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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

(Mark One)

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

For the fiscal year ended: February 28, 2009or

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

For the transition period from __________________to
__________________

Commission file number: 000-52721

FOX PETROLEUM INC.(Exact
name of registrant as specified in its charter)

|Nevada                                                             | N/A                                 
|------------------------------------------------------------------ | ------------------------------------
|State or other jurisdiction of incorporation or
      organization | (I.R.S. Employer Identification No.)

64 Knightsbridge, London, England, UK SW1X
7JF(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code
44-207-590-9630

Securities registered pursuant to Section 12(b) of the Act

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                | N/A                                      

Securities registered pursuant to Section 12(g) of the Act:

Common Stock(Title of Class)

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No
[X]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No
[X]

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

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T

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ii

(§229.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such
files). Yes [ ] No [ ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [
]

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

|Large accelerated filer [ ] |                                               | Accelerated filer [ ]        
|--------------------------- | --------------------------------------------- | -----------------------------
|Non-accelerated filer [ ]   | (Do not check if a smaller reporting company) | Smaller reporting company [X]

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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently
completed second fiscal quarter. $4,020,005.08 (computed by reference to the
closing price of $0.28 per share on May 29, 2009)

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date:
84,668,245 shares of common stock issued and outstanding as of July 13,
2009

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by
reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which
the document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or information statement; and (3) Any prospectus filed pursuant to Rule
424(b) or (c) under the Securities Act of 1933. The listed documents should be
clearly described for identification purposes (e.g., annual report to security
holders for fiscal year ended December 24, 1980). Not applicable.

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iii

TABLE OF CONTENTS

|CAUTIONARY
      NOTE REGARDING FORWARD LOOKING STATEMENTS                                                                        | 4 
|--------------------------------------------------------------------------------------------------------------------------------- | --
|PART
      I                                                                                                                      | 5 
|Item
      1. Business                                                                                                            | 5 
|Item
      1A. Risk Factors                                                                                                       | 15
|Item
      1B. Unresolved Staff Comments                                                                                          | 25
|Item
      2. Properties                                                                                                          | 25
|Item
      3. Legal Proceedings                                                                                                   | 26
|Item
      4. Submission of Matters to a Vote of Security Holders.                                                                | 26
|PART
      II                                                                                                                     | 26
|Item
      5. Market for Registrants Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity Securities. | 26
|Item
      6. Selected Financial Data                                                                                             | 27
|Item
      7. Managements Discussion and Analysis of Financial Condition and Results
      of Operations                         | 28
|Item
      7A. Quantitative and Qualitative Disclosures About Market Risk                                                         | 35
|Item
      8. Financial Statements and Supplementary Data.                                                                        | 36
|Item
      9. Changes in and Disagreements With Accountants on Accounting and
      Financial Disclosure                          | 37
|Item
      9A(T). Controls and Procedures                                                                                         | 37
|Item
      9B. Other Information                                                                                                  | 38
|PART
      III                                                                                                                    | 38
|Item
      10. Directors, Executive Officers and Corporate Governance.                                                            | 38
|Item
      11. Executive Compensation                                                                                             | 41
|Item
      12. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters               | 43
|Item
      13. Certain Relationships and Related Transactions, and Director
      Independence.                                   | 45
|Item
      14. Principal Accounting Fees and Services.                                                                            | 46
|PART
      IV                                                                                                                     | 47
|Item
      15. Exhibits, Financial Statement Schedules                                                                            | 47
|SIGNATURES                                                                                                                        | 53

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4

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This annual report contains forward looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward looking statements by terminology such as may,
should, intend, expect, plan, anticipate, believe, estimate,
project, predict, potential, or continue or the negative of these terms
or other comparable terminology. These statements speak only as of the date of
this annual report. Examples of forward looking statements made in this annual
report include statements about:

- our future exploration programs and results;
- our future capital expenditures;
- our future financing; and
- our future investments in and acquisitions of oil and gas properties.

These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including the risks, such as

- our ability to establish or find reserves;
- volatility in market prices for natural gas and crude oil;
- liabilities inherent in natural gas and crude oil operations;
- uncertainties associated with estimating natural gas reserves and crude
  oil;
- competition for, among other things, capital, acquisitions of reserves,
  undeveloped lands and skilled personnel;
- political instability or changes of laws in the countries in which we
  operate and risks of terrorist attacks;
- incorrect assessments of the value of acquisitions;
- geological, technical, drilling and processing problems;
- the uncertainty inherent in the litigation process, including the
  possibility of newly discovered evidence or the acceptance of novel legal
  theories, and the difficulties in predicting the decisions of judges and
  juries; and
- other factors discussed under Item 1A. Risk Factors commencing on
  page 15 of this annual report.

