UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(Amendment No.1)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [ ] No [X]

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

Indicate by check mark whether the registrant 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 [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [ ] No [X ]

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

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

1

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $831,549

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 105,416,987 common shares as of November 30, 2012.

Explanatory Note

The purpose of this Amendment No. 1 (this “Amendment”) to the Annual Report on Form 10-K of Force Minerals Corporation, formerly known as Force Energy Corp. (the “Company”), for the fiscal year ended November 30, 2012, and filed with the Securities and Exchange Commission on February 27, 2013 (the “Original Filing”), is to include an audit opinion for certain of the Company’s financial statements that were included in the Original Filing.  Specifically, the Original Filing included corrections to the Company’s financial statements for the fiscal year ended November 30, 2011, which were included in the Original Filing, but omitted an audit opinion for those financial statements before the corrections.  Accordingly, this Amendment includes such an audit report, which complies with the requirements of Rule 2-05 of Regulation S-X. For convenience of the reader, this amendment specifies the Original Filing in its entirety, as amended by this Amendment.  Except for the inclusion of the audit opinion for those financial statements, this Amendment does not amend or otherwise update any other information in the Original Filing.  Accordingly, this Amendment should be read in conjunction with the Original Filing.

As required by the provisions of Rule 12b-15 promulgated pursuant to the Securities Exchange Act of 1934, new certifications by the Company’s Principal Executive Officer and Principal Financial Officer are filed as exhibits to this Amendment.

2

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	4
Item 2.	Properties	8
Item 3.	Legal Proceedings	12
Item 4.	Mine Safety Disclosures	12
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6.	Selected Financial Data	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8.	Financial Statements and Supplementary Data	21
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	52
Item 9A(T).	Controls and Procedures	52
Item 9B.	Other Information	53
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	53
Item 11.	Executive Compensation	53
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	56
Item 13.	Certain Relationships and Related Transactions, and Director Independence	57
Item 14.	Principal Accountant Fees and Services	57
PART IV
Item 15.	Exhibits, Financial Statement Schedules	58

3

PART I

Item 1. Business

Company Overview

We are currently engaged in the business of identifying, evaluating, and qualifying potential natural gas and oil wells; investing in interests in those wells with the goal of producing commercially marketable quantities of oil and natural gas. We have recently expanded our business model to include the exploration of mineral claims for rare earth minerals.

The Hayter Well

We presently hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well located in Alberta, Canada.

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

We have not incurred any development costs on the Hayter Well for the year ended November 30, 2012. We do not anticipate immediate attention to this project, as our time and effort currently is focused on our Zoro 1 Mineral Claim.

Competition

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

Compliance with Government Regulation

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

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

4

Zoro 1 Mineral Claim

On July 6, 2010, we entered into an option agreement with Dalton Dupasquier, pursuant to which Mr. Dupasquier has granted to us the sole and exclusive right and option, exercisable in the manner described below, to acquire a 100% net undivided interest in the property known as the Zoro 1 mineral claim, located near the East Shore of Wekusko Lake in west-central Manitoba, Canada.

Amount of Payment									Date Payment is Due								Additional Notes
$	59,600					July 6, 2010								This amount was paid.
$		80,000								June 15, 2011								This amount was paid in 1,000,000 shares of common stock.
$		200,500								June 15, 2012								This amount was agreed to be paid in $50,500 and 7,500,000 shares of common stock. We have paid $50,500 and issued 7,500,000 shares of common stock.
$		403,560								June 15, 2013

During the year ended November 30 2012, we incurred $8,639 of exploration expenditures on the property.

We have no rights to the Zoro 1 mineral claim unless and until we exercise the option.

We acquired the option to explore the potential for deposits of lithium on the Zoro 1 mineral claim. According to the United States Geological Survey (USGS), global end-use markets for lithium include ceramics and glass, batteries, lubricating greases, air treatment, continuous casting and primary aluminum production. Batteries, especially rechargeable batteries, are the market for lithium compounds with the largest growth potential as major automobile companies pursue the development of lithium batteries to power hybrid electric cars.

In September 2009, we received a Technical Report on the Zoro 1 mineral claim. The report was authored by Mr. Mark Fedikow, PhD., P.Eng. of Mount Morgan Resources Ltd. The objectives of the report were to summarize the geology, review the historic ore reserves, and economic potential of the spodumene-bearing dykes delineated on the property and their surrounding geological environment.

An historic reserve estimate for Lithium oxide (Li2O) has been calculated on limited drilling on a single dyke on the Zoro 1 mineral claim. Drill indicated spodumene reserves coupled with data from trenching have been calculated with a total undiluted tonnage given as 1,727,550 at 0.945% Li2O. However, the historic data upon which the resource of 1,727,550 tons grading 0.945% Li2O was based is not dispositive. When the historic work was done, there was no “Qualified Person” in place, assay labs were not ISO Certified and insufficient drilling was undertaken to define the resource. It therefore became necessary to conduct more exploration activities to support the limited historic data available.

There are seven zoned pegmatite dykes on the Zoro 1 mineral claim. An exploration team explored the main dyke, located the additional seven trenches that had historically been noted on the Zoro 1 claim and produced a geologic map of each trench. Once areas of interest were located, the crew cleaned out the trenches and used a pick and shovel method to look at rocks to find pegmatite. They then took channel samples using a rock saw on historic trenches hosting pegmatite.

While exploring the main and additional seven dykes on the project area the crew identified several additional trenches that had not been noted in previous exploration programs. These findings suggest a potential for a greater amount of resource to be spread across the property, and give further encouragement for more detailed exploration.

Altogether 170 channel samples were sent for assay at Activation Laboratories in Ancaster, Ontario. The samples were analyzed to confirm historical lithium assays, and to assess the pegmatite for rare earth elements, including gold, rubidium, niobium, tantalum, tin, tungsten, and beryllium, all of which add to the prospectivity and economic viability of the Zoro 1 property.

Analysis of the channel samples collected from historic trenches in the pegmatite target has confirmed that a significant zone of lithium mineralization is present on the Zoro 1 claim. Analytical results are summarized in Table 1, which is attached to our annual report as Exhibit 99.2 that we filed with the Securities and Exchange Commission on February 23, 2012.

With the current and future importance of lithium and the mineralized zone at Zoro 1, we are now preparing for the next phase of our exploration program. This phase, which will require a drill program, will assess the third dimension of the deposit and its historic resource, and determine the economic viability of mining the resource.

5

We plan to continue to explore the Zoro 1 mineral claim using the Exploration Recommendations outlined by Dr. Fedikow in the NI 43-101 Technical Report, which are set forth below along with a table of recommended expenditures.

Initially, the Zoro 1 pegmatites should be the focus of the following exploration approaches. These are as follows:

	1.	Trench rehabilitation including overburden stripping and washing.

	2.	Geologic mapping of individual trenches at a scale of 1:20.

	3.	Detailed geological mapping at a scale appropriate to document relevant features on the property. This will include the seven pegmatite dykes, trench locations, historic drill collars and geological attributes of the dykes. It is likely this mapping will be undertaken at a scale of 1:1000.

	4.	Trench and channel sampling should be undertaken to confirm historic assay results.

	5.	Re-log historic drill core as possible.

	6.	A grid should be re-established on the property and an attempt made to tie-in the collar locations of all previous drilling. This information would help to structure new diamond drill programs. Initially, an attempt should be made to re-construct the historic grid although it is unlikely this will be possible given the length of time that has elapsed since the grid was first cut.

	7.	The geochemistry of the spodumene with particular relevance to iron content should be evaluated. Albite-rich portions of the pegmatite should be assayed for tantalum, tin, and niobium values. Altered and mineralized wallrocks should be assayed for gold particularly where the mineral assemblage of pyrrhotite, chalcopyrite and arsenopyrite are observed. Any subsequent drill program should be accompanied by a multi-element geochemical approach to assaying core including assays for gold. This will be followed up with assays for specific metals that may be present in the pegmatite dykes. The new assay program should be accompanied by a quality assurance and quality control program.

	8.	Diamond drilling should initially target Dyke No. 1 with the aim of ascertaining the physical size and extent of this dyke. Additional drilling will be necessary in the vicinity of the six remaining known dykes as well as any additional lithium-bearing pegmatite uncovered during exploration on the remainder of the property.

Trench Rehabilitation, Geologic Mapping and Assays (Four Weeks)
1. Trench stripping, excavation and washing:		$	15,000.00
2. Field technician: $250.00/day:					$	7,000.00
3. General Laborers (n=2): $150.00/day:					$	8,400.00
4. Geologist: $400.00/day:					$	11,200.00
5. Assays (n=100 @ $50.00/sample):					$	5,000.00
Drill Program
6. Mobilization/Demobilization of equipment and crews:					$	10,000.00
7. Two Thousand metres of NQ coring:					$	250,000.00
8. Moves between holes:					$	25,000.00
9. Core trays and survey tool:					$	8,000.00
10. Room and board @ $150.00/day for 60 days:					$	18,000.00
11. Communications and freight:					$	10,000.00
12. Helicopter:					$	40,000.00
13. Helicopter fuel:					$	7,500.00
14. Geologist @ $400.00/day for 60 days:					$	24,000.00
15. Geologist Room and Board @ $150.00/day:					$	9,000.00
16. Geologist Transportation/Mobilization/Demobilization/Site access:					$	5,000.00
17. Assays @$50.00/sample for 300 samples:					$	15,000.00
18. Report preparation:					$	7,500.00
Sub-total:					$	475,600.00
Contingency @ 10%:					$	47,560
Total:					$	523,160.00

Anticipated Cash Requirements

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

Estimated Funding Required During the Next Twelve Months
Expenses						Amount
Management fees		$	150,000
Exploration expenses					$	523,160
Zoro 1 mineral property payment					$	94,958
Professional fees					$	120,000
General administrative expenses					$	80,000
Total					$	968,118

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

Competition

The mineral exploration industry, in general, is intensely competitive and even if commercial quantities of reserves are discovered, a ready market may not exist for the sale of the reserves.

