petro_20f.htm

20-F 1 petro_20f.htm petro_20f.htm

As filed with the Securities and Exchange Commission on August 30, 2009

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2009.

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

[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ________

For the transition period from ________ to ________

Commission file number ________

PETRO HORIZON ENERGY CORP. (formerly Horizon Industries Ltd.)

(Exact name of registrant as specified in its charter)

British Columbia, Canada

(Jurisdiction of incorporation or organization)

Suite 1710-1040 West Georgia Street, Box 83, Vancouver, BC Canada V6E 4H1

(Address of principal executive offices)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

TITLE OF CLASS:

COMMON STOCK WITHOUT PAR VALUE

SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(D) OF THE ACT:

NONE

Indicate the number of outstanding shares of the issuer's classes of capital or common stock as of the close of the period covered by the annual report -3,427,350 as of February 28, 2009.

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

[ ] Yes [X] No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

[ ] Yes [X] No

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 Company 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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated Filer [ ] Non-accelerated Filer [X]

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 [X] Item 18 [ ]

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [X] No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

[ ] Yes [ ] No

TABLE OF CONTENTS

	Page
Part I.
Item 1. Identity of Directors, Senior Management and Advisers	4
Item 2. Offer Statistics and Expected Timetable	4
Item 3. Key Information	5
Item 4. Information on the Company	10
Item 4A. Unresolved Staff Comments	15
Item 5. Operating and Financial Review and Prospects	16
Item 6. Directors, Senior Management and Employees	18
Item 7. Major Shareholders and Related Party Transactions	21
Item 8. Financial Information	21
Item 9. The Offer and Listing	21
Item 10. Additional Information	23
Item 11. Quantitative and Qualitative Disclosures About Market Risk	26
Item 12. Description of Securities Other than Equity Securities	26

Part II.
Item 13. Defaults, Dividend Arrearages and Delinquencies	26
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds	26
Item 15. Controls and Procedures	29
Item 16. [Reserved]	30
Item 16(A). Audit Committee Financial Expert	30
Item 16(B). Code of Ethics	30
Item 16(C). Principal Accountant Fees and Services	30
Item 16(D). Exemption from the Listing Standards for Audit Committees	31
Item 16(E). Purchases of Equity Securities by the Issuer and Affiliated Purchasers	31
Item 17. Financial Statements	31
Item 18. Financial Statements	32
Item 19. Exhibits	32

SIGNATURES	33

PART I.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

A. DIRECTORS AND SENIOR MANAGEMENT

Name	Business Address	Functions


Christopher J. Wensley	Suite 1710 -1040 West Georgia Street Vancouver, BC Canada V6E 4H1	Director, President

Patrick Forseille	Suite 1710-1040 West Georgia Street Vancouver, BC Canada V6E 4H1	Director, CFO

J. Paul Sorbara	Suite 1710-1040 West Georgia Street Vancouver, BC Canada V6E 4H1	Director

Ron Bourgeois	Suite 1710-1040 West Georgia Street Vancouver, BC Canada V6E 4H1	Director, Secretary

Mr. Chris Wensley has been a director and officer since October 6, 2005.

Mr. James Romano was a director from October 1, 2003 to March 21, 2006.

Mr. Robert Paul was a director from February 27, 1997 to October 1, 2003.

Mr. Jim Pettit was a director from January 20, 2003 to August 10, 2006.

Mr. Donald Huston acted as director from March 1, 2000 to January 30, 2004.

Mr. Daniel Torok acted as director from April 1, 2002 to January 20, 2003.

Mr. Patrick Forseille has been a director and officer since October 12, 2004.

Mr. Ronald Bougeois has been a director and officer since August 10, 2006.

Mr. Paul Sorbara has been a director since January 30, 2004.

Mr. Larry Hargrave was a director from September 20, 2007 to January 9, 2009.

B. ADVISERS

Name	Business Address	Position

Tupper Johnsson & Yeadon	1710-1177 West Hastings Street Vancouver, BC Canada V6E 2L3	Legal Counsel

C. AUDITORS

Name	Business Address	Professional Body Membership

Davidson & Company LLP	1200-609 Granville Street. P.O. Box 10372 Pacific Centre, Vancouver Canada V7Y 1G6	Nexia International

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

The selected consolidated financial data presented in the table below for the fiscal years ended February 28, 2009 and February 29, 2008 is derived from our consolidated financial statements and is denominated in Canadian dollars. Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in Canada. This data includes our accounts and our wholly-owned subsidiary's accounts. The following selected financial data is qualified by reference to, and should be read in conjunction with, our consolidated financial statements and related notes. We follow the full cost method of accounting for oil and gas operations.

The selected financial data for the years ended February 28, 2009 and February 29, 2008 was derived from our financial statements, which have been audited by Davidson & Company LLP, as indicated in their audit report which is included elsewhere in this Annual Report. We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Our present policy is to retain future earnings for use in our operations and the expansion of our business.

Selected Financial Data Presented According to Canadian GAAP---Please see full financials for full explanation of reconciliation of the below financial data to U.S. GAAP.

	Year ended			Year ended			Year ended			Year ended			Year ended
	February 28			February 29			February 28			February 28			February 28
	2009			2008			2007			2006			2005

Revenue	$	142,597		$	163,283		$	137,196		$	0		$	0
Net Loss		(1,068,748	)		(1,667,370	)		(672,855	)		(1,430,579	)		(382,381	)
Net Loss per share basic
and diluted		(0.32	)		(0.61	)		(0.32	)		(0.88	)		(0.32	)
Cash dividends per share		0			0			0			0			0
Weighted average shares		3,342,278			2,722,588			2,094,367			1,666,263			1,076,839
Year ended shares outstanding		3,427,350			3,136,100			2,386,781			1,861,781			1,200,000

Total assets		68,805			706,070			1,613,474			691,974			1,106,353
Long term liabilities		0			0			0			0			0
Shareholders' equity (deficiency)		(123,126	)		696,622			986,047			362,189			764,697
Capital expenditures (net)		122,343			235,756			794,370			503,063			1,046,984

B. CAPITALIZATION AND INDEBTEDNESS

The following table sets forth our capitalization and indebtedness as at February 28, 2009 and is qualified by reference to, and should be read in conjunction with, our consolidated financial statements and related notes.

Capitalization and Indebtedness

(In Canadian Dollars)

	February 28, 2009
Indebtedness

Accounts payable and accrued liabilities	$	187,101
Note Payable		-
Convertible loan		-

Total Indebtedness		187,101

Shareholders' equity

Share capital		5,401,693
Contributed surplus		367,716
Deficit		(5,892,535	)

Net shareholders' equity (deficiency)		(123,126	)

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable

D. RISK FACTORS

This section describes some of the risks and uncertainties faced by us. The factors below should be considered in connection with any forward looking statements in this Annual Report. The risk factors described below are considered to be the significant or material ones, but they are not the only risks faced by us.

The Company Faces Competition.

The oil and gas industry is highly competitive. We experience competition in all aspects of our business, including searching for, developing and acquiring reserves, obtaining pipeline and processing capacity, leases, licenses and concessions, and obtaining the equipment and labor needed to conduct operations and market crude oil and natural gas. Our competitors include multinational energy companies, other independent crude oil and natural gas concerns and individual producers and operators. We have limited financial and other resources. Many competitors have financial and other resources substantially greater than those available to us and, accordingly, may be better positioned to acquire and exploit prospects, hire personnel and market production. In addition, many of our larger competitors may be better able to respond to factors such as changes in worldwide crude oil and natural gas prices, levels of production, the cost and availability of alternative fuels or the application of government regulations. We expect a high degree of competition to continue.

Government Regulation and Environmental Matters may Adversely Affect the Company

We are subject to various federal and state laws and regulations, including environmental laws and regulations in each jurisdiction in which we operate. As we are in the drilling industry, government regulation is much greater than that of many other industries. We believe that we are in compliance with such laws and regulations. Such laws and regulations may change in the future in a manner that will increase the burden and cost of compliance. In addition, we could incur significant liability for damages, clean up costs and penalties in the event of certain discharges into the environment. Certain laws and governmental regulations may impose liability on us for personal injuries, clean-up costs, environmental damages and property damages, as well as administrative, civil and criminal penalties. We believe that cost of compliance with environmental regulations will not have an adverse effect on our operations or earnings, risks of costs and liabilities are inherent in oil and gas operations, and there can be no assurance that significant costs and liabilities, including criminal penalties, will not be incurred. Moreover, it is possible that other developments, such as stricter environmental laws and regulations, and claims for damages for injuries to property or persons resulting from our operations could result in costs and liabilities. Some of the regulations that apply to us in the United States, where we have field operations, include the Resource Conservation and Recovery Act and comparable state statutes, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Air Act, the Occupational Safety and Health Act and comparable state statutes, the Oil Pollution Act 1990, the Water Pollution Control Act of 1972, the Safe Drinking Water Act and the Toxic Substances Control Act. We are unable to estimate the costs to be incurred for compliance with environmental laws over the next twelve months. Management believes all such costs will be those ordinarily and customarily incurred in the development and production of oil and gas and that no unusual costs will be encountered.

Exploration and Production Regulations may Limit Petro Horizon’s Expansion and Growth.

Our operations in the United States are subject to various types of regulation at the federal, state and local levels. Such regulations include requiring permits for the drilling of wells, maintaining bonding requirements in order to drill or operate wells and regulating the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, the plugging and abandoning of wells and the disposal of fluids used or obtained in connection with operations. Our operations are also subject to various conservation regulations. These include the regulation of the size of drilling and spacing units and the density of wells that may be drilled and the unitization or pooling of oil and gas properties. In addition, certain state conservation laws may establish maximum rates of production from oil and gas wells, generally prohibit the venting or flaring of gas and impose certain requirements regarding the ratability of production. The effect of these regulations is to limit the amount of oil and gas which can be produced from wells in which we hold interest and may limit the number of wells or the locations at which wells can be drilled. The extent of any impact on our operations of such restrictions cannot be predicted.

International Operations may Complicate Petro Horizon’s Gov’t., Environmental and Regulatory Compliance.

We are actively pursuing oil and gas opportunities in several foreign countries. International crude oil and natural gas exploration, development and production activities are subject to political and economic uncertainties (including but not limited to changes, sometimes frequent or material, in governmental energy policies or the personnel administering them), expropriation of property, cancellation or modification of contract rights, foreign exchange restrictions, currency fluctuations, royalty and tax increases, limits on allowable levels of production and other risks arising out of foreign governmental sovereignty over the areas in which our operations will be conducted, as well as risks of loss due to civil strife, terrorism, acts of war and insurrection. These risks may be higher in developing countries in which we may conduct such activities. Our international operations may also be adversely affected by laws and policies of Canada or the United States affecting foreign trade, taxation and investment. Consequently, our international exploration, development and production activities may be affected by factors beyond our control, any of which could materially adversely affect our financial position or results of operations. Furthermore, in the event of a dispute arising from international operations, we may be subject to the exclusive jurisdiction of courts outside the United States or Canada or may not be successful in subjecting persons to the jurisdictions of the courts in the United States or Canada, which could adversely affect the outcome of such dispute.

Dependence on Key Personnel may Limit Petro Horizon’s Growth.

As we have only a few employees, we depend to a large extent on the services of Christopher J. Wensley, our President, Patrick Forseille, our CFO and Ron Bourgeois, corporate secretary. The loss of the services of any of these individuals could have a potential adverse effect on our operations.

Ability to Attract Competent Personnel may Hamper Petro Horizon’s Growth.

Recent commodity price fluctuations have effected oil and gas exploration activities worldwide, with a possible rise in demand for competent oil and gas professionals. We are a small company and must compete with larger, better capitalized companies for competent personnel.

Concentration of Producing Properties may Cause Delays or Interruptions.

Our crude oil and natural gas production is presently concentrated in two properties in Texas, United States: the Funk Lease and Waverly Prospect. We will be vulnerable to a disproportionate impact of delays or interruptions of production until we develop a more diversified production base. Once we have more producing properties, a disruption in one property will have less of an impact on our overall production. In addition, we are not the operator of the Waverly prospect. As such, our plans, commitments and obligations are dependent on the operator's plans and on how well the operator executes such plans.

Insurance and Uninsured Risk to Petro Horizon’s Assets and Operations.

Our business is subject to a number of risks and hazards, including the risk of fire, explosions, equipment failure, abnormally pressured formations, environmental hazards, industrial accidents, changes in the regulatory environment, labor disputes, the occurrence of any of which could result in losses to us due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigation and penalties and suspension of operations. Our insurance will not cover all the potential risks associated with an oil and gas company's operations. We may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not be available or may not be adequate to cover any resulting liability. There are risks against which we cannot insure or against which we may elect not to insure. We, and the operators of our properties, maintain insurance in amounts that we believe to be reasonable. The occurrence of a significant event that is not fully insured could have an adverse effect on our results of operation and our financial condition.

Commodity Price Fluctuations may Affect Profitability or Production.

Our revenues and profitability are dependent upon prevailing prices for crude oil, natural gas and natural gas liquids. For much of the past decade, the markets for crude oil and natural gas have been extremely volatile. These markets are expected to continue to be volatile in the foreseeable future. In general, future prices of crude oil, natural gas and natural gas liquids are dependent upon numerous external factors such as various economic, political and regulatory developments and competition from other sources of energy. The unsettled nature of the energy market and the unpredictability of worldwide political developments, including, for example, the Iraq war and the actions of the Organization of Petroleum Exporting Countries members, make it particularly difficult to estimate future prices of crude oil, natural gas and natural gas liquids.

Exploration Risks may Limit Petro Horizon’s Success.

Our results of operations are heavily dependent on how successful we are in the exploration for crude oil and natural gas. Exploration activities involve more risk than development or exploitation activities. Exploratory drilling is a speculative activity. The use of three-dimensional seismic data and other advanced technologies may increase the probability of success of exploratory wells, and reduce the average finding costs through the elimination of prospects that might otherwise be drilled solely on the basis of two-dimensional seismic data and other traditional methods. Even when fully utilized and properly interpreted, three-dimensional seismic data and visualization techniques only assist geoscientists in identifying subsurface structures and hydrocarbon indicators and do not conclusively allow the interpreter to know if hydrocarbons will in fact be present, or present in economic quantities, in such structures. Failure of our exploration activities would have an adverse effect on our results of operations and financial condition.

Operating Risks to Property, Equipment and Operations.

The oil and gas industry involves a variety of operating risks, including the risk of fire, explosion, blowout, pipe failure, casing collapse, stuck tools, abnormally pressured formations and environmental hazards such as oil spills, gas leaks, pipeline ruptures and discharges of toxic gases, the occurrence of any of which could result in losses to us due to injury and loss of life, loss of or damage to well bores and/or drilling or production equipment, costs of overcoming down hole problems, severe damage to and destruction of property, natural resources and equipment, pollution and other environmental damage, clean-up responsibilities, regulatory investigation and penalties and suspension of operations. Gathering systems and processing facilities are subject to many of the same hazards and any significant problems related to those facilities could adversely affect our ability to market our production. Moreover, offshore operations are subject to a variety of operating risks peculiar to the marine environment, such as hurricanes or other adverse weather conditions. The occurrence of a significant event not fully insured or indemnified against could materially and adversely affect our financial condition and results of operations.

