10-K 1 tegc10k31aug10.txt ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2010 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file # 333-130922 THRUST ENERGY CORP. (Exact Name of Registrant as Specified in its Charter) NEVADA (State or other jurisdiction of incorporation or organization) 20-3373669 (I.R.S. Employer Identification number) 1440-3044 BLOOR STREET, TORONTO, ONTARIO M8X 2Y8 (Address of principal executive offices) Issuer's telephone number: (647) 456-5375 Securities registered under Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $0.0001 PAR VALUE Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ x ] No [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Issuer's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [X] No [ ] The Issuer had no revenue for the fiscal year ended August 31, 2010. As of November 26, 2009, the Issuer had 680,202 shares of Common Stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] FORWARD LOOKING STATEMENTS Certain statements made in this Annual Report are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements made in this Report are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the growth and expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements made in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements made in this Report, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. As used in this annual report, the terms "we", "us", "our", "Company", and "Thrust" means Thrust Energy Corp., unless otherwise indicated. PART I ITEM 1. DESCRIPTION OF BUSINESS BUSINESS We are an exploration stage oil and gas company. Since our business requires significant capital and we have limited assets and resources, we will initially participate in the oil and gas industry by acquiring undivided working interests in small oil and gas exploration properties and non-operating interests in both producing and exploration projects throughout the United States and Canada. There can be no assurance that we will be successful in our exploration and investment activities. The oil and gas business involves numerous risks. A "working interest" is an interest in a well that bears the drilling and operating expenses thereof. A "non-operating interest" is a working interest for which the owner does not operate the well. Our management is not experienced in the oil and gas industry. We will therefore rely on consultants to identify, evaluate and structure suitable oil and gas acquisition opportunities. With the assistance of our consultants and, to a lesser extent, unsolicited submissions, we intend to evaluate potential acquisitions of oil and gas interests in the United States and Canada that may become available on acceptable terms and that have the potential to provide us with production revenue and reserves. We will rely on third parties for outsourced drilling and exploration services as appropriate. By outsourcing an appropriate level of the capital-intensive aspects of our business, we expect to achieve significant cost savings and operational efficiencies. We believe that our business model will permit us to maximize the use of our otherwise limited resources, reduce the risk of unsuccessful drilling efforts, and capitalize on the experience of our consultants. We are focusing our acquisition and exploration activities in the Province of Alberta. This region is characterized by potentially long-lived reserves with predictable and relatively low production depletion rates, multiple geologic targets that decrease risk, lower service costs than in more competitive or remote areas, a favorable regulatory environment that encourages drilling efforts, and limited federal land or land access impediments. We will, however, consider any prospective oil and gas projects located in the United States or Canada that we believe may yield commercially producible amounts of oil or gas. We have not earned any revenue since our inception and presently have negative cash flow. To date, our efforts upon have been devoted to acquiring non-operating interests in projects that are already producing oil or natural gas, and thereby generate positive cash flow to fund operations and re-investment in other oil and gas projects. We have also pursued non-operating interests in exploration projects. In 2009, we expanded our business plan to include the development of renewable energy sources. Our efforts in this area been unsuccessful. In 2010, we abandoned our pursuit of renewable energy to focus on the acquisition of oil and natural gas interests. On November 25, 2009, we obtained an assignment of the conditional right to acquire a working interest in certain natural gas properties located in Alberta (the "Prospect") from the well operator (an independent third party), which was subject to Thrust providing up to $1,000,000 in financing for the completion of wells located on the Prospect. On January 22, 2010, the well operator informed us that we were in default of our contractual obligations. As part of our negotiations with the well operator, we agreed to pay a further $100,000 CAD to the operator in respect of the Prospect. On February 8, 2010, our sole director advanced the sum of $25,000 CAD ($23,740) to the operator on our behalf, but we were unable to make any further payments. No working interest or any other interest in the Prospect has been granted to the Company, and the Company is not pursuing the grant of any such interest related to the Prospect. As a result of conservatism, we have written off a total of $83,740 in costs relating to the acquisition of conditional rights to acquire an interest in the Prospect. The Company is actively pursuing recovery of its cash investment in the Prospect. The well operator is obligated to return $100,000 CAD to the Company by January 6, 2011. An additional $25,000 CAD is payable to the Company on demand without interest. On October 12, 2010, we made formal demand for the payment of $25,000 CAD from the well operator by October 31, 2010. To date, no payment has been received by the well operator. We do not presently have any oil, gas or renewable energy interests, or other assets. STRATEGY We will regularly review exploration opportunities generated by our management and consultants. We will generally seek to acquire and explore properties that are located in regions having established production history and infrastructure, or current production levels with proven and potential reserve upside opportunities. In some cases, we may acquire higher risk undeveloped acreage based on available information suggesting the potential for commercially producible reserves and a favorable risk-based economic evaluation of production and price scenarios. Our selection of exploration properties will be based primarily on available information gathered from historical records and drill logs, geologic and engineering data, surrounding production from similar wells and ease of access. The cost of obtaining such information will be unique to each property we may acquire in the future and cannot presently be estimated. Due to the expense of 3-D seismic data it is unlikely that we will obtain such information with respect to any property we acquire. 