Most companies operating in this industry are more established and have greater resources to engage in the production of mineral claims. Our resources at the present time are limited. We may exhaust all of our resources and be unable to complete full exploration of our claim. There is also significant competition to retain qualified personnel to assist in conducting mineral exploration activities. If a commercially viable deposit is found to exist and we are unable to retain additional qualified personnel, we may be unable to enter into production and achieve profitable operations. These factors set forth above could inhibit our ability to compete with other companies in the industry and enter into production of the mineral claim if a commercial viable deposit is found to exist.

Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in not receiving an adequate return on invested capital.

Compliance with Government Regulation

We are required to obtain licenses and permits from various governmental authorities. These permits or licenses may include water and surface use permits, occupation permits, fire permits, and timber permits. Prior to being issued the various permits or licenses, the applicant must file a detailed work plan with the applicable government agency. Permits are issued on the basis of the work plan submitted and approved by the governing agency. Additional work on a given mineral property or a significant change in the nature of the work to be completed would require an amendment to the original permit or license.

As part of the permit or licensing requirements, the applicant may be required to post an environmental reclamation bond in respect to the work to be carried out on the mineral property. The amount of such bond is determined by the amount and nature of the work proposed by the applicant. The amount of a bond may also be increased with increased levels of development on the property.

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

On January 18, 2012, we received a call from the Natural Resource Officer in Snow Lake and were informed that our drill permit has been approved. We believe this is excellent news as we are able to continue with the next phase of our work program. As of the date of this Annual Report, however, we have not yet commenced the next phase of our exploration program.

Employees

7

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

Subsidiaries

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

Item 2. Properties

Executive Offices

Our executive offices are located at 1400 16th Street, Suite 400, Denver, CO 80202. We lease our head office in Denver Colorado at a rate of $119.00 month. Our head office is a business center. Our current premises are adequate for our current operations and we do not anticipate that we will require additional premises in the foreseeable future.

The Hayter Well

Purchase of Interest in the Hayter Well

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

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

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

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

We have not incurred any development costs on the Hayter Well for the year ended November 30, 2012.

8

Location of Hayter Well

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

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

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

9

Oil and Gas Properties and Wells

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

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

The Company has not since the beginning of its most recently completed fiscal year, filed any annual estimates of proved oil and gas reserves with any federal agencies. As at November 30, 2012, the 50% working interest of the Hayter Well was recorded at $135,427.

Zoro 1 Mineral Claim

Property Description and Access

The Zoro 1 property is located near the east shore of Wekusko Lake (Figure 4.1) in west-central Manitoba, approximately 25 km east of the mining community of Snow Lake, 249 km southeast of Thompson and 571 km north-northeast of Winnipeg. Provincial Road 393 occurs 23 km to the northwest. The pegmatite dykes are located northwest of the northwest corner of a small pot hole Lake east of the east shore of Wekusko Lake. The small historic gold mining community of Herb Lake is located about 10 km southwest of the property.

Access to the property is by boat from Bartlett’s Landing accessed from Provincial Road 392 and then by All Terrain Vehicle to the property along a trail and/or by helicopter from Snow Lake, Manitoba. The nearest road link is a seasonal road on the east side of Wekusko Lake that accesses the village of Herb Lake Landing and Provincial Highway 392 to the south. A rail link is located at Wekusko siding approximately 20 km south of Herb Lake Landing.

The property is located within NTS map sheet 63J/13SE (latitude: 54⁰51.27’ and longitude: 99⁰38.46’; Township 68N; Range 15WPM).

The Zoro 1 property is covered by one claim, the Zoro 1 (P1993F). The property is 52 hectares in area and was recorded March 14, 1994, under the name of Dalton Bruce Dupasquier. The claim is in good standing.

10

History of the Zoro 1 mineral claim

The pegmatite dykes are located on the north side of a small lake between Roberts Lake and the south end of Crowduck Bay. Early in 1953, Cs No. 3-10, 12 (P 26973-80, 82), S.R. No. 1-6 (P 7877-82) and Linda 1 (P 26983) were staked by Mrs. Johanna Stoltz, Eric Stoltz, Carl Stoltz and Edwin Stoltz, and Key No. 1-4, 8-14 (P 27159-62, 27226-27, 27164-68) were staked by John Tikkanen, Hjalmar Peterson, and Loren Fredeen. These were cancelled the following year.

Lit Nos. 11-5 (P 31758-62) was staked by J.J. Johnson in 1954. In 1955 Lit Nos. 6-1l8 (P 35014-26) were added by J.A. Syme. All the Lit claims were assigned to Green Bay Uranium Limited in 1956 which changed its name to Green Bay Mining & Exploration Ltd. Early in 1956, before drilling commenced, samples containing more than 2% Li2O and containing no contaminating accessory lithium minerals and no high iron content were reported. A shipment of 136 kg (300 lbs.) of spodumene was sent to Ottawa for testing in 1956. This sample assayed 1.19% Li2O, with minor NbO5. Ore dressing tests concluded that good liberation and separation could not be effected.

Over 6096 m (20 000 ft.) of diamond drilling was done on Lit No. 1-4, with at least 3048 m (10 000 ft.) of this on the main dyke. Results of the drilling on dykes 1, 3, 5 and 7 were reported to be "promising". Assays of 2.42% to 7.28% Li2O were reported from Dyke 5. Dyke 5 was apparently 305 m long x 12 m wide (1000 x 40 ft.); Dyke No. 7, over 457 m x 24 m (1500 x 80 ft.). Several of the holes went deeper than 305 m (1000 ft.). Drilling on Lit 10, 16 and 17 amounted to 1950 m (6399 ft.). Gold was also found on the property, with a 3.3 kg (7.25 lb.) sample across 3.4 m (11 ft.) yielding $5.95 gold at $35.00 equating to approximately 0.17 ounces per ton gold.

Lithium tonnage estimates vary. An unsubstantiated visual estimate in September 1956 suggested up to 9-11 million tonnes (10-12 million tons) of Li2O occur on the entire group. In mid-March the main dyke was estimated to contain 18 million tonnes (2 million tons) grading 1.4% Li2O to a depth of 305 m (1000 ft.) in the main dyke. A reserve estimate of 1 815 000 tonnes grading 1.4% Li2O was 15 reported by Bannatyne (1985). In 1957, the estimate was revised to 1.72 million tonnes averaging 1.3% Li2O or 2.72 million tonnes (3.0 million tons) at l.0% Li2O in the main dyke (Mulligan, 1957a, 1957b). By March 1958, 12 different tonnage estimates had been made. Also by that time, a permanent camp and a 4-mile road into the property had been built. Plans for a heavy media separation plant on the property were being prepared by the Lummus Co. of New York together with Knowles Associates and the Colorado School of Mines.

No further work on the property is known since 1957. The claims were assigned to J.A. Syme in 1963. The Zoro 1 claim is currently listed under the name of Dalton Bruce Dupasquier.

Reserve Estimate

An historic reserve estimate for Li2O has been calculated on limited drilling on a single dyke on the Zoro 1 mineral claim. Drill indicated spodumene reserves coupled with data from trenching have been calculated with a total undiluted tonnage given as 1,727,550 at 0.945% Li2O.

The Zoro 1 mineral claim hosts multiple rare metal spodumene pegmatite dykes. The main mass of spodumene-bearing zones exposed in seven main trenches has not been fully delineated and a recommended exploration program will assess the geological characteristics of the dykes on the property. Trench rehabilitation, new sampling from the trenches and diamond drilling and a thorough assay/analytical approach accompanied by a quality assurance and quality control program is recommended. Rare and precious metal contents in the pegmatite, not considered in the historic exploration and development program, can also be assessed in this manner.

11

Item 3. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 4. Mine Safety Disclosures

N/A

PART II

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

Market Information

Our common stock is quoted under the symbol “FORC” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc. Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA. Consequently, market makers that once quoted our shares on the OTCBB system may no longer be posting a quotation for our shares. As of the date of this report, however, our shares are quoted by several market makers on the OTCQB. The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting.

Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Fiscal Year Ending November 30, 2012
Quarter Ended									High $								Low $
	November 30, 2012					.032								.008
		August 31, 2012								.022								.006
		May 31, 2012								.035								.011
		February 29, 2012								.082								.016

Fiscal Year Ending November 30, 2011
Quarter Ended									High $								Low $
	November 30, 2011					0.04								0.02
		August 31, 2011								0.08								0.03
		May 31, 2011								0.22								0.07
		February 28, 2011								0.27								0.17

Penny Stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

12

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

Holders of Our Common Stock

As of November 30, 2012, we had 105,416,987 shares of our common stock issued and outstanding, held by eighty six (86) shareholders of record.

Dividends

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

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

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

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

Recent Sales of Unregistered Securities

The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933 during the reporting period.

Between April 9, 2012 and April 23, 2012, we issued 2,486,549 common shares pursuant to the conversion of a note payable falling due on July 3, 2012.

On May 5, 2012, we issued 2,691,926 common shares pursuant to a consultancy agreement with Primary Capital LLC

On June 12, 2012, we issued 7,500,000 common shares pursuant to the Zoro mineral property option agreement.

On June 13, 2012, we issued 3,000,000 common shares in settlement of a $30,000 advance payable.

Between July 9, 2012 and August 14, 2012, we issued an aggregate of 6,956,813 common shares upon the conversion of the convertible note payable falling due on October 6, 2012.

On July 17, 2012, we issued 7,500,000 common shares pursuant to an employment agreement with the President of the Company.

On September 5, 2012, we issued 3,000,000 common shares pursuant to a consultancy agreement.

Between September 20, 2012 and November 23, 2012, we issued an aggregate of 14,344,432 common shares upon the conversion of the convertible note payable falling due on May 10, 2013.

On September 26, 2012, we issued 3,000,000 common shares pursuant to a consultancy agreement.