These risks may cause our companys or our industrys actual
results, levels of activity or performance to be materially different from any
future results, levels of activity or performance expressed or implied by these
forward looking statements.

Although we believe that the expectations reflected in the
forward looking statements are reasonable, we cannot guarantee future results,
levels of activity or performance. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward looking statements to conform these statements to actual
results.

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5

In this report, the terms we, us and our refer to Fox
Petroleum Inc. and/or its wholly owned subsidiaries, Fox Petroleum (Alaska)
Inc., Fox Petroleum, Inc. (a Kansas corporation) and Fox Energy Exploration
Limited, as the case may be.

PART I

Item 1. Business.

We are a development stage company engaged in the
identification, acquisition, exploration, and, if warranted, development of
prospective oil and gas properties. We have oil and gas leases in Alaska,
interests in a UK onshore license, and joint venture interests in a gas well in
Texas.

Recent Development of Our Business

Trafalgar Capital Specialized Investment Fund,
Luxembourg

We failed to make most payments due to Trafalgar Capital
Specialized Investment Fund, Luxembourg under the various loan arrangements
(approximately $196,000 in scheduled principal, premium and interest repayments
at February 28, 2009). We later were not in a position to repay the $1.25
million principal due at the end of April 2009 under a loan agreement with
Trafalgar (which would have left $2.25 million principal outstanding).

We have trade creditor and direct salary related debt of
approximately $1 million at February 28, 2009 for our operations in Kansas.
Several of these key trade creditors have issued mechanical liens against our
facilities in Kansas.

Subsequently, Trafalgar and we have commenced negotiations to
amend the various loan arrangements to avoid default notices and legal action
having to be taken. In principle, we have been asked by Trafalgar to assign our
leases in Kansas to Trafalgar in return for a loan rescheduling, Trafalgars
realizing the 15,000,000 shares of our common stock pledged under an earlier
loan document with Trafalgar and a covenant not to sue by Trafalgar.

As a result, on April 30, 2009, we and Trafalgar entered into
amendment to the securities purchase agreement, secured debenture, registration
rights agreement and security agreement, whereby Trafalgar agreed to extend the
maturity date of a secured debenture in the principal amount of $1.25 million
until October 31, 2009 from April 30, 2009. In consideration for Trafalgars
agreeing to extend the maturity date of that secured debenture, we released
15,000,000 shares of our common stock from escrow to Trafalgar as payment of an
extension fee. These shares were originally intended to serve as additional
pledged property under the security agreement that we entered into with
Trafalgar in connection with the sale of the debentures to Trafalgar.

In addition, pursuant to the bill of sale and assignment in
lieu of foreclosure and the certificate of seller, we sold and assigned to TCF
Oil and Gas Corp., a Florida corporation owned by Trafalgar, all of our
properties located in Ellsworth County, Kansas, including three oil and gas
leases located in Ellsworth County, Kansas in consideration of the payment of
$100 from TCF Oil and Gas to us and of the simultaneous execution by Trafalgar
of a covenant not to sue us for an in personam judgment under the obligations
evidenced or secured by the various loan documents between Trafalgar and us. TCF
Oil and Gas did not assume our obligations and liabilities under the loan
documents between Trafalgar and us and such obligations and liabilities remain
our responsibility. In addition, this bill of sale and assignment does not
restrict the right of Trafalgar as holder of such loan documents to enforce the
same or to institute or proceed with foreclosure or any other remedial
proceedings under the same. We also released Trafalgar from any claims arising
out of the loans from Trafalgar

In consideration of the simultaneous execution by our company
of the bill of sale and assignment in lieu of foreclosure and the certificate of
seller, Trafalgar Capital Specialized Investment Fund, FIS entered into the
covenant not to sue. Pursuant to this covenant, Trafalgar agreed not to sue for
an in personam judgment against our company under the various loan documents
between our company and Trafalgar. Nevertheless, in connection with the
enforcement of its rights under such loan documents, Trafalgar reserved the
right to sue our company in rem.

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6

In addition, Trafalgar expressly reserved all rights of action,
claims, and demands against any and all persons or entities, including without
limitation any guarantor of any of the loans, indebtedness or obligations
evidenced or secured by such loan documents other than our company, and
expressly reserved all rights of action, claims and demands against and all
persons or entities including our company under or arising out of or related to
any mechanics liens and/or mechanics lien claims filed on, asserted against or
related to any of the mortgaged properties (mostly three oil and gas leases in
Ellsworth County, Kansas and related properties) from our company to Trafalgar.
This instrument was not a release and does not operate to discharge any of the
loans, indebtedness or obligations evidenced or secured by the loan
documents.

