10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended May 31, 2012
[  ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from __________ to__________
	Commission File Number: 000-52494

Force Energy Corp.

(Exact name of registrant as specified in its charter)

Nevada	98-0462664
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1400 16th Street, Suite 400, Denver, CO 80202

(Address of principal executive offices)

720-470-1414

(Registrant’s telephone number)

___________________________

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 60,115,742 common shares as of May 31, 2012.

	TABLE OF CONTENTS
		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4:	Controls and Procedures	12
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	13
Item 1A:	Risk Factors	13
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3:	Defaults Upon Senior Securities	13
Item 4:	Mine Safety Disclosures	13
Item 5:	Other Information	13
Item 6:	Exhibits	13

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our financial statements included in this Form 10-Q are as follows:

F-1	Balance Sheets as of May 31, 2012 and November 30, 2011 (unaudited);
F-2	Statements of Operations for the three and six months ended May 31, 2012 and 2011 and period from November 1, 2006 (Inception) to May 31, 2012 (unaudited);
F-4	Statements of Cash Flows for the six months ended May 31, 2012 and 2011 and period from November 1, 2006 (Inception) to May 31, 2012 (unaudited);
F-5	Notes to Financial Statements.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended May 31, 2012 are not necessarily indicative of the results that can be expected for the full year.

3

FORCE ENERGY CORP.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

May 31, 2012 and November 30, 2011

(Stated in US Dollars)

	May 31,			November 30
	2012			2011
	(Unaudited)			(Audited)
ASSETS
Current
Cash	$	19,958		$	16,393
Prepaid expenses		—			1,119
		19,958			17,512
Oil and gas properties,  full cost method of accounting
Unproved Properties – Note 5		135,427			135,427
Mineral Property Option – Note 6		80,000			80,000
	$	235,385		$	232,939
LIABILITIES
Current
Bank overdraft	$	—		$	—
Accounts payable and accrued liabilities		21,580			48,871
Advances payable - Note 7		50,000			50,000
Due to related parties - Note 8		—			625
Convertible Notes Payable - Note 9		357,432			217,870
		429,012			317,366
Asset retirement obligation – Note 10		15,148			13,524
		444,160			330,890
STOCKHOLDERS’ EQUITY (DEFICIENCY)
Preferred stock, $0.001 par value 10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value – Note 11 270,000,000 shares authorized 61,115,742 shares issued (November 30, 2010, - 5,493,267 shares issued)		60,116			54,937
Additional paid in capital		3,048,450			2,826,176
Deferred stock compensation – Note 10		(17,200	)		(79,600	)
Deficit accumulated during the development stage		(3,300,141	)		(2,899,464	)
		(208,775	)		(97,951	)
	$	235,385		$	232,939

Nature of Operations and Ability to Continue as a Going Concern – Note 2

Commitments - Note 13

Subsequent events – Note 14

See accompanying notes to the Financial Statements

F-1

FORCE ENERGY CORP.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

for the three and six month periods ended May 31, 2012 and May 31, 2011 and

for the period from November 1, 2006 (Date of Inception)

to May 31, 2012

(Stated in US Dollars)

(Unaudited)

													November 1,
													2006 (Date of
	Six Months Ended						Three Months Ended						Inception) to
	May 31,						May 31,						May 31,
	2012			2011			2012			2011			2012
														(cumulative)
Expenses
Accounting and audit fees	$	14,400		$	12,050		$	3,900		$	4,600		$	301,521
Accretion of ARO		1,075			970			551			510			5,994
Accretion of convertible note discount		68,311			—			30,630			—			110,431
Bank charges and interest		981			803			149			425			5,248
Consulting fees		63,838			—			63,838			—			472,338
Depreciation		—			—			—			—			4,651
Interest on convertible notes		6,906			438			3,203			438			12,656
Investor relations		—			5,000			—			5,000			61,443
Legal fees		12,259			8,573			5,453			3,611			205,064
Management fees – Note 10		107,400			169,000			53,700			81,000			1,255,175
Mineral property option costs		—			—			—			—			59,600
Mineral property exploration costs		—			1,575			—			1,575			55,611
Office expenses		2,388			2,573			333			1,407			41,810
Oil and gas exploration costs		—			—			—			—			15,000
Rent – Note 6		1,548			778			777			393			45,249
Tax penalties and interest		421			—			421			—			42,910
Transfer and filing fees		919			4,044			429			1,552			79,664
Travel		1,289			—			1,289			—			11,630
Write-off of oil and gas costs		—			—			—			—			418,039
Loss before other items		(281,735	)		(205,804	)		(164,673	)		(100,511	)		(3,204,034	)
Other items:
Debt forgiveness		—			—			—			—			15,286
Interest expense - beneficial conversion feature of convertible notes		(140,000	)		—			(50,000	)		—			(140,000	)
Foreign exchange gain (loss)		(830	)		(815	)		454			18			6,561
Gain on elimination of convertible note		21,888			—			21,888			—			21,888
Interest income		—			—			—			—			158
		(118,942	)		(815	)		(27,658	)		18			(96,107	)
Net loss and comprehensive loss for the period	$	(400,677	)	$	(206,619	)	$	(192,331	)	$	(100,493	)	$	(3,300,141	)

See accompanying notes to the Financial Statements

F-2

FORCE ENERGY CORP.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

for the three and six month periods ended May 31, 2012 and May 31, 2011 and

for the period from November 1, 2006 (Date of Inception)

to May 31, 2012

(Stated in US Dollars)

(Unaudited)