Subsequent to the year end we issued 3,333,333 common shares pursuant to the partial conversion of a note payable falling due on July 3, 2012.

The above issuances were made pursuant to Regulation S of the 1933 Act. Each purchaser represented to us that the purchaser was a Non-US Person as defined in Regulation S. We did not engage in a distribution of this offering in the United States. Each purchaser represented their intention to acquire the securities for investment only and not with a view toward distribution. All purchasers were given adequate access to sufficient information about us to make an informed investment decision. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. The selling stockholders named in this prospectus include all of the purchasers who purchased shares pursuant to this Regulation S offering.

13

Securities Authorized for Issuance under Equity Compensation Plans

We do not have any equity compensation plans.

Item 6. Selected Financial Data

A smaller reporting company is not required to provide the information required by this Item.

14

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

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Results of Operations

The following summary of our results of operations should be read in conjunction with our audited financial statements for the year ended November 30, 2012, which are included herein.

Our operating results for the years ended November 30, 2011 and 2012 are summarized as follows:

					Years Ended
					November 30,
					2011								2012
Revenue					$	—							$	—
Operating Expenses			462,799							660,180
Net Loss						502,867								1,072,264

Revenues

We have not earned any revenues to date, and do not anticipate earning revenues until such time as we are able to locate oil and gas potential on our well or exploit minerals on our mineral claim. All of our oil and gas prospects are undeveloped. We anticipate that we will have to address the cash shortfall through additional equity financings in the future. We can offer no assurance, however, that such financings will be available on terms acceptable to our company.

Expenses

Our expenses for the years ended November 30, 2011 and 2012 are outlined in the table below:

					Year EndedNovember 30, 2011								Year EndedNovember 30, 2012
Expenses
Accounting and audit fees		$	20,175						$	22,825
Accretion of ARO						1,965								2,238
Bank charges						1,639								1,176
Consulting fees						—								213,439
Investor relations						10,000								—
Legal fees						20,667								28,514
Management fees						293,225								234,825
Mineral property exploration costs						55,611								8,939
Office expenses						6,481								4,771
Rent						2,673								3,113
Tax, penalties and Interest						42,489								421
Transfer and filing fees						7,874								2,657
Travel						—								2,135
Write-off of oil and gas costs						—								135,427
Total						462,799								660,180

Our expenses increased in fiscal year 2012 as compared to fiscal year 2011. The increase in our expenses for the year ended November 30, 2012 was due mainly to increased consulting fees, and write-offs of oil and gas costs.

15

Other Expenses

We paid more in interest expenses for the year ended November 30, 2012 than in the prior year ended 2011,which was the primary basis for total other expenses of $341,484 for the year ended November 30, 2012 as compared with $42,089 for the prior year.

Loss

We incurred a net loss of $1,072,264 for the year ended November 12, 2012, as compared with a net loss of $502,867 for the year ended November 30, 2011.

Liquidity And Capital Resources

Working Capital
						November 30, 2011								November 30, 2012
Current Assets		$	17,512						$	35,442
Current Liabilities						309,585								442,056
Working Capital (deficit)						(292,073)								(406,614			)

Cash Flows
						Year Ended								Year Ended
						November 30, 2011								November 30, 2012
Cash used in Operating Activities		$	184,623						$	215,380
Cash used in Investing Activities						—								50,499
Cash provided by Financing Activities						201,875								283,845
Net Increase (Decrease) in Cash						16,529								19,049

Cash Used In Operating Activities

We used cash in operating activities in the amount of $215,380 during the year ended November 30, 2012. Our comprehensive loss of $1,073,628 for the year ended November 30, 2012 was the primary reason for our negative operating cash flow.

Cash Used In Investing Activities

We used cash in investing activities in the amount of $50,499 during the year ended November 30, 2012, in connection with the option on our mineral property.

Cash from Financing Activities

We generated $283,845 in cash from financing activities during the year ended November 30, 2012. Most of our cash from financing activities, $337,500, resulted from cash received from convertible notes that we issued during the year. These convertible notes are unsecured, bear interest at 8% per annum, and are convertible into shares of our common stock at roughly 50% of the market price of our common stock.

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

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

Off Balance Sheet Arrangements

As of November 30, 2012, there were no off balance sheet arrangements.

Going Concern

16

At November 30, 2012, we have a working capital deficit of $406,614. We have yet to achieve profitable operations, have accumulated losses of $3,905,711 since our inception and expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that we will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all.

Critical Accounting Policies

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

Development Stage Activities

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

Principles of Consolidation

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

Foreign Currency Translation

The reporting currency is the U.S. dollar. The functional currency of the Company is the local currency, the Canadian dollar. The financial statements of the Company are translated into United States dollars in accordance with ASC 830, FOREIGN CURRENCY MATTERS, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. At November 30, 2012 and 2011, the cumulative translation adjustment of $6,027 and $7,397, respectively, was classified as an item of other comprehensive income in the stockholders' equity (deficit) section of the consolidated balance sheets. For the years ended November 30, 2012 and 2011, the foreign currency translation adjustment to accumulated other comprehensive income was $1,364 and $928, respectively.

Oil and Gas Properties

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

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

Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred.

17

When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations.

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

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

Impairment of Long-lived Assets

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

Asset Retirement Obligations

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

Derivative Liabilities and Classification

Free-standing financial instruments (or embedded derivatives) indexed to the Company’s common stock are evaluated to properly classify such instruments within equity or as liabilities in our financial statements. Accordingly, the classification of an instrument indexed to our stock, which is carried as a liability, must be reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.

Income Taxes

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

18

Basic Loss per Share

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

Comprehensive Income

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive income (loss) requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. For the years presented, the Company's comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments and is presented in the consolidated statements of changes in operations.

Recently Issued Accounting Pronouncements

Adopted

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRS) of Fair Value Measurement – Topic 820.” ASU 2011-04 is intended to provide a consistent definition of fair value and improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. The amendments include those that clarify the FASB’s intent about the application of existing fair value measurement and disclosure requirements, as well as those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. This update is effective for annual and interim periods beginning after December 15, 2011. The adoption of this ASU did not have a material impact on our financial statements.

The FASB issued Accounting Standards Update (ASU) No. 2012-02—Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, on July 27, 2012, to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The changes permit businesses and other organizations to first use

subjective criteria to determine if an intangible asset has lost value. The amendments to U.S. GAAP will be effective for fiscal years starting after September 15, 2012. Early adoption is permitted. The adoption of this ASU did not have a material impact on our financial statements.

Not Adopted

In December 2011, the FASB issued ASU No. 2011-11: Balance Sheet (topic 210): Disclosures about Offsetting Assets and Liabilities, which requires new disclosure requirements mandating that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. This ASU is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Entities should provide the disclosures required retrospectively for all comparative periods presented. We are currently evaluating the impact of adopting ASU 2011-11 on the financial statements.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

19

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

20

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements Required by Article 8 of Regulation S-X:

Audited Financial Statements:

22	Report of Independent Registered Public Accounting Firm
23	Consolidated Balance Sheets as of November 30, 2012 and 2011;
25	Consolidated Statements of Operations and Comprehensive Loss for the years ended November 30, 2012 and 2011;
27	Consolidated Statement of Stockholders’ Deficit for the years ended November 30, 2012 and 2011;
29	Consolidated Statements of Cash Flows for the years ended November 30, 2012 and 2011;
31	Notes to Consolidated Financial Statements

21

To the Board of Directors and Stockholders

Force Energy Corp.

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

 

We have audited the accompanying consolidated balance sheets of Force Energy Corp. (“the Company”) as of November 30, 2012 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit and cash flows for the year ended November 30, 2012 and from November 1, 2006 (date of inception) through November 30, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The financial statements of the Company as of November 30, 2011, and for the period from November 1, 2006 (date of inception) through November 30, 2011, before the restatement described in Note 16, were audited by other auditors, whose report, dated February 20, 2012, expressed an unqualified opinion on those financial statements.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company, at November 30, 2012, and the results of its operations and its cash flows for the years ended November 30, 2012 and from inception (November 1, 2006) through to November 30, 2012, in conformity with accounting principles generally accepted in the United States of America.

 

We also audited the adjustments described in Note 16 that were applied to restate the 2011 financial statements. In our opinion, such adjustments are appropriate and have been properly applied.

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As described in Note 1 to the consolidated financial statements, the Company has incurred net losses since inception and has an accumulated deficit at November 30, 2012. These and other factors discussed therein raise a substantial doubt about the ability of the Company to continue as a going concern. Management’s plans in regard to those matters are also described in Note 1. The Company’s ability to achieve its plans with regard to those matters, which may be necessary to permit the realization of assets and satisfaction of liabilities in the ordinary course of business, is uncertain. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Noblesville, Indiana

October 29, 2014

5797 East 169^th Street, Suite 100Noblesville, IN 46062    317-222-1416  www.HillaryCPAgroup.com

FORCE ENERGY CORP
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
	November 30, 2012	November 30, 2011
		As Restated (Note 16)
ASSETS
Current Assets
Cash	$ 35,442	$ 16,393
Prepaid Expenses	$ -	$ 1,119
Total Current Assets	$ 35,442	$ 17,512
Oil and gas properties, full cost method of accounting
Unproved properties	$ -	$ 135,427
Mineral property option	$ 340,099	$ 139,600
TOTAL ASSETS	$ 375,541	$ 292,539
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities	$ 43,713	$ 48,871
Advances Payable	$ 20,000	$ 50,000
Due to related parties	$ 4,625	$ 625
Convertible notes payable, net of discount	$ 315,518	$ 81,089
Derivative liabilities	$ 58,200	$ 129,000
Total Current Liabilities	$ 442,056	$ 309,585
Asset retirement obligation	$ 16,845	$ 13,524
Total Liabilities	$ 458,901	$ 323,109
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value 10,000,000 shares authorized	$ -	$ -
None outstanding
Common stock, $0.001 par value 750,000,000 authorized	$ 105,417	$ 54,937
105,416,987 shares issued and outstanding at November 30, 2012
54,937,267 shares issued and outstanding at November 30, 2011
Additional paid in capital	$ 3,812,334	$ 2,826,176
Deferred stock compensation	$ (95,400)	$ (79,600)
Accumulated other comprehensive income	$ 6,027	$ 7,391
Deficit accumulated during the development stage	$ (3,911,738)	$ (2,839,474)
Total Stockholders' Equity	$ (83,360)	$ (30,570)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 375,541	$ 292,539
The accompanying notes are an integral part of these financial statements