Transactions with Carbon Energy Investments
Limited

Subscription Agreement

On November 5, 2008, we entered into a subscription agreement
with Carbon Energy Investments Limited for the sale of 80,000,000 shares of our
common stock at a price of $0.50 per share for the aggregate price of
$40,000,000, which Carbon Energy agreed to pay by March 31, 2009 in three
installments commencing on December 12, 2008.

Carbon Energy was introduced to our company by Trafalgar
Capital Advisory Partners LLP under its introducer/advisor agreement with our
company dated November 7, 2008.

On November 26, 2008, we issued 50,000,000 shares of our common
stock to Carbon Energy. We were to receive $25,000,000 for these shares pursuant
to the above-mentioned subscription agreement.

To date, we have received no funding whatsoever from Carbon
Energy and we have terminated the agreement and demanded the return of the
shares. We are also currently reviewing our legal position and any associated
remedies relating to the above.

Libertas Capital Ventures Limited

In January 2009, Trafalgar also introduced us to Libertas
Capital Group PLC, a broker licensed under the FSA in the United Kingdom and
listed on the UK AIM. Trafalgar advised us to enter into an agreement with
Libertas whereby Libertas would act as financial advisor and broker to our
company. Under the agreement, Libertas were to receive 20,000,000 shares of our
common stock. We never issued these shares to Libertas and actually terminated
the agreement on May 7, 2009.

It is understood that Trafalgar arranged 20,000,000 shares of
our common stock already issued to Carbon Energy to be transferred to Libertas
instead.

No funds were raised into our company by Libertas.

Purchase Agreement for Alaska Oil & Gas Resources
Limited

On November 5, 2008, we entered into an agreement with Carbon
Energy to purchase shares in Alaska Oil & Gas Resources Limited from Carbon
Energy. Pursuant to the agreement, we agreed to acquire 100% of the issued
shares of Alaska Oil & Gas from Carbon Energy in consideration for
$57,500,000, $250,000 of which was to be paid in cash and the remainder by the
issuance of 57,250,000 shares of our common stock at a deemed price of $1.00 per
share. In addition, Carbon Energy agreed to procure the directors of Alaska Oil
& Gas to appoint Richard Moore (our chairman, president, chief executive
officer and director) as director and another party as director and as secretary
of Alaska Oil & Gas. On the same day, Mr. Moore and William MacNee (our
chief operating officer and director) were appointed as directors of Alaska Oil
& Gas.

On November 28, 2008, we entered into an amendment agreement
with Carbon Energy relating to purchase of Alaska Oil & Gas whereby it was
agreed that the consideration to be paid pursuant to the agreement was varied
such that the consideration would amount to $57,500,000, payable by the issuance
of 2,000,000 shares of our common stock within three business days of November
2008 and 55,500,000 shares on completion of the transaction, as described in the
agreement for the purchase of Alaska Oil & Gas, with all shares having a
deemed price of $1.00 per

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7

share. On December 2, 2008, we issued 2,000,000 shares of our
common stock to Carbon Energy pursuant to the terms of the amendment
agreement.

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

To date, Carbon Energy has neither delivered on any part of the
above transactions nor has it been able to demonstrate any ability to amend or
extend the above transactions to our satisfaction.

Having given due consideration to the above mentioned in light
of market conditions and having discussed with Carbon Energy its financial
capabilities, we are of the view that it is now highly unlikely that Carbon
Energy can fulfill any of the above mentioned transaction demands and as such we
feel obliged to terminate all arrangements with Carbon Energy forthwith. This
termination also annuls the appointments of Richard Moore and William MacNee as
directors of Alaska Oil and Gas.

There is an unsigned version of an agreement dated April 15,
2009 between our company and Carbon Energy relating to cancelling the original
sale and purchase of shares in Alaska Oil and Gas Resources Limited which was
dated November 5, 2008 and the amendment agreements to that original agreement
dated January 14, 2009. We only possess an unsigned version of the agreement
dated April 15, 2009 and it remains unclear as to whether it was ever signed by
both parties.

Shares Issued to Carbon Energy Investments
Limited

Under the transactions described above, we issued an aggregate
of 52,000,000 shares of our common stock or approximately 61.4% of the issued
and outstanding shares of our common stock to Carbon Energy. For the reasons
stated above, we have taken steps to cancel all of the shares issued
(restricted) in the name of Carbon Energy and have notified the transfer agent
and Carbon Energy, but those shares are not yet cancelled.

Increase in the Authorized Capital

We are currently authorized to issue 90,000,000 shares of our
common stock. As of July 13, 2009, we had 84,668,245 shares of our common stock
issued and outstanding. We planned to increase our authorized capital from
90,000,000 shares of common stock with a par value of $0.001 to 500,000,000
shares of common stock with a par value of $0.001 in order to issue all the
shares under the subscription agreement and the purchase agreement for Alaska
Oil & Gas and to accommodate future asset acquisitions and cash requirements
and to issue the shares to our employees for compensation for their
services.

