determined to be $4,364, which was included in fees payable in stock and warrants at February 28, 2011. These warrants are exercisable at $2.77 and will expire three years from the date of issuance. The fair value of these warrants was determined using the Black Scholes valuation model. The assumptions used in the Black-Scholes calculation are as follows: expected life – 3 years; volatility – 192%; Dividend rate – 0%; and risk free interest rate is 1.0%. These warrants expired May 8, 2011and the fair value of the warrants ($4,364) has been reflected as a credit to consulting fees for the three months ended May 31, 2011.

On May 21, 2008, the Company signed a letter of commitment whereby the Company agreed to commit to the use of a drilling rig commencing no earlier than October 1, 2008 for a total cost of $8,910,000 which has been accrued in accounts payable and accrued liabilities as at February 28, 2011 and 2010. The Company also committed to enter into a well project management and integrated services contract for the management of a well program on the rig. The Company is also obligated to pay a fee of 1.75% of the operating rig rate in acknowledgement of the value provided with the rig opportunity, if the Company uses the rig, but not the integrated project management services. The Company also incurred and accrued penalties of $2,000,000 as compensation for lost revenues of the rig owners for its failure to fulfill its obligations under the rig provision contract and may be liable to pay up to an additional $2,000,000 for its share of additional costs incurred by the rig owners during the Company’s allotted rig slot.

This additional $2,000,000 amount is subject to a commercial discussion between the parties involved and has been accrued at February 28, 2011 and 2010 as it is likely that will be incurred. A total of $12,910,000 was recorded as a loss on failure to perform obligations under oil & gas commitments and has been charged to the statement of operations during the year ended February 28, 2009.

By a bonus agreement dated May 22, 2008, the Company agreed to issue 5,000 common shares and £5,000 ($10,000) (paid during the year ended February 29, 2008) to an officer and director of the Company as a performance bonus. At February 28, 2008, the Company had not yet issued the shares due. The fair value of the shares was determined to be $22,150, which was included in fees payable in stock and warrants at February 28, 2010. Due to the resignation of the officer, the fair value of the shares ($22,500) has been reflected as a credit to consulting fees for the year ended February 28, 2011.

During the year ended February 28, 2010, the Company recorded a recovery of $8,500 in consulting fees for the change in fair value of 50,000 common shares issuable pursuant to Board of Advisors (“BOA”) agreements dated November 17, 2007 as compensation to the members of the BOA. An amount of $6,500 is included in fees payable in stock and warrants at February 28, 2010 for these shares. Due to the termination of the BOA, the fair value of the shares ($6,500) has been reflected as a credit to consulting fees for the year ended February 28, 2011.

During the year ended February 28, 2010, the Company accrued $8,460 in consulting fees for the fair value of 11,000 common shares issuable to a former employee of the Company. This amount is included in fees payable in stock and warrants at February 28, 2010. Due to the termination of the consulting agreement, the fair value of the shares ($8,460) has been reflected as a credit to consulting fees for the year ended February 28, 2011.

As of February 28, 2011, the Company has evaluated certain accrued expenses and accounts payable from prior years, primarily consisting of accrued salaries, consulting and management fees, and has determined that these amounts are no longer payable. Accordingly, $3,184,620 has been recorded as a gain on recovery of payables for the year ended February 28, 2011.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 10 – Income Taxes

Deferred income taxes have been provided to show the effect of temporary differences between the recognition of expenses for financial and income tax reporting purposes and between the tax basis of assets and liabilities, and their reported amounts in the consolidated financial statements. In assessing the realizability of deferred tax assets, the Company assesses the likelihood that deferred tax assets will be recovered through tax planning strategies or from future taxable income, and to the extent that recovery is not likely or there is insufficient operating history, a valuation allowance is established. The Company adjusts the valuation allowance in the period management determines it is more likely than not that net deferred tax assets will or will not be realized. As of May 31, 2011 and February 28, 2011, the Company has provided a valuation allowance for all net deferred tax assets due to their current realization not being more likely than not.