Shortage of Supplies and Equipment may Limit or Reduce Production.

Our ability to conduct operations in a timely and cost effective manner is subject to the availability of crude oil and natural gas field supplies, rigs, equipment and service crews. There presently exists a general tightening of supplies, equipment and personnel available to conduct operations in a timely manner. As we may not receive priority in ordering and shipping over other companies who may place larger and more frequent orders, we anticipate this shortage of certain types of supplies and equipment will result in delays in our operations as well as in higher operating and capital costs.

Capital Requirements may Limit Petro Horizon’s Growth.

We will be required to make capital expenditures to develop reserves and to discover new crude oil and natural gas reserves. If our cash and cashflow from operating activities is insufficient to fund such additional expenditures, we may be required to sell equity, issue debt, sell properties or offer interests in the properties to be earned by another party or parties carrying out further exploration or development thereof. There can be no assurance that capital will be available to us from any source or that, if available, it will be at prices or on terms acceptable to us. Should sufficient capital not be available, the development and exploration of our properties could be delayed and, accordingly, the implementation of our business strategy would be adversely affected. If we are unable to meet our share of costs incurred under agreements to which we are a party, our interest in the properties subject to such agreements may be reduced.

Replacement of Reserves may Reduce Future Production.

Producing oil and natural gas reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Our future success depends upon our ability to find, develop and/or acquire crude oil and natural gas reserves at prices that permit profitable operations. Except to the extent that we conduct successful development, exploitation or exploration activities or acquire properties containing proved reserves, our proved reserves will decline.

Estimates of Reserves and Related Data may Prove Inaccurate.

Numerous uncertainties are inherent in estimating quantities of proved and other reserves of oil and gas and in projecting future rates of production and timing of development expenditures, including many factors beyond the control of the producer. The reserve data presented in this Annual Report represents only estimates based on available geological, geophysical, production and engineering data, the extent, quality and reliability of which vary. Oil and gas reserve engineering is a subjective process of estimating accumulations of oil and gas that cannot be measured in an exact manner, and estimates of other engineers might differ materially from those shown.

Additional Capital Contributions Could Result in Dilution to Existing Shareholders.

We do not know if we will be able to generate material revenue from oil and gas operations. Historically, the primary source of funds available to us has been through the sale of our equity securities. Any future additional equity financing could cause dilution to current stockholders.

Limited and Volatile Trading Volume may Limit Stock Resale Ability.

Our shares trade on the TSX Venture Exchange, the volume of trading has been limited and volatile in the past and is likely to continue to be so in the future, making it difficult for investors to readily sell their shares in the open market. Without a liquid market for the our shares, investors may be unable to sell their shares at favorable times and prices and may be required to hold their shares in declining markets or to sell them at unfavorable prices. Our shares do not trade on an established market in the United States and we cannot make any assurances that our shares will ever trade in such a market, or if they do so trade, that a United States market for our shares will be sustained.

Volatility of Share Price may Limit Stock Resale Value.

The market price of many resource companies, particularly resource exploration companies like us, have experienced wide fluctuations in price, resulting in losses to investors who have sold their shares at a low price point. These fluctuations are based only in part on the level of progress of exploration, and can reflect general economic and market trends, world events or investor sentiment, and may sometimes bear no apparent relation to any objective factors or criteria. Significant fluctuation in our share price is likely to continue, and could potentially increase, in the future.

The Company Does not Intend to Issue Dividends.

No dividends on our common shares have been paid to date. We currently plan to retain all future earnings and other cash resources, if any, for the future operation and development of our business. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account many factors, including our operating results, financial condition, and current and anticipated cash needs.

Future Sales of Common Shares by Existing Shareholders may Limit Stock Resale Ability and Price.

Sales of a large number of our common shares in the public markets, or the potential for such sales, could decrease the trading price of the common shares and could impair our ability to raise capital through future sales of common shares.

Incorporation in Canada may Cause Difficulty for U.S. Investors to Effect Service of Process.

We are incorporated under the laws of the Province of British Columbia, Canada. Consequently, it will be difficult for United States investors to effect service of process in the United States upon our directors or officers, or to realize in the United States upon judgments of United States' courts predicated upon civil liabilities under the Exchange Act. All of our directors are residents of Canada, and a significant portion of our assets are located outside of the United States. A judgment of a United States court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the United States court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is doubt whether an original action could be brought successfully in Canada against any of such persons or us predicated solely upon such civil liabilities.

Conflicts of Interest may Hamper Officer and Director Effectiveness.

There may be potential conflicts of interest for certain of our officers and directors who are or may become engaged from time to time in the crude oil and natural gas business on their own behalf or on behalf of other companies with which they may serve in the capacity as directors or officers. Certain of our independent directors are officers and/or directors of other publicly traded crude oil and natural gas exploration and production companies.

Clear Title to Properties is subject to many factors.

Title to oil and gas properties is subject to royalty, overriding royalty, carried, net profits, working and other similar interests and contractual arrangements, to liens for current taxes not yet due and to other encumbrances. Only cursory investigation of record title is made at the time of acquisition. Drilling title opinions are usually prepared before commencement of drilling operations. The Company has no basis to believe that such will occur and there can be no assurance that our title to oil and gas properties may not be challenged through legal proceedings.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

Incorporation, Amalgamation and Name Change. The Company was incorporated under the provisions of the Company Act of the Province of British Columbia on February 24, 1997 as J.P.T. Resources Ltd., and changed its name to Horizon Industries, Ltd. on June 7, 1999. The Company further changed its name to Petro Horizon Energy Corp. on February 13, 2009.

On December 22, 2003, the Company formed a wholly-owned subsidiary, Horizon Industries (USA), Ltd. which was incorporated in the State of Nevada. All current and future U.S. based petroleum and natural gas interests will be legally held by this wholly-owned U.S. subsidiary.

CONTACT INFORMATION. Our head office is located at Suite 1710-1040 West Georgia Street Box 83, Vancouver BC Canada V6E 4H1. Telephone: 604-488-3900. Fax: 604-488-3910. Our contact person is Patrick Forseille.

PRINCIPAL EXPENDITURES.

Our principal capital expenditures over the last 3 years are: During fiscal 2008, Horizon acquired a 25 to 37.5% interest in the Waverly prospect located in San Jacinto County, Texas for $78,750 and 200,000 shares of Horizon. One gas well was completed on the property. During fiscal 2006, Horizon acquired the Funk lease located in Goliad County, Texas, for $40,000. 3D seismic data was acquired and two gas wells were drilled on the lease. During fiscal 2005, Horizon acquired the Stewart leases in Goliad County, Texas for $93,404. 3D seismic data was acquired and one well was drilled on the property. During the 2005 fiscal year, Horizon acquired a 12% interest in the Whatley #1 Development prospect in the Spartan Field, San Patricio County, Texas for $19,200. One well was drilled on the prospect. All of these are in the U.S. and were financed internally through the sale of the Company’s stock.

Our principle capital divestitures over the last three years were the, the Whatley prospect and the Stewart lease, which were written off in fiscal 2008 and fiscal 2009 respectively. Both properties are in the U.S.

DEVELOPMENT OF OUR BUSINESS. We are in the business of exploring, developing and producing crude oil and natural gas properties.

STEWART LEASE. During the 2005 fiscal year, the Company's wholly owned subsidiary, Horizon Industries U.S.A. Ltd. acquired 544 acres composed of two contiguous 272 acre leases in Goliad County, Texas expiring between January 12, and July 5, 2008.

The Stewart prospect is within the Jobar field, which was discovered by Edge Petroleum in late 1997 with production from the middle Yegua formation between 5,300 and 5,500 feet. To date, there are 9 wells in the Jobar field with cumulative gas production of 5.9 Bcf of gas. The average initial production for the wells in the field has been 1.8Mmcf per day to a maximum of 5 Mmcf per day from the Swickheimer #2 well. The closest well to the Stewart lease is the V. Albrecht #1 well, which is located 900 feet east of the lease. Total production from this well is 650 Mmcf with an initial production rate of 1.85Mmcf per day. The Company has not entitlement to this property and the locality of the property does not assure it will experience similar recoveries.

The Jobar field appears to be a series of isolated bar deposits trending in a north-east/south-west direction. Some faulting may have occurred between the bars. The average area of the individual bar is approximately 40 acres. The Jobar field was discovered using seismic amplitude analysis. 2D Seismic over the Stewart lease indicates the existence of at least three and up to five untested sand bars. Even when properly interpreted, seismic data and visualization techniques are not conclusive in determining if hydrocarbons are present in economically producible amounts. Horizon has purchased a 3D data set over this prospect to further refine these targets prior to drilling.

During 2006, the Company completed drilling of the 5,700 foot Stewart #1 well at the Stewart East Prospect. The well was put online in February 2006 and produced uneconomic quantities of gas. The well was subsequently shut in.

During 2006, the Company acquired all deeper rights on the Stewart lease in Goliad County, TX. Recently gas and condensate was discovered by Chesapeake Energy Corporation in 2003 in the Marshall Field in the Middle Wilcox formation, which is located approximately 1.5 miles north of the Stewart lease.

Preliminary interpretation shows several defined structural targets comprising approximately 200 acres in the Wilcox formation situated within the Stewart West acreage. The target appears consistent with other successful Wilcox wells in the immediate vicinity. Even when properly interpreted, seismic data and visualization techniques are not conclusive in determining if hydrocarbons are present in economically producible amounts.

There are currently several producing Wilcox wells within one half mile of the Stewart leases. The Etoco Heard #1 well located one half mile due North, came on line in February of 2005 having an initial production rate of 8.9 Million Cubic Feet Per Day (MMCF/ D). This well produced a cumulative 2/26BCF of gas plus 47,300 Bbl of condensate to date. The Chesapeake Eichman #1 Well, situated less than one half mile North West of Horizon's Stewart leases, came on line in April 2005 having an initial production rate of 21MMCF/D. The well has produced a cumulative 3.5BCF of gas plus 45,000 Bbls of condensate. The Chesapeake Hawkins Deep #1 well located 1,000 feet due west of Horizon's Stewart leases has produced a cumulative 2.9 BCF and 33,000 barrels of condensate. The Hawkins Deep #2 located directly south of the Hawkins Deep #1 has produced .9 BCF and 10,000 barrels of condensate. The Company has not entitlement to this property and the locality of the property does not assure it will experience similar recoveries.

During the current fiscal year the leases lapsed and all costs were written off to operations.

WHATLEY PROSPECT. The Company's wholly owned subsidiary, Horizon Industries, U.S.A. Ltd. owns a 9% working interest in the Whatley #1 Development Prospect, in the Spartan Field, San Patricio County, Texas. The Whatley #1 well is located on a 312 acre lease in the Spartan Field, San Patricio County Texas. The Spartan Field was discovered in the 1940's by 2D seismic exploration. The Company paid approximately US$192,000 for its ownership share of a development well on the property which was drilled in September 2004. The well was put online in January 2005 and since that time, several zones have been perforated tested and flowed to sales with limited production. During the previous fiscal year, the well was abandoned and the prospect was written off.

WAVERLY PROSPECT. During fiscal 2007, the Company's wholly-owned subsidiary, Horizon Industries U.S.A. Ltd. entered into a Joint Venture agreement to participate with Pan American Development Company, Inc. in a drilling program in San Jacinto County, Texas, approximately 50 miles north of Houston Texas. The Company acquired a 25% working interest in the initial phase of the prospect with an option to acquire up to 37.5% working interest in the balance of the prospect currently comprising a total of 3,100 acres (75% net revenue interest).

The initial phase calls for the development of 400 acres of Jackson sands at a depth of approximately 2,800 feet. The acreage may also host a second gas charged Jackson sand at approximately 3,100 feet based on logs from nearby wells. Well log indications of hydrocarbon saturation do not assure productivity and that the locality of your property does not assure it will experience similarities in well log response. No reserves have been assigned to this stratigraphic trap, but the sand has produced gas in several wells in the immediate area. There is geological evidence for an additional 40 location on existing leasehold and the possibility for even more (up to 80) potential locations if the geologic model associated with this prospect is accurate.

An initial test well was drilled in June 2007 and perforation and flow testing of the first of several primary zones of interest as identified by logs and side wall cores was completed. Four feet of perforations were shot in this first zone. The well was flow tested for 2 hours each on a 6/64ths choke, an 8/64ths choke and for 4 hours on a 10/64ths choke. The well flowed at stable rates of 264 MCF, 461 MCF and 611 MCF dry gas per day respectively, with stabilized flowing tubing pressures of 1,135 PSI, 1,120 PSI and 1,080 PSI respectively. The well flowed approximately 100 MMCFPD until it watered out in October 2008. No further production was obtained from the well.

The Hammond #1 well is the first of up to five wells proposed to be drilled on the initial 400 acre phase of the New Waverly prospect.

FUNK LEASE. During the fiscal 2007, the Company's wholly-owned subsidiary, Horizon Industries U.S.A. Ltd., acquired a 100% working interest in the Funk property consisting of two oil and gas leases totaling 400 acres located in Goliad County, Texas. The leases expire on March 31, 2009. The property is situated in the prolific Middle Yegua gas trend which has produced gas and condensate in the nearby Naetze Yegua, Perdido Creek and Jobar fields.

The Company has acquired 3D data covering Funk and surrounding lands to further define and identify prospective targets on the lease previously defined by 2d seismic data. Analysis and interpretation of the 3d data has identified several prospective targets throughout the property. Even when properly interpreted, seismic data and visualization techniques are not conclusive in determining if hydrocarbons are present in economically producible amounts.

The Perdido Creek field, discovered in 1985 is located one and one half miles northeast of the Funk Prospect. Perdido Creek hosts seven producing wells with cumulative production from Yega sands of approximately 3-4 Bcf of gas and 80,000 bbl. of oil and condensate. The most prolific well in Perdido Creek, the Vrazel #1 produced 1.8 BCF together with 3,000 barrels of oil and condensate from a 90' sand covering 36 acres. The Company has not entitlement to this property and the locality of the property does not assure it will experience similar recoveries. These Yegua sands appear to be similar to that underlying the Funk Prospect which hosts 2D defined Yegua sand bodies of 35 to 50 acres in aerial extent. Even when properly interpreted, seismic data and visualization techniques are not conclusive in determining if hydrocarbons are present in economically producible amounts.

During fiscal 2006, the Company drilled the Horizon Funk #1 well to a total depth of 2,530 feet. Logs were completed indicating fifteen feet of pay extending from a depth of 2,018 feet to 2,033 feet. On August 22, 2006, a four foot interval was perforated between 2,020 feet and 2,024 feet. The Funk #1 well is currently shut in after producing minor amounts of gas from various zones.

During the previous year, the Horizon Funk #2 well was drilled cased and completed at a depth of 6,060 feet. Log results showed four highly prospective pay zones in the well in the Yegua, Cook and Frio formations. The Funk #2 well was perforated in August 2007 and put to sales at that time. It is currently producing at approximately 100 MCF/D as of August 2009.