FORCE ENERGY CORP
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(Audited)
	For The Year Ended        November 30, 2012	For The Year Ended        November 30, 2011     (As Restated)	From Inception (November 1, 2006) through               November 30, 2012
Operating Expenses:
Accounting and audit fees	$ 22,825	$ 20,175	$ 309,946
Accretion of ARO	$ 2,238	$ 1,965	$ 7,157
Bank charges	$ 1,176	$ 1,639	$ 5,443
Consulting fees	$ 213,439	$ -	$ 621,939
Depreciation	$ -	$ -	$ 4,651
Investor relations	$ -	$ 10,000	$ 61,443
Legal fees	$ 28,514	$ 20,667	$ 221,319
Management fees	$ 234,825	$ 293,225	$ 1,382,600
Mineral property exploration costs	$ 8,639	$ 55,611	$ 64,250
Office expenses	$ 4,771	$ 6,481	$ 44,193
Oil and gas exploration costs	$ -	$ -	$ 15,000
Rent	$ 3,113	$ 2,673	$ 46,814
Tax penalties and interest	$ 421	$ 42,489	$ 42,910
Transfer and filing fees	$ 2,657	$ 7,874	$ 81,402
Travel	$ 2,135	$ -	$ 12,476
Write-off of oil and gas costs	$ 135,427	$ -	$ 553,466
Total Operating Expenses	$ 660,180	$ 462,799	$ 3,475,009
Operating Loss	$ (660,180)	$ (462,799)	$ (3,475,009)
Other Income and Expense
Interest income	$ -	$ 21	$ 158
Interest expense	$ (341,484)	$ (42,089)	$ (422,173)
Total Other Income and Expense	$ (341,484)	$ (42,068)	$ (422,015)
Extraordinary Items
Debt forgiveness	$ -	$ -	$ 15,286
Loss on settlement of advance payable	$ (30,000)	$ -	$ (30,000)
Change in fair value of derivative liability	$ (40,600)	$ 2,000
Total Extraordinary Items	$ (70,600)	$ 2,000	$ (14,714)
Net Loss for the Period	$ (1,072,264)	$ (502,867)	$ (3,911,738)
Foreign currency exchange gain/(loss)	$ (1,364)	$ 928	$ 6,027
Comprehensive Loss for the Period	$ (1,073,628)	$ (501,939)	$ (3,905,711)
Net gain (loss) per share:
Basic and diluted	$ (0.0151)	$ (0.0095)
Weighted average number of shares outstanding: Basic and diluted	70,979,728	52,972,335
The accompanying notes are an integral part of these financial statements

FORCE ENERGY CORP
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Audited)
	For The Year Ended        November 30, 2012	For The Year Ended        November 30, 2011     (As Restated)	From Inception (November 1, 2006) through               November 30, 2012
Operating activities:
Net loss for the period	$                  (1,073,628)	$                     (501,939)	$                  (3,905,711)
Adjustment to reconcile net loss to net cash used by operations
Accrued interest	$                        32,723	$                          5,750	$                        38,473
Interest expense	$                      127,000	$                                  -	$                      127,000
Accretion and elimination of discount on convertible notes	$                      211,761	$                        36,339	$                      248,100
Revaluation of derivative liability to fair value	$                        40,600	$                         (2,000)	$                        38,600
Consulting fees paid in stock	$                      178,338	$                                  -	$                      583,338
Share based compensation	$                      134,200	$                      215,600	$                      729,600
Debt forgiveness	$                                  -	$                                  -	$                       (15,286)
Accretion of ARO	$                          2,238	$                          1,965	$                          7,154
Depreciation	$                                  -	$                                  -	$                          4,651
Write-off of oil and gas costs	$                      135,427	$                                  -	$                      553,466
Prepaid expenses	$                          1,119	$                            (881)	$                                  -
Advance payable	$                                  -	$                        50,000	$                        50,000
Accounts payable and accrued liabilities	$                         (5,158)	$                        10,543	$                        19,671
Net cash used by operating activities	$                     (215,380)	$                     (184,623)	$                  (1,520,944)
Financing activities:
Proceeds from issuance of common stock	$                                  -	$                        50,000	$                   1,419,000
Convertible note payable	$                      337,500	$                      170,000	$                      507,500
Settlement of Convertible note payable	$                          4,000	$                       (18,125)	$                      165,442
Cash acquired on reverse acquisition	$                                  -	$                                  -	$                        37,058
Due to related party	$                       (57,655)	$                                  -	$                       (57,655)
Net cash provided by financing activities	$                      283,845	$                      201,875	$                   2,071,345
Investing activities:
Property and Equipment	$                                  -	$                                  -	$                         (4,651)
Mineral property option	$                       (50,499)	$                                  -	$                     (110,099)
Development costs of oil and gas properties	$                                  -	$                                  -	$                     (387,517)
Net cash provided by investing activities	$                       (50,499)	$                                  -	$                     (502,267)
Effect of foreign currency translation	$                          1,083	$                            (723)	$                       (12,692)
Net increase/(decrease) in cash	$                        19,049	$                        16,529	$                        35,442
Cash, beginning of period	$                        16,393	$                            (136)	$                                  -
Cash, end of period	$                        35,442	$                        16,393	$                        35,442
The accompanying notes are an integral part of these financial statements

30

FORCE ENERGY CORP

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2012 and 2011

Note 1:Organization and Basis of Presentation

 

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

 

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

 

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

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. The Financial Statements and related disclosures as of November 30, 2012 are audited pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Unless the context otherwise requires, all references to “Force Energy Corp,” “we,” “us,” “our” or the “company” are to Force Energy Corp and any subsidiaries.

Note 2: Summary of Significant Accounting Policies

 

The financial statements of the Company are presented on the accrual basis. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader.

The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America. This requires management to make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.

Development Stage Activities

 

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

 

The Company is subject to several categories of risk associated with its development stage activities. Mineral exploration and natural gas and oil exploration and production is a speculative business, and involves a high degree of risk. Many factors have a direct bearing on the Company’s prospects and there are inherent uncertainties in these activities. Mineral exploration is dependent upon finding an ore body that is economic to develop. Uncertainties that exist with natural gas exploration include estimating natural gas and oil reserves, future hydrocarbon production, and cash flows, particularly with respect to wells that have

31

not been fully tested and with wells having limited production histories; access to additional capital; changes in the price of natural gas and oil; availability and cost of services and equipment; and the presence of competitors with greater financial resources and capacity.

 

Principles of Consolidation

 

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

 

Foreign Currency Translation

 

The reporting currency is the U.S. dollar. The functional currency of the Company is the local currency, the Canadian dollar. The financial statements of the Company are translated into United States dollars in accordance with ASC 830, Foreign Currency Matters, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. At November 30, 2012 and 2011, the cumulative translation adjustment of $6,027 and $7,391, respectively, was classified as an item of other comprehensive income in the stockholders' equity (deficit) section of the consolidated balance sheets. For the years ended November 30, 2012 and 2011, the foreign currency translation adjustment to Accumulated Other Comprehensive income was ($1,364) and $928 respectively.

 

Cash and Cash Equivalents

 

Cash and cash equivalents are comprised of cash and highly liquid investments with original maturity dates of less than three months that may not be reported as investments. While the Company may maintain cash and cash equivalents in bank deposit accounts, which at times exceed Federal Deposit Insurance Corporation insured limits, they have not experienced any losses in such accounts.

Management believes it is not exposed to any significant credit risk on cash and cash equivalents.

 

Oil and Gas Properties

 

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

 

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

 

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

 

If capitalized costs, less related accumulated amortization and deferred income taxes, exceed the “full cost ceiling” the excess is expensed in the period such excess occurs. The “full cost ceiling” is determined based

32

on the present value of estimated future net revenues attributed to proven reserves, using current prices less estimated future expenditures plus the lower of cost and fair value of unproven properties within the cost center.

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

 

Impairment of Long-lived Assets

 

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

 

Mineral Properties

 

Mineral property acquisition costs are capitalized in accordance with FASB ASC 930-805, “Extractive Activities-Mining,” when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met.

 

In the event that mineral property acquisition costs are paid with Company shares, those shares are recorded at the estimated fair value at the time the shares are due in accordance with the terms of the property agreements.

 

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 proven and probable reserves and pre-feasibility, the costs incurred to develop such property are capitalized.

 

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis.

 

Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

 

To date the Company has not established any proven or probable reserves on its mineral properties.

 

Asset Retirement Obligations

 

33

Asset Retirement Obligations (“ARO”) associated with the retirement of a tangible long-lived asset, including natural gas and oil properties, are recognized as liabilities in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated assets. The cost of tangible long-lived assets, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the assets. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted fair value is accreted to the expected settlement value. The fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free interest rate.

 

Derivative Liabilities and Classification

 

Free-standing financial instruments (or embedded derivatives) indexed to the Company’s common stock are evaluated to properly classify such instruments within equity or as liabilities in the financial statements. Accordingly, the classification of an instrument indexed to our stock, which is carried as a liability, must be reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.

 

Income Taxes

 

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions for any of the reporting periods presented.