3-D seismic is the method by which a three dimensional image of the earth's subsurface is created through the interpretation of reflection seismic data collected over a surface grid. A 3-D seismic survey allows for a more detailed understanding of the subsurface than does a 2-D seismic survey and contributes significantly to field appraisal, exploitation and production. Without a 3-D seismic survey it is much more likely that our drilling efforts will be unsuccessful. Prior to any acquisition, we intend to perform a review of the subject property generally consistent with industry practices. Such a review, however, will not reveal all existing or potential problems, nor will it permit us to become sufficiently familiar with the property to assess fully its deficiencies or potential value. Inspections of the property may not be practicable and existing problems may not be observable even in those cases where an inspection is undertaken. We may assume existing liabilities, including environmental liabilities, upon such an acquisition and would likely acquire interests in such a property on an "as is" basis. Due to our limited assets and resources, we will be circumscribed in the type and quality of properties that we will be able to acquire. This may result in us being able to acquire only small leaseholds in areas with proven producing horizons (geological formations with a history of oil or gas production), or leaseholds in higher risk properties. We may also be required to enter into various forms of joint arrangements with unrelated companies, whereby the parties agree to share the costs of exploration, as well as the costs of and any revenue from a discovery. Such arrangements do not always equate the proportion of expenditures undertaken by a party with the share of revenue to be received by such party. There can be no assurance that we will be able to find acceptable properties for exploration, or if we do, that we will be successful in locating commercially producible reserves of oil or gas. When we acquire a working interest in an exploration property we will assess the potential reserves of oil and gas, future oil and gas prices, operating costs, potential environmental liability, and other risks and factors beyond our control. Such an assessment is necessarily inexact and its accuracy is inherently uncertain. Based on this assessment we will determine the degree to which we will participate in exploration drilling. We plan to finance any such participation from available capital. But, when available capital is insufficient, we plan to finance our participation through the issuance of debt instruments and the sale of our stock. We do not presently have sufficient capital to perform any exploration and there can be no assurance that we ever will. In the right circumstances, we will assume the entire risk of exploration. Alternatively, we may determine that it will be more beneficial to invite industry participants to share the risk and the reward of the prospect by financing some or all of the costs of drilling contemplated wells. In such cases, we may retain a carried working interest or a reversionary interest, or we may be required to finance all or a portion of our proportional interest in the prospect. Although this approach will reduce our potential return should the drilling operations prove successful, it will also reduce our risk and financial commitment to a particular prospect. A "carried working interest" is an oil or gas interest that has no obligation for operating costs, which are instead borne by the owner or owners of the remaining interest in the property. A "reversionary interest" is a fractional interest reserved by the owner of a whole interest when the balance of the whole interest is transferred to another party. As is customary in the oil and gas industry, we will conduct a preliminary title examination at the time that we acquire an exploration property. We will rely upon the brokers of each property to conduct the title examination. We will engage an attorney to provide a title opinion on any property having an acquisition cost of more than $100,000 prior to acquiring it. Similarly, before we commit to spending $100,000 on the exploration of a property we acquire, such as for drilling operations, if we have not already obtained a title opinion on the property we will engage an attorney to do so. We will perform necessary curative work with respect to any significant defects in title prior to proceeding with operations. We also plan to evaluate and pursue from time-to-time opportunities to acquire non-operating interests in both producing and exploratory oil and gas projects with a view towards generating revenue and a significant reserve base. This approach will allow us to diversify into a larger number of prospects at a lower cost per prospect. There can be no assurance, however, that such non-operating interests will be available to us on acceptable terms. SALES AND MARKETING As we remain in the exploration stage, we have not yet generated any revenue, nor do we have any customers. The principal customers for our crude oil production, if any, are expected to be refiners, remarketers and other companies, some of which are expected to have pipeline facilities near the properties we acquire. In the event pipeline facilities are not conveniently available, we intend to truck or barge crude oil to storage, refining or pipeline facilities. The principal target customers for our gas production, if any, are expected to be pipelines, utilities, gas marketing firms, industrial users and local distribution companies. We intend to use existing gathering systems and interstate and intrastate pipelines to consummate gas sales and deliveries. We intend to sell our oil and gas production, if any, under both short-term (less than one year) and long-term (one year or more) agreements at prices negotiated with third parties. Under both short-term and long-term contracts, typically either the entire contract (in the case of short-term contracts) or the price provisions of the contract (in the case of long-term contracts) are renegotiated from intervals ranging in frequency from daily to annually. We have not yet adopted any specific sales and marketing plans. We will address the need to hire sales and marketing personnel if and when production begins. COMPETITION The oil and gas business is highly competitive, and we do not hold a significant competitive position within it. Our competitors include major integrated oil and gas companies and numerous independent oil and gas companies, individuals and drilling and income programs. Some of our competitors are also potential customers. Many of our competitors are large, well established companies with substantially larger operating staffs and greater capital resources than we have and which have been engaged in the energy business for a much longer time than we have. Such companies may be able to pay more for productive oil and gas properties and exploratory prospects and to define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. Our ability to acquire additional properties and to discover reserves in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. GOVERNMENT AND ENVIRONMENTAL REGULATION Domestic development, production and sale of oil and gas are extensively regulated at both the federal and state levels. Legislation affecting the oil and gas industry is under constant review for amendment or expansion, frequently increasing the regulatory burden. Also, numerous departments and agencies, both federal and state/provincial, have issued rules and regulations binding on the oil and gas industry and its individual members, compliance with which is often difficult and costly and some of which carry substantial penalties for failure to comply. Statutes and regulations require permits for drilling operations, drilling bonds and reports concerning wells. Alberta and other jurisdictions in which we intend to conduct operations also have statutes and regulations governing conservation matters, including the unitization or pooling of oil and gas properties and establishment of maximum rates of production from oil and gas wells. Our planned operations will be subject to extensive and developing federal, state and local laws and regulations relating to environmental, health and safety matters; petroleum; chemical products and materials; and waste management. Permits, registrations or other authorizations will be required for any future oil and gas exploration and production activities. These permits, registrations or authorizations will be subject to revocation, modification and renewal. Governmental authorities have the power to enforce compliance with these regulatory requirements, the provisions of required permits, registrations or other authorizations, and lease conditions, and violators are subject to civil and criminal penalties, including fines, injunctions or both. Failure to obtain or maintain a required permit may also result in the imposition of civil and criminal penalties. Third parties may have the right to sue to enforce compliance. Some risk of costs and liabilities related to environmental, health and safety matters is inherent in our planned operations, as it is with other companies engaged in similar businesses, and there can be no assurance that material costs or liabilities will not be incurred. In addition, it is possible that future developments, such as stricter requirements of environmental or health and safety laws and regulations affecting our business or more