B. BUSINESS OVERVIEW

Nature of Our Operations. Our principal business is acquiring, exploring and developing crude oil and natural gas properties. In the United States, we are currently acquiring, exploring or developing crude oil and natural gas properties located in Texas. We intend to continue to pursue the acquisition of crude oil and natural gas properties and pursue strategic opportunities to buy or sell assets or otherwise contract with other companies in our industry.

Our success will depend on whether we are able to locate and successfully negotiate for crude oil and natural gas opportunities in countries which meet our criteria and then successfully develop and produce crude oil and natural gas in those countries. Our success will also depend on how well our prospects in the United States perform. All of our production is currently from properties located in the United States.

In the United States, we will continue to acquire properties where we can exploit lower-risk missed pay, increased density and behind casing reserves by using modern technologies: three dimensional seismic data, cased hole logging, under balanced drilling, horizontal drilling and fracture stimulation.

Principal Markets. As of February 28, 2009, we operate in one reportable segment, the exploration for and the development and production of crude oil and natural gas.

Seasonality. Seasonality has no material effect on our financial condition or results of operations. However, our crude oil and natural gas exploration and development activities may be timed to meet seasonal conditions.

Marketing Channels. Crude oil production is sold under market sensitive or spot price contracts. Natural gas production is sold to purchasers under varying percentage-of-proceeds and percentage-of-index contracts or by direct marketing to end users or aggregators. By the terms of the percentage-of-proceeds contracts, we receive a percentage of the resale price paid to the purchaser for sales of residue gas and natural gas liquids recovered after gathering and processing the natural gas. The residue gas and natural gas liquids sold by these purchasers are sold primarily based on spot market prices. The revenue from the sale of natural gas liquids is included in natural gas sales.

Material Effects of Governmental Regulations. Government regulations have a material effect on us to the extent that they require us to conduct field operations and hydrocarbon extraction activities according to prescribed environmentally-safe, sensitive regulations. Also, government regulations may restrict the commencement or re-commencement of field activities in certain properties in which we hold an interest for the purpose of exploration. Examples of types of governmental laws and regulations that may have a material effect on our business include:

requirements to acquire permits before commencing drilling operations;

requirements to restrict the substances that can be released into the environment in connection with drilling and production activities;

limitations on, or prohibitions to, drilling in protected areas such as wildlife preserves; and

requirements to mitigate and remediate the effects caused by drilling and production operations.

C. ORGANIZATIONAL STRUCTURE

We conduct the majority of our business through a subsidiary incorporated outside of Canada. The following table presents the name, the percentage of voting securities owned and the jurisdiction of incorporation of our principal subsidiaries:

	Percent	Jurisdiction
Subsidiary	Owned	of Incorporation

Horizon Industries (USA), Ltd.	100	Texas

D. PROPERTY, PLANT AND EQUIPMENT

See ITEM 4. DEVELOPMENT OF OUR BUSINESS

Property and Equipment

	Year Ended			Year Ended
	February 29,			February 28,
	2008			2009
Petroleum and Natural Gas Interest
--Beginning of Year	$	1,250,029		$	556,782


Whatley Prospect, Texas
Deferred exploration costs
net of recoveries		-			-
Write-off dry hole costs		(222,481	)		-

Stewart Leases, Texas

Deferred exploration cost,
net of recovery		(3,725	)		(293,878	)

Deferred exploration cost,
net of recovery		48,916			-
Depletion		(230,314	)		(109,135	)
Write-off dry hole costs		(180,856	)		(11,023	)

Coleto Creek

Deferred exploration cost,
net of recovery		(204,960	)		-

Waverly

Deferred exploration cost,
net of recovery		395,524			114,257
Depletion		(12,122	)		(14,402	)
Write-off dry hole costs		(283,229	)		(200,028	)

Petroleum and Natural Gas Interest
--End of Year	$	556,782		$	42,573

Property acquisitions:

See ITEM 4. DEVELOPMENT OF OUR BUSINESS

Estimated Reserves of Crude Oil and Natural Gas. As a Canadian issuer, we are required under Canadian law to comply with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" (NI 51-101) implemented by the members of the Canadian Securities Administrators in all of our reserves related disclosures. Under NI 51-101, proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. Reported proved reserves should target, under a specific set of economic conditions, at least a 90% probability that the quantities of oil and natural gas actually recovered will equal or exceed the estimated proved reserves.

In the United States, registrants, including foreign private issuers like us, are required to disclose proved reserves using the standards contained in Rule 4-10(a) of the United States Securities and Exchange Commission's ("SEC") Regulation S-X. Proved reserves estimated and reported below pursuant to NI 51-101 also meet the definition of estimated proved reserves required to be disclosed under Rule 4-10(a) of Regulation S-X. The crude oil and natural gas industry commonly applies a conversion factor to production and estimated proved reserve volumes of natural gas in order to determine an "all commodity equivalency" referred to as barrels of oil equivalent ("boe"). The conversion factor we have applied in this Annual Report is the current convention used by many oil and gas companies, where six thousand cubic feet ("mcf") of natural gas is equal to one barrel ("bbl") of oil. The boe conversion ratio we use is based on an energy equivalency conversion method primarily applicable at the burner tip. It may not represent a value equivalency at the wellhead and may be misleading, particularly if used in isolation.

There are currently proved + probably undeveloped reserves from the Funk #2 well.

The Hammond #1 well was drilled was drilled and completed to a depth of 3,200 feet. The well was perforated and has flowed gas until October 2008. The Funk #2 well was drilled and completed to a depth of 6,060 feet. The well was perforated and flowed gas from various formations since 2007.

(1)

"Gross Reserves" are our working interest (operating or non-operating) share before deducting of royalties and without including our royalty interests. "Net Reserves" are our working interest (operating or non-operating) share after deduction of royalty obligations, plus our royalty interests in reserves.

(2)	"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

(3)	"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

(4)	"Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.

(5)	"Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

(6)

"Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

(7)	"Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.

(8)

"Undeveloped" reserves are those reserves expected to be recovered from know accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. OPERATING RESULTS

The Company incurred a net loss before other items of $1,068,748 for the year ended February 28, 2009 compared to a net loss of $1,667,370 in the previous year and $789,625 in 2007. This represents no significant overall change from the previous year. Comparative changes of individual expenses resulted in consulting fees of $123,300 (2008-$199,358) (2007- $161,609), shareholder communication fees of $25,915 (2008-$130,618) (2007-$138,200), direct operating expense of $111,217 (2008-$151,130) (2007-$108,362). Consulting fees decreased over the period due to the Company spending less on the usage of technical consultants to explore and develop its land position. Shareholder communications fees decreased over the period to better reflect the downturn in the investing market. Direct operating expenses also decreased over the period due to gas wells previously brought online incurring less expenses associated with operating gas producing wells. Professional fees increased from $153,185 for the year ended February 29, 2008 to $186,573 for the year ended February 28, 2009 due to the Company expanding its property base requiring more professional expertise such as property management and legal representation. Office and administration fees decreased from $47,733 for the year ended February 29, 2008 to $20,937 for the year ended February 28, 2009 due to decreased overhead activity related to the development of the Company’s resources properties.

Our revenue has decreased from 2008 to 2009 due to the Company's inability to find and develop natural gas reservoirs. We cannot be certain whether this revenue will continue due to the uncertainty involved in producing from new reservoirs. Without long term engineering analysis, it is difficult to determine the life span of the reservoirs.

Every year end, the Company is required to file a Form 51-101F Statement of reserves data. As of February 28, 2009 the Company has proved reserves of natural gas.

B. LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations to date primarily though the issuance of common shares and exercise of stock options. The Company continues to seek capital through various means including the issuance of equity and/or debt. The Company anticipates that as additional equity/debt financing continues along with increasing revenues from production, the Company’s working capital deficiency shall be eliminated. The Company anticipates that current financing along with cash flow from production shall be sufficient for the Company to operate without additional arrangements for funding for at least the next 12 months.

The financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future.

	February 29		February 28
	2008		2009

Working Capital (Deficiency)	$	144,231	$	(160,869	)
Deficit		4,823,787		5,892,535

Net cash used in operating activities for the year period ended February 28, 2009 was $191,388 compared to $571,209 used during the year ended February 29, 2008. The cash used in operating activities for the current year consists primarily of operating loss and a change in non-cash working capital.

Net cash used by investing activities for the year ended February 28, 2009 was $122,343 compared to $930,228 used during the prior year. Net cash used during the current period consists primarily of expenditures on oil and gas properties.

Net cash provided by financing activities for the year ended February 28, 2009 was $193,000 compared to $1,290,370 provided during the prior year. The cash provided by financing activities for the current period was primarily raised by private placements, and the exercise of warrants and options.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

We have no material research and development programs or policies.

D. TREND INFORMATION

There are a number of trends in the crude oil and natural gas industry that are shaping the near future of the business. Crude oil prices are dependent upon the world economy and the global supply-demand balance. Demand for crude oil continues to grow, particularly in developing countries. The current environment of geopolitical unrest has increased prices well above those supported by current supply-demand balances based on perceived risk. While pricing in the future may more accurately reflect supply-demand fundamentals, it would appear that the current tight supply environment is highly sensitive to political and terrorist risks as evidenced by the risk premium in the current price structure. The magnitude of this risk premium changes over time. Natural gas prices have been somewhat volatile over the past year, particularly due to shut-ins and damages to production facilities in the Gulf of Mexico as a result of adverse weather conditions. With the supply and demand balance for natural gas being tight, the market has experienced volatility in pricing due to a number of factors, including weather, drilling activity, declines, storage levels, fuel switching and demand. In addition, in the next few years liquid natural gas terminals are anticipated to add natural gas supplies to the United States, resulting in a moderation of natural gas prices. It appears that prices of crude oil and natural gas no longer rise and fall in tandem. Any disruptive event could cause crude oil or natural gas prices to spike. Similarly, resolution of certain geopolitical tensions, such as the crisis with Iran concerning the development of nuclear weapons capability, could cause such prices to moderate.

E. OFF-BALANCE SHEET ARRANGEMENTS

As at February 28, 2009, we had no off-balance sheet arrangements.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

None.

G. SAFE HARBOR

Certain statements in this Annual Report, including those appearing under this Item 5, constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, Section 27A of the United States Securities Act of 1933, as amended and within the meaning of applicable Canadian securities legislation. Additionally, forward looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future, by us on our behalf. Such statements are generally identifiable by the terminology used such as "plans", "expects, "estimates", "budgets", "intends", anticipates", "believes", "projects", "indicates", "targets", "objective", "could", "may" or other similar words. As the Company is currently defined as a “penny stock” under the Securities Exchange act of 1934, the Company cannot rely on the safe harbor provision for forward-looking statements under the Private Securities Litigation Reform Act of 1995.

By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for natural gas, natural gas liquids and oil products; the ability to produce and transport natural gas, natural gas liquids and oil; the results of exploration and development drilling and related activities; economic conditions in the countries and provinces in which we carry on business, especially economic slowdown; actions by governmental authorities including increases in taxes, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflict; the negotiation and closing of material contracts; and the other factors discussed in Item 3 Key Information - "Risk Factors", and in other documents that we file with the United States Securities and Exchange Commission and with Canadian securities regulatory authorities. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors; our course of action would depend upon our assessment of the future considering all information then available. In that regard, any statements as to future natural gas, or oil production levels; capital expenditures; the allocation of capital expenditures to exploration and development activities; sources of funding for our capital program; drilling of new wells; demand for natural gas and oil products; expenditures and allowances relating to environmental matters; dates by which certain areas will be developed or will come on-stream; expected finding and development costs; future production rates; ultimate recoverability of reserves; dates by which transactions are expected to close; cash flows; uses of cash flows; collectability of receivables; availability of trade credit; expected operating costs; and changes in any of the foregoing are forward-looking statements, and there can be no assurance that the expectations conveyed by such forward-looking statements will, in fact, be realized.

We believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity, achievements or financial condition. Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning us, including factors that potentially could materially affect our financial results, may emerge from time to time. We do not intend to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

Name	Position Held	Age

Christopher J. Wensley	President and Director	52
Patrick Forseille	Director and CFO	44
J. Paul Sorbara	Director	56
Ron Bourgeois	Director and Secretary	58

CHRISTOPHER J. WENSLEY Mr. Wensley holds a Diploma of Technology in Administrative Management from the British Columbia Institute of Technology. Following graduation in 1981, Mr. Wensley began an 18 year career in commercial and investment real estate. During this period, he was actively involved in: the acquisition and disposition of income properties including office buildings, industrial facilities, and development sites; office portfolio leasing for a major Canadian pension fund group; and managing sales and project marketing of high-end recreational real estate property in British Columbia. In the late nineties, Mr. Wensley left the real estate business to become an independent business management and venture capital consultant. In 1999, he began providing investor relations, corporate communication, and corporate finance services to numerous public companies.

Mr. Wensley became involved with the Company in the fall of 2003 since which time he has made significant investment in Horizon and has given valuable assistance in the ongoing funding of the company and its prospects.

Mr. Wensley also owns and oversees several private interests in a number of North American oil and gas properties. Mr. Wensley devotes approximately 30 to 50 hours per week to the Company’s activities. Mr. Wensley spends his remaining 10 hours per week consulting with and reviewing information from the above private interests.

Mr. Wensley is not a director of any other public companies.

See CONFLICTS OF INTEREST in Risk Factors.

PATRICK FORSEILLE Mr. Forseille has worked in the oil and gas and mining industry for over ten years. Most recently he has been Chief Financial Officer of Olympic Resources, Ltd., an oil and gas producing company since 1997 and has also concurrently served as a director for various other public companies in differing capacities including comptroller and exploration manager. Mr. Forseille is a Professional Geoscientist with a Bachelor of Commerce degree in accounting. Previously, he was employed as an accountant and geologist with Cameco Corp and Imperial Oil Resources Ltd.

Mr. Forseille devotes approximately 30 hours per week to the Company’s activities.

Mr. Forseille is currently a director of the following public companies:

Company	Exchange

First Star Resources, Inc.	TSXV

See CONFLICTS OF INTEREST in Risk Factors

J. PAUL SORBARA Mr. Sorbara holds a Master of Science Degree from the University of Toronto and is also a Professional Geologist. Following graduation, he conducted Caldera Reconnaissance Programs for Cominco Ltd. In both British Columbia and the Seirra Madre Occidental range in Northern Mexico, spending a number of years in Cominco's Guadalajara office. In the mid nineteen-eighties, Mr. Sorbara left Cominco to establish a successful geological consultant practice. In 1992, Mr. Sorbara started his own private Mexican exploration company, Minera Delta S.A. de C.V. which has now grown to become a substantial operation. Mr. Sorbara is presently the President of Golden Goliath Resources Ltd. a junior mining exploration company exploring for gold in Mexico.