 

Basic Loss per Share

 

Net loss per share was computed by dividing the net loss by the weighted average number of common shares outstanding during the period.  The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding.  For the twelve months ended December 31, 2013 and 2012, the assumed exercise of share options are anti-dilutive due to the Company’s net loss and are excluded from the determination of net loss per share – basic and diluted.  Accordingly, net loss per share basic and diluted are equal in all periods presented.

 

Comprehensive Income

 

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive income (loss) requires that all items that are required to be recognized under current accounting standards

34

as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. For the years presented, the Company's comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments and is presented in the consolidated statements of changes in operations.

Fair Value of Financial Instruments

Effective July 1, 2009, the Company adopted Accounting Standards Codification Topic 820, Fair Value Measurements (ASC 820). ASC 820 defines fair value, 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 also establishes a fair market hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The standard describes three levels based on the reliability of the inputs to determine the fair value:

Level 1 – defined as inputs such as unadjusted quoted prices in active markets for identical assets or   liabilities;

Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3 – defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments consist of cash, accounts receivable, accounts payable and notes payable. The carrying amount of cash, accounts receivable and accounts payable approximates fair value because of the short-term nature of these items.

 

Financial assets and liabilities measured at fair value on a recurring basis:

 

	Fair Value	November 30, 2012		November 30, 2011
	Input Level	Carrying Amount	Estimated Fair Value	Carrying Amount	Estimated Fair Value
Derivative Liability	3	$      58,200	$      58,200	$    129,000	$    129,000
Total Financial Liabilities		$      58,200	$      58,200	$    129,000	$    129,000

 

In management’s opinion, the fair value of convertible notes payable and advances payable approximatesthe carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.

 

Note 3 Recent Accounting Pronouncements

 

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRS) of Fair Value Measurement – Topic 820.” ASU 2011-04 is intended to provide a consistent

35

definition of fair value and improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. The amendments include those that clarify the FASB’s intent about the application of existing fair value measurement and disclosure requirements, as well as those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. This update is effective for annual and interim periods beginning after December 15, 2011. The adoption of ASU 2011-04 did not have a material impact on theCompany’s financial statements.

The FASB issued Accounting Standards Update (ASU) No. 2012-02—Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, on July 27, 2012, to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The changes permit businesses and other organizations to first usesubjective criteria to determine if an intangible asset has lost value. The amendments to U.S. GAAP will be effective for fiscal years starting after September 15, 2012. Early adoption is permitted. The adoption of this ASU did not have a material impact on theCompany’s financial statements.

 

In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities, (“ASU 2011-11”). ASU 2011-11 requires an entity to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Retrospective disclosure is required for all comparative periods presented. The adoption of ASU 2011-11 did not have a material impact on the Company’s financial statements.

In October 2012, the FASB issued ASU No. 2012-04, Technical Corrections and Improvements, (“ASU 2012-04”). This update includes source literature amendments, guidance clarification, reference corrections and relocated guidance affecting a variety of topics in the Codification. The update also includes conforming amendments to the Codification to reflect ASC 820’s fair value measurement and disclosure requirements. The amendments in this update that will not have transition guidance are effective upon issuance. The amendments in this update that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 did not have a material impact on the Company’s financial statements.

Note 4: Oil and Gas Properties

 

	November 30, 2012		November 30, 2011
	Canada	Total	Canada	Total
Unproven Properties
Acquisition Costs	$  119,640	$  488,640	$ 119,640	$  488,640
Development Costs	$     7,365	$    36,404	$    7,365	$    36,404
Asset Retirement Obligation	$     8,422	$     8,422	$    8,422	$     8,422
	$  135,427	$  533,466	$ 135,427	$  533,466
Written Off	$(135,427)	$(533,466)		$(398,039)
	$            -	$            -	$ 135,427	$  135,427

 

36

 

1. Hayter Prospect, Alberta, Canada

 

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

 

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

 

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

 

On October 16, 2009, the Company entered into an amendment to its Participation Agreement pursuant to which it acquired an additional 30% working interest in the Hayter Well in consideration of a release by Force from an amount of $23,938 owed by the Grantor to the Company. The Company holds a 50% working interest of the Grantor’s interest in the Hayter Well.

 

The addendum was subsequently amended by the parties on February 1, 2010 to replace the reference to the Company in the agreement with Nuance Exploration Ltd., the Company’s wholly owned subsidiary.

 

During the year ended November 30, 2012, due to financial restrictions in the current capital markets, management determined the focus of the Company in the future would predominantly be the exploration and development of the Zoro Mineral Property (See Note 5). Accordingly, as no current plans to further develop the Hayter property exist, the company recorded an impairment provision of $135,427.

 

At November 30, 2012, the 50% working interest of the Hayter Well was recorded at $0. The company also recorded $16,845 as an asset retirement obligation (See Note 10).

 

Note 5: Mineral Property

 

On July 6, 2010, the Company entered into a Property Option Agreement (amended May 11, 2011) to acquire an option to purchase a 100% interest in the property known as the Zoro 1 property, a mineral property comprising 52 hectares (approximately 128.50 acres) in the Snow Lake region of Manitoba Canada. In order to exercise the option, the Company must pay cash or issue stock to the option holder by the following dates:

 

1.

$59,600 (CDN 62,000) on signing the agreement (paid)

2.

$102,900 (CDN 100,000) or issue 1,000,000 shares of common stock on or before June, 15, 2011. (1,000,000 shares issued with a fair value of $80,000)

3.

$50,500 cash (CDN 50,000) and issue 7,500,000 common stock on or before June, 15, 2012. ($50,500 paid (CDN 50,000) and 7,500,000 shares issued with a fair value of $150,000)

4.

$403,560 (CDN 400,000) or issue a specified number of common shares still to be determined by the parties on or before June, 15, 2013.

37

During the year ended November 30 2012, the Company incurred $8,639 of exploration expenditures on the property.

 

Note 6: Advances Payable

 

On February 1, 2011, the Company received a cash advance of $30,000. The advance is unsecured, non-interest bearing and has no fixed repayment terms. On June 13, 2012, this advance was settled by the issuance of 3,000,000 shares of common stock with a fair value of $60,000. The excess of fair value over the face value of the note was recorded as an interest expense with a corresponding credit to additional paid in capital.

 

On March 21, 2011, the Company received a cash advance of $20,000. The advance is unsecured, non-interest bearing and has no fixed repayment terms.

Note 7: Related Party Transactions

 

Amounts due to related parties comprise:

 

	2012	2011
Amounts due to Director
Tim DeHerrera	$  4,625	$  625

 

All amounts due to related parties are unsecured, non-interest bearing and have no specific terms for repayment.

 

On July 23, 2010, the Company entered into an employment contract with a director which expired July 22, 2011. Pursuant to the contract, the Director received $5,000 per month remuneration. On December 31, 2010 the Director resigned and the employment contract was terminated.

 

On August 4, 2010, the Company entered into a share for debt settlement agreement with the Company’s former President whereby 643,267 common shares having a fair value of $0.25 each were issued to settle in full management fees of $154,600 rent expense of $1,000 and other expenses of $5,216, totaling $160,817.

 

On July 23, 2010, the Company entered into an employment contract with the Company President which expired July 22, 2011. Pursuant to the contract, the President received 2,500,000 common shares having a fair value of $550,000. Should the contract be terminated prior to completion, the President will return 100,000 shares to treasury for each unfulfilled month of the contract. The President will also receive $2,500 per month for months 1-3, $4,000 per month for months 4-6 and $5,000 per month for months 7-12 of the contract.

 

The fair value of 1,300,000 shares issuedwere earned immediately and were expensed as stock based compensation of $286,000. The fair value of the remaining 1,200,000 shares, which are to be earned over the term of the contract,were charged to operations over the life of the employment contract. This portion of the stock award is accounted for as deferred compensation whereby the fair value of the award is recorded as a component of stockholders’ equity until earned.

 

Pursuant to this stock award the Company recorded management fees of $170,200 for the year ended November 30, 2011 and $93,800 for the year ended November 30, 2010.

 

On July 18, 2011, the Company entered into a new employment contract with the Company President which expires July 18, 2013. Pursuant to the contract, the President receives 2,500,000 common shares

38

having a fair value of $125,000. The President will receive $7,500 per month for the term of the contract. Unless the contract is terminated by either party giving 45 days written notice the contact will automatically renew. Should the contract be renewed then the President will receive 2,500,000 shares of common stock and an annual increase of $2,500 per month upon each renewal. If the Company does not have sufficient cash resources to settle the cash element of the contract, then at the request of the President any accrued unpaid fees may be converted into common stock at $0.025 per share.

The fair value of the 2,500,000 shares, which are to be earned over the term of the contract will be charged to operations over the life of the employment contract. The stock award is accounted for as deferred compensation whereby the fair value of the award is recorded as a component of stockholders’ equity until earned. Pursuant to the stock award the Company recorded management fees of $79,600 for the year ended November 30, 2012 and $45,400 for the year ended November 30, 2011.

 

On July 16, 2012, the Company entered into an addendum to the contract which expires July 15, 2014. Pursuant to the contract, the President received 7,500,000 common shares on July 2012, and will continue to receive 7,500,000 common shares upon each anniversary date of the addendum. The fair value of the shares received was $150,000. The President will receive $10,000 per month for the term of the addendum and an annual monthly increase of $2,500 per month thereafter. Unless the contract is terminated by either party giving 45 days written notice the contact will automatically renew. If the Company does not have sufficient cash resources to settle the cash element of the contract, then at the request of the President any accrued unpaid fees may be converted into common stock at $0.01 per share.

 

The fair value of the 7,500,000 shares, which are to be earned over the term of the contract will be charged to operations over the life of the employment contract. The stock award is accounted for as deferred compensation whereby the fair value of the award is recorded as a component of stockholders’ equity until earned. Pursuant to this stock award the Company recorded management fees of $54,600 for the year ended November 30, 2012.