stringent interpretations of, or enforcement policies with respect to, such laws and regulations, could adversely affect us. To meet changing permitting and operational standards, we may be required, over time, to make site or operational modifications at our facilities, some of which might be significant and could involve substantial expenditures. There can be no assurance that material costs or liabilities will not arise from these or additional environmental matters that may be discovered or otherwise may arise from future requirements of law. EMPLOYEES We currently have no employees other than our sole officer and director, who has not been paid for his services. We do not have any employment agreements with our sole officer and director. We do not presently have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to our officers and directors. Since our sole officer and director is not experienced with oil or gas exploration, we intend to retain qualified persons on a contract basis as needed from time to time to identify, evaluate and structure suitable oil and gas investment opportunities. ITEM 1A. RISK FACTORS We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. ITEM 1B. UNRESOLVED STAFF COMMENTS We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. ITEM 2. PROPERTIES We do not presently own or have an interest in any property. ITEM 3. LEGAL PROCEEDINGS Neither Thrust Energy Corp., nor its sole officer and director is a party to any material legal proceeding or litigation and such persons know of no material legal proceeding or contemplated or threatened litigation. There are no judgments against Thrust Energy Corp. or its sole officer and director. Our sole officer and director has not been convicted of a felony or misdemeanor relating to securities or performance in corporate office. PART II ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION. Our shares trade on the OTCBB under the symbol "TEGC." Very limited trading activity has occurred during the past two years with our common stock; therefore, only limited historical price information is available. The following table sets forth the high and low bid prices of our common stock (USD) for the last two fiscal years and subsequent interim period, as reported by the National Quotation Bureau and represents inter dealer quotations, without retail mark-up, mark-down or commission and may not be reflective of actual transactions: ------------------------------- QUARTER ENDED HIGH LOW ------------------------------- August 31, 2010 $0.07 $0.07 May 31, 2010 $0.09 $0.04 February 28, 2010 $0.15 $0.05 November 30, 2009 $0.09 $0.05 August 31, 2009 $0.20 $0.02 May 31, 2009 $0.10 $0.02 February 28, 2009 $0.05 $0.02 November 30, 2008 $0.26 $0.05 ------------------------------- SHAREHOLDERS Our shares of common stock are issued in registered form. The registrar and transfer agent for our shares of common stock is Transfer Online, Inc., 512 SE Salmon Street, Portland, Oregon 97214 (Telephone: 503.227.2950; Facsimile: 503.227.6874). On November 10, 2009, the shareholders' list of our shares of common stock showed 29 registered holders of our shares of common stock and 680,202 shares of common stock outstanding. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. DIVIDEND POLICY Our Board of Directors may declare and pay dividends on outstanding shares of common stock out of funds legally available there for in our sole discretion; however, to date no dividends have been declared or paid on common stock. PENNY STOCK REGULATION Our shares must comply with the Penny Stock Reform Act of 1990, which may potentially decrease our shareholders' ability to easily transfer their shares. Broker-dealer practices in connection with transactions in "penny stocks" are regulated. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that must comply with the penny stock rules. Since our shares must comply with such penny stock rules, our shareholders will in all likelihood find it more difficult to sell their securities. ITEM 6. SELECTED FINANCIAL DATA We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES. We are an exploration stage oil and gas company that has not begun operations. We plan to acquire undivided working interests in small exploration properties and non-operating interests in both producing and exploration projects throughout the United States and Canada. We do not presently own or have any interest in any oil or natural gas properties. We have not earned any revenue since the date of our inception. Our capital has been obtained via the issuance of common stock and shareholder loans. We do not presently have sufficient working capital to satisfy our cash requirements for the next twelve months of operations. Our director has undertaken to provide such financing as may be required to maintain nominal operations. We will require additional financing to pursue our business plan. We expect to obtain such financing through the issuance of debt instruments and the sale of our stock, but we cannot give any assurance that we will be able to obtain additional funding on commercially acceptable terms when it is required. If we fail to obtain the funding when it is needed, we may be required to forego or delay potentially valuable opportunities to acquire oil and gas interests, or we may default on future anticipated funding commitments to third parties and forfeit or dilute our rights in future anticipated oil and gas interests, or we may be required to cease operation altogether. We do not have any plans or contingencies in the event that we cease operating. On November 25, 2009, we obtained an assignment of the conditional right to acquire a working interest in certain natural gas properties located in Alberta (the "Prospect") from the well operator (an independent third party), which was subject to Thrust providing up to $1,000,000 in financing for the completion of wells located on the Prospect. As consideration for the conditional right, we paid a total of $160,000 upon execution of the agreement, and were to issue 75 million common shares and 5 million preferred shares upon receiving a 4.9% working interest in wells to be completed on the Prospect. On January 22, 2010, the well operator informed us that we were in default of our contractual obligations. As part of our negotiations with the well operator, we agreed to pay a further $100,000 CAD to the operator in respect of the Prospect. We paid a total of $25,000 CAD ($23,740) to the operator on February 8, 2010, but were unable to make any further payments. The payment to the operator was financed by a director of the Company. We are actively pursuing recovery of our cash investment in the Prospect. The well operator is obligated to return $100,000 CAD to the Company by January 6, 2011. An additional $25,000 CAD is payable to us on demand without interest. No working interest or any other interest in the Prospect has been granted to Thrust Energy, and we are not pursuing the grant of any such interest related to the Prospect. As a result of conservatism, we have written off and expensed a total of $83,740 in costs relating to the acquisition of conditional rights to acquire an interest in the Prospect. As of August 31, 2010, we had total assets of $94,960 comprised entirely of a cash receivable from the operator of the Prospect. This reflects a decrease of the value of our total assets from $177,741 on August 31, 2009, due to the write-off of costs relating to the acquisition of conditional rights to acquire an interest in the Prospect. Working capital was reduced, as at August 31, 2010, to $59,970 as compared to $174,950 on August 31, 2009. As of August 31, 2010, our total liabilities increased to $34,990 from $2,791 as of August 31, 2009. The increase was primarily due to a cash loan from our director. We do not expect to purchase or sell any significant equipment nor do we expect any significant changes in the number of our employees. We plan to acquire undivided working interests in small exploration properties and non-operating interests in both producing and exploration projects throughout North America. RESULTS OF OPERATIONS We posted an operating loss of $114,980 for the fiscal year ending August 31, 2010, due primarily to $24,467 in professional fees and the write-off of $83,740 in costs associated with the acquisition of conditional oil exploration rights. This was consistent with the operating loss of $114,921 for the previous fiscal year. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. ITEM 8. FINANCIAL STATEMENTS THRUST ENERGY CORP. (An Exploration Stage Company) Financial Statements (EXPRESSED IN U.S. DOLLARS) August 31, 2010 and 2009 INDEX Report of Independent Registered Public Accounting Firm Balance Sheets Statements of Stockholders' Equity Statements of Operations and Comprehensive Loss Statements of Cash Flows Notes to Financial Statements CHANG LEE LLP Chartered Accountants 606 - 815 Hornby Street Vancouver, B.C, V6Z 2E6 Tel: 604-687-3776 Fax: 604-688-3373 E-mail: info@changleellp.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF THRUST ENERGY CORP. (An exploration stage company) We have audited the accompanying balance sheets of Thrust Energy Corp. (an exploration stage company) as at August 31, 2010 and 2009 and the related statements of stockholders' equity, operations and cash flows for the years then ended and the cumulative period from September 15, 2004 (date of inception) to August 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at August 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended and the cumulative period from September 15, 2004 (date of inception) to August 31, 2010, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred losses from operations since inception, has not attained profitable operations and is dependent upon obtaining adequate financing to fulfill its exploration activities. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Vancouver, Canada "Chang Lee LLP" November 26, 2010 Chartered Accountants
THRUST ENERGY CORP. (An Exploration Stage Company) Balance Sheets August 31, 2010 (EXPRESSED IN U.S. DOLLARS) --------------------------------------------------------------------------------------------------------- 2010 2009 --------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ - $ 177,741 Other receivable (Note 3) 94,960 - --------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 94,960 $ 177,741 --------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities $ 1,470 $ 2,791 Due to a related party 33,520 - --------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 34,990 2,791 --------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY PREFERRED STOCK (NOTE 4) 100,000,000 preferred shares at a par value of $0.0001 per share Issued and outstanding: None - - COMMON STOCK (NOTE 4) 900,000,000 common shares at a par value of $0.0001 per share Issued and outstanding: 680,202 common shares (August 31, 2009: 680,198) 68 68 ADDITIONAL PAID-IN CAPITAL 362,285 362,285 (DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (302,383) (187,403) --------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 59,970 (174,950) --------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 94,960 $ 177,741 =========================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THRUST ENERGY CORP. (An Exploration Stage Company) Statements of Stockholders' Equity For the period from September 15, 2004 (inception) to August 31, 2010 (EXPRESSED IN U.S. DOLLARS) ------------------------------------------------------------------------------------------------------------------------------------ Deficit accumulated Total Additional Share during stockholders' Preferred Stock Common Stock paid-in subscriptions exploration equity Shares Amount Shares Amount capital received stage (deficiency) ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for cash July 5, 2005, $0.00005 per share - $ - 500,000 $ 50 $ 450 $ - $ - $ 500 Imputed interest from a shareholder - - - - 21 - - 21 Loss and comprehensive loss for the period - - - - - - (1,800) (1,800) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2005 - - 500,000 50 471 - (1,800) (1,279) ------------------------------------------------------------------------------------------------------------------------------------ Share subscription received - - - - - 165,000 - 165,000 ------------------------------------------------------------------------------------------------------------------------------------ Imputed interest from a shareholder - - - - 750 - - 750 Loss and comprehensive loss for the year - - - - - - (20,021) (20,021) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2006 - - 500,000 50 1,221 165,000 (21,821) 144,450 ------------------------------------------------------------------------------------------------------------------------------------ Share subscription received - - 180,198 18 360,377 (165,000) - 195,395 Imputed interest from a shareholder - - - - 687 - - 687 Loss and comprehensive loss for the year - - - - - - (23,203) (23,203) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2007 - - 680,198 68 362,285 - (45,024) 317,329 ------------------------------------------------------------------------------------------------------------------------------------ Loss and comprehensive loss for the year - - - - - - (27,458) (27,458) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2008 - $ - 680,198 $ 68 $ 362,285 $ - $ (72,482) $ 289,871 ------------------------------------------------------------------------------------------------------------------------------------ Loss and comprehensive loss for the year - - - - - - (114,921) (114,921) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2009 - $ - 680,198 $ 68 $ 362,285 $ - $ (187,403) $ 174,950 ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for debt settlement July 21, 2010, $0.10 per share - $ - 4 $ 0 $ 0 $ - $ - $ 0 Loss and comprehensive loss for the year - - - - - - (114,980) (114,980) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2010 - $ - 680,202 $ 68 $ 362,285 $ - $ (302,383) $ 59,970 ====================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THRUST ENERGY CORP. (An Exploration Stage Company) Statements of Operations and Comprehensive Loss (EXPRESSED IN U.S. DOLLARS) ------------------------------------------------------------------------------------------------------------ Cumulative from September 15, 2004 (inception) to Year Ended Year Ended August 31, 2010 August 31, 2010 August 31, 2009 ------------------------------------------------------------------------------------------------------------ EXPENSES Accounting fees $ 41,795 $ 9,472 $ 7,750 Amortization 2,153 - - Bank charges 377 51 - Filing fees 2,171 - - Business development 105,227 - 105,227 Interest 1,458 - - Leases 3,547 - - Legal 27,866 14,995 155 Office 8,959 2,180 1,100 Transfer agent 7,385 732 689 Write-off of oil & gas property (note 5) 97,635 83,740 - ------------------------------------------------------------------------------------------------------------ OPERATING LOSS 298,573 111,170 114,921 ------------------------------------------------------------------------------------------------------------ OTHER INCOME AND EXPENSES Foreign exchange (gain)/loss 3,810 3,810 - ------------------------------------------------------------------------------------------------------------ NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (302,383) $ (114,980) $ (114,921) ------------------------------------------------------------------------------------------------------------ BASIC AND DILUTED LOSS PER SHARE $ (0.17) $ (0.17) ============================================================================================================ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - basic and diluted 680,198 680,198 ============================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