Mr. Sorbara is currently a director of the following public companies:

Company	Exchange

Golden Goliath Resources Ltd.	TSXV

See CONFLICTS OF INTEREST in Risk Factors

RON BOURGEOIS A Chartered Accountant, Ron Bourgeois brings over 25 years of executive and managerial experience to the Company. He has held numerous and varying management and public company positions with extensive experience in the development and financing of major oil and gas resource and infrastructure assets internationally. Mr. Bourgeois has been deeply involved in the acquisition, administration and development of oil and gas projects in Texas and Louisiana where these activities have showcased his rigorous due diligence and negotiation abilities. As the founding Chief Financial Officer, Mr. Bourgeois managed and coordinated the merger of two public corporations; Optima Petroleum Corporation and American Explorer LLC to create PetroQuest Energy Inc. which currently trades on the NYSE with a market valuation exceeding US$500 million. Mr. Bourgeois served as CFO for Optima Petroleum Corporation. The date of the merger was 1998.

His long term experience in the U.S. oil patch has given Mr. Bourgeois a keen understanding of local issues relating to tax and corporate structure as well as state and federal policy. He has played a hands-on role overseeing the exploration, financing and administration of numerous exploration and development oil and gas properties and transactions.

Mr. Bourgeoise is currently not a director of any other public companies:

The Directors of the Company devote times as Directors of the Company as needed. They have no interests which require a devotion of time which would hamper their full devotion of times as Directors to the Company as needed.

B. COMPENSATION

The following table sets forth all annual and long-term compensation for services in all capacities in the year ended Feb. 28, 2009 for our directors, chief executive officer and chief financial officer.

							Options
				Other			Granted
				Annual			Exercise
	Fees		Bonus	Compensation	Number		Price		Expiry Date

Christopher Wensley
President, Chief Executive
Officer and Director	$	106,800	nil	nil		18,750		2.40	Oct. 5 2011
						9,375		2.00	Dec. 5, 2010
						6,250		2.40	Aug. 3, 2009
						8,750		1.36	Oct. 6, 2010
						6,250		1.50	Mar. 15 2010
						10,625		2.40	Apr. 12 2011

Patrick Forseille
CFO, Secretary and Director	$	77,124	nil	nil		6,250		1.60	Mar. 15, 2010
						9,375		1.36	Oct. 6, 2010
						3,125		2.00	Dec. 5, 2010
						5,000		2.40	Aug. 2009
						7,500		2.40	Apr. 12 2011
Ron Bourgeois
Secretary and Director	$	12,500	nil	nil		12,500		2.40	Apr. 12, 2011
						12,500		2.40	Oct. 5, 2011
						6,250		2.80	Sep. 20, 2012

The Company’s Directors currently receive no compensation for their work as directors other than being compensated for expenses incurred in their duty as directors.

The following are the options exercised by executive officers during the Company's completed financial year ended Feb 28, 2009.

	Securities	Aggregate	Unexercised	Value
	Acquired	Value Realized	Options/SARs at FY-End	the-Money Options/SARS
Name	On Exercise	($)	Exercisable/Unexcercisable	at FY-End Exerc/Unexerc

Nil

C. BOARD PRACTICES

Term of Office. At the end of Fiscal 2009, we had four directors. The terms of all four expire at the annual meeting of shareholders:

Christopher Wensley

Patrick Forseille

Paul Sorbara

Ron Bourgeois

D. EMPLOYEES

As of February 28, 2009, we had no full time employees including our executive officers.

E. Share Ownership.

The following list all officer and director beneficial share ownership in excess of 1%.

Christopher Wensely		795,107		23.20%
Patrick Forseille		310,408		9.06%

For a description of our Amended and Restated Stock Option Plan (2008), please see Part II, Item 10.C - Material Contracts and Agreements.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

To the best of our knowledge, no person beneficially owns, directly or indirectly, or exercises control or direction over shares constituting more than five percent of the voting rights of our shares, other than as set forth below:

Shareholder	Number of Shares	Percentage

Christopher Wensley	795,107	23.20%

Approximately 3,052,694 of the company’s outstanding shares or 89.07% are currently listed under deposit with CDS & Co.

Our major shareholders do not have different voting rights than any other shareholders. As of February 28, 2009, our shareholders list showed 3,427,350 common shares outstanding with 14 registered shareholders in Canada holding common shares. We are not controlled, directly or indirectly, by any corporation, foreign government or other person.

B. RELATED PARTY TRANSACTIONS

The aggregate amount of expenditures made to parties not at arms length to the Company consist of the following:

a)	Paid consulting fees of $106,800 (2008-$115,586) to Chris Wensley as a director and officer of the company for services during the year.

b)	Paid professional fees of $72,000 (2008-$72,124) to Patrick Forseille as a director and officer of the Company.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION FINANCIAL STATEMENTS ARE PROVIDED UNDER PART III, ITEM 17.

Legal or Arbitration Proceedings. As of the date of this Annual Report, we are, to the best of our knowledge, not subject to any material active or pending legal proceedings or claims against us or any of our properties. However, from time to time, we may be subject to claims and litigation generally associated with any business venture. Additionally, our operations are subject to risks of accident and injury, possible violations of environmental and other regulations, and claims associated with the risks of exploration operations some of which cannot be covered by insurance or other risk reduction strategies.

Dividend Policy. We have not paid any cash dividends on our common stock and have no present intention of paying dividends. Our current policy is to retain earnings, if any, for use in operations and in business development.

B. SIGNIFICANT CHANGES

None

ITEM 9. THE OFFER AND LISTING

A. OFFER AND LISTING DETAILS

Not Applicable

B. PLAN OF DISTRIBUTION

Not Applicable

C. MARKETS

Our shares of common stock are traded in Canada on the Toronto Stock Exchange ("TSX-V") under the symbol "PHE.V." As of February 28, 2009, we had 3,427,350 shares of common stock outstanding. Our shares of common stock are issued in registered form and the number of shares of common stock reported to be held by record holders in Canada and the United States is taken from the records of Pacific Corporate Trust Company of Canada, the registrar and transfer agent for our shares of common stock. For U.S. reporting purposes, we are a foreign private issuer. We currently have no established market for trading our shares in the United States. The high and low prices for our common stock from January 1, 2001 through December 31, 2007 on the TSX are as follows:

	High		Low
January 1, 2002 through December 31, 2002	$	0.10	$	0.03

January 1, 2003 through December 31, 2003	$	0.40	$	0.04

January 1, 2004 through December 31, 2004	$	0.48	$	0.13

January 1, 2005 through December 31, 2005	$	0.28	$	0.13

January 1, 2006 through December 31, 2006	$	0.40	$	0.18

January 1, 2007 through December 31, 2007	$	0.53	$	0.19

January 1, 2008 through December 31, 2008	$	0.19	$	0.01

The high and low prices for our common stock for the most recent six months on the TSX-V are as follows:

	High		Low
Feb. 1, 2009 through Feb. 28, 2009	$	0.13	$	0.13

March 1, 2009 through March 31, 2009	$	0.23	$	0.11

April 1, 2009 through April 30, 2009	$	0.20	$	0.09

May 1, 2009 through May 31, 2009	$	0.30	$	0.22

June 1, 2009 through June 30, 2009	$	0.23	$	0.18

July 1, 2009 through July 31, 2009	$	0.19	$	0.16

D. SELLING SHAREHOLDERS

Not Applicable

E. DILUTION

Not Applicable

F. EXPENSES OF THE ISSUE

Not Applicable

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Our authorized share capital consists of 100,000,000 common shares without par value. All issued shares are fully paid and non-assessable. As of February 28, 2009 we had 3,427,350 shares issued and outstanding and had 3,136,100 shares outstanding at the beginning of the year (March 1, 2008). As of February 28, 2009, we have outstanding an aggregate of 177,500 options to purchase shares pursuant to our Amended and Restated Stock Option Plan (2008). We also have outstanding 578,219 share purchase warrants related to several private placements which closed in the past two years.

On February 28, 2008 we had a total of 3,136,100 shares issued and outstanding as compared to 2,386,781 issued and outstanding on February 28, 2007.

There are no shares of the company which are currently under option or upon which there is an agreement to be put under option in the future.

The Company’s flow through shares have the following characteristics: Canadian tax legislation permits a company to issue flow-through shares whereby the deduction for tax purposes relating to qualified resource expenditures is claimed by the investors rather than the Company. Recording these expenditures for accounting purposes gives rise to taxable temporary differences.

Emerging Issues Committee 146 “Flow-Through Shares” requires that, whcn flow-through expenditures are renounced, a portion of the future income tax assets that were not recognized in previous years, due to the recording of a valuation allowance, be recognized as a recovery of income taxes in the statement of operations.

B. ARTICLES OF INCORPORATION AND BYLAWS

The Company’s Articles are included as an Exhibit hereto. There are no limitations in the Articles upon the Company’s Objects and purposes. All shares have equal dividend rights and there is no time limit at which any dividend entitlement expires. The entire Board of Directors stands for election at the same time and there is no cumulative voting. All shares have equal rights to share in the company’s profits, rights to surplus in the event of liquidation. There are no redemption provisions, sinking fund provisions, liability to further capital calls by the company and no provisions discriminating against any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares.

The Board has found that the fiduciary duties placed on individual directors by the Company's governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on a individual director's participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.

Under the corporate legislation, a director is required to act honestly and in good faith with a view to the best interests of the Company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, and disclose to the board the nature and extent of any interest of the director in any material contract or transaction, is a director of officer (or an individual acting in a similar capacity) of a party to the contract or transaction or has a material interest in a party to the contract or transaction. The director must then abstain from voting on the contract or transaction unless the contract or transaction (i) relates primarily to their remuneration as a director, officer, employee or agent of the Company or an affiliate of the Company (ii) is for indemnity or insurance for the benefit of the director in connection with the Company, or (iii) is with an affiliate of the corporation. If the director abstains from voting after disclosure of their interest, the directors approve the contract or transaction and the contract or transaction was reasonable and fair to the Company at the time it was entered into, the contract or transaction is not invalid and the director is not accountable to the Company for any profit realized from the contract or transaction. Otherwise, the director must have acted honestly and in good faith, the contract or transaction must have been reasonable and fair to the Company and the contract or transaction be approved by the shareholders by a special resolution after receiving full disclosure of its terms in order for the director to avoid such liability or the contract or transaction being invalid.

Shareholder votes are required on any action which changes the rights of holders of the Company’s stock as required by law.

Annual general meetings shall be held once every calendar year at a time not being more than 13 months after the holding of the last preceding annual general meeting, and at a place as the Directors shall appoint. The Directors may, whenver they think fit, convene a general meeting. A general meeting, if requisitioned in accordance with The Act, shall be convened by the Directors or, if not convened by the Directors, may be convened by the requisitionists.

C. MATERIAL CONTRACTS AND AGREEMENTS

Amended and Restated Stock Option Plan (2008). Our only equity compensation plan is the Amended and Restated Stock Option Plan (2008) (the "Option Plan"), which has been approved and adopted by our shareholders. Pursuant to the Option Plan, we may grant stock options to our directors, officers, employees and consultants or to directors, officers, employees or consultants of our subsidiaries. The stock options enable such persons to purchase our common shares at the exercise price fixed by our Board at the time the option is granted. Our Board determines the number of common shares purchasable pursuant to each option and such exercise price within the guidelines established by the Option Plan. These guidelines allow the Board to authorize the issuance of options with a term not to exceed 10 years and to set other conditions to the exercise of options, including any vesting provisions. Consistent with the rules of the Toronto Stock Exchange, our Option Plan requires that the exercise price of the options at the time of grant may not be lower than the market price of our common shares, which is the closing price of our common shares on the Toronto Stock Exchange on the trading day immediately prior to the date the stock option is granted.

Stock Options.

As of February 28, 2009, the following stock options are outstanding:

Number of Shares	Exercise Price	Expiry Date

10,000	$ 2.40	August 3, 2009
12,500	1.60	March 15, 2010
18,125	1.36	October 6, 2010
12,500	2.00	December 5, 2010
6,250	1.60	January 31, 2011
52,500	2.40	April 12, 2011
31,250	2.40	October 5, 2011
6,250	2.64	August 30, 2012
28,125	2.80	September 30, 2012

Warrants.

As of February 28, 2009, the following warrants are outstanding:

Number of Shares	Exercise Price	Expiry Date

241,250	$ 1.60	May 27, 2009
336,969	2.40	December 27, 2009

Joint Venture.

During the 2008 fiscal year, the Company’s wholly-owned subsidiary, Horizon Industries U.S.A. Ltd. entered into a Joint Venture agreement to participate with Pan American Development Company, Inc. in a drilling program in San Jacinto County, Texas, approximately 50 miles north of Houston Texas. The Company acquired a 25% working interest in the initial phase of the prospect with an option to acquire up to 37.5% working interest inn the balance of the prospect currently comprising a total of 3,100 acres (75% net revenue interest).

The initial phase calls for the development of 400 acres of Jackson sands at a depth of approximately 2,800 feet. Drilling of up to five wells is contemplated on the initial 400 acres.

Management Agreements.

The Company has management agreements with Christopher Wensley and Patrick Forseille. Mr. Forseille’s contract is for a renewable 1 year term under which is to provide geological, management and administrative services to the Company. Mr. Forseille’s compensation under this contract is $5,500 per month, plus G.S.T. At the time of this contracts renewal the compensation is set at a mutually agreed upon amount. Mr. Wensley’s contract is for a renewable 3 year term under which he is to provide leadership, management and administrative services to the Company. Mr. Wensley’s compensation under this contract is $8,900 per month, plus G.S.T.

D. EXCHANGE CONTROLS

There are no governmental laws, decrees, or regulations in Canada that restrict the export or import of capital or that affect the remittance of dividends, interest, or other payments to non-resident holders of our common stock. However, any such remittance to a non-corporate resident of the United States may be subject to a 15% withholding tax pursuant to Article XI of the reciprocal tax treaty between Canada and the United States. Except as provided in the Investment Canada Act (the "Act"), enacted on June 20, 1985, as amended, as further amended by the North American Free Trade Agreement (NAFTA) Implementation Act (Canada) and the World Trade Organization (WTO) Agreement Implementation Act, there are no limitations under the laws of Canada, the Province of British Columbia or in the charter or any other of our constituent documents on the right of non-Canadians to hold and/or vote our common stock.

E. TAXATION

The following paragraphs set forth certain United States and Canadian federal income tax considerations in connection with the payment of dividends on and purchase or sale of our shares of common stock. The tax considerations are stated in general terms and are not intended to be advice to any particular shareholder. Each prospective investor may consult his or her own tax advisor regarding the tax consequences of his or her purchase, ownership and disposition of shares of our common stock. The discussion set forth below is based upon the provisions of the Income Tax Act (Canada) (the "Tax Act"), the Internal Revenue Code of 1986, as amended (the "Code") and the Convention between Canada and the United States of America with respect to Taxes on Income and on Capital (the "Convention"), as well as United States Treasury regulations and rulings and judicial decisions. Except as otherwise specifically stated, the following discussion does not take into account or anticipate any changes to such laws, whether by legislative action or judicial decision. The discussion does not take into account the provincial tax laws of Canada or the tax laws of the various state and local jurisdictions in the United States.