 

During the years ended November 30, 2012 and 2011 the Company charged or accrued the following amounts:

 

	2012	2011
Amounts charged by directors
Management fees	$  234,825	$  284,475
Amounts charged by former director and Company controlled by former director
Management fees	$               -	$      8,750
Total	$  234,825	$  293,225

Note 8: Convertible Notes Payable

 

At November 30, 2012 and November 30, 2011 convertible notes payable are recorded net of unamortized debt discount of $0 for 2012 and $94,661 for 2011.

 

	2012	2011
Promissory Note #1	$               -	$  100,000
Promissory Note #2	$               -	$    37,500
Promissory Note #3	$               -	$    32,500
Promissory Note #4	$               -	$               -
Promissory Note #5	$               -	$               -
Promissory Note #6	$    20,000	$               -
Promissory Note #7	$    20,000	$               -
Promissory Note #8	$    20,000	$               -
Promissory Note #9	$               -	$               -
Promissory Note #10	$    30,000	$               -
Promissory Note #11	$    42,500	$               -
Promissory Note #12	$    42,500	$               -
Promissory Note #13	$    75,000	$               -
Promissory Note #14	$    50,000	$               -
	$  300,000	$  170,000
Debt Discount	$               -	$  (94,661)
Accrued Interest	$    15,518	$      5,750
	$  315,518	$    81,089

Promissory Note #1

 

On May 11, 2011, the Company received $100,000 cash and the Company issued a convertible promissory note in the amount of $100,000. The promissory note was unsecured, bearing interest at 8% per annum, and matures on May 10, 2013.

 

During the year ended November 30, 2012 the Company accrued $6,691 in interest expense pursuant to the note.

 

The note is convertible at the option of the holder at any time into Common stock of the Company. The conversion price is defined as “50% discount to the average bid price for the shares as quoted on the OTCBB, where the shares are traded, for the three consecutive business days prior to the date of conversion”. The Company determined that the embedded conversion feature was a derivative liability based upon its variable conversion terms.

 

On October 24, 2012, the note was amended. The amended note is unsecured, bears interest at 10% and matures on May 11, 2013. The note may be converted into Common stock at the option of the holder at any time prior to maturity. The conversion price is defined as “50% multiplied by the market price, where market price is determined as the lowest three (3) closing bid prices during the ten trading day period ending the day prior to conversion. The Company determined the embedded conversion feature was a derivative liability based upon its variable conversion terms.

Upon inception the Company recorded debt discount and a derivative liability of $131,000 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term on the note or to the date of conversion. The derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

40

During the year ended November 30, 2012 the Company recorded a loss of $44,400 due to the change in value of the derivative liability during the year, and debt discount of $26,059 was accreted to the statement of operations.

 

During the year ended November 30, 2012, the Company issued 14,344,432 common shares upon the conversion of the principal balance of the note into common stock, and $160,400 of the derivative liability was re-classified as additional paid in capital upon conversion, and the balance of the debt discount of $68,602 was charged to the statement of operations.

 

At November 30, 2012, accrued interest of $11,141, debt discount of $0 and a derivative liability of $13,000 was recorded.

 

During the year ended November 30, 2011, the Company failed to recognize the embedded derivative which arose upon inception of the note due to the note being convertible at the option of the holder immediately. The Company has restated its accounting for this note as more fully described in Note 16.

 

Promissory Note #2

 

On August 18, 2011, the Company received $37,500 cash and issued a convertible promissory note in the amount of $37,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 22, 2012. During the year ended November 30, 2012 the Company accrued $625 in interest expense.

 

After 180 days the note is convertible at the option of the holder into Common stock of the Company. The conversion price is 55% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms once the holder’s conversion rights were triggered.

 

On February 15, 2012, the Company exercised its right of prepayment settlement, and the note was settled for cash consideration of $57,655. During the year ended November 30, 2012, the Company recorded $18,685 of interest pursuant to the terms of the note as a result of an early settlement penalty.

 

Promissory Note #3

 

On September 28, 2011, the Company received $32,500 cash and issued a convertible promissory note in the amount of $32,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 3, 2012. During the year ended November 30, 2012 the Company accrued $845 in interest expense.

 

After 180 days the note is convertible at the option of the holder into Common stock of the Company. The conversion price is 55% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms once the holder’s conversion rights were triggered.

 

Upon the holder’s option to convert becoming active the company recorded debt discount to the extent of the face value of the note of $32,500, expensed the excess amount of $700 as debt discount immediately and recorded a derivative liability of $33,200, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term on the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

41

During the year ended November 30, 2012 the Company recorded a gain of $1,700 due to the change in value of the derivative liability during the year.

 

During the year ended November 30, 2012, the Company issued an aggregate of 2,486,549 common shares upon the conversion of the principal and interest balance of the note into common stock. At that time the balance of debt discount of $32,500 was charged to the statement of operations and the remaining balance of the derivative liability amounting to $31,500 was re-classified to additional paid in capital.

 

At November 30, 2012, there was no accrued interest, debt discount or a derivative liability recorded.

 

Promissory Note #4

 

On January 4, 2012, the Company received $37,500 cash and issued a convertible promissory note in the amount of $37,500. The promissory note was unsecured, bears interest at 8% per annum, and matured on October 6, 2012. During the year ended November 30, 2012 the Company accrued $1,500 interest expense.

 

After 180 days the note is convertible at the option of the holder into Common stock of the Company. The conversion price is defined as “55% discount to the average bid price for the shares as quoted on the OTCBB where the shares are traded for the three consecutive business days prior to the date of conversion”. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms once the holder’s conversion rights were triggered.

 

Upon the holder’s option to convert becoming active the Company recorded a debt discount and a derivative liability of $35,700 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term on the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the year ended November 30, 2012 the Company recorded a loss of $900 due to the change in value of the derivative liability during the year.

 

During the year ended November 30, 2012, the Company issued an aggregate of 6,956,813 common shares upon the conversion of the principal and interest balance of the note into common stock. At that time the balance of debt discount of $35,700 was charged to the statement of operations and the remaining balance of the derivative liability amounting to $36,600 was re-classified to additional paid in capital.

 

At November 30, 2012, there was no accrued interest, debt discount or a derivative liability recorded.

 

Promissory Note #5

 

On February 15, 2012, the Company received $30,000 cash and issued a convertible promissory note in the amount of $30,000. The promissory note is unsecured, interest free and repayable upon demand.

 

The note is convertible at the option of the holder into Common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly the note may be converted into 3,000,000 common shares of the Company.

 

On October 24, 2012, thePromissory Note was amalgamated with Note 9 and a new amended Convertible promissory note for $50,000 was created. (See Promissory Note #14).

 

Promissory Note #6

42

 

On February 15, 2012, the Company received $20,000 cash and issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand.

 

The note is convertible at the option of the holder into Common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly the note may be converted into 2,000,000 common shares of the Company.

 

Promissory Note #7

 

On February 15, 2012, the Company received $20,000 cash and issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand.

 

The note is convertible at the option of the holder into Common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly the note may be converted into 2,000,000 common shares of the Company.

 

Promissory Note #8

 

On February 15, 2012, the Company received $20,000 cash and issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand.

 

The note is convertible at the option of the holder into Common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly the note may be converted into 2,000,000 common shares of the Company.

 

Promissory Note #9

 

On March 20, 2012, the Company received $20,000 cash and issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand.

 

The note may is convertible at the option of the holder into Common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly the note may be converted into 2,000,000 common shares of the Company.

 

On October 24, 2012, thePromissory Note was amalgamated with Promissory Note #5 and a new amended Convertible Promissory Note for $50,000 was created. (See Promissory Note #14)

 

Promissory Note #10

 

On March 20, 2012, the Company received $30,000 cash and issued a convertible promissory note in the amount of $30,000. The promissory note is unsecured, interest free and repayable upon demand.

 

The note is convertible at the option of the holder into Common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly the note may be converted into 3,000,000 common shares of the Company.

 

Promissory Note #11

 

On June 12, 2012, the Company received $42,500 cash and issued a convertible promissory note in the amount of $42,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on

43

March 14, 2013. During the year ended November 30, 2012 the Company accrued $1,593 in interest expense.

 

After 180 days the note is convertible at the option of the holder into Common stock of the Company. The conversion price is defined as “55% multiplied by market price where market price is determined as the average bid price for the shares as quoted on the OTCBB where the shares are traded for the three consecutive business days prior to the date of conversion”. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms once the holder’s conversion rights were triggered.

 

Promissory Note #12

 

On August 17, 2012, the Company received $42,500 cash and issued a convertible promissory note in the amount of $42,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 21, 2013. During the year ended November 30, 2012 the Company accrued $978 in interest expense.

 

After 180 days the note is convertible at the option of the holder into Common stock of the Company. The conversion price is defined as “48% multiplied by market price where market price is determined as the average bid price for the shares as quoted on the OTCBB where the shares are traded for the three consecutive business days prior to the date of conversion”. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms once the holder’s conversion rights were triggered.

 

Promissory Note #13

 

On September 12, 2012, the Company received $75,000 cash and issued a convertible promissory note in the amount of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 14, 2013. During the year ended November 30, 2012 the Company accrued $1,299 in interest expense.

 

After 180 days the note is convertible at the option of the holder into Common stock of the Company. The conversion price is defined as “50% multiplied by market price where market price is determined as the average of the lowest three (3) closing bid prices during the ten trading days prior to the date of conversion”. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms once the holder’s conversion rights were triggered.

 

Promissory Note #14

 

On October 24, 2012, Notes 5 and 9 were amalgamated and a new amended note was created, in the amount of $50,000. The promissory note is unsecured, bears interest at 10% per annum, and is due upon demand. During the year ended November 30, 2012 the Company accrued $507 in interest expense.

 

The note is convertible at the option of the holder at any time into Common stock of the Company. The conversion price is defined as “50% multiplied by the market price, where market price is determined as the lowest three (3) closing bid prices during the ten trading day period ending the day prior to conversion. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms.