													November 1,
													2006 (Date of
	Six Months Ended						Three Months Ended						Inception) to
	May 31,						May 31,						May 31,
	2011			2010			2011			2010			2011
														(cumulative)
Basic loss per share	$	(0.01	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted average number of shares outstanding		55,441,775			51,436,168			56,938,846			51,437,267

 
See accompanying notes to the Financial Statements

F-3

FORCE ENERGY CORP.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the six month periods ended May 31, 2012 and February 28, 2011 and

for the period from November 1, 2006 (Date of Inception)

to May 31, 2012

(Stated in US Dollars)

(Unaudited)

							Period from
							November 1,
							2006 (Date of
	Six Months Ended						Inception) to
	May 31			May 31			May 31
	2012			2011			2012
								(cumulative)
Cash Flows provided by (used in) Operating Activities
Net loss for the period	$	(400,677	)	$	(206,619	)	$	(3,300,141	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accrued interest		6,906			438			12,656
Interest expense - beneficial conversion feature of convertible note		140,000			—			140,000
Accretion of discount on convertible notes and interest		68,311			—			110,431
Gain on elimination of convertible note		(21,888	)		—			(21,888	)
Consulting fees paid in stock		53,838			—			458,838
Share based compensation		62,400			132,000			657,800
Debt forgiveness		—			—			(15,286	)
Accretion expense		1,075			1,508			5,991
Depreciation		—			—			4,651
Write-off of oil and gas costs		—			—			418,039
Changes in non-cash working capital items related to operations:
Prepaid expenses		1,119			(4,815	)		—
Advance payable		—			50,000			50,000
Accounts payable and accrued liabilities		(27,288	)		(20,692	)		(2,459	)
Net cash used in operating activities		(116,204	)		(48,180	)		(1,481,368	)
Cash Flows used in Investing Activities
Acquisition of property and equipment		—			—			(4,651	)
Acquisition and development costs of oil and gas properties		—			—			(387,517	)
Net cash used in investing activities		—			—			(392,168	)
Cash Flows provided by Financing Activities
Capital stock issued		—			50,000			1,419,000
Convertible note payable		177,500			100,000			347,500
Due to related parties		(625	)		(8,000	)		160,817
Settlement of Convertible note payable		(57,655	)		—			(57,655	)
Cash acquired on reverse acquisition		—			—			37,058
Net cash provided by financing activities		119,220			142,000			1,906,720
Effect of foreign currency translation		549			—			(13,226	)
Increase (decrease) in cash during the period		3,565			93,890			19,958
Cash, (Bank indebtedness) beginning of the period		16,393			(136	)		—
Cash, end of the period	$	19,958		$	93,684		$	28,583

Supplemental Disclosure with Respect to Cash Flows – Note 12

See accompanying notes to the Financial Statements

F-4

FORCE ENERGY CORP.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2012

(Stated in US Dollars)

(Unaudited)

Note 1 Interim Reporting

The unaudited financial information furnished herein reflects all adjustments, which in the opinion of management are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented. All adjustments are of a normal recurring nature. These interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s audited consolidated financial statements for the fiscal year ended November 30, 2011. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal period and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s audited consolidated financial statements for the fiscal year ended November 30, 2011, has been omitted. The results of operations for the six-month period ended May 31, 2012 are not necessarily indicative of results for the entire year ending November 30, 2012.

Note 2 Nature of Operations and Ability to Continue as a Going Concern

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

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

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

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At May 31, 2012, the Company has a working capital deficit of $409,054. The Company has yet to achieve profitable operations, has accumulated losses of $3,300,141 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company 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.

F-5

Note 2 Summary of Significant Accounting Policies

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

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

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. 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 activites. Mineral exploration is dependent upon finding an ore body that is economic to develop. Uncertainties that exist with nNatural gas exploration include 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 company incorporatated 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 Company’s functional currency is the Canadian dollar as substantially all of the Company’s operations are in Canada. The Company uses the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission (“SEC”).

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

F-6

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

Property and Equipment

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

Oil and Gas Properties

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

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

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

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

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

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.

F-7

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

Mineral Properties – (cont’d)

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.

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.

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.

F-8

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

Basic Loss per Share

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

Comprehensive Income

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

Note 3 Newly Issued Accounting Pronouncements

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

Note 4 Financial Instruments

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

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

These levels are:

Level 1- inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

F-9

Note 4 Financial Instruments – (cont’d)

Level 3- inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The carrying value of the Company’s financial assets and liabilities consisting of cash, accounts payable and accrued liabilities, advances payable, convertible note payable and due to related parties in management’s opinion, approximate their fair value due to the short maturity of such instruments. In management’s opinion, the fair value of notes payable is approximate to 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 5 Oil and Gas Properties

	May 31, 2012
	Canada		Total
Unproved properties
- acquisition costs	$	119,640	$	488,640
- development costs		7,365		36,404
- asset retirement obligation		8,422		8,422
		135,427		533,466
Written off		—		(398,039	)
	$	135,427	$	135,427

	November 30, 2011
	Canada		Total
Unproved properties
- acquisition costs	$	119,640	$	488,640
- development costs		7,365		36,404
- asset retirement obligation		8,422		8,422
		135,427		533,466
Written off		—		(398,039	)
	$	135,427	$	135,427

a) Hayter Prospect, Alberta, Canada

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

F-10

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

a) Hayter Prospect, Alberta, Canada – (cont’d)

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

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

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

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

As at May 31, 2012, the 50% working interest of the Hayter Well was recorded at $135,427 (November 30, 2011:- $135,427). The company also recorded $15,148 (November 30, 2011 - $13,524) as an asset retirement obligation (Note 10).