The provisions for income taxes differ from the amount computed by applying the statutory federal income tax rate to Income before provision for income taxes. The source and tax effects of the differences are as follows for the three months ended May 31, 2011 and 2010:

	2011			2010
U.S. federal statutory rate		34	%		34	%
Valuation reserve		- 34	%		-34	%
Total		0	%		0	%

As of May 31, 2011, the Company did not recognize any assets or liabilities relative to uncertain tax positions, nor do we anticipate any significant unrecognized tax benefits will be recorded during the next 12 months. Any interest or penalties related to unrecognized tax benefits is recognized in income tax expense. Since there are no unrecognized tax benefits as a result of tax positions taken, there are no accrued penalties or interest.

Tax positions are positions taken in a previously filed tax return or positions expected to be taken in a future tax return that are reflected in measuring current or deferred income tax assets and liabilities reported in the consolidated financial statements. Tax positions include, but are not limited to, the following:

	·	An allocation or shift of income between taxing jurisdictions;
	·	The characterization of income or a decision to exclude reportable taxable income in a tax return; or

A decision to classify a transaction, entity or other position in a tax return as tax exempt.

The Company reflects tax benefits only if it is more likely than not that we will be able to sustain the tax position, based on its technical merits. If a tax benefit meets this criterion, it is measured and recognized based on the largest amount of benefit that is cumulatively greater than 50% likely to be realized. The Company has no unrecognized tax benefits as of May 31, 2011.

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties on the Company’s balance sheets at May 31, 2011, and has not recognized interest and/or penalties in the statement of operations for either period.

Note 11 – Subsequent Events

On June 15, 2011 the Company issued 6,000,000 shares of its restricted common stock in conversion of $1,750 of notes payable at a market price of $0.0095 per share.

Effective July 12, 2011, the Company amended its Articles of Incorporation increasing its authorized capital structure to 3,000,000,000 shares, consisting of 2,950,000,000 shares of common stock, par value $0.001, and 50,000,000 shares of preferred stock, par value $0.001.

Fox Petroleum Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

May 31, 2011

(unaudited)

Note 11 – Subsequent Events (Continued)

On July 13, 2011 the Company issued 261,000,000 shares of its restricted common stock in conversion of $251,000 of notes payable at a market price of $0.012 per share.

From July 13, 2011 to August 22, 2011 the Company issued a total of 2,455,000,000 shares of its restricted common stock to Mr. William Lieberman, its President and Chief Executive Officer, for services rendered. The shares were values at the market price on the dates of issuance of an average of $0.012, or a total of $29,491,000.

On July 28, 2011 the Company issued 10,000,000 shares of its restricted common stock in conversion of $10,000 of notes payable at a market price of $0.02 per share.

On August 9, 2011 the Company issued 1,010,101 shares of its restricted common stock in conversion of $10,000 of notes payable at a market price of $0.016 per share.

On August 11, 2011 the Company issued 60,000,000 shares of its restricted common stock in conversion of $55,000 of notes payable at a market price of $0.015 per share.

On August 24, 2011 the Company issued 1,690,141 shares of its restricted common stock in conversion of $12,000 of notes payable at a market price of $0.015 per share.

On August 30, 2011 the Company issued 2,272,727 shares of its restricted common stock in conversion of $15,000 of notes payable at a market price of $0.0125 per share.

The Company has evaluated subsequent events through the date the financial statements were issued and filed with Securities and Exchange Commission. The Company has determined that there are no other events that warrant disclosure or recognition in the financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” ”will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended February 28, 2011 and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.

Company Overview

We are a development stage company and have not generated any revenue to date. The following discussions sets forth selected financial information for the periods indicated. We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities, however, there is no assurance that we will be successful in raising additional capital.

Plan of Operation

We are a development stage company engaged in the identification, acquisition, exploration and, if warranted, development of prospective oil and gas properties and the acquisition of plastics recycling businesses.

With the acquisition of Ontario in July 2010, the company initiated plans to move into the business of recycling oil based plastics. We are focused on acquiring, developing and operating plastic recycling operations throughout North America. We expect to begin operations of this division in fiscal 2012. Our goal is to become an important partner for leading recycling companies who need proficient services. We expect Ontario to eventually become carbon neutral and process up to 30 Million pounds of post-industrial and post-consumer scrap plastics per year with revenues approaching Five million dollars per year at these processing levels. We are also aggressively seeking additional acquisition targets in the plastics recycling market place to increase our processing capacity and are currently speaking to companies in the automotive and beverage industries to process plastic waste streams and fulfill circular recycling streams

We are also currently identifying and evaluating alternatives to expand our Oil and Natural gas portfolios.