Canadian Federal Income Tax Considerations. The following discussion applies only to citizens and residents of the United States and United States corporations who are not resident in Canada and will not be resident in Canada and who do not use or hold nor are deemed to use or hold such shares of our common stock in carrying on a business in Canada. The payment of cash dividends and stock dividends on the shares of our common stock will generally be subject to Canadian withholding tax. The rate of the withholding tax will be 25% or such lesser amount as may be provided by treaty between Canada and the country of residence of the recipient. Under the Convention, the withholding tax generally would be reduced to 15%. Neither Canada nor any province thereof currently imposes any estate taxes or succession duties. Provided a holder of shares of our common stock has not, within the preceding five years, owned (either alone or together with persons with whom he or she does not deal at arm's length) 25% or more of the shares of common stock, the disposition (or deemed disposition arising on death) of such shares of common stock will not be subject to the capital gains provisions of the Tax Act.

United States Federal Income Tax Considerations. The following discussion is addressed to US holders. As used in this section, the term "US holder" means a holder of our common stock that is for United States federal income tax purposes (1) an individual citizen or resident of the United States, (2) a corporation created or organized in or under the laws of the United States, any state of the United States or the District of Columbia, (3) an estate the income of which is subject to United States federal income taxation regardless of its source, or (4) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the Code) have the authority to control all substantial decisions of the trust, or a trust was in existence on August 20, 1996, and validly elected to continue to be treated as a United States person. This discussion deals only with the holders that hold their common stock as capital assets within the meaning of Section 1221 of the Code. The discussion does not address all aspects of United States federal income taxation that may be relevant to US holders in light of their particular circumstances, nor does it address the United States federal income tax consequences to US holders that are subject to special rules under the Code, including, but not limited to, (i) dealers or traders in securities, (ii) financial institutions, (iii) tax-exempt organizations or qualified retirement plans, (iv) insurance companies, (v) entities that are taxed under the Code as partnerships, pass-through entities or "Subchapter S Corporations", (vi) persons or entities subject to the alternative minimum tax, (vii) persons holding common stock as a hedge or as part of a straddle, constructive sale, conversion transaction, or other risk management transaction, and (viii) holders who hold their common stock other than as a capital asset.

Dividends. Subject to the discussion of the "passive foreign investment company" rules below, a US holder owning shares of common stock must generally treat the gross amount of dividends paid by us to the extent of our current and accumulated earnings and profits without reduction for the amount of Canadian withholding tax, as dividend income for United States federal income tax purposes. To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a tax-free return of capital, which will reduce the holder's adjusted tax basis in his or her common stock (but not below zero), then as capital gain. The dividends generally will not be eligible for the "dividends received" deduction allowed to United States corporations. The amount of Canadian withholding tax on dividends may be available, subject to certain limitations, as a foreign tax credit or, alternatively, as a deduction (see discussion at "Foreign Tax Credit" below). In general, dividends paid by us will be treated as income from sources outside the United States if less than 25% of our gross worldwide income for the 3-year period ending with the close of our taxable year preceding the declaration date of the dividends was effectively connected with a trade or business in the United States. If 25% or more of our worldwide gross income for the 3-year testing period is effectively connected with a trade or business in the United States, then for United States federal income tax purposes our dividends will be treated as U.S. source income in the same proportion that the U.S. trade or business income bears to our total worldwide gross income. Dividends paid by us generally will be "passive income," or in the case of certain types of taxpayers, "financial services income" for foreign tax credit purposes.

If we make a dividend distribution in Canadian dollars, the U.S. dollar value of the distribution on the date of receipt is the amount includible in income. Any subsequent gain or loss in respect of the Canadian dollars received arising from exchange rate fluctuations generally will be U.S. source ordinary income or loss. Long-term capital gain of noncorporate taxpayers generally is eligible for preferential tax rates. Additionally, for taxable years beginning after December 31, 2002 and before January 1, 2011, subject to certain exceptions, dividends received by certain noncorporate taxpayers from "qualified foreign corporations" are taxed at the same preferential rates that apply to long-term capital gain. The maximum federal tax rate on net long-term capital gains recognized by noncorporate taxpayers currently is 15%. Provided that we are not a "passive foreign investment company," as discussed below, we currently should meet the definition of "qualified foreign corporation." As a consequence, dividends paid to certain noncorporate taxpayers should be taxed at the preferential rates. Sale or Exchange of Common Stock. Subject to the discussion of the "passive foreign investment company" rules below, the sale of a share of our common stock generally results in the recognition of gain or loss to the US holder in an amount equal to the difference between the amount realized and the US holder's adjusted tax basis in such share. Gain or loss upon the sale of the share will be long-term or short-term capital gain or loss, depending on whether the share has been held for more than one year. The maximum federal tax rate on net long-term capital gains currently is 15% for noncorporate taxpayers and 35% for corporations. Capital gain that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to certain limitations. Gain recognized by a US holder on the sale or other disposition of our common stock will generally be treated as United States source income.

Foreign Tax Credit. Subject to the limitations set forth in the Code, as modified by the Convention, a US holder may elect to claim a credit against his or her U.S. federal income tax liability for Canadian income tax withheld from dividends received in respect of shares of our common stock. Holders of our common stock and prospective US holders of our common stock should be aware that dividends we pay generally will constitute "passive income" for purposes of the foreign tax credit, which could reduce the amount of foreign tax credit available to them. The rules relating to the determination of the foreign tax credit are complex. US holders of our common stock and prospective US holders of our common stock may their own tax advisors to determine whether and to what extent they would be entitled to such credit. Holders who itemize deductions may instead claim a deduction for Canadian income tax withheld.

Information Reporting and Backup Withholding. Information reporting requirements will generally apply to dividends on, and the proceeds of a sale or exchange of, our common stock that are paid within the United States (and, in some cases, outside the United States) to US holders and certain exempt recipients (such as corporations). Certain US holders may be subject to backup withholding at the rate of 28% on dividends paid or the proceeds of a sale or exchange of our common stock. Generally, backup withholding will apply to a US holder only when the US holder fails to furnish us with or to certify to us the US holder's proper United States tax identification number or we are informed by the Internal Revenue Service of the United States that the US holder has failed to report payments of interest and dividends properly. US holders may use their own tax advisors regarding the qualification for exemption from backup withholding and information reporting and the procedure for obtaining any applicable exemption.

Passive Foreign Investment Company Considerations. Special rules apply to US holders that hold stock in a "passive foreign investment company" ("PFIC"). A non-U.S. corporation generally will be a PFIC for any taxable year in which either (i) 75% or more of its gross income is passive income or (ii) 50% or more of the gross value of its assets consists of assets, determined on the basis of a quarterly average, that produce, or that are held for the production of, passive income. For this purpose, passive income generally includes, among other things, interest, dividends, rents, royalties and gains from certain commodities transactions. We believe that we should not be classified as a PFIC for the current taxable year or prior taxable years, and we do not anticipate being a PFIC with respect to future taxable years. However, there can be no assurance that we will not be considered a PFIC for any taxable year, because (1) the application of the PFIC rules to our circumstances is unclear and (2) status under the PFIC rules is based in part on factors not entirely within our control (such as market capitalization). Furthermore, there can be no assurance that the Internal Revenue Service will not challenge our determination concerning our PFIC status. Therefore, US holders and prospective US holders mayo consult with their own tax advisors with respect to the application of the PFIC rules to them. If, contrary to our expectations, we were to be classified as a PFIC for any taxable year, a US holder may be subject to an increased tax liability (including an interest charge) upon the receipt of certain distributions from us or upon the sale, exchange or other disposition of our common stock, unless such US holder timely makes one of two elections. First, if, for any taxable year that we are treated as a PFIC, a US holder makes a timely election to treat us as a qualified electing fund ("QEF") with respect to such Holder's interest in common stock, the electing US holder would be required to include annually in gross income (1) such Holder's pro rata share of our ordinary earnings, and (2) such Holder's pro rata share of any of our net capital gain, regardless of whether such income or gain is actually distributed. In general, a US holder may make a QEF election for any taxable year at any time on or before the due date (including extensions) for filing such Holder's United States federal income tax return for such taxable year. However, Treasury regulations provide that a US holder may be entitled to make a retroactive QEF election for a taxable year after the election's due date if certain conditions are satisfied. In the event of a determination by us or the Internal Revenue Service that we are a PFIC, we intend to comply with all record-keeping, reporting and other requirements so that US holders, at their option, may maintain a QEF election with respect to us. However, if meeting those record-keeping and reporting requirements becomes onerous, we may decide, in our sole discretion, that such compliance is impractical, and will notify US holders accordingly.

As an alternative to the QEF election, US holders may elect to mark their common stock to its market value (a "mark-to-market election"). If a valid mark-to-market election is made, the electing US holder generally will recognize ordinary income for the taxable year an amount equal to the excess, if any, of the fair market value of their common stock as of the close of such taxable year over the US holder's adjusted tax basis in the common stock. In addition, the US holder generally is allowed a deduction for the lesser of (1) the excess, if any, of the US holder's adjusted tax basis in the common stock over the fair market value of the common stock as of the close of the taxable year, or (2) the excess, if any of (A) the mark-to-market gains for the common stock included in gross income by the US holder for prior taxable years, over (B) the mark-to-market losses for common stock that were allowed as deductions for prior tax years.

If we were determined to be a PFIC in any year, a US holder who beneficially owned shares of our common stock during that year would be required to file an annual return on Internal Revenue Service Form 8621 with the Internal Revenue Service that described any distributions received from us and any gain realized by that US holder on the disposition of their shares of our common stock. The

PFIC rules are complex. Accordingly, US holders and prospective US holders of our common stock may consult their own tax advisors concerning the impact of these rules, including the making of QEF or mark-to-market elections, on their investment or prospective investment in our common stock.

F. DIVIDENDS AND PAYING AGENTS

We have not paid any dividends since our inception and have no plans to pay dividends.

G. STATEMENT OF EXPERTS

Our consolidated financial statements as of February 29, 2008 and February 28, 2009 and for each of the years in the three year period ended February 29, 2009, have been included herein and in the Annual Report, in reliance upon the report of Davidson & Company LLP, 1200 -609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C. Canada V7Y 1G6, Tel: 604-687-0947 Fax: 604-687-6172 independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

H. DOCUMENTS ON DISPLAY

We have filed this Annual Report on Form 20-F with the SEC, under the Securities and Exchange Act of 1934, as amended, with respect to our common stock. You may read and copy all or any portion of this Annual Report or other information in the SEC's public reference room at 100 F Street, N.E. Washington, DC 20549.. You can also request copies of these documents upon payment of a duplicating fee, by writing the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC maintains a web site (http://www.sec.gov) that contains all of our filings with the SEC. The documents concerning us may also be viewed at our offices in Vancouver BC and Texas during normal business hours.

I. SUBSIDIARY INFORMATION

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position, results of operations, or cash flows due to adverse changes in financial market prices, including interest rate risk, foreign currency exchange rate risk, commodity price risk, and other relevant market or price risks. We do not have activities related to derivative financial instruments or derivative commodity instruments. We do hold a portfolio of equity securities resulting from previous business transactions. These securities are susceptible to equity market risk. The oil and gas industry is exposed to a variety of risks including the uncertainty of finding and recovering new economic reserves, the performance of hydrocarbon reservoirs, securing markets for production, commodity prices, interest rate fluctuations, potential damage to or malfunction of equipment and changes to income tax, royalty, environmental or other governmental regulations. We mitigate these risks to the extent we are able by:

utilizing competent, professional consultants as support teams to company employees;

performing careful and thorough geophysical, geological and engineering analyses of each prospect;

maintaining adequate levels of property liability and other business insurance;

limiting our prospect operations to the extent appropriate.

Market risk is the possibility that a change in the prices for natural gas, natural gas liquids, condensate and oil, foreign currency exchange rates, or interest rates will cause the value of a financial instrument to decrease or become more costly to settle. We are exposed to commodity price risks, credit risk and foreign currency exchange rates.

Commodities Price Risk. Our financial condition, results of operations and capital resources are highly dependent upon the prevailing market prices of oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control. Factors influencing oil and natural gas prices include the level of global demand for crude oil, the foreign supply of oil and natural gas, the establishment of and compliance with production quotas by oil exporting countries, weather conditions which determine the demand for natural gas, the price and availability of alternative fuels and overall economic conditions. It is impossible to predict future oil and natural gas prices with any degree of certainty. Sustained weakness in oil and natural gas prices may adversely affect our financial condition and results of operations, and may also reduce the amount of oil and natural gas reserves that we can produce economically. Any reduction in our oil and natural gas reserves, including reductions due to price fluctuations, can have an adverse affect on our ability to obtain capital for our development activities. Similarly, any improvements in oil and natural gas prices can have a favorable impact on our financial condition, results of operations and capital resources

Credit Risk. In addition to market risk, our financial instruments involve, to varying degrees, risk associated with trade credit and risk associated with operatorship of certain properties as well as credit risk related to our customers and trade payables. All of our accounts receivable are with customers or partners and are subject to normal industry credit risk. We do not require collateral or other security to support financial instruments nor do we provide collateral or security to counterparties. Currently, we do not expect non-performance by any counterparty. Foreign Exchange Risk. Whenever we fund subsidiary company operations, foreign exchange gains or losses are incurred (upon conversion from Canadian to U.S. Dollars).

Interest Rate Risk. Interest rate risk exists principally with respect to our cash invested in short term investments that bears interest at floating rates.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

The Company has no defaults, dividend arrearages nor delinquencies in any of its obligations.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

The Company has made no material modifications to the rights of security holders nor does the Company have any registration statements under the Securities Act of 1933.

ITEM 15. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of February 28, 2009 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 20-F for the year ended February 28, 2009 fairly present our financial condition, results of operations and cash flows in all material respects.

Management's Annual 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 Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:

Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.

Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.

Insufficient Written Policies & Procedures: We have insufficient written policies and procedures for accounting and financial reporting.

Inadequate Financial Statement Closing Process: We have an inadequate financial statement closing process.

Lack of Audit Committee & Outside Directors on the Company’s Board of Directors: We do not have a functioning audit committee and outside directors on the Company’s Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) prepare and implement sufficient written policies and checklists for financial reporting and closing processes and (4) may consider appointing outside directors and audit committee members in the future.

Management, including our Chief Executive Officer and the Chief Financial Officer, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

Changes in internal control over financial reporting

As of the Evaluation Date, there were no changes in our internal control over financial reporting that occurred during the fiscal year ended February 28, 2009 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the effectiveness of controls and procedures

Our management, including our Chief Executive Officer and the Chief Financial Officer, do not expect that the our controls and procedures will prevent all potential errors or 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.

ITEM 16. [RESERVED]

ITEM 16(A). AUDIT COMMITTEE FINANCIAL EXPERT

Mr. Patrick Forseille is serving as the Audit Committee Financial Expert. Mr. Forseille as an officer of the corporation is not an independent expert. See Item 6A Directors and Senior Management for Mr. Forseille’s qualifications.

ITEM 16(B). CODE OF ETHICS

The Company has not yet adopted a code of ethics but is in the process of evaluating and adopting such code.