Note 6 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 Optionor by the following dates:

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

ii) $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)

iii) $194,800 (Cdn$200,000) or issue a specified number of common shares still to be determined by the parties on or before June, 15, 2012 (Note 13)

iv) $389,600 (Cdn$400,000) or issue a specified number of common shares still to be determined by the parties on or before June, 15, 2013.

During the six month period ended May 31, 2012 the Company incurred $nil (six month period ended May 31, 2011 - $nil) of exploration expenditures on the property.

F-11

Note 7 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 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 8 Related Party Transactions

Amounts due from (to) related parties comprise:

	May 31		November 30
	2012		2011
Amounts due to Director
Management fees	$	—	$	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 expires July 22, 2011. Pursuant to the contract the Director will receive $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 owing of $5,216, an aggregate amount of $160,817.

On July 23, 2010, the Company entered into an employment contract with the Company President which expires 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 issued which were earned immediately have been expensed as stock based compensation of $286,000. The fair value of the remaining 1,200,000 shares issued which are to be earned over the term of the contract will be 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 (year ended November 30, 2011 - $93,800).

F-12

Note 8 Related Party Transactions – (cont’d)

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 received 2,500,000 common shares having a fair value of $125,000. The President 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 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 issued which are to be earned over the term of the contract will be 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 $62,400 (six month period ended May 31, 2011 - $nil).

During the three and six month periods ended May 31, 2012 and May 31, 2011, the Company charged or accrued the following amounts:

	Six Month				Three Month
	Period Ended				Period Ended
	May 31,				May 31,
	2012		2011		2012		2011
Amounts charged by directors
Management fees	$	107,400	$	160,250	$	53,700	$	81,000
Amounts charged by former director and Company controlled by former director
Management fees		—		8,750		—		—
Total	$	107,400	$	169,000	$	53,700	$	81,000

F-13

Note 9 Convertible Notes Payable

	May 31		November 30
	2012		2011
Promissory Note #1		100,000		100,000
Promissory Note #2		—		37,500
Promissory Note #3		—		32,500
Promissory Note #4		37,500		—
Promissory Note #5		30,000		—
Promissory Note #6		20,000		—
Promissory Note #7		20,000		—
Promissory Note #8		20,000		—
Promissory Note #9		20,000		—
Promissory Note #10		30,000		—
		277,500		170,000
Interest		9,652		5,750
Accretion expense		70,280		42,120
	$	357,432	$	217,870

As at May 31, 2012 and November 30, 2011 convertible notes payable are recorded net of unamortized debt and accrued interest discount of $63,637 and $6,197 respectively.

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 is unsecured, bears interest at 8% per annum, and matures on May 10, 2013. During the six month period ended May 31, 2012 the Company accrued $8,439 (six month period ended May 31, 2011 - $438) in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is defined as “the lesser 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”.

Promissory Note #2

On August 18, 2011, the Company received $37,500 cash and the Company 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 six month period ended May 31, 2012 the Company accrued $1,470 (six month period ended May 31, 2011 - $nil) in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 55% of the market price, where market price defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”. On February 15, 2012, the Company exercised its right of prepayment settlement, and the note was settled for cash consideration of $57,655

F-14

Note 9 Convertible Notes Payable - (cont’d)

Promissory Note #3

On September 28, 2011, the Company received $32,500 cash and the Company 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 six month period ended May 31, 2012 the Company accrued $1,534 (six month period ended May 31, 2011 - $nil) in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 55% of the market price, where market price defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”. On April 9, 2012, at the request of the holder the Company issued 875,000 common shares with a fair value of $17,500 upon partial conversion of the note. On April 18, 2012 and April 23, 2012 upon the request of the holder the Company issued 944,882 and 666,667 common shares respectively with an aggregate fair value of $16,115 upon the final conversion of the note to common stock. As a result of the conversion the Company recorded a gain on elimination of the note of $21,888.

Promissory Note #4

On January 4, 2012, the Company received $37,500 cash and the Company 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 October 6, 2012. During the six month period ended May 31, 2011 the Company accrued $459 (six month period ended May 31, 2011 - $nil) in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is defined as “the lesser 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”.

Promissory Note #5

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

The note may be converted 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 #6

On February 15, 2012, the Company received $20,000 cash and the Company 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 be converted 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.

F-15

Note 9 Convertible Notes Payable - (cont’d)

Promissory Note #7

On February 15, 2012, the Company received $20,000 cash and the Company 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 be converted 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 the Company 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 be converted 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 the Company 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 be converted 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 #10

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

The note may be converted 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.

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 beneficial conversion feature is calculated at its intrinsic value (that is, 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 recorded cannot be greater than the face value of the note issued.

F-16

Note 9 Convertible Notes Payable - (cont’d)

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to 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 six month period ended May 31, 2012 interest expense relating to the beneficial conversion feature of convertible notes of $140,000 (six month period ended May 31, 2011 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

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 assets retirement obligations at May 31, 2012 to be $15,148 based on a total undiscounted liability of $17,045 (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.