 

Upon inception the Company recorded a debt discount and a derivative liability of $45,200 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount has been charged immediately to the statement of operations as the note is due upon demand. The derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

44

 

During the year ended November 30, 2012 the Company recorded a gain of $3,000 due to the change in value of the derivative liability during the year.

 

At November 30, 2012, accrued interest of $507, debt discount of $0 and a derivative liability of $45,200 was recorded.

 

Subsequent to the year ended November 30, 2012, the holder was issued 3,333,333 common shares upon the conversion of $12,000 of the principal balance of the note into common stock.

 

The Company determined that Promissory notes 5, 6, 7,8, 9 and 10 should be accounted for in accordance with FASB ASC 470-20 which addresses “Accounting for Convertible Securities with Beneficial Conversion Features". The intrinsic value of the conversion feature is calculated as the difference between the conversion price $0.01 and the fair value of the common stock into which the debt is convertible at the commitment date (being $0.05 for notes 5, 6, 7 and 8 and $0.02 for notes 9 and 10), multiplied by the number of shares into which the debt is convertible. The valuation of the beneficial conversion feature is calculated as pro rata portion of the proceeds from issuance of the convertible debt, being equal to proceeds received multiplied by intrinsic value divided by the total value received (i.e. the aggregate of proceeds and intrinsic value). This beneficial conversion feature is allocated to debt discount and additional paid in capital. Because the debt is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

During the year ended November 30, 2012 interest expense relating to the beneficial conversion feature of convertible notes of $97,000 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

Note 9: Derivative Liabilities

 

The Company issued financial instruments in the form of convertible notes with embedded conversion features. Some of the convertible notes payable have conversion rates, which are indexed to the market value of the Company’s stock price.

 

During the year ended November 30, 2012, the Company recorded derivative liabilities for embedded conversion features related to convertible notes payable of face value $120,000. During the year ended November 30, 2012, $172,800 of convertible notes payable plus accrued interest were converted into common stock of the Company. The Company performed a final mark-to-market adjustment for the derivative liability related to the convertible notes and the carrying amount of the derivative liability related to the conversion feature of $228,500 was re-classed to additional paid in capital on the date of conversion in the statement of shareholders’ deficit. During the year ended November 30, 2012, the Company recognized a loss of $40,600 based on the change in fair value (mark-to market adjustment) of the derivative liability associated with the embedded conversion features in the accompanying statement of operations.

 

These derivative liabilities have been measured in accordance with fair value measurements, as defined by ASC 820. The valuation assumptions are classified within Level 1 and Level 2 inputs. The following table represents the Company’s derivative liability activity for the embedded conversion features discussed above.

	2012	2011
Balance, beginning of year	$  129,000	$           -
Initial recognition of derivative liability	$  117,100	$ 131,000
Conversion of derivative instruments to Common Stock	$ (228,500)	$           -
Mark-to-Market adjustment to fair value	$    40,600	$   (2,000)
Balance, end of year	$    58,200	$ 129,000

 

These instruments were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. The instruments do not qualify for hedge accounting, and as such, all future changes in the fair value will be recognized currently in earnings until such time as the instruments are exercised, converted or expire. The following assumptions were used to determine the fair value of the derivative liabilities as at November 30, 2012 and 2011.

 

	2012	2011
Risk Free Rate	0.13%	0.25%
Dividend Yield	None	None
Weighted Average	0.44%	0.00%
Expected Term (Years)	1.5	1.5
Weighted Average Volatility	98.00%	97.00%

 

Note 10: Asset Retirement Obligation

 

Total future asset retirement obligations were estimated by management based on the Company’s net ownership interest, estimated costs to reclaim and abandon the wells and the estimated timing of the costs to be incurred in future periods. The Company has estimated the net present value of its total asset retirement obligations at November 30, 2012 to be $16,845 based on a total undiscounted liability of $17,637 (CDN 17,500) in the Hayter Prospect, Alberta, Canada. These payments are expected to be made over the next seven years, with the majority of the cost incurred between 2016 and 2019.

 

The Company’s credit adjusted risk free rate of 15% and an inflation rate of 8% were used to calculate the present value of the asset retirement obligation.

 

	2012	2011
Balance, beginning of year	$ 13,524	$ 12,282
Liabilities Incurred	$         -	$         -
Accretion Expense	$   2,238	$   1,965
Effect of Foreign Exchange	$   1,083	$    (723)
	$ 16,845	$ 13,524

 

Note 11: Capital Stock

 

On November 1, 2006 the Company authorized 90,000,000 shares of commons stock with a par value of $0.001 per share and 10,000,000 shares of preferred stock with a par value of $0.001.

During the period of November 1, 2006 (Inception) to November 30, 2006, the Company issued 23,000,000 common shares at $0.005 per share for total proceeds of $107,000 net of $8,000 in commissions pursuant to a private placement. 

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

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

46

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

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

 

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

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

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

On July 9, 2010, the Company issued 500,000 common shares at $0.20 per share for gross proceeds of $100,000.

 

On July 23, 2010, the Company issued 2,500,000 common shares pursuant to an employment contract with the Company President. The fair value of the shares issued was $550,000.

 

On August 4, 2010, the Company issued 643,267 common shares pursuant to a debt settlement agreement, in settlement of amounts owing to the Company’s former president in the amount of $160,817.

 

On December 1, 2010, the Company issued 200,000 common shares for aggregate proceeds of $50,000.

 

On June 3, 2011 the Company issued 1,000,000 shares of common stock pursuant to the Zoro 1 mineral property agreement, with a fair value of $80,000.

 

On June 7, 2011 and July 18, 2011, the Company issued 1,000,000 and 1,500,000 shares of common stock to the President pursuant to the new management contract. (Note 7). The shares issued had a fair value of $125,000.

 Between April 9, 2012 and April 23, 2012, the Company issued 2,486,549 common shares with an aggregate fair value of $65,300 pursuant to the conversion of a note payable falling due on July 3, 2012 to common stock.

 

On May 5, 2012, the Company issued 2,691,926 common shares with a fair value of $53,838 pursuant to a consultancy agreement with Primary Capital LLC. (Note 14)

 

On June 12, 2012, the Company issued 7,500,000 common shares with a fair value of $150,000 pursuant to the Zoro 1 mineral property option agreement.

On June 13, 2012, the Company issued 3,000,000 common shares with a fair value of $60,000 in settlement of a $30,000 advance payable.

 

Between July 9, 2012 and August 14, 2012, the Company issued an aggregate of 6,956,813 common shares with an aggregate fair value of 75,600, upon the conversion of the convertible note payable falling due on October 6, 2012.

 

47

On July 17, 2012, the Company issued 7,500,000 common shares with a fair value of $150,000 pursuant to an employment agreement with the President of the Company.

 

On September 5, 2012, the Company issued 3,000,000 common shares with a fair value of $51,000 pursuant to a consultancy agreement.

 

Between September 20, 2012 and November 23, 2012 the Company issued an aggregate of 14,344,432 common shares with an aggregate fair value of $260,401 upon the conversion of the convertible note payable falling due on May 10, 2013.

On September 26, 2012, The Company increased its authorized capital stock to 750,000,000 common shares from 270,000,000 common shares.

 

On September 26, 2012, the Company issued 3,000,000 common shares with a fair value of $73,500 pursuant to a consultancy agreement.

 

Note 12: Income Taxes

 

Income taxes are summarized as follows for the year ended November 30, 2012.

 

	November 30, 2012
Current Benefit	$               (1,073,628)
Deferred Benefit	$                 1,073,628
Net Income Tax (benefit) expense	$                                  -

 

A full valuation allowance has been established for deferred tax assets based on a “more likely than not” threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carry forward periods provided in the tax law. While the Company’s statutory tax rate can range from 15% to 39% depending on the taxable income level, the effective tax rate is 0% due to the effects of the valuation allowance described above. The Company does not have any material uncertainties with respect to its provisions for income taxes.

 

Note 13: Supplemental Disclosure with Respect to Cash Flows

 

During the year ended November 30, 2012, the following non-cash investing and financing activities occurred:

 

1.

2,691,926 common shares were issued with a fair value of $53,838 pursuant to a consulting agreement (Note 11).

2.

6,000,000 common shares were issued with a fair value of $124,500 pursuant to a consulting agreement.

3.

An aggregate of 2,486,549 common shares were issued with a fair value of $65,300 upon the extinguishment of a convertible note payable.

4.

An aggregate of 6,956,813 common shares were issued with a fair value of $75,600 upon the extinguishment of a convertible note payable.

5.

An aggregate of 14,344,432 common shares were issued with a fair value of $260,401 upon the extinguishment of a convertible note payable.

6.

7,500,000 common shares were issued with a fair value of $150,000 pursuant to Zoro mineral property agreement. (Note 5)

7.

An aggregate of 3,000,000 common shares were issued with a fair value of $60,000 to settle an advance payable in the amount of $30,000.

8.

48

7,500,000 common shares were issued with a fair value of $150,000 pursuant to an employment contract.

During the year ended November 31, 2011, the following non-cash investing and financing activities occurred;

 

1.

2,500,000 common shares were issued with a fair value of $125,000 pursuant to an employment contract.

2.

1,000,000 common shares were issued with a fair value of $80,000 pursuant to a mineral property option agreement. 

During the year ended November 30, 2010, the following non-cash investing and financing activities occurred:

 

1.

2,500,000 common shares were issued with a fair value of $550,000 pursuant to an employment contract.

2.

643,267 common shares were issued pursuant to a debt settlement agreement, in settlement of amounts owing to the Company’s former president in the amount of $160,817.

 

During the year ended November 30, 2009, the following non-cash investing and financing activities occurred:

1.

450,000 common shares were issued with a fair value of $0.32 per share for a total of $144,000 pursuant to an agreement to acquire an additional 25% working interest in the Diamond Springs Prospect.

 

During the year ended November 30, 2008, the following non-cash investing and financing activities occurred:

1.