ITEM 16(C). PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The following auditing fees have been paid in the last two years: 2008--$30,000 2009---$40,000

Audit Related Fees

The following auditing related fees have been paid in the last two years: None

Tax Fees

The following tax fees have been paid in the last two years: 2008---$6,000 2009---$5,000

All other Fees

All other fees for products and services performed by the principal accountant for the last two years: 2008--$12,000 2009-$nil

It is the Audit Committee’s policy to:

i. In accordance with Section 10A(i) of the Securities Exchange Act of 1934 either:

Before the accountant is engaged by the issuer or its subsidiaries, or the registered investment company or its subsidiaries, to render audit or non-audit services, the engagement is approved by the issuer's or registered investment company's audit committee; or

The engagement to render the service is entered into pursuant to pre-approval policies and procedures established by the audit committee of the issuer or registered investment company, provided the policies and procedures are detailed as to the particular service and the audit committee is informed of each service and such policies and procedures do not include delegation of the audit committees responsibilities under the Securities Exchange Act of 1934 to management; or

With respect to the provision of services other than audit, review or attest services the pre-approval requirement is waived if:

The aggregate amount of all such services provided constitutes no more than five percent of the total amount of revenues paid by the audit client to its accountant during the fiscal year in which the services are provided;

Such services were not recognized by the issuer or registered investment company at the time of the engagement to be non-audit services; and

Such services are promptly brought to the attention of the audit committee of the issuer or registered investment company and approved prior to the completion of the audit by the audit committee or by one or more members of the audit committee who are members of the board of directors to whom authority to grant such approvals has been delegated by the audit committee.

Less than 10% of the Audit Related, Tax and Other Accountant fees were approved by the Audit Committee under section i(c) above.

ITEM 16(D). EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16(E). PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

ITEM 17. FINANCIAL STATEMENTS

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.

The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report. The interim financial statements do not vary materially from US GAAP.

A. Audited Financial Statements

Auditor's Report, dated 6/26/2009

Consolidated Balance Sheets at 2/29/2008 and 2/28/2009

Consolidated Statements of Operations and Deficit

for the years ended 2/28/2009, 2/29/2008, and 2/28/2007

Consolidated Statements of Cash Flows

for the years ended 2/28/2009, 2/29/2008, and 2/28/2007

Notes to Consolidated Financial Statements

ITEM 18. FINANCIAL STATEMENTS

The Company has elected to provide financial statements pursuant to ITEM #17.

Not Applicable.

ITEM 19. EXHIBITS

See Exhibit Index.

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

PETRO HORIZON ENERGY CORP.

By: /s/ Patrick Forseille

Patrick Forseille

Chief Financial Officer

Date: August 30, 2009

INDEX TO EXHIBITS

Exhibit
Numbers		EXHIBITS

1.1*		Certificate and Articles of Continuance dated June 10, 1997

1.2*		Certificate and Articles of Amendment dated December 12, 1998

1.3*		By-law No. 1 dated June 2, 1997

4.1*		Amended and Restated Stock Option Plan (2006)

15.1		Consent of Davidson & Company LLP

* Incorporated by reference to the 20-FR12G/A filed September 14, 2007.

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Funds)

FEBRUARY 28, 2009

F-1

DAVIDSON & COMPANY LLP

Chartered Accountants - A Partnership of Incorporated Professionals

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of

Petro Horizon Energy Corp.

(formerly Horizon Industries Ltd.)

We have audited the consolidated balance sheets of Petro Horizon Energy Corp. (formerly Horizon Industries Ltd.) as at February 28, 2009 and February 29, 2008 and the consolidated statements of operations, comprehensive loss and deficit and cash flows for the years ended February 28, 2009, February 29, 2008 and February 28, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and 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.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at February 28, 2009 and February 29, 2008 and the results of its operations and cash flows for the years ended February 28, 2009, February 29, 2008 and February 28, 2007 in accordance with Canadian generally accepted accounting principles.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants

June 22, 2009

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA –

U.S. REPORTING DIFFERENCE

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the financial statements. Our report to the shareholders dated June 22, 2009 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when these are adequately disclosed in the financial statements.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants

June 22, 2009

1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6

Telephone (604) 687-0947 Fax (604) 687-6172

F-2

PETRO HORIZON ENERGY CORP.
(formerly Horizon Industries Ltd.)
CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian Funds)
AS AT
	February 28,			February 29,
	2009			2008
ASSETS

Current
Cash	$	9,350		$	130,081
Prepaid deposits		-			437
Amounts receivable		16,882			18,770

		26,232			149,288

Petroleum and natural gas interests (Note 5)		42,573			556,782

	$	68,805		$	706,070

LIABILITES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

Current
Accounts payable and accrued liabilities	$	187,101		$	5,057

Asset retirement obligation (Note 6)		4,830			4,391

		191,931			9,448
Shareholders' equity (deficiency)

Share capital (Note 7)		5,401,693			5,152,693
Contributed surplus (Note 7)		367,716			367,716
Deficit		(5,892,535	)		(4,823,787	)

		(123,126	)		696,622

	$	68,805		$	706,070

Nature and continuance of operations (Note 1)
Commitments (Note 10)
Subsequent events (Note 13)

On behalf of the Board:

	"Chris Wensley"	"Patrick Forseille"
	Chris Wensley	Patrick Forseille

The accompanying notes are an integral part of these consolidated financial statements.

F-3

PETRO HORIZON ENERGY CORP.
(formerly Horizon Industries Ltd.)
CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
(Expressed in Canadian Funds)
FOR THE YEARS ENDED
	February 28,			February 29,			February 28,
	2009			2008			2007

OIL AND GAS REVENUES	$	142,597		$	163,283		$	137,196

OPERATING EXPENSES
Depletion		123,537			242,437			47,404
Direct expenses		111,217			151,130			108,362

		234,754			393,567			155,766

		(92,157	)		(230,284	)		(18,570	)

GENERAL AND ADMINISTRATIVE EXPENSES
Accretion		439			399			-
Bad debts		-			32,776			-
Bank and interest charges		474			885			22,846
Consulting fees		123,300			199,358			161,609
Foreign exchange (gain) loss		(208	)		-			3,205
Financing charges		-			-			27,500
Office and administration		20,937			47,733			57,250
Professional fees		186,573			153,185			106,604
Regulatory fees and transfer agent		22,911			22,753			24,952
Rent		63,566			61,265			55,425
Shareholder communications		25,915			130,618			138,200
Stock-based compensation expense		-			75,159			162,537
Travel		19,069			48,988			10,927

		(462,976	)		(773,119	)		(771,055	)

Loss before other items		(555,133	)		(1,003,403	)		(789,625	)

OTHER ITEMS
Gain on extinguishment of debt		-			-			61,343
Write-off of natural gas interests		(529,015	)		(686,567	)		-
Interest income		200			-			-
Rent income		15,200			22,600			-
		(513,615	)		(663,967	)		61,343

Net loss before taxes		(1,068,748	)		(1,667,370	)		(728,282	)

Future income tax recovery		-			-			55,427

Net loss and comprehensive loss for the year		(1,068,748	)		(1,667,370	)		(672,855	)

Deficit, beginning of year		(4,823,787	)		(3,156,417	)		(2,483,562	)

Deficit, end of year	$	(5,892,535	)	$	(4,823,787	)	$	(3,156,417	)

Loss per share - basic and diluted	$	(0.32	)	$	(0.61	)	$	(0.32	)

Weighted average number of common
shares outstanding - basic and diluted		3,342,278			2,722,588			2,094,367

The accompanying notes are an integral part of these consolidated financial statements.

F-4

PETRO HORIZON ENERGY CORP.
(formerly Horizon Industries Ltd.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian Funds)
FOR THE YEARS ENDED
	February 28,			February 29,			February 28,
	2009			2008			2007
CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES
Loss for the period	$	(1,068,748	)	$	(1,667,370	)	$	(672,855	)
Items not affecting cash
Accretion		439			399			-
Bad debts		-			32,776			-
Deferred financing fees		-			-			27,500
Depletion		123,537			242,437			47,404
Shares for services		22,500			-			-
Stock-based compensation		-			75,159			162,537
Future income tax recovery		-			-			(55,427	)
Gain on extinguishment of debt		-			-			(61,343	)
Write-off resource properties		529,015			686,567			-
Changes in non-cash working capital items
Increase (decrease) in amounts receivable		1,888			(40,346	)		3,865
Decrease in prepaid deposits		437			10,660			5,628
Increase in accounts payables and accrued liabilities		199,544			88,509			173,617

		(191,388	)		(571,209	)		(369,074	)

INVESTING ACTIVITIES
Expenditures on petroleum
and natural gas properties, net of recoveries		(122,343	)		(930,228	)		(372,767	)

		(122,343	)		(930,228	)		(372,767	)
FINANCING ACTIVITIES
Repayment of note payable		-			-			(6,235	)
Proceeds from issue of share capital, net of issuance costs		193,000			1,290,370			959,603

		193,000			1,290,370			953,368

Increase (decrease) in cash position during
the year		(120,731	)		(211,067	)		211,527

Cash position, beginning of year		130,081			341,148			129,621

Cash position, end of year	$	9,350		$	130,081		$	341,148

Supplemental disclosure with respect to cash flows (Note 9)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

1. NATURE AND CONTINUANCE OF OPERATIONS

Petro Horizon Energy Corp. (formerly Horizon Industries Ltd.) (“Horizon” or “the Company”) was incorporated in British Columbia on February 24, 1997 as J.P.T. Resources Ltd., and changed its name to Horizon Industries Ltd. on June 7, 1999. The Company changed its name again on February 13, 2009 to Petro Horizon Energy Corp. The Company is engaged in the exploration and development of petroleum and natural gas properties.

On December 22, 2003, the Company formed a wholly-owned subsidiary, Horizon Industries (USA), Ltd., which was incorporated in the State of Nevada.

The Company is developing some of its petroleum and natural gas properties and has not yet determined whether all of the reserves of its properties are economically recoverable. The recoverability of the amounts shown for petroleum and natural gas properties are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production.

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles assuming the Company will continue on a going-concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Management is actively targeting sources of additional financing which would assure continuation of the Company’s operations and exploration programs. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.

There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realize on its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded on the balance sheets. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

The current market conditions and volatility increase the uncertainty of the Company’s ability to continue as a going concern given the need to both curtail expenditures and to raise additional funds. The Company is experiencing, and has experienced, negative operating cash flows. The Company will continue to search for new or alternate sources of financing but anticipates that the current market conditions may impact the ability to source such funds.

2.	SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Horizon Industries (USA) Ltd. All inter-company transactions have been eliminated upon consolidation.

F-6

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

2.	SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Foreign currency translation

The Company’s foreign operations are of an integrated nature. Monetary assets and liabilities are translated at the exchange rate in effect at the balance sheet date and non-monetary assets and liabilities are translated at historical exchange rates. Revenue and expenses are translated at rates of exchange prevailing on the dates of the underlying transaction. Gains or losses on translation are included in the determination of net loss for the year.

Petroleum and natural gas properties

The Company utilizes the full cost method to account for its investment in oil and gas properties. Under this method, all costs of acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, geological expenditures, tangible and intangible development costs and direct internal costs, are capitalized as incurred. The cost of the oil and gas properties with proved reserves will be depleted and charged to operations using the unit-of-production method based on the ratio of current production to estimated proved petroleum and natural gas reserves.

Costs directly associated with the acquisition and evaluation of unproved properties are excluded from the depletion computation until it is determined whether or not proved reserves can be assigned to the properties or whether impairment has occurred. If the results of an annual assessment indicate that the properties are impaired, the amount of the impairment along with the costs of drilling exploratory dry holes and geological and geophysical costs that cannot be directly associated with specific unevaluated properties are added to the capitalized costs subject to depletion. Should the Company not have properties with proven reserves, these costs are charged to operations for the year.

In applying the full cost method, the Company performs an annual cost centre impairment (ceiling test). The Company tests each cost centre for recoverability by comparing the carrying value of capital costs to the undiscounted cash flows expected to result from its use and eventual disposition. The calculation of future net revenues is based on reasonable estimates of future oil and gas prices and costs. Unproved properties are included in the cost centre impairment test by adding the cost of the unproved property, less any impairment, to the estimated future cash flow for the cost centre. An impairment loss is recognized when the carrying amount of a cost centre is not recoverable and is measured as the amount by which the carrying amount of the assets capitalized in a cost centre exceeds the sum of the fair value of proved and probable reserves plus costs, less any impairment, of unproved properties.

Any amounts recorded for depletion and amortization of oil and gas properties and equipment and any provision for future site restoration and abandonment costs are based on estimates. The ceiling test is based on estimates of proved reserves, production rates, oil and gas prices, future costs and other relevant assumptions. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant.

F-7

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

2.	SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Impairment of long-lived assets

A long-lived asset is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value. For purposes of recognition and measurement of an impairment loss, a long-lived asset is grouped with other assets and liabilities to form an asset group at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Estimates of future cash flows used to test recoverability of a long-lived asset include only the future cash flows that are directly associated with, and that are expected to arise as a direct result of, its use and eventual disposition.

Asset retirement obligations

The Company recognizes the fair value of a liability for an asset retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability.

Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the cost of the related long-lived asset.

Future income taxes

Future income taxes are calculated using the asset and liability method. Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs. To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess.

Loss per share

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the year. For the years presented the dilutive effect has not been computed as it proved to be anti-dilutive.

Basic loss per share is calculated using the weighted-average number of common shares outstanding during the year.

F-8

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

2.	SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Stock-based compensation

The Company recognizes compensation expense for all stock options granted, using the fair value based method of accounting. Any cash paid on the exercise of stock options is added to the stated value of common shares.

Revenue recognition

Revenue from the sale of petroleum and natural gas products is recognized upon the passage of title and when ultimate collection is reasonably assured, and is recorded net of royalties and severance taxes.

Financial instruments

All financial instruments are classified into one of five categories: held-for-trading, held-to-maturity investments, loans and receivables, available-for-sale financial assets or other financial liabilities. All financial instruments and derivatives are measured in the balance sheet at fair value except for loans and receivables, held-to maturity investments and other financial liabilities which are measured at amortized cost. Subsequent measurement and changes in fair value will depend on their initial classification. Held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net loss. Available-for-sale financial instruments are measured at fair value with changes in fair value recorded in other comprehensive income until the instrument is derecognized or impaired.

The Company has classified its cash as held-for-trading. Amounts receivable are classified as loans and receivables. Accounts payable and accrued liabilities are classified as other liabilities, which are measured at amortized cost.

Comparative figures

Comparative figures have been reclassified, where applicable, to conform with the current year’s presentation.

Changes in accounting policy

Effective March 1, 2008, the Company adopted the following new standards issued by the CICA.

Capital disclosures (Section 1535)

This Section establishes standards for the disclosure of (i) an entity’s objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The implementation of this section did not have a significant impact on the Company’s results of operations or financial position. The new disclosure is provided in Note 3.