	May 31		November 30
	2012		2011
Balance, beginning of period	$	13,524	$	12,282
Liabilities incurred		—		—
Accretion expense		1,075		1,965
Effect of foreign exchange		549		(723	)
	$	15,148	$	13,524

Note 11 Capital Stock

Authorized

10,000,000 Preferred share, par value $0.001 – none issues

270,000,000 Common shares par value $0.001– 60,115,742 issued (November 30, 2011 54,937,267 shares issued)

Issued

During the six month period ended May 31, 2012, the Company incurred the following stock transactions:

i) On April 9, 2012 issued 875,000 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

F-17

Note 11 Capital Stock - (cont’d)

Issued- (cont’d)

ii) On April 18, 2012 and April 23, 2012 issued 944,882 and 666,667 common shares respectively with an aggregate fair value of $16,115, upon the final conversion of the convertible note payable falling due on July 3, 2012 to common stock..

iii) On May 5, 2012, issued 2691,926 common shares with a fair value of $53,838 pursuant to a consultancy agreement with Primary Capital LLC. (Note 13)

Note 12. Supplemental Disclosure with Respect to Cash Flows

During the six month period ended May 31, 2012, the following non-cash investing and financing activities occurred:

i) 2,691,926 common shares were issued with a fair value of $53,838 pursuant to a consulting agreement (Note 13).

ii) An aggregate of 2,486,549 common shares were issued with a fair value of $33,615 upon the extinguishment of a convertible note payable.

Note 13 Commitment

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 with 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.

Pursuant to the agreement should the Company issue further potentially dilutive derivative instruments, or issue stock from treasury at any time, then within 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 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 complete 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:

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

ii) a 5year warrant to purchase that number of shares equal to 8% of the number of shares securities issued in the financing on the same terms as the financing.

F-18

Note 13 Commitment - (cont’d)

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.

Note 14 Subsequent Events

The Company entered into the following transactions subsequent to the period end;

a) The Company agreed to pay $50,000 ($25,000 paid) and issue 7,500,000 common shares (all issued) in settlement of obligations falling due on June 15th, 2012 pursuant to the Mineral property agreement.

b) On June 12, the Company received $42,500 cash and the Company 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 March 13, 2013. he note may be converted 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 calculated as the average of the lowest 3 closing bid prices in the ten days prior to conversion for the Company’s shares as quoted on the OTCBB.

Subsequent events have been evaluated through July 3, 2012, the date the financial statements were approved for issue by the board of directors.

F-19

Item 2. 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” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. 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. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

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, 2011 or the six months ended May 31, 2012. We do not anticipate immediate attention to this project, as our time and effort currently is focused on our Zoro 1 Mineral Claim.

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
$	59,600	July 6, 2010 (paid)
$	102,900	June 15, 2011 (paid in 1,000,000 shares of common stock)
$	194,800	June 15, 2012 (see Note 14 to the notes to financial statements)
$	389,600	June 15, 2013

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.

5

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.

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.

6

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.

7

Results of operations for the three and six months ended May 31, 2012 and May 31, 2011, and for the period from Inception (November 1, 2006) to May 31, 2012

Our operating results for the three and six months ended May 31, 2012 and May 31, 2011 are summarized as follows:

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	May 31, 2012		May 31, 2011		May 31, 2012		May 31, 2011
Revenue	$	0	$	0	$	0	$	0
Operating Expenses	$	164,673	$	100,511	$	281,735	$	205,804
Net Loss	$	192,331	$	100,493	$	400,677	$	206,619

Revenues

We have not earned any revenues to date, and do not anticipate earning revenues until such time as we encounter commercially productive oil or gas reservoirs on our oil and gas prospects. All of our oil and gas prospects are undeveloped. 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 three and six months ended May 31, 2012 and May 31, 2011 are outlined in the table below:

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	May 31, 2012		May 31, 2011		May 31, 2012		May 31, 2011
Accounting and audit fees	$	3,900	$	4,600	$	14,400	$	12,050
Accretion of ARO	$	551	$	510	$	1,075	$	970
Accretion of convertible note discount	$	30,630		—	$	68,311		—
Bank charges and interest	$	149	$	425	$	981	$	803
Consulting fees		63,838		—		63,838		—
Interest on convertible notes	$	53,203	$	438	$	146,906	$	438
Investor relations		—	$	5,000		—	$	5,000
Legal fees	$	5,453	$	3,611	$	12,259	$	8,573
Management fees – Note 10	$	53,700	$	81,000	$	107,400	$	169,000
Mineral property exploration  costs		—	$	1,575		—	$	1,575
Office expenses	$	333	$	1,407	$	2,388	$	2,573
Rent – Note 6	$	777	$	393	$	1,548	$	778
Tax, penalties and Interest	$	421		—	$	421		—
Transfer and filing fees	$	429	$	1,552	$	919	$	4,044
Travel	$	1,289		—	$	1,289		—
Total	$	164,673	$	100,511	$	281,735	$	205,804

Our operating expenses increased by $64,162 for the three months ended May 31, 2012 as compared with the three months ended May 31, 2011. The increase in our expenses in 2012 as compared with 2011 was largely a result of $63,838 in consulting fees, and $20,630 that we incurred in 2012 as an accretion of a convertible note discount.

8

Our operating expenses increased by $75,931 for the six months ended May 31, 2012 as compared with the six months ended May 31, 2011. The increase in our expenses in 2012 as compared with 2011 was largely a result of $63,838 in consulting fees, and $68,311 that we incurred in 2012 as an accretion of a convertible note discount.

We recorded $50,000 and $140,000 for the three and six months ended May 31, 2012, respectively, for interest expenses related to a beneficial conversion feature on certain convertible notes. This resulted in other expenses of $27,658 and $118,942 for the three and six months ended May 31, 2012, respectively, that we did not incur in the corresponding periods in 2011.