We have no access to capital to repay our debt or fund our current or ongoing operations. Unless we can secure additional capital and renegotiate the terms of our outstanding debts, we may be required to discontinue our operations at any time. We will need additional further advances and issuance of debt instruments to fund our operations over the next nine months. In connection with our future business plan, management anticipates additional increases in operating expenses and capital expenditures relating to acquisition of further interests in oil and gas assets or other acquisitions. We would finance these expenses with further issuances of securities and debt issuances. We expect we would need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities would result in dilution to our current shareholders. Further, such securities may have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If we are not able to obtain additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Results of Operations

For the Three Months Ended May 31, 2011 and 2010

Revenues

The Company had no revenues for the three months ended May 31, 2011 and 2010.

Operating Expenses

For the three months ended May 31, 2011, our operating expenses were $56,808 compared to $(514,500) for the three months ended May 31, 2010, representing an increase of $571,308. The increase in operating expenses was primarily attributable to an increase in general and administrative expenses of $11,172 (reflecting our increase in administrative activity and changes in management structure), increase in consulting fees of $45,636. For the three months ended May 31, 2010, we recorded a credit to finance fees of $(514,500) while we incurred no finance fees for the three months ended May 31, 2011.

Other Income (Expense)

During the three months ended May 31, 2011, we incurred interest expense of $126,229 compared to $117,557 in the same period of 2010. We realized a loss on conversion of debt of $33,250 and accretion of convertible note discounts of $10,888 for the three months ended May 31, 2011.

Net Loss

For the period from November 4, 2004 (date of inception) to May 31, 2011, we have incurred an accumulated loss of $44,360,801.

Liquidity and Capital Resources

Liquidity and Capital Resources during the three months ended May 31, 2011 compared to the three months ended May 31, 2010

As of May 31, 2011, the Company had no cash and a deficit in working capital of $21,473,700. The Company used cash of $5,772 in operations for the three months ended May 31, 2011. The Company generated no cash flow from operating activities during the three months ended May 31, 2010.

No cash flows were generated from investing activities and cash from financing activities was $5,772, consisting of advances from its officer, for the three months ended May 31, 2011. No cash flows were generated from investing or financing activities for the three months ended May 31, 2010.

We will require additional financing during the current fiscal year in order to pay certain general and administrative costs while we re-evaluate our business strategy. We presently do not have sufficient financing to enable us to complete these activities and will require additional financing or loans or advances from our management and shareholders. Our actual expenditures on these activities will depend on the amount of funds we have available as a result of our financing efforts. There is no assurance that we will be able to raise the necessary financing.

Going Concern

Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the consolidated financial statements for the year ended February 28, 2011 regarding concerns about our ability to continue as a going concern. Our unaudited consolidated financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Our unaudited consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/ or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited consolidated financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

There is no assurance that our operations will be profitable. The Company has conducted private placements of its common stock and has issued notes payable, which have generated funds to satisfy the initial cash requirements of its planned exploration ventures. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

Our significant accounting policies are summarized in Note 3 of our unaudited consolidated financial statements. While all of these significant accounting policies impact the Company’s consolidated financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on the Company and require management to use a greater degree of judgment and estimates. We believe that the estimates and assumptions that are most important to the portrayal of our consolidated financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting for mineral property costs, impairment of long-lived assets, income taxes and stock-based compensation. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future consolidated financial conditions or results of operations. We suggest that our significant accounting policies be read in conjunction with this Management's Discussion and Analysis of Financial Condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The disclosure required under this item is not required to be reported by smaller reporting companies; as such term is defined by Item 503(e) of Regulation S-K.

Item 4. Controls and Procedures.

(a)	Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the CEO and CFO concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

(b)	Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s Amendment No. 1 to Annual Report on Form 10-K for the fiscal year ended February 28, 2011, filed with the SEC on August 9, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On April 4, 2011, the Company issued 3,500,000 shares of its restricted common stock in conversion of $1,750 of notes payable at a price of $0.0005 per share.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit No.		Description

31.1		Rule 13a-14(a) Certification by the Principal Executive Officer of Registrant.

31.2		Rule 13a-14(a) Certification by the Principal Financial Officer of Registrant.

32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

/s/ William Lieberman		September 29, 2011
President and Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer)		Date

Attached files

FOX PETROLEUM INC. Reports

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