F-9

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

2.	SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Changes in accounting policy (cont’d…)

Financial instruments – Disclosures (Section 3862)

This Section requires an increased emphasis on disclosing the nature and the extent of risk arising from financial instruments and how the entity manages those risks. This section, together with Section 3863, “Financial Instruments – Presentation”, replaced Section 3861, “Financial Instruments – Disclosure and Presentation”. The adoption of these Sections has had no impact on the Company’s results of operations or financial position. See Note 4 for required disclosures.

Financial instruments – Presentation (Section 3863)

This Section establishes standards for presentation of financial instruments and non-financial derivatives. The adoption of the Section has had no significant impact on the Company’s financial statements.

General standards of financial statement presentation (Section 1400)

In June 2007, the CICA issued amendments to Section 1400, "General Standards of Financial Statement - Presentation" to include requirements to assess and disclose an entity's ability to continue as a going concern. The amendments are effective for interim and annual financial statements beginning on or after January 1, 2008. The Company has applied the new amendments at the beginning of its fiscal year. The implementation did not have a significant impact on the Company's results of operations or financial position. The additional disclosure is provided in Note 1.

Future accounting pronouncements

Goodwill and intangible assets (Section 3064)

In February 2008, the CICA issued Section 3064, “Goodwill and Intangible Assets”, which replaces Section 3062, “Goodwill and Other Intangible Assets”. This new standard provides guidance on the recognition, measurement, presentation and disclosure of goodwill and intangible assets. Concurrent with the adoption of this standard, EIC 27, “Revenue and Expenditures in the Pre-operating Period”, will be withdrawn. The Company does not expect the adoption of this section to have a significant effect on its financial statements. This section will be adopted effective March 1, 2009.

Business combinations (Section 1582)

In January 2009, the CICA issued Section 1582 “Business Combinations” to replace Section 1581. Prospective application of the standard is effective January 1, 2011, with early adoption permitted. This new standard effectively harmonizes the business combinations standard under Canadian GAAP with International Financial Reporting Standards. The new standard revises guidance on the determination of the carrying amount of the assets acquired and liabilities assumed, goodwill and accounting for non-controlling interests at the time of a business combination. The Company does not expect the adoption of this section to have a significant effect on its financial statements.

F-10

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

2.	SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Future accounting pronouncements (cont’d…)

Consolidated financial statements (Section 1601) and non-controlling interests (Section 1602)

The CICA concurrently issued Section 1601 “Consolidated Financial Statements” and Section 1602 “Non-Controlling Interests” which replace Section 1600 “Consolidated Financial Statements.” Section 1601 provides revised guidance on the preparation of consolidated financial statements and Section 1602 addresses accounting for non-controlling interests in consolidated financial statements subsequent to a business combination. Theses standards are effective January 1, 2011, unless they are early adopted at the same time as Section 1582 “Business Combinations.” The Company does not expect the adoption of this section to have a significant effect on its financial statements.

Credit risk and the fair value of financial assets and liabilities (EIC-173)

In January 2009, the Emerging Issues Committee (“EIC”) issued EIC -173 “Credit Risk and the Fair Value of Financial Assets and Financial Liabilities.” This abstract requires companies to take counterparty credit risk into account when measuring the fair value of financial assets and liabilities, including derivatives. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing March 1, 2009. The Company does not expect that the adoption of this standard will have a material impact on its financial statements.

Mining exploration costs (EIC-174)

On March 27, 2009, the CICA approved EIC-174 “Mining Exploration Costs.” This guidance clarified that an entity that has initially capitalized exploration costs has an obligation in the current and subsequent accounting periods to test such costs for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company does not expect that the adoption of this standard will have a material impact on its financial statements.

International financial reporting standards ("IFRS")

In January 2006 the AcSB announced that accounting standards in Canada are to converge with IFRS. The AcSB has indicated that Canadian entities will need to begin reporting under IFRS for fiscal years beginning on or after January 1, 2011 with appropriate comparative data from the prior year. The transition date of March 1, 2011 will require restatement for comparative purposes of amounts reported by the Company for the year ended February 28, 2011. Under IFRS, the primary audience is capital markets and as a result, there is significantly more disclosure required, specifically for quarterly reporting. Further, while IFRS uses a conceptual framework similar to Canadian GAAP, there are significant differences in accounting policy which must be addressed. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.

3. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of petroleum and natural gas properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.

F-11

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

3. CAPITAL MANAGEMENT (cont’d…)

The properties in which the Company currently has an interest are in the exploration and early production stage; as such the Company has historically relied on the equity markets to fund its activities. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

There were no changes in the Company’s approach to capital management during the year ended February 28, 2009. The Company is not subject to externally imposed capital requirements.

4. FINANCIAL INSTRUMENTS

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to amounts receivable. Management believes that the credit risk concentration with respect to financial instruments included in accounts receivable is remote.

Liquidity risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at February 28, 2009, the Company had a cash balance of $9,350 (2008 - $130,081) to settle current liabilities of $187,101 (2008 - $5,057). All of the Company’s financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. The Company expects to fund those liabilities through the issuance of capital stock and loans from related parties over the coming year.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.

(a) Interest rate risk

The Company has cash balances and no interest-bearing debt. The Company’s current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. As of February 28, 2009, the Company did not have any investments in investment-grade short-term deposit certificates.

F-12

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

4. FINANCIAL INSTRUMENTS (cont’d…)

Market risk (cont’d…)

(b) Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to cash, receivables and accounts payable and accrued liabilities that are denominated in US Dollars (USD). The Company holds $488 USD in cash and has a USD receivable of $4,149. Any fluctuations in foreign currency exchange rates would have an insignificant impact on net loss for the year.

The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices of oil and natural gas, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

5.	PETROLEUM AND NATURAL GAS PROPERTIES

	2009			2008

Balance, beginning of year	$	556,782		$	1,250,029

Proved properties – additions		101,212			444,442
Unproved properties – additions (recovery)		37,131			(208,685	)
Depletion during the year		(123,537	)		(242,437	)
Write off of oil and gas properties		(529,015	)		(686,567	)

Balance, end of year	$	42,573		$	556,782

F-13

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

5.	PETROLEUM AND NATURAL GAS PROPERTIES (cont’d…)

The Company’s producing oil and gas properties are located within the state of Texas, USA. As at February 28, 2009, the oil and gas properties include $Nil (2008 - $293,878) relating to unproved properties that have been excluded from the depletion calculation. During the year, the Company abandoned certain unproved properties, and accordingly the costs relating to the properties were written-off to operations, in the amount of $331,009 (2008 - $222,481).

The full cost ceiling test results as of February 28, 2009 resulted in an impairment of evaluated oil and gas properties of $198,006 (2008 - $464,086). The future prices used in the February 28, 2009 ceiling test are as follows:

	Natural Gas (Cdn $/MMbtu)

2010	$	7.66
2011		8.43
2012		8.67
2013		8.83
2014		8.95

6.	ASSET RETIREMENT OBLIGATION

	2009		2008

Asset retirement obligation – beginning balance	$	4,391	$	-
Liabilities incurred		-		3,992
Accretion expense		439		399

Asset retirement obligation – ending balance	$	4,830	$	4,391

The total undiscounted amount of estimated cash flows required to settle the obligations is $5,400, which was adjusted for inflation at the rate of 2% and then discounted at 10%. Certain minimum amounts of asset retirement obligations will occur each year with the significant amounts estimated to be paid between 2011 and 2012.

F-14

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

7. SHARE CAPITAL

a) Authorized capital stock: Unlimited common shares without par value

b) Common shares issued and outstanding:

	Number		Share			Contributed
	of shares		capital			surplus

Balance, February 28, 2006		1,861,781	$	2,686,804		$	158,947
Private placements		196,250		459,000			-
Issuance of shares for debt		71,875		230,000			-
Exercise of warrants		223,125		451,100			-
Exercise of options		33,750		86,374			(33,425	)
Renunciation of flow-through shares		-		(55,427	)		-
Stock-based compensation		-		-			162,537
Share issuance costs		-		(3,446	)		-

Balance, February 28, 2007		2,386,781		3,854,405			288,059
Private placements		715,094		1,295,400			-
Exercise of warrants		23,750		47,500			-
Exercise of options		5,625		11,688			(4,038	)
Shares issued for resource properties		4,850		12,416			-
Stock-based compensation		-		-			75,159
Share issuance costs		-		(68,716	)		8,536

Balance, February 29, 2008		3,136,100		5,152,693			367,716
Private placements		241,250		193,000			-
Shares issued for property		25,000		16,000			-
Shares issued for services and settlement
of accounts payable		25,000		40,000			-

Balance, February 28, 2009		3,427,350	$	5,401,693		$	367,716

During the year ended February 28, 2009:

Effective February 13, 2009, the Company consolidated its issued and outstanding share capital on an 8 old shares to 1 new share basis. As a result of the share consolidation, the Company’s issued share capital decreased from 27,418,800 to 3,427,350 shares. All references to share and per share amounts have been retroactively restated to reflect the share consolidation.

F-15

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

7.	SHARE CAPITAL (cont’d…)

the Company completed a non-brokered private placement of 1,930,000 units (241,250 units, post consolidation) at $0.10 per unit ($0.80 per unit post consolidation) for gross proceeds of $193,000. Each unit consists of one common share and one common share purchase warrant. One share purchase warrant entitles the holder to acquire one common share of the Company at $0.20 per unit ($1.60 per unit, post consolidation) until May 27, 2009. Directors and officers of the Company purchased 150,000 units (18,750 units, post consolidation) for total proceeds of $15,000.

the Company issued 200,000 common shares (25,000 common shares, post consolidation) valued at $40,000 for settlement of accounts payable of $20,430 and for professional services valued at $19,570.

During the year ended February 29, 2008:

the Company completed a non-brokered private placement of 3,025,000 units (378,125 units, post consolidation) at $0.25 per unit ($2.00 per unit, post consolidation) for gross proceeds of $756,250. Each unit consists of one common share and one common share purchase warrant. One share purchase warrant entitles the holder to acquire one common share of the Company at $0.30 ($2.40, post consolidation) until September 25, 2007 and at $0.35 ($2.80, post consolidation) until June 25, 2008. Directors and officers of the Company purchased 150,000 units (18,750 units, post consolidation) for total proceeds of $37,500. In connection with the private placement, 192,000 finders’ warrants (24,000 warrants, post consolidation) were issued, exercisable at a price of $0.30 per share ($2.40 per share, post consolidation) for a period of one year. The fair value of the finders’ warrants, being $8,536, was determined using the Black-Scholes option pricing model, with a volatility of 58.42%, risk free rate of 4%, expected life of one year and a dividend rate of 0%.

the Company completed a non-brokered private placement of 2,695,752 units (336,969 units, post consolidation) at $0.20 per unit ($1.60 per unit, post consolidation) for gross proceeds of $539,150. Each unit consists of one common share and one common share purchase warrant. One share purchase warrant entitles the holder to acquire one common share of the Company at $0.30 ($2.40 per share, post consolidation) until December 27, 2009. Directors and officers of the Company purchased 50,000 units (6,250 units, post consolidation) for total proceeds of $10,000.

During the year ended February 28, 2007:

the Company completed a non-brokered private placement of 1,470,000 units (183,750 units, post consolidation) at $0.30 per unit ($2.40 per unit, post consolidation) for gross proceeds of $441,000. Each unit consists of one common share and one common share purchase warrant. One share purchase warrant entitles the holder to acquire one common share of the Company at $0.35 per share ($2.80 per share, post consolidation) for two years to May 5, 2008. Directors and officers of the Company purchased 131,500 units (16,438 units, post consolidation) for total proceeds of $39,450.

the Company completed a non-brokered private placement of 100,000 units (12,500 units, post consolidation) at $0.18 per unit ($1.44 per unit, post consolidation) for gross proceeds of $18,000. Each unit consists of one common share and one common share purchase warrant. One share purchase warrant entitles the holder to acquire one common share of the Company at $0.25 per share ($2.00 per share, post consolidation) for one year to March 10, 2007.

F-16

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

7.	SHARE CAPITAL (cont’d…)

Stock options

The Company has a stock option plan under which it is authorized to grant options to directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common shares of the Company. Under the plan, the exercise price of each option equals the market price, minimum price, or a discounted price of the Company's shares as calculated on the date of grant. The options can be granted for a maximum term of 5 years. Vesting terms are determined by the board of directors at the time of grant.

Stock option transactions and the number of stock options outstanding are summarized as follows:

				Weighted
				Average
	Number of			Exercise
	Options			Price

Outstanding, February 28, 2006		124,375		$	1.76
Granted		124,375			2.48
Exercised		(33,750	)		1.76
Cancelled		(25,625	)		2.24

Outstanding, February 28, 2007		189,375			2.17
Granted		65,625			2.78
Cancelled / expired		(25,000	)		2.20
Exercised		(5,625	)		1.36

Outstanding, February 29, 2008		224,375			2.36
Granted		-
Cancelled / expired		(46,875	)		2.78
Exercised		-			-

Outstanding, February 28, 2009		177,500		$	2.25

Options Exercisable, February 28, 2009		177,500		$	2.25

The following stock options were outstanding at February 28, 2009:

Number of options	Exercise Price	Expiry Date

10,000	2.40	August 3, 2009
12,500	1.60	March 15, 2010
18,125	1.36	October 6, 2010
12,500	2.00	December 5, 2010
6,250	1.60	January 31, 2011
52,500	2.40	April 12, 2011
31,250	2.40	October 5, 2011
6,250	2.64	August 30, 2012
28,125	2.80	September 20, 2012

F-17

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

7.	SHARE CAPITAL (cont’d…)

Stock-based compensation

Compensation costs have been determined based on the fair value of the options at the grant date using the Black-Scholes option-pricing model.

During the year ended February 28, 2009, the Company granted Nil (2008 – 65,625; 2007 – 124,375) stock options. Stock-based compensation expense using the Black-Scholes option pricing model was $nil (2008 - $75,159; 2007 - $162,537) which was also recorded as contributed surplus on the balance sheet. The weighted average fair value of the options granted was $nil (2008 - $1.36; 2007 - $1.28) per option.

The following assumptions were used for the Black-Scholes valuation of stock options granted:

	2009		2008			2007

Risk-free interest rate		-		4.00	%		4.00	%
Expected life of options		-	4.6 years			4 years
Annualized volatility		-		68.67	%		73.26	%
Dividend rate		-		0.00	%		0.00	%

Share purchase warrants

Warrant transactions and the number of warrants outstanding are summarized as follows:

	Number of Warrants			Weighted Average Exercise Price


Outstanding, February 28, 2006		346,250		$	2.00
Granted		196,250			2.72
Exercised		(223,125	)		2.00
Cancelled		(2,500	)		1.60

Outstanding, February 28, 2007		316,875			2.64
Granted		739,094			2.64
Cancelled / expired		(121,875	)		2.56
Exercised		(23,750	)		2.00

Outstanding, February 29, 2008		910,344			2.64
Granted		241,250			1.60
Cancelled / expired		(573,375	)		2.80
Exercised		-			-

Outstanding, February 28, 2009		578,219		$	2.07

F-18

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

7. SHARE CAPITAL (cont’d…)

Share purchase warrants (cont’d…)

At February 28, 2009, the following share purchase warrants were outstanding:

Number of Warrants	Exercise Price	Expiry Date

241,250	1.60	May 27, 2009 (subsequently expired)
336,969	2.40	December 27, 2009

8. RELATED PARTY TRANSACTIONS AND BALANCES

The Company entered into the following transactions with related parties:

Accrued consulting fees of $106,800 (2008 - $115,586; 2007 - $108,565) to an officer of the Company for services during the year. Total unpaid consulting fees due to this officer as at February 28, 2009 are $62,760 (2008 - $2,843; 2007 - $Nil), and are included in accounts payable and accrued liabilities.