Liquidity And Capital Resources

Working Capital

	May 31, 2012			November 30, 2011
Current Assets	$	19,958		$	17,512
Current Liabilities	$	429,012		$	317,366
Working Capital (Deficit)	($	409,054	)	($	299,854	)

Cash Flows

	Six Months Ended May 31, 2012		Six Months Ended May 31, 2011
Cash used in Operating Activities	$	116,204	$	48,180
Cash used in Investing Activities		—		—
Cash provided by Financing Activities	$	119,220	$	142,000
Increase (Decrease) in Cash	$	19,958	$	93,684

We anticipate that we will incur approximately $750,000 for operating expenses, including, legal, accounting and audit expenses associated with our reporting requirements as a public company under the Exchange Act during the next twelve months.

Cash Used In Operating Activities

We used cash in operating activities in the amount of $116,204 during the six months ended May 31, 2012 and $48,180 during the same period ended May 31, 2011. Our net losses for the six months ended May 31, 2012 and May 31, 2011 were the main contributed reason for our negative operating cash flow for both periods. Cash used in operating activities was funded by cash from financing activities.

Cash from Financing Activities

We generated $119,220 in cash from financing activities during the six months ended May 31, 2012 compared to cash from financing activities in the amount of $142,000 during the six months ended May 31, 2011.

On January 4, 2012, we received $37,500 cash and we 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 October 6, 2012.

The note may be converted at the option of the holder into Common stock of the company. The conversion price is defined as “the lesser 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”.

9

On February 1, 2011, we received a cash advance of $30,000. The advance is unsecured, non-interest bearing and has no fixed repayment terms.

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

The note may be converted 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 February 15, 2012, we received $20,000 cash and the we 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 be converted 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 February 15, 2012, we received $20,000 cash and we 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 be converted 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 February 15, 2012, we received $20,000 cash and the we 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 be converted 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 March 20, 2012, we received $20,000 cash and the we 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 be converted 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 March 20, 2012, we received $30,000 cash and we issued a convertible promissory note in the amount of $30,000. The promissory note is unsecured, interest free and repayable upon demand.

The note may be converted 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 March 21, 2011, we received a cash advance of $20,000. The advance is unsecured, non-interest bearing and has no fixed repayment terms.

On May 5, 2012, we entered into a consultancy agreement with Primary Capital LLC. (“Primary”) whereby Primary would provide financial advisory and investment banking services to us for a period of two years commencing May 7, 2012. Pursuant to the agreement we paid Primary a non-refundable signing fee of $10,000 and issued Primary with 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.

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

10

Should the Board of Directors grant Options, Warrants or other securities 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 we complete any financing during the engagement period and also within 2 years of the termination of the agreement with any party introduced to us by Primary, Primary will be entitled to:

i. cash fee of 8% of the of the gross proceeds of the financing, a 5 year warrant to purchase that number of shares equal to 8% of the number of shares securities issued in the financing on the same terms as the financing.

ii. 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.

On June 12, we received $42,500 cash and we 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 March 13, 2013. The note may be converted at the option of the holder into our common stock. The conversion price is defined as “55% multiplied by Market Price” where market price is calculated as the average of the lowest 3 closing bid prices in the ten days prior to conversion for our shares as quoted on the OTCBB.

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 May 31, 2012, there were no off balance sheet arrangements.

Going Concern

The accompanying financial statements in this quarterly report on Form 10-Q have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that we will be able to meet our obligations and continue our operations for the next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should we be unable to continue as a going concern. At May 31, 2012, we had a working capital deficit of $409,054. We have yet to achieve profitable operations, have accumulated losses of $3,300,141 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.

11

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, 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 Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our 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 the following material weaknesses in internal control over financial reporting 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.

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, 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, 2012, 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 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 affected in a material manner.

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 our internal control over financial reporting during the quarter ended May 31, 2012 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

12

PART II – OTHER INFORMATION

Item 1. 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 1A: Risk Factors

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

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

During the six month period ended May 31, 2012, we incurred the following stock transactions:

• On April 9, 2012, we issued 875,000 common shares with a fair value of $17,500 pursuant to the partial conversion of a note payable falling due on July 3, 2012;
• On April 18, 2012 and April 23, 2012, we issued 944,882 and 666,667 common shares respectively with an aggregate fair value of $16,115, upon the final conversion of the convertible note payable falling due on July 3, 2012;
• On May 5, 2012, we issued 2691,926 common shares with a fair value of $53,838 pursuant to a consultancy agreement with Primary Capital LLC.

Subsequent to the period end we agreed to pay $50,000 ($25,000 paid) and issue 7,500,000 common shares (all issued) in settlement of obligations falling due on June 15th, 2012 pursuant to the Mineral property agreement.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2012 formatted in Extensible Business Reporting Language (XBRL).

**Provided herewith

13

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FORCE ENERGY CORP.
Date:	July 9, 2012 By: /s/ Tim DeHerrera Tim DeHerrera Title: Chief Executive Officer and Director

14

EX-31.1

CERTIFICATIONS

I, Tim DeHerrera, certify that;

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended May 31, 2012 of Force Energy Corp. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 9, 2012

/s/ Tim DeHerrera

By: Tim DeHerrera

Title: Chief Executive Officer

EX-31.2

CERTIFICATIONS

I, Tim DeHerrera, certify that;

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended May 31, 2012 of Force Energy Corp. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 9, 2012

/s/ Tim DeHerrera

By: Tim DeHerrera

Title: Chief Financial Officer

EX-32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly Report of Force Energy Corp. (the “Company”) on Form 10-Q for the quarter ended May 31, 2012 filed with the Securities and Exchange Commission (the “Report”), I, Tim DeHerrera, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

By:	/s/ Tim DeHerrera
Name:	Tim DeHerrera
Title:	Principal Executive Officer, Principal Financial Officer and Director
Date:	July 9, 2012

This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XML

Financial Instruments

3 Months Ended

May 31, 2012

Notes to Financial Statements

Financial Instruments

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

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

These levels are:

Level 1- inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3- inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The carrying value of the Company’s financial assets and liabilities consisting of cash, accounts payable and accrued liabilities, advances payable, convertible note payable and due to related parties in management’s opinion, approximate their fair value due to the short maturity of such instruments. In management’s opinion, the fair value of notes payable is approximate to 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.