THRUST ENERGY CORP. (An Exploration Stage Company) Statements of Cash Flows (EXPRESSED IN U.S. DOLLARS) ----------------------------------------------------------------------------------------------------------------------- Cumulative from September 15, 2004 (inception) to Year Ended Year Ended August 31, 2010 August 31, 2010 August 31, 2009 ----------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net (Loss) for the period $ (302,383) $ (114,980) $ (114,921) Adjustments to reconcile net income to net cash provided by (used in) operating activities: - amortization 2,153 - - - imputed interest 1,458 - - - foreign exchange loss 5,040 5,040 - - write-off of oil & gas property 97,635 83,740 - Changes in operating assets and liabilities - increase in due to a related party 33,520 33,520 - - increase (decrease) in accounts payable and accrued liabilities 1,470 (1,321) 1,100 ----------------------------------------------------------------------------------------------------------------------- NET CASH USED IN OPERATING ACTIVITIES (161,107) 5,999 (113,821) ----------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Acquisition of oil and gas interest (197,635) (183,740) - Purchase equipment (2,153) - - ----------------------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (199,788) (183,740) - ----------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Proceeds from issuance of common stock 360,895 - - ----------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - (177,741) (113,821) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 177,741 291,562 ----------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ - $ - $ 177,741 =======================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS NOTE 1 - NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS Thrust Energy Corp. is engaged in the exploration, exploitation, development and production of oil and gas projects within North America. We incorporated in the state of Nevada on September 15, 2004. Our principal offices are in Toronto, Ontario, Canada. Our fiscal year end is August 31. These financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America with the on-going assumption that we will be able to realize our assets and discharge its liabilities in the normal course of business. As shown in the accompanying financial statements, we have incurred operating losses since inception and further losses are anticipated in the development of our business. As of August 31, 2010, we have limited financial resources and require additional financing to fund our operations. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to locate profitable mineral properties, generate revenue from our planned business operations, and control exploration cost. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern. Management plans to fund its future operation by obtaining additional financing and commencing commercial production. However, there is no assurance that we will be able to obtain additional financing from investors or private lenders. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Cash Equivalents We consider all highly liquid investments and debt instruments purchased with maturity of three months or less to be cash equivalents. At August 31, 2010 and 2009, we had no cash equivalents. Use of Estimates Accounting principles generally accepted in the United States of America require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk We place our cash and cash equivalents with high credit quality financial institutions in uninsured accounts. Fair Value of Financial Instruments ASC 820 "Fair Value Measurements and Disclosures" requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. The Company's financial instruments include cash and cash equivalents, other receivable, accounts payable and accrued liabilities and due to a related party. Fair values were assumed to approximate carrying value for these financial instruments, except where noted. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company is operating outside the United States of America and has significant exposure to foreign currency risk due to the fluctuation of currency in which the Company operates and U.S. dollars. Revenue Recognition We record revenue when title passes, delivery occurs to our customers and the customer assumes the risks and rewards of ownership, when the price is fixed and determinable, and when collectability is reasonably assured. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Tax We recognize deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. We provide a valuation allowance for deferred tax assets when we consider realization of such assets to be less likely than not. Net Loss per Common Share We have adopted ASC 260, Earnings Per Share. ASC 260 requires the reporting of basic and diluted earnings/loss per share. We calculate basic loss per share by dividing net loss by the weighted average number of outstanding common shares during the period. Comprehensive Loss We apply ASC 220, Comprehensive Income. ASC 220 establishes standards for the reporting and display of comprehensive income or loss, requiring its components to be reported in a financial statement. For the years ended August 31, 2010 and 2009 our only component of comprehensive income or loss was the net loss reported in the operations statement. Foreign Currency Translation We maintain our accounting records in U.S. Dollars. At the transaction date, each asset, liability, revenue and expense involves foreign currencies is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities involving foreign currencies are remeasured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. Our currency exposure is insignificant and immaterial and we do not use derivative instruments to reduce our potential exposure to foreign currency risk. Oil and Gas Activity We follow the successful-efforts method of accounting for oil and gas property. Under this method of accounting, we capitalize all property acquisition cost and cost of exploratory and development wells when incurred, pending determination of whether the well has found proved reserves. If an exploratory well does not find proved reserves, we charge to expense the cost of drilling the well. We include exploratory dry hole cost in cash flow from investing activities within the cash flow statement. We capitalize the cost of development wells whether productive or nonproductive. We expense as incurred geological and geophysical cost and the cost of carrying and retaining unproved property. We will provide depletion, depreciation and amortization (DD&A) of capitalized cost of proved oil and gas property on a field-by-field basis using the units-of-production method based upon proved reserves. In computing DD&A we will take into consideration restoration, dismantlement and abandonment cost and the anticipated proceeds from equipment salvage. When applicable, we will apply the provisions of ASC 410, Asset Retirement and Environmental Obligations, which provides guidance on accounting for dismantlement and abandonment cost. We review our long-lived assets for impairment when events or changes in circumstances indicate that an impairment may have occurred. In the impairment test we compare the expected undiscounted future net revenue on a field-by-field basis with the related net capitalized cost at the end of each period. Should the net capitalized cost exceed the undiscounted future net revenue of a property, we will write down the cost of the property to fair value, which we will determine using discounted future net revenue. We will provide an impairment allowance on a property-by-property basis when we determine that the unproved property will not be developed. Stock-Based Compensation The Company adopted ASC 718, Compensation - Stock-Based Compensation, to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. ASC 718 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. We did not grant any stock options during the years ended August 31, 2010 and 2009. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recent Accounting Pronouncements In June 2009, the FASB issued a standard that established the FASB Accounting Standards Codification ("ASC") which mended hierarchy of generally accepted accounting principles ("GAAP") such that the ASC became the single source of authoritative nongovernmental US GAAP. The ASC did not change current US GAAP, but was intended to simplify user access to all authoritative US GAAP by providing all the authoritative literature related to a particular topic in one place. All previously existing accounting standard documents were superseded and all other accounting literature not included in the ASC is considered non-authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through Accounting Standards Updates. The ASC was effective for the Company on September 1, 2009. This standard did not have an impact on our financial statements. In December 2007, FASB issued ASC 850 (prior authoritative literature: SFAS No. 141(R), Business Combinations) and ASC 810-10-65 (prior authoritative literature: SFAS No. 160, Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51). These new standards will significantly change the accounting for and reporting of business combinations and non-controlling (minority) interests in consolidated financial statements. ASC 805 and ASC 810-10-65 are required to be adopted simultaneously and are effective for the first annual reporting period beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company has adopted these new pronouncements on September 1, 2009. The adoption of ASC850 and ASC 810-10-65 did not have a material impact on the Company's financial position or results of operations. In March 2008, FASB issued ASC 815-10 (prior authoritative literature: SFAS 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133). ASC 815-10 requires enhanced disclosures about an entity's derivative and hedging activities. ASC 815-10 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. The Company adopted ASC 815-10 on September 1, 2009. The adoption of this ASC did not have a material impact on the Company's financial position or results of operations. In April 2008, the FASB issued FSP FAS No. 142-3, Determination of the Useful Life of Intangible Assets , as codified in ASC subtopic 350-30, Intangibles - Goodwill and Other: General Intangibles Other than Goodwill (ASC 350-30) and ASC topic 275, Risks and Uncertainties (ASC 275), which amends the factors that must be considered in developing renewal or extension assumptions used to determine the useful life over which to amortize the cost of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets , as codified in ASC topic 350, Intangibles Goodwill and Other (ASC 350). ASC 350-30 requires an entity to consider its own assumptions about renewal or extension of the term of the arrangement, consistent with its expected use of the asset, and is an attempt to improve consistency between the useful life of a recognized intangible asset under ASC 350 and the period of expected cash flows used to measure the fair value of the asset under ASC 805, Business Combinations. The Company adopted ASC 350-30 on September 1, 2009. The adoption of ASC 350-30 did not have a material impact on the Company's financial position or results of operations. In May 2008, FASB issued ASC 470, Debt. ASC 470 specifies that issuers of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. We have adopted ASC 470 on September 1, 2009, and this standard was applied on a retrospective basis. The adoption of this statement did not have a material effect on the Company's financial statements. In April, 2009, the FASB issued ASC subtopic 820-10 (formerly Staff Position No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly). ASC 820-10 provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. This ASC subtopic also includes guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of ASC 820-10 will not have a material impact on the Company's financial statements. In April, 2009, the FASB issued ASC 820-10-50 (formerly Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments) that expands to interim periods the existing annual requirement to disclose the fair value of financial instruments that are not reflected on the balance sheet at fair value. The new guidance could potentially require additional disclosures in interim periods after the Company's fiscal year ending 2010. Adoption of this FSP will not have a material impact on the Company's financial statements. On April 1, 2009, the FASB issued ASC 320-10-65 (formerly Staff Position No. FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments). ASC 320-10-65 amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. ASC 320-10-65 does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The Company adopted ASC 320-10-65 on September 1, 2009. The adoption of this FSP did not have a material impact on the Company's financial statements. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recent Accounting Pronouncements and Newly Adopted Accounting Policies (continued) In June 2009, the FASB issued ASC 860, Transfers and Servicing. ASC 860 requires more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures. It also enhances information reported to users of financial statements by providing greater transparency about transfers of financial assets and an entity's continuing involvement in transferred financial assets. ASC 860 is effective for fiscal years beginning after November 15, 2009. In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends Subtopic 820-10 to clarify existing disclosures, require new disclosures, and includes conforming amendments to guidance on employers' disclosures about postretirement benefit plan assets. ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company does not expect the adoption of ASU 2010-06 to have a material impact on its financial statements. In February 2010, The FASB issued ASU 2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 amends Topic 855 to exclude SEC reporting entities from the requirement to disclose the date on which subsequent events have been evaluated. In addition, it modifies the requirement to disclose the date on which subsequent events have been evaluated in reissued financial statements to apply only to such statements that have been restated to correct an error or to apply U.S. GAAP retrospectively. The amendments are generally effective immediately, but with respect to the requirement that conduit obligors evaluate subsequent events through the date the financial statements are issued, the effective date is for interim or annual periods ending after June 15, 2010. The Company has adopted ASU 2010-09 with no material impact on the financial statements. ASU No. 2010-13 was issued in April 2010, and clarified the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades. This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted. The adoption of ASU No. 2010-13 is not expected to have a material impact on the Company's financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's financial statements upon adoption. NOTE 3 - WRITE-OFF OF GAS WELL OPTION On November 25, 2009, the Company obtained an assignment of a conditional right to acquire a working interest in certain natural gas properties located in Alberta (the "Prospect") from the well operator (an independent third party), which was subject to the Company providing up to $1,000,000 in financing for the completion of wells located on the Prospect. As consideration for the conditional right, the Company paid a total of $160,000 upon execution of the agreement, and were to issue 75 million common shares and 5 million preferred shares upon receiving a 4.9% working interest in wells to be completed on the Prospect. On January 22, 2010, the well operator informed the Company that it was in default of its obligations. As part of its negotiations with the well operator, the Company agreed to pay a further $100,000 CAD to the operator in respect of the Prospect. The Company paid a total of $25,000 CAD ($23,740) to the operator on February 8, 2010, but was unable to make any further payments. The payment to the operator was financed by a director of the Company. The Company is actively pursuing recovery of its cash investment in the Prospect. The well operator is obligated to return $100,000 CAD to the Company by January 6, 2011. An additional $25,000 CAD is payable to the Company on demand without interest. No working interest or any other interest in the Prospect has been granted to the Company, and the Company is not pursuing the grant of any such interest related to the Prospect. As a result of conservatism, a total of $83,740 in costs relating to the acquisition of conditional rights to acquire an interest in the Prospect has been written off and expensed by the Company. NOTE 4 - PREFERRED AND COMMON STOCK We have 100,000,000 shares of preferred stock authorized and none issued. We have 900,000,000 shares of common stock authorized. All shares of stock are non-assessable and non-cumulative, with no preemptive rights. NOTE 5 - RELATED PARTY TRANSACTION On February 8, 2010, the Company's sole director advanced the sum of $25,000 CAD ($23,740) on behalf of the Company to the operator of certain natural gas wells located in Alberta. The advance has been recorded by the Company as a non-interest bearing, unsecured loan by our sole director to Thrust that is due and payable on demand. As of August 31, 2010, the entire principal amount of the advance is still outstanding. NOTE 6 - INCOME