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

 

During the year ended November 30, 2007, the Company sold its cost interest in the 3D seismic data for a promissory note. On November 30, 2007, the Company settled the promissory note for a 20% of the Grantor’s working interest in the County Line 10D Hayter 10-8-40-1 W4M well (Note 6). This transaction has been excluded from the statements of cash flows.

 

Note 14: Commitments

 

On May 5, 2012, the Company entered into a consultancy agreement with Primary Capital LLC. (“Primary”) whereby Primary would provide financial advisory and investment banking services to the Company for a period of two years commencing May 7, 2012. Pursuant to the agreement the Company paid Primary a non-refundable signing fee of $10,000 and issued Primary common stock equivalent to 4.9% (the “Applicable Percentage”) of the Common shares on a fully diluted basis after giving effect to the conversion of all outstanding derivative securities at the time of inception of the agreement,

 

Accordingly on May 5, 2012, 2,691,926 common shares were issued with a fair value of $53,838.

 

49

Pursuant to the agreement should the Company issue further potentially dilutive derivative instruments, or issue stock from treasury at any time, then within five (5) days of the end of the fiscal quarter in which such instruments or stock was issued, the Company will issue to Primary additional common shares (the “Adjustment shares”) such that Primary continues to hold common stock equivalent to the Applicable Percentage.

Should the Board of Directors grant Options, Warrants or other securities pursuant to a restricted stock purchase plan or stock option plan approved by the stockholders and Board of Directors of the Company, to employees or Directors such grants shall be considered Excluded Securities for the purposes of determining the Applicable Percentage and the calculation of Adjustment shares in future periods.

 

Also if the Company completes any financing during the engagement period and also within 2 years of the termination of the agreement with any party introduced to the Company by Primary, Primary will be entitled to:

 

1.

a cash fee of 8% of the gross proceeds of the financing,

2.

a 5 year warrant to purchase that number of shares equal to 8% of the number of shares issued in the financing on the same terms as the financing. Any such warrant issued will be in a form provided by Primary and may include terminology allowing for full ratchet anti-dilution provisions, standard and cashless exercise provisions and the same registration rights as received by the original investors.

The agreement can be terminated by either party by providing written notice at any time after the first anniversary of the agreement if either party is in breach of the agreement and fails to cure such breach within 15 days after it receives notice of such breach.

 

As at November 30, 2012, the Company has accrued $25,100 being the fair value of stock issuable at November 30, 2012 pursuant to the contract.

 

Note 15: Subsequent Events

 

Subsequent to the year ended November 30, 2012, the Company issued 3,333,333 common shares with a fair value of $17,500 pursuant to the partial conversion of a note payable falling due on July 3, 2012 to common stock.

 

Note 16: Restatement

 

1.

Mineral Property Option Costs

The Company on review of its accounting policy for the capitalization of mineral option costs, and has determined that the mineral option costs incurred in the year ended November 30, 2010, amounting to $59,600 were expensed, when they should have been capitalized and accordingly the results for the year ended November 30, 2010, have been restated. The effect of the restatement is to increase the value of the Mineral Property Option by $59,600 at November 30, 2010 and 2011 and to reduce the loss for the year ended November 30, 2010 by $59,600, resulting in the accumulated deficit being reduced by $59,600 at November 30, 2010 and November 30, 2011.

 

2.

Convertible Notes Payable

50

The Company has determined that certain transactions relating to the convertible notes payable were not correctly accounted for in the year ended November 30,2011 and accordingly the results of the year ended November 30, 2011 were restated.

The Company did not recognize any embedded derivative liabilities arising upon the inception or during the term of certain convertible notes payable. As a result of this, at November 30, 2011 the value of the convertible notes on the balance sheet was overstated by $136,781 and derivative liabilities were understated by $129,000. In the statement of loss, accretion of convertible debt and interest discount expense was overstated by $5,781 and the gain on change in fair value of derivative liability was understated by $2,000.

 

The effect of the restatement is to reduce the carrying value of the convertible notes payable from $217,870 to $210,089 and to increase derivative liability from $0 to $129,000. Also the loss for the year is reduced from $509,720 to $501,939, with a corresponding reduction to deficit at November 30, 2011.

Note 17:Legal Matters

The Company has no known legal issues pending.

Note 18:Going Concern

The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern.  

For the year ended November 30, 2012, the Company had a comprehensive loss of $1,073,628.  In addition, the Company had a net loss of $501,939 for the year ended November 30, 2011. These circumstances result in substantial doubt as to the Company’s ability to continue as a going concern.  The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to operate profitably or raise additional capital through debt financing and/or through sales of common stock.  

The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  

51

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

No events occurred requiring disclosure under Item 304 of Regulation S-K during the fiscal year ending November 30, 2012 that were not previously reported in our filings with the Securities and Exchange Commission.

Item 9A(T). Controls and Procedures

Disclosure Controls and Procedures

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our sole chief executive officer and principal financial officer concluded that as of November 30, 2012, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to our company’s management, including our company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

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

Management’s Report on Internal Control Over Financial Reporting

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

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

Our Management, including our principal executive officer and principal financial officer, conducted an evaluation of the design and operation of our internal control over financial reporting as of November 30, 2012 based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over financial reporting was not effective as at November 30, 2012 due to the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

52

Our company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending November 30, 2013, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely effected in a material manner.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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

Changes in Internal Control Over Financial Reporting.

There were no changes in the Company’s internal control over financial reporting during the quarter ended November 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following table contains information with respect to our current executive officers and directors:

Name	Age		Principal Positions With Us
Tim DeHerrera		54		President, CEO, CFO and Director

Effective July 21, 2010, Tim DeHerrara was appointed as president, CEO, CFO and director of our company. Mr. DeHerrera currently serves as a director of the publicly held corporation Grid Petroleum Corp. He was President of Bonfire Productions Inc. from September 2009 until May 2010. During some of the same period he was President and Chairman of the Intervision Network Corporation from January 2008 until January 2010. Intervision Network was a technology business in IPTV broadcasting and related live Internet-based multimedia transmission technologies including a global content delivery network. Prior to that, from January 2005, he was President and Chairman of Future Quest Incorporated, a publicly traded oil and gas exploration company. From May 2006 until December 2007 he was also President of Atlantis Technology Group a technology based company. Additionally, during the past several years he has been a consultant to several other companies.

Term of Office

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

Family Relationships

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of

53

competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Committees of the Board

Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the board of directors.

Our company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our CEO and director, Tim DeHerrera, at the address appearing on the first page of this annual report.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us during or with respect to the year ended November 30, 2012, the following persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended November 30, 2012:

Name and principal position

Number of late reports

Transactions not timely reported

Known failures to file a required form

Tim DeHerrera

0

0

0

Code of Ethics

We adopted a Code of Ethics applicable to all of our directors, officers, employees and consultants, which is a “code of ethics” as defined by applicable rules of the SEC. Our Code of Ethics was attached as an exhibit to our annual report filed on Form 10-K on March 15, 2009. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.

54

Item 11. Executive Compensation

The table below summarizes all compensation awarded to, earned by, or paid to our officers for all services rendered in all capacities to us for our fiscal years ended November 30, 2012 and 2011.

Narrative Disclosure to Summary Compensation Table

Tim DeHerrara

On August 10, 2010, we entered into a written Employment Agreement (the “Agreement”) with Tim DeHerrera (“DeHerrera”). Pursuant to the terms and conditions of the Agreement:

·

For a 12-month period commencing as of July 23, 2010, DeHerrera will serve as our President and Chief Executive Officer and as a member of the Board of Directors.

·

During his tenure with us, DeHerrera responsibilities will include the following:

o

Development of Management Strategy and Corporate Vision

o

Review and Development of Business Strategies

o

Organizational and Personnel Development

o

General Review and Development of Corporate Material

o

Corporate and Client Restructuring

o

Review and assisting in preparation of corporate filing

·

DeHerrera will earn an annual salary of $99,500 payable as follows:

o

$2500 per month for the first three months of employment; $4000 per month for months 4-6 of employment; and $5000 per month for the final six months of the employment term. If we do not possess the capital to make cash payments to DeHerrera, then the monies owed him shall accrue as insider debt, which DeHerrera will have the option to convert into shares of our common stock at $.10 per share; and

o

2,500,000 shares of our stock which was payable upon execution of the Agreement. If the Agreement is terminated by either DeHerrera or us, then DeHerrera shall owe to us an amount of shares equal to 100,000 shares multiplied by the number of months he failed to work for us during that time period from July 23, 2010 to July 22, 2011.

·

The Agreement may be terminated on 30 days notice by either us or DeHerrera.

On July 18, 2011, we entered into a new employment contract with DeHerrera as President, which expires July 18, 2013. Pursuant to the contract, DeHerrera received 2,500,000 common shares having a fair value of $125,000. DeHerrera will receive $7,500 per month for months 13-24 of the contract. Unless the contract is terminated by either party giving 45 days written notice the contact will automatically renew. Should the contract be renewed then DeHerrera will receive 2,500,000 shares of common stock and an annual increase of $2,500 per month upon each renewal. If the Company does not have sufficient cash resources to settle the cash element of the contract, then at the request of DeHerrera any accrued unpaid fees may be converted into common stock at $0.025 per share.

55

On July 16, 2012, we entered into an addemdum to the contract which expires on July 15, 2014. Pursuant to the contract DeHerrera received 7,500,000 common shares and will continue to receive 7,500,000 common shares upon the anniversary of the addendum. DeHerrera will receive $10,000 per month for months 25-36 of the contract and an annual monthly increase of $2,500 per month thereafter. Unless the contract is terminated by either party giving 45 days written notice the contact will automatically renew. If we do not have sufficient cash resources to settle the cash element of the contract, then at the request of DeHerrera any accrued unpaid fees may be converted into common stock at $0.01 per share.

Outstanding Equity Awards at Fiscal Year-End

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of December 31, 2012.