XML

Newly Adopted Accounting Policy

3 Months Ended

May 31, 2012

Notes to Financial Statements

Newly Adopted Accounting Policy

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

XML

Consolidated Balance Sheets (USD $)	May 31, 2012	Nov. 30, 2011
Current
Cash	$ 19,958	$ 16,393
Prepaid expenses		1,119
Total Current Assets	19,958	17,512
Oil and gas properties, full cost method of accounting
Unproved Properties	135,427	135,427
Mineral Property Option	80,000	80,000
Total Assets	235,385	232,939
Current
Bank overdraft
Accounts payable and accrued liabilities	21,580	48,871
Advances payable	50,000	50,000
Due to related parties		625
Convertible Notes Payable	357,432	217,870
Total Current Liabilities	429,012	317,366
Asset retirement obligation	15,148	13,524
Total Liabilities	444,160	330,890
STOCKHOLDERS EQUITY (DEFICIENCY)
Common stock, $0.001 par value - Note 11 270,000,000 shares authorized 61,115,742 shares issued (November 30, 2010, - 5,493,267 shares issued)	60,116	54,937
Additional paid in capital	3,048,450	2,826,176
Deferred stock compensation	(17,200)	(79,600)
Deficit accumulated during the development stage	(3,300,141)	(2,899,464)
Total Stockholders Equity (Deficiency)	(208,775)	(97,951)
Total Liabilities and Stockholders Equity (Deficiency)	$ 235,385	$ 232,939

XML

Interim Reporting

3 Months Ended

May 31, 2012

Notes to Financial Statements

Interim Reporting

The unaudited financial information furnished herein reflects all adjustments, which in the opinion of management are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented. All adjustments are of a normal recurring nature. These interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s audited consolidated financial statements for the fiscal year ended November 30, 2011. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal period and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s audited consolidated financial statements for the fiscal year ended November 30, 2011, has been omitted. The results of operations for the six-month period ended May 31, 2012 are not necessarily indicative of results for the entire year ending November 30, 2012.

XML

Nature of Operations and Ability to Continue as a Going Concern

3 Months Ended

May 31, 2012

Notes to Financial Statements

Nature of Operations and Ability to Continue as a Going Concern

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

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

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

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At May 31, 2012, the Company has a working capital deficit of $409,054. The Company has yet to achieve profitable operations, has accumulated losses of $3,300,141 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company 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.

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. 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 activites. Mineral exploration is dependent upon finding an ore body that is economic to develop. Uncertainties that exist with nNatural gas exploration include 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 company incorporatated 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 Company’s functional currency is the Canadian dollar as substantially all of the Company’s operations are in Canada. The Company uses the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission (“SEC”).

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

Property and Equipment

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

Oil and Gas Properties

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

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

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

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

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

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.

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.

Income Taxes

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

Basic Loss per Share

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

Comprehensive Income

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

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Consolidated Balance Sheets (Parenthetical) (USD $)	May 31, 2012	Nov. 30, 2011
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Perferred stock, issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	270,000,000	270,000,000
Common stock, issued	61,115,742	5,493,267

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Supplemental Disclosure with Respect to Cash Flows

3 Months Ended

May 31, 2012

Notes to Financial Statements

Supplemental Disclosure with Respect to Cash Flows

During the six month period ended May 31, 2012, the following non-cash investing and financing activities occurred:

i) 2,691,926 common shares were issued with a fair value of $53,838 pursuant to a consulting agreement (Note 13).

ii) An aggregate of 2,486,549 common shares were issued with a fair value of $33,615 upon the extinguishment of a convertible note payable.

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Document and Entity Information	3 Months Ended
	May 31, 2012
Document And Entity Information
Entity Registrant Name	Force Energy Corp.
Entity Central Index Key	0001333563
Document Type	10-Q
Document Period End Date	May 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--11-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	60,115,742
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012

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Commitment

3 Months Ended

May 31, 2012

Notes to Financial Statements

Commitment

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 with 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.

Pursuant to the agreement should the Company issue further potentially dilutive derivative instruments, or issue stock from treasury at any time, then within 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 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 complete 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:

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

ii) a 5year warrant to purchase that number of shares equal to 8% of the number of shares securities 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.