TAXES At August 31, 2010, we had deferred tax assets of approximately $106,000 principally arising from net operating loss carryforwards for income tax purposes. As our management cannot determine that it is more likely than not that we will realize the benefit of the deferred tax asset, a valuation allowance equal to the deferred tax asset has been established at August 31, 2010. A reconciliation of income taxes at statutory rates with the reported taxes is as follows: -------------------------------------------------------------------------------- August 31, 2010 August 31, 2009 -------------------------------------------------------------------------------- Net loss before income taxes $ 114,980 $ 114,921 Income tax recovery at statutory rates of 35% 40,243 40,222 Unrecognized benefits of non-capital losses (40,243) (40,222) Total income tax recovery $ - $ - -------------------------------------------------------------------------------- The significant components of the deferred tax asset at August 31, 2010 were as follows: -------------------------------------------------------------------- August 31, 2010 August 31, 2009 -------------------------------------------------------------------- Deferred tax assets: Net operating loss carryforwards $ 106,000 $ 65,600 Valuation allowance (106,000) (65,600) Net deferred tax asset $ - $ - -------------------------------------------------------------------- At August 31, 2010, we had net operating loss carryforwards of approximately $302,400, which expire in the year 2026 through 2030. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with our independent accountants since our inception. ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES As of August 31, 2010, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (who are one and the same person), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based solely on the material weaknesses described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of August 31, 2010, the Company's disclosure controls and procedures were not effective: 1. The Company presently has only one officer, who is also the sole director, and no employees. Inasmuch as there is no segregation of duties within the Company, there is no management oversight, no one to review control documentation and no control documentation is being produced. CHANGES IN DISCLOSURE CONTROLS AND PROCEDURES There were no changes in disclosure controls and procedures that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially effect, our disclosure controls and procedures. We will not be implementing any changes to our disclosure controls and procedures until there is a significant change in our operations or capital resources. LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS Our management, including our CEO and CFO (who are one and the same person), does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the 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 a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. CEO AND CFO CERTIFICATIONS Appearing immediately following the Signatures section of this report there are Certifications of our CEO and CFO (who are one and the same person). The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented. MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of August 31, 2010. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based solely on the material weaknesses described below, our management has concluded that, as of August 31, 2010, the Company's internal control over financial reporting was not effective. Management has identified the following deficiencies that, when aggregated, may possibly be viewed as a material weakness in our internal control over financial reporting as of August 31, 2010: 1. We do not have an Audit Committee - While not being legally obligated to have an audit committee, it is our management's view that such a committee, including a financial expert member, is an utmost important entity level control over our financial statements. To date we have not established an audit committee. 2. Insufficient documentation of financial statement preparation and review procedures - We employ policies and procedures in reconciliation of the financial statements and the financial information based on which the financial statements are prepared. Notwithstanding, the controls and policies we employ are not sufficiently documented. 3. We did not maintain proper segregation of duties for the preparation of our financial statements - As of August 31, 2010 the majority of the preparation of financial statements was carried out by one person. Additionally, we currently only have one officer/director having oversight on all transactions. This has resulted in several deficiencies including: a. Significant, non-standard journal entries were prepared and approved by the same person, without being checked or approved by any other personnel. b. Lack of control over preparation of financial statements, and proper application of accounting policies. 4. We lack sufficient information technology controls and procedures - As of August 31, 2010, we lacked a proper data back-up procedure, and while backup did take place in actuality, we believe that it was not regulated by methodical and consistent activities and monitoring. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING We have also established and evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation. Nor have there have been any changes in our internal control over financial reporting during the last fiscal quarter. Except as set out below, we do not intend to implement any changes to our internal control over financial reporting until there is a significant change in our level of operations and capital resources: 1. We will engage additional personnel to assist with the preparation of our financial statements; which will allow for proper segregation of duties, as well as additional manpower for proper documentation. 2. We will engage in a thorough review and restatement of our information technology control procedures, in addition to procurement of all hardware and software that will enable us to maintain proper backups, access, control etc. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. We are not required to provide an attestation report by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT DIRECTORS AND EXECUTIVE OFFICERS The following sets forth our directors, executive officers, promoters and control persons, their ages, and all offices and positions held. Directors are elected for a period of one year and thereafter serve until the shareholders duly elect their successor. Officers and other employees serve at the will of the Board of Directors. -------------------------------------------------------------------------------- TERM PERIOD SERVED NAME POSITION AGE AS DIRECTOR/OFFICER -------------------------------------------------------------------------------- Thomas Mills CEO, President, CFO, 42 2005 to present Secretary and a director -------------------------------------------------------------------------------- Thomas E. Mills serves as our President, Secretary, Treasurer and our sole director. From 2001 until 2004, Mr. Mills was the President of Torrent Energy Corp. (formerly, Scarab Systems, Inc.), an oil and gas exploration company. Mr. Mills was a director and executive officer of Kingston Mines, Ltd., a mineral exploration company, from 2005 to 2008. Since 2003, Mr. Mills has been the President, CEO and a director of AMP Productions Ltd., a motion picture production company. In 2009, Mr. Mills became the sole executive officer and director of Novagen Solar Inc., a company involved in the sale of photovoltaic products. Mr. Mills maintains a part-time legal practice to which he devotes not more than 25 hours per week. Mr. Mills received his Bachelor of Laws degree from the University of British Columbia in 1996, and holds a Bachelor of Arts degree obtained from the University of Waterloo, Waterloo, Ontario in 1992. He was called to the Bar of British Columbia in 1997. All directors serve for terms of one year each, and are subject to re-election at our regular Annual Meeting of Shareholders, unless they earlier resign. There are no material proceedings to which any of our directors, officers or affiliates, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, affiliate, or security holder is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries. We have attempted and will continue to attempt to insure that any transactions between us and our officers, directors, principal shareholders, or other affiliates have been and will be on terms no less favorable to us than could be obtained from unaffiliated third parties on an arm's-length basis. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS Except as noted herein or below, during the last ten-(10) years none of our directors or officers have: (1) had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) been convicted in a criminal proceeding or subject to a pending criminal proceeding; (3) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or (4) been found by a court of competent jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Under the Securities Laws of the United States, the Company's Directors, our Executive (and certain other) Officers, and any persons holding more than ten percent of the Company's common stock are required to report their ownership of the Company's common stock and any changes in that ownership to the Securities and Exchange Commission. Specific due dates for these reports have been established and the Company is required to report in this report any failure to file by these dates. All of these filing requirements were satisfied by the Company's Officers, Directors, and ten-percent holders. In making these statements, we have relied on the written representation of our Directors and Officers or copies of the reports that they have filed with the Commission. COMMITTEES OF THE BOARD All proceedings of the board of directors for the fiscal year ended August 31, 2010 were conducted by resolutions consented to in writing by our board of directors and filed with the minutes of the proceedings of our board of directors. Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by the board of directors. Our company does not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment. A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our CEO, Thomas Mills, at the address appearing on the first page of this registration statement. AUDIT COMMITTEE FINANCIAL EXPERT We do not have a standing audit committee. Our directors perform the functions usually designated to an audit committee. Our board of directors has determined that we do not have a board member that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K, nor do we have a board member that qualifies as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the NASD Rules. We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. Our board of directors does not believe that it is necessary to have an audit committee because management believes that the functions of an audit committees can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows from operations to date. As we generate revenue in the future, we intend to form a standing audit committee and identify and appoint a financial expert to serve on our audit committee. CODE OF ETHICS The Company has adopted a Code of Ethics for Senior Financial Officers that is applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our Code of Ethics for Senior Financial Officers is filed as an exhibit to this annual report on Form 10-K. INDEMNIFICATION Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada. Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable. ITEM 11. EXECUTIVE COMPENSATION To date we have no employees other than our officers. No compensation has been awarded, earned or paid to our officers. We have no employment agreements with any of our officers. We do not contemplate entering into any employment agreements until such time as we have proven mineral reserves. There is no arrangement pursuant to which any of our directors has been or is compensated for services provided as one of our directors. There are no stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers or directors. We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS The following table sets forth certain information regarding the beneficial ownership of our common stock as of August 31, 2010 by (i) each person known by us to be a beneficial owner of more than five percent (5%) of our issued and outstanding common stock; (ii) each of our Directors and executive officers; and (iii) all our directors and executive officers as a group. --------------------------------------------------------------------- NAME AND ADDRESS NUMBER OF SHARES % --------------------------------------------------------------------- Thomas Mills 500,002 74 1440-3044 Bloor Street West Toronto, ON M8X 2Y8 --------------------------------------------------------------------- Directors and officers as a group (one person) 500,003 74 ===================================================================== Unless otherwise noted, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. For purposes hereof, a person is considered to be the beneficial owner of securities that can be acquired by such person within 60 days from the date hereof, upon the exercise of warrants or options or the conversion of convertible securities. Each beneficial owner's percentage ownership is determined by assuming that any such warrants, options or convertible securities that are held by such person (but not those held by any other person) and which can be exercised within 60 days from the date hereof, have been exercised. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE On February 8, 2010, our sole director advanced the sum of $25,000 CAD ($23,740) on our behalf to the operator of certain natural gas wells located in Alberta. We have recorded the advance as a non-interest bearing demand loan by our sole director to Thrust. As of August 31, 2010, the entire principal sum of the advance remains owing to our sole director. No other material related party transactions between Thrust and its officers, directors or control persons occurred during the fiscal year ended August 31, 2010. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES AUDIT FEES The aggregate fees billed by Chang Lee LLP for professional services rendered for the audit of our annual financial statements included in this Annual Report on Form 10-K for the fiscal year ended August 31, 2010 is estimated to be $5,500. The aggregate fees billed by Chang Lee LLP for professional services rendered for the audit of our annual financial statements included in this Annual Report on Form 10-K for the fiscal year ended August 31, 2009 was $5,265. AUDIT RELATED FEES For the fiscal years ended August 31, 2010 and 2009, the aggregate fees billed for assurance and related services by Chang Lee LLP relating to our quarterly financial statements which are not reported under the caption "Audit Fees" above, were 4,201 and $2,500, respectively. TAX FEES For the fiscal years ended August 31, 2010 and 2009, the aggregate fees billed for tax compliance, by Chang Lee LLP were nil. ALL OTHER FEES For the fiscal years ended August 31, 2010 and 2009, the aggregate fees billed by Chang Lee LLP for other non-audit professional services, other than those services listed above, totaled nil. Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before Chang Lee LLP is engaged by us or our subsidiaries to render any auditing or permitted non-audit related service, the engagement be: * approved by our audit committee; or * entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management. We do not have an audit committee. Our sole director pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our sole director does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by our sole director either before or after the respective services were rendered. PART IV ITEM 15. EXHIBITS EXHIBIT TITLE 3.1 Amended and Restated Articles of Incorporation, Thrust Energy Corp. 3.2 Amended and Restated Bylaws, Thrust Energy Corp. 14.1 Code of Ethics for Senior Financial Officers, Thrust Energy Corp., incorporated by reference from the Form 10KSB filed November 6, 2006 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THRUST ENERGY CORP. Date: November 26, 2010 By:/s/ Thomas Mills Thomas Mills, Chief Executive Officer, Chief Principal Accounting Officer, President In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Thomas Mills Chief Executive Officer, November 26, 2010 Thomas Mills Chief PrincipalAccounting Officer, President & Director