Accrued professional fees of $72,000 (2008 - $72,000; 2007 - $67,000) to an officer of the Company for services during the year. Total unpaid professional fees due to this officer as at February 28, 2009 are $42,862 (2008 - $Nil; 2007 - $Nil) and are included in accounts payable and accrued liabilities.

Charged rent of $Nil (2008 - $3,400; 2007 - $Nil) to directors and officers of the Company.

Accrued consulting fees of $12,500 to a director of the Company for services during the year.

Included in accounts payable as at February 28, 2009 is $105,622 (2008 - $2,843; 2007 - $Nil) due to a directors of the Company. Included in amounts receivable is $Nil (2008 - $2,538) due from an officer of the Company.

The amounts paid by the Company for the services provided have been determined by negotiation among the parties and, in certain cases, are covered by signed agreements. These transactions were in the normal course of operations and were measured at the exchange value, which represented the amount of consideration established and agreed to by the related parties.

9. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASHFLOWS

	2009		2008		2007

Cash paid during the year for interest	$	-	$	-	$	-

Cash paid during the year for income taxes	$	-	$	-	$	-

F-19

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

9. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASHFLOWS (cont’d…)

The significant non-cash transactions for the year ended February 29, 2009 were as follows:

The issuance of 25,000 common shares valued at $16,000 for petroleum and natural gas properties.

The Company recorded a write-off of petroleum and natural gas properties in the amount of $529,015.

The issuance of 25,000 common shares valued at $40,000 for settlement of accounts payable of $20,430 and for professional services valued at $19,570.

The significant non-cash transactions for the year ended February 29, 2008 were as follows:

The issuance of 4,850 common shares valued at $12,416 for petroleum and natural gas properties.

The Company recorded a write-off of petroleum and natural gas properties in the amount of $686,567.

The accrual of $3,992 for asset retirement obligations with a corresponding increase to petroleum and natural gas properties.

The Company previously accrued $204,960 for certain resource property expenses pursuant to an agreement entered into in fiscal 2007. During 2008, the Company and the vendor mutually agreed to terminate the agreement and as a result, the accrual of $204,960 was reversed in 2008.

The Company allocated $4,038 to share capital upon the exercise of stock options.

The Company issued 192,000 finders’ warrants (24,000 finders’ warrants, post consolidation) with a fair value of $8,536 in connection with a private placement (Note 7(b)(i)).

The significant non-cash transactions for the year ended February 28, 2007 were as follows:

The issuance of 71,875 common shares to settle $230,000 in convertible loans and related bonus fees

Included in oil and gas expenditures was $505,919 of accounts payable.

10. COMMITMENTS

The Company entered into a two year agreement on October 1, 2008 with a director for consulting services to the Company for consideration of $5,000 per month plus GST, plus reimbursement of all traveling and direct expenses incurred.

The Company entered into a five-year office space lease, expiring April 2010. The minimum annual payments are as follows:

2010	$	31,780
2011		5,296

	$	37,076

F-20

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

11. INCOME TAXES

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

	2009			2008			2007


Loss before income taxes	$	(1,068,748	)	$	(1,667,370	)	$	(728,282	)


Expected income tax recovery	$	(328,640	)	$	(561,620	)	$	(248,490	)
Non-deductible expenses		32,629			112,133			48,665
Write-off of oil and gas properties		162,672			231,256			10,236
Unrecognized benefits of non-capital losses		133,339			218,231			134,162

Total income tax recovery	$	-		$	-		$	(55,427	)

Details of future income tax assets are as follows:

	2009			2008

Resource deductions	$	298,000		$	301,900
Financing costs		10,000			15,400
Non-capital losses available for future periods		647,000			838,100

		955,000			1,155,400

Valuation allowance		(955,000	)		(1,155,400	)

Net future income tax assets	$	-		$	-

The Company has non-capital losses of approximately $2,580,000 which may be carried forward and applied against taxable income in future years. These losses, if unutilized, will expire through to 2029. Subject to certain restrictions, the Company has further resource development and exploration expenditures available to reduce taxable income of future years. The future income tax benefits of these losses, resource deductions and other tax assets have not been reflected in these financial statements and have been offset by a valuation allowance.

F-21

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

12. SEGMENTED INFORMATION

The Company operates in one reportable operating segment, being petroleum and natural gas exploration and development. All of the Company’s petroleum and natural gas exploration properties are located in the United States.

13. SUBSEQUENT EVENTS

Subsequent to year end, the Company:

completed a non-brokered private placement of 3,076,751 units at $0.08 per unit for gross proceeds of $246,140. Each unit consists of one common share and one half Series “A” share purchase warrant (a “Series A Warrant”). One whole Series A Warrant, if exercised within ninety days of Closing entitles the subscriber to purchase an additional unit comprised of one additional common share (a “Series A Warrant Share”) and one-half Series B share purchase warrant (a “Series B Warrant”) at an exercise price of $0.15. If not exercised within ninety days from the closing date of the financing, the Series A Warrant entitles the subscriber to purchase one Series A Warrant Share only, at a price of $0.30 if exercised between the ninety-first and one hundred and eightieth day following the closing date and thereafter at a price of $0.45 if exercised between the 181st day following the closing date and the 365th day following the closing date, following which the Series A Warrants expire.

One whole Series B Warrant will entitle the subscriber to purchase one additional common share (a “Series B Warrant Share”) at a price of $0.30 until 180 days following the Closing and thereafter at a price of $0.45 if exercised between the 181st day following the Closing and the 365th day following the Closing, following which the Series B Warrants will expire.

granted 160,000 stock options, to certain directors, consultants and officers. These options are exercisable at a price of $0.12 per share for a term of 2 years.

granted 350,000 stock options to certain consultants, directors and investor relations personnel. These options are exercisable at $0.20 per share for a period of 2 years.

14.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada (“Canadian GAAP”). Material variations in the accounting principles, practices and methods used in preparing these consolidated financial statements from principles, practices and methods accepted in the United States (“United States GAAP”) are described and quantified below.

F-22

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

14.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d…)

Consolidated financial statement balances under United States GAAP

	2009			2008

Consolidated balance sheets

Total assets under Canadian GAAP and United States GAAP	$	68,805		$	706,070

Total liabilities under Canadian GAAP and United States GAAP	$	191,931		$	9,448

Capital stock and contributed surplus under Canadian GAAP		5,769,409			5,520,409
Future income tax recovery		55,427			55,427
Flow-through share premium paid in excess of market value		(25,080	)		(25,080	)

Capital stock and contributed surplus under United States GAAP		5,799,756			5,550,756

Deficit under Canadian GAAP		(5,892,535	)		(4,823,787	)
Future income tax recovery		(55,427	)		(55,427	)
Flow-through share premium paid in excess of market value		25,080			25,080

Deficit under United States GAAP		(5,922,882	)		(4,854,134	)

Total shareholders’ equity (deficiency) under United States GAAP		(123,126	)		696,622

Total liabilities and shareholders’ equity (deficiency) under United States GAAP	$	68,805		$	706,070

Consolidated statements of operations

The impact of the differences between Canadian GAAP and United States GAAP on the consolidated statements of operations would be as follows:

	2009			2008			2007

Loss for the year, Canadian GAAP	$	(1,068,748	)	$	(1,667,370	)	$	(672,855	)
Adjustments:
Future income tax recovery		-			-			(55,427	)

Loss for the year, United States GAAP	$	(1,068,748	)	$	(1,667,370	)	$	(728,282	)

Basic and diluted loss per common share, United States GAAP	$	(0.32	)	$	(0.61	)	$	(0.32	)

Weighted average number of common shares outstanding, United States GAAP		3,342,278			2,722,588			2,094,367

F-23

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

14.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d…)

Consolidated statements of cash flows

There were no significant differences between Canadian GAAP and United States GAAP on the consolidated statements of cash flows.

Oil and gas properties

Under both United States and Canadian GAAP, property, plant and equipment must be assessed for potential impairment.

Under Canadian GAAP, a ceiling test is applied to ensure that capitalized costs for oil and gas properties and equipment do not exceed the sum of estimated undiscounted, future net revenues from proven reserves less the cost incurred or estimated to develop those reserves, interest and general and administration costs, and an estimate for restoration costs and applicable taxes. Effective January 1, 2004, the CICA implemented a new pronouncement on impairment of long-lived assets, which required the impairment loss as a result of the ceiling test to be measured as the amount by which the carrying amount of the asset exceeds the expected future cash flows discounted using a risk free interest rate.

Under United States GAAP, costs accumulated in each cost center are limited to an amount equal to the present value, discounted at 10%, of the estimated future net operating revenues from proved reserves, net of restoration costs and income taxes. Under United States GAAP an additional write-down was not required for the years ended February 28, 2009, February 29, 2008 and February 28, 2007.

Flow-through shares

Under Canadian income tax legislation, the Company is permitted to issue shares whereby the Company agrees to incur qualifying expenditures (as defined under the Income Tax Act of Canada) and renounce the related income tax deductions to the investors. Under Canadian GAAP, flow-through shares are accounted for as part of the issuance of capital stock at the price paid for the shares, net of any future income tax liability. Under United States GAAP, any difference between the market price of the Company's stock and the fair value of the flow-through shares must be recorded as a liability if a premium is paid by investors or as an asset if investors are purchasing the shares at a discount. The asset or liability is charged to income as the flow-through share proceeds are expended on qualifying expenditures.

During fiscal 2006 the Company issued flow-through shares and recorded a premium of $25,080 in 2006 for United States GAAP purposes. In fiscal 2007, the Company renounced these funds resulting in a future tax recovery for Canadian GAAP purposes.

During the 2009 and 2008 fiscal years, the Company did not issue any flow-through shares and accordingly there was no difference between Canadian and United States GAAP.

F-24

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

14.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d…)

New accounting pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 establishes a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards which permit, or in some cases require, estimates of fair market value. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year.

FASB Staff Position 157-2 (“FSP FAS 157-2”) delayed the effective date of FAS 157 until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of FAS 157 is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2008, the FASB issued FAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 changes the disclosure requirements for derivative instruments and hedging activities by requiring enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under FAS 133, and how derivative instruments and related hedged items affect an entity’s operating results, financial position, and cash flows. FAS 161 is effective for fiscal years beginning after November 15, 2008. Early adoption is permitted. The Company is currently reviewing the provisions of FAS 161 and has not yet adopted the statement. However, as the provisions of FAS 161 are only related to disclosure of derivative and hedging activities, the Company does not believe the adoption of FAS 161 will have a material impact on its consolidated operating results, financial position, or cash flows.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51,” (SFAS 160). SFAS 160 amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard defines a noncontrolling interest, sometimes called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. SFAS 160 requires, among other items, that a noncontrolling interest be included in the consolidated statement of financial position within equity separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of both the parent’s and noncontrolling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statement of income; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. Management has determined that the adoption of SFAS 160 will not have an impact on its consolidated operating results, financial position, or cash flows.

F-25

PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

14.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d…)

New accounting pronouncements (cont’d…)

In December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 and retains the fundamental requirements in SFAS 141, including that the purchase method be used for all business combinations and for an acquirer to be identified for each business combination. This standard defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control instead of the date that the consideration is transferred. SFAS 141(R) requires an acquirer in a business combination, including business combinations achieved in stages (step acquisition), to recognize the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. It also requires the recognition of assets acquired and liabilities assumed arising from certain contractual contingencies as of the acquisition date, measured at their acquisition-date fair values. SFAS 141(R) becomes effective for the first annual reporting period beginning on or after December 15, 2008. Management has determined that the adoption of SFAS 141(R) will not have a material impact on the consolidated operating results, financial position or cash flows.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets,” (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets,” (SFAS 142) in order to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other GAAP. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. Management has determined that the adoption of FSP FAS 142-3 will not have a material impact on the consolidated operating results, financial position or cash flows.

In June 2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” (FSP EITF 03-6-1). FSP EITF 03-6-1 states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. Management has determined that the adoption of FSP EITF 03-6-1 will not have a material impact on the consolidated operating results, financial position or cash flows.

In April 2009, the FASB issued FASB Staff Position 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” (“FSP 157-4”). FSP 157-4 provides significant guidance for determining when a market has become inactive as well as guidance for determining whether transactions are not orderly. FSP 157-4 also provides guidance on the use of valuation techniques and the use of broker quotes and pricing services. It reiterates that fair value is based on an exit price and also that fair value is market-driven and not entity-specific. FSP 157- 4 applies to all assets and liabilities within the scope of SFAS No. 157. FSP 157-4 is effective for all interim and annual periods ending after June 15, 2009. Management has determined that the adoption of FSP 157-4 will not have a material effect on the Company’s results of operations, financial position, and cash flows.

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PETRO HORIZON ENERGY CORP.

(formerly Horizon Industries Ltd.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2009

14.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d…)

New accounting pronouncements (cont’d…)

In April 2009, the FASB issued FASB Staff Position FAS 115-2, FAS 124-2 and EITF 99-20-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP 115-2”). FSP 115-2 provides guidance related to determining the amount of an other-than-temporary impairment (OTTI) of debt securities and prescribes the method to be used to present information about an OTTI in the financial statements. FSP 115-2 is effective for all interim and annual periods ending after June 15, 2009. Management has determined that the adoption of FSP 115-2 will not have a material effect on the Company’s results of operations, financial position, and cash flows.

In April 2009, the FASB issued FASB Staff Position FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP 107-1”), which increases the frequency of fair value disclosures to a quarterly basis instead of an annual basis. The guidance relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet at fair value. FSP 107-1 is effective for interim and annual periods ending after June 15, 2009. Management has determined that the adoption of FSP 107-1 will not have a material effect on the Company’s results of operations, financial position, and cash flows.

In June 2009, the FASB issued SFAS No. 165, Subsequent Events. SFAS No. 165 provides guidance as to the period after the balance sheet date during which management must evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity must make about events or transactions that occurred after the balance sheet date. SFAS No. 165 is effective for periods ending after June 15, 2009. Management has determined that the adoption of SFAS No. 165 will not have a material effect on the Company’s results of operations, financial position, and cash flows.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 168 replaces SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles,” and establishes the FASB Accounting Standards CodificationTM as the source of authoritative accounting guidance under U.S. GAAP. The rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. SFAS No. 168 is effective for periods ending after September 15, 2009. The Company does not expect SFAS No. 168 to have a material effect on its results of operations, financial position, and cash flows.

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