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Consolidated Statements of Operations and Comprehensive Loss (USD $)	3 Months Ended		6 Months Ended		67 Months Ended
	May 31, 2012	May 31, 2011	May 31, 2012	May 31, 2011	May 31, 2012
Expenses
Accounting and audit fees	$ 3,900	$ 4,600	$ 14,400	$ 12,050	$ 301,521
Accretion of ARO	551	510	1,075	970	5,994
Accretion of convertible note discount	30,630		68,311		110,431
Bank charges and interest	149	425	981	803	5,248
Consulting fees	63,838		63,838		472,338
Depreciation					4,651
Interest on convertible notes	3,203	438	6,906	438	12,656
Investor relations		5,000		5,000	61,443
Legal fees	5,453	3,611	12,259	8,573	205,064
Management fees	53,700	81,000	107,400	169,000	1,255,175
Mineral property option costs					59,600
Mineral property exploration costs		1,575		1,575	55,611
Office expenses	333	1,407	2,388	2,573	41,810
Oil and gas exploration costs					15,000
Rent	777	393	1,548	778	45,249
Tax penalties and interest	421		421		42,910
Transfer and filing fees	429	1,552	919	4,044	79,664
Travel	1,289		1,289		11,630
Write-off of oil and gas costs					418,039
Loss before other items	(164,673)	(100,511)	(281,735)	(205,804)	(3,204,034)
Other items:
Debt forgiveness					15,286
Interest expense - beneficial conversion feature of convertible notes	(50,000)		(140,000)		(140,000)
Foreign exchange gain (loss)	454	18	(830)	(815)	6,561
Gain on elimination of convertible note	21,888		21,888		21,888
Interest income					158
Total Other Items	(27,658)	18	(118,942)	(815)	(96,107)
Net loss and comprehensive loss for the period	$ (192,331)	$ (100,493)	$ (400,677)	$ (206,619)	$ (3,300,141)
Basic loss per share	$ 0.00	$ 0.00	$ (0.01)	$ 0.00
Weighted average number of shares outstanding	56,938,846	51,437,267	55,441,775	51,436,168

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Advance Payable

3 Months Ended

May 31, 2012

Notes to Financial Statements

Advance 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 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.

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Mineral Property

3 Months Ended

May 31, 2012

Notes to Financial Statements

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 Optionor by the following dates:

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

ii) $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)

iii) $194,800 (Cdn$200,000) or issue a specified number of common shares still to be determined by the parties on or before June, 15, 2012 (Note 13)

iv) $389,600 (Cdn$400,000) or issue a specified number of common shares still to be determined by the parties on or before June, 15, 2013.

During the six month period ended May 31, 2012 the Company incurred $nil (six month period ended May 31, 2011 - $nil) of exploration expenditures on the property.

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Subsequent Events

3 Months Ended

May 31, 2012

Notes to Financial Statements

Subsequent Events

The Company entered into the following transactions subsequent to the period end;

a) The Company agreed to pay $50,000 ($25,000 paid) and issue 7,500,000 common shares (all issued) in settlement of obligations falling due on June 15th, 2012 pursuant to the Mineral property agreement.

b) On June 12, the Company received $42,500 cash and the Company 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 March 13, 2013. he note may be converted 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 calculated as the average of the lowest 3 closing bid prices in the ten days prior to conversion for the Company’s shares as quoted on the OTCBB.

Subsequent events have been evaluated through July 3, 2012, the date the financial statements were approved for issue by the board of directors.

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Asset Retirement Obligation

3 Months Ended

May 31, 2012

Notes to Financial Statements

Asset Retirement Obligation

Total future asset retirement obligations were estimated by management based on the Company’s net ownership interest, estimated costs to reclaim and abandon the wells and the estimated timing of the costs to be incurred in future periods. The Company has estimated the net present value of its total assets retirement obligations at May 31, 2012 to be $15,148 based on a total undiscounted liability of $17,045 (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.

	May 31		November 30
	2012		2011
Balance, beginning of period	$	13,524	$	12,282
Liabilities incurred		—		—
Accretion expense		1,075		1,965
Effect of foreign exchange		549		(723	)
	$	15,148	$	13,524

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Related Party Transactions

3 Months Ended

May 31, 2012

Notes to Financial Statements

Related Party Transactions

Amounts due from (to) related parties comprise:

	May 31		November 30
	2012		2011
Amounts due to Director
Management fees	$	—	$	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 expires July 22, 2011. Pursuant to the contract the Director will receive $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 owing of $5,216, an aggregate amount of $160,817.

On July 23, 2010, the Company entered into an employment contract with the Company President which expires 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 issued which were earned immediately have been expensed as stock based compensation of $286,000. The fair value of the remaining 1,200,000 shares issued which are to be earned over the term of the contract will be 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 (year ended November 30, 2011 - $93,800).

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 received 2,500,000 common shares having a fair value of $125,000. The President 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 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 issued which are to be earned over the term of the contract will be 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 $62,400 (six month period ended May 31, 2011 - $nil).

During the three and six month periods ended May 31, 2012 and May 31, 2011, the Company charged or accrued the following amounts:

	Six Month				Three Month
	Period Ended				Period Ended
	May 31,				May 31,
	2012		2011		2012		2011
Amounts charged by directors
Management fees	$	107,400	$	160,250	$	53,700	$	81,000
Amounts charged by former director and Company controlled by former director
Management fees		—		8,750		—		—
Total	$	107,400	$	169,000	$	53,700	$	81,000

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Convertible Notes Payable

3 Months Ended

May 31, 2012

Notes to Financial Statements

Convertible Notes Payable

	May 31		November 30
	2012		2011
Promissory Note #1		100,000		100,000
Promissory Note #2		—		37,500
Promissory Note #3		—		32,500
Promissory Note #4		37,500		—
Promissory Note #5		30,000		—
Promissory Note #6		20,000		—
Promissory Note #7		20,000		—
Promissory Note #8		20,000		—
Promissory Note #9		20,000		—
Promissory Note #10		30,000		—
		277,500		170,000
Interest		9,652		5,750
Accretion expense		70,280		42,120
	$	357,432	$	217,870

As at May 31, 2012 and November 30, 2011 convertible notes payable are recorded net of unamortized debt and accrued interest discount of $63,637 and $6,197 respectively.

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 is unsecured, bears interest at 8% per annum, and matures on May 10, 2013. During the six month period ended May 31, 2012 the Company accrued $8,439 (six month period ended May 31, 2011 - $438) in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is defined as “the lesser 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”.

Promissory Note #2

On August 18, 2011, the Company received $37,500 cash and the Company 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 six month period ended May 31, 2012 the Company accrued $1,470 (six month period ended May 31, 2011 - $nil) in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 55% of the market price, where market price defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”. On February 15, 2012, the Company exercised its right of prepayment settlement, and the note was settled for cash consideration of $57,655

Promissory Note #3

On September 28, 2011, the Company received $32,500 cash and the Company 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 six month period ended May 31, 2012 the Company accrued $1,534 (six month period ended May 31, 2011 - $nil) in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 55% of the market price, where market price defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”. On April 9, 2012, at the request of the holder the Company issued 875,000 common shares with a fair value of $17,500 upon partial conversion of the note. On April 18, 2012 and April 23, 2012 upon the request of the holder the Company issued 944,882 and 666,667 common shares respectively with an aggregate fair value of $16,115 upon the final conversion of the note to common stock. As a result of the conversion the Company recorded a gain on elimination of the note of $21,888.

Promissory Note #4

On January 4, 2012, the Company received $37,500 cash and the Company 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 October 6, 2012. During the six month period ended May 31, 2011 the Company accrued $459 (six month period ended May 31, 2011 - $nil) in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is defined as “the lesser 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”.

Promissory Note #5

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

The note may be converted 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 #6

On February 15, 2012, the Company received $20,000 cash and the Company 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 be converted 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 the Company 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 be converted 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 the Company 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 be converted 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 the Company 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 be converted 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 #10

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

The note may be converted 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.

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 beneficial conversion feature is calculated at its intrinsic value (that is, 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 recorded cannot be greater than the face value of the note issued.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to 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 six month period ended May 31, 2012 interest expense relating to the beneficial conversion feature of convertible notes of $140,000 (six month period ended May 31, 2011 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

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Capital Stock

3 Months Ended

May 31, 2012

Notes to Financial Statements

Capital Stock

Authorized

10,000,000 Preferred share, par value $0.001 – none issues

270,000,000 Common shares par value $0.001– 60,115,742 issued (November 30, 2011 54,937,267 shares issued)

Issued

During the six month period ended May 31, 2012, the Company incurred the following stock transactions:

i) On April 9, 2012 issued 875,000 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

ii) On April 18, 2012 and April 23, 2012 issued 944,882 and 666,667 common shares respectively with an aggregate fair value of $16,115, upon the final conversion of the convertible note payable falling due on July 3, 2012 to common stock..

iii) On May 5, 2012, issued 2691,926 common shares with a fair value of $53,838 pursuant to a consultancy agreement with Primary Capital LLC. (Note 13)

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Consolidated Statements of Cash Flows (USD $)	6 Months Ended		67 Months Ended
	May 31, 2012	May 31, 2011	May 31, 2012
Statement of Cash Flows [Abstract]
Net loss for the period	$ (400,677)	$ (206,619)	$ (3,300,141)
Adjustments to reconcile net loss to net cash used in operating activities:
Accrued interest	6,906	438	12,656
Interest expense - beneficial conversion feature of convertible note	140,000		140,000
Accretion of discount on convertible notes and interest	68,311		110,431
Gain on elimination of convertible note	(21,888)		(21,888)
Consulting fees paid in stock	53,838		458,838
Share based compensation	62,400	132,000	657,800
Debt forgiveness			(15,286)
Accretion expense	1,075	1,508	5,991
Depreciation			4,651
Write-off of oil and gas costs			418,039
Changes in non-cash working capital items related to operations:
Prepaid expenses	1,119	(4,815)
Advance payable		50,000	50,000
Accounts payable and accrued liabilities	(27,288)	(20,692)	(2,459)
Net cash used in operating activities	(116,204)	(48,180)	(1,481,368)
Cash Flows used in Investing Activities
Acquisition of property and equipment			(4,651)
Acquisition and development costs of oil and gas properties			(387,517)
Net cash used in investing activities			(392,168)
Cash Flows provided by Financing Activities
Capital stock issued		50,000	1,419,000
Convertible note payable	177,500	100,000	347,500
Due to related parties	(625)	(8,000)	160,817
Settlement of Convertible note payable	(57,655)		(57,655)
Cash acquired on reverse acquisition			37,058
Net cash provided by financing activities	119,220	142,000	1,906,720
Effect of foreign currency translation	549		(13,226)
Increase (decrease) in cash during the period	3,565	93,890	19,958
Cash, (Bank indebtedness) beginning of the period	16,393	(136)
Cash, end of the period	$ 19,958	$ 93,684	$ 19,958

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Oil and Gas Properties

3 Months Ended

May 31, 2012

Notes to Financial Statements

Oil and Gas Properties

	May 31, 2012
	Canada		Total
Unproved properties
- acquisition costs	$	119,640	$	488,640
- development costs		7,365		36,404
- asset retirement obligation		8,422		8,422
		135,427		533,466
Written off		—		(398,039	)
	$	135,427	$	135,427

	November 30, 2011
	Canada		Total
Unproved properties
- acquisition costs	$	119,640	$	488,640
- development costs		7,365		36,404
- asset retirement obligation		8,422		8,422
		135,427		533,466
Written off		—		(398,039	)
	$	135,427	$	135,427

a) Hayter Prospect, Alberta, Canada

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

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

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

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

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

As at May 31, 2012, the 50% working interest of the Hayter Well was recorded at $135,427 (November 30, 2011:- $135,427). The company also recorded $15,148 (November 30, 2011 - $13,524) as an asset retirement obligation (Note 10).