Pursuant to the above, on November 26, 2008, our board of
directors unanimously approved the amendment to our articles of incorporation to
increase the authorized number of shares of our common stock from 90,000,000 to
500,000,000. The approval of the amendment to our articles of incorporation
requires the consent of the holders of at least a majority of the outstanding
shares of our common stock. Subsequent to the approval of our board of directors
of the amendment to our articles of incorporation, Carbon Energy Investments
Limited and Trafalgar Capital Specialized Investment Fund, the holders of the
majority of the outstanding shares of our common stock at that time, gave us
their written consents to the amendment to our articles of incorporation
effective December 6, 2008. Later they gave us their written consents again
effective April 21, 2009. The increase in our authorized share capital is not to
become effective until not less than 20 days after the information statement
regarding the increase in the authorized capital is first mailed to our
stockholders and until the appropriate filing is made with the Nevada Secretary
of State.

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8

Subsequently, on January 7, 2009, we filed a preliminary
information statement on Schedule 14C regarding the increase in the authorized
capital with the Securities and Exchange Commission. The Securities and Exchange
Commission responded on January 30, 2009 with a list of comments and a request
that we revise our submission. At the end of February 2009, Alexander Craven,
our executive vice president and compliance officer resigned from his position
with our company. The legal firm Richardson and Patel, at Trafalgars
recommendation, were engaged to reply to this. Richardson and Patel continued to
prepare answers to this and other issues until such time as we could not afford
to pay the legal bills being incurred.

We entered into a process of approving an S8 share registration
to pay Richardson and Patel as well as other creditors including the Kansas
operational creditors. Trafalgar did not consent to this action and the SEC
letter has not been formally addressed. Before the information statement can be
mailed to our stockholders, we need to resolve all the comments from the
Securities and Exchange Commission.

Offer to Minmet Plc.

In early December 2008, we were introduced by Carbon Energy to
an asset in New Mexico, owned by an Irish company called Minmet plc. On December
4, 2008, and on the advice of Trafalgar, we sent a letter to the directors of
Minmet plc with an offer for the entire issued and to be issued share capital of
Minmet. We proposed to offer a price of 0.12 pence per share to all shareholders
of Minmet. The proposed offer was an all share offer whereby shareholders of
Minmet were to receive shares of our common stock in exchange for shares in
Minmet. The offer was subject to our completing, to our satisfaction, both
technical and legal due diligence on the proposed transaction and Minmet. It was
intended that the proposed offer would be funded through an issue and allotment
of new shares of our common stock based on the average mid market price 10 days
prior to any circular going to the shareholders of Minmet. We intended to apply
for admission and trading of our shares post completion on the London Plus
Market in order to afford all shareholders the opportunity to trade their shares
in the UK, but, because the offer has been withdrawn, as more particularly
described below, we no longer intend to apply for admissions and trading of our
shares on the London Plus Market.

This offer was subject to satisfaction of certain
pre-conditions: (i) the proposed offer being unanimously recommended by the
board of Minmet and such recommendation not being subsequently modified or
withdrawn; and (ii) final approval of our board of directors. This acquisition
was also conditioned on a final due diligence review of Tucumcari Oil and Gas
field, as well as a signed acquisition agreement between our company and
Tucumcari Investments Limited for the acquisition of a 75% ownership interest in
Tucumcari to close simultaneously with the acquisition of Minmet. Our management
considers that the corporate history of Minmet still requires substantial
clarification before progressing to a final agreement between the companies, and
we are unlikely to pursue this opportunity to participate in the Tucumcari field
and the offer for the entire issued and to be issued share capital of Minmet has
been withdrawn.

Ballyliffin Capital Corp.

On September 26, 2008, Fox Petroleum Inc. and its wholly owned
subsidiary, Fox Energy Exploration Limited, entered into a transaction proposal
and exclusive agreement with Ballyliffin Capital Corp. relating to the proposed
business combination. Under the proposed transaction, Ballyliffin would have
acquired 100% of the issued and outstanding shares of Fox Energy Exploration
Limited whereby the holder of the issued and outstanding shares of Fox Energy
Exploration Limited would receive common shares of Ballyliffin in exchange for
its shares of Fox Energy Exploration Limited. The agreement has now lapsed and,
although extensions were considered by both parties, on January 16, 2009
Ballyliffin informed us, through their legal counsel, that it considers the
proposed transaction terminated.

Reverse Split

On April 21, 2008, we effected a reverse stock split of our
authorized and issued and outstanding shares of common stock on a 1 new for 5
old basis. As a result, our authorized capital decreased from 450,000,000 shares
of common stock to 90,000,000 shares of common stock.

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9

Kansas

On June 26, 2008, we purchased three leases comprising 320
acres and located in Ellsworth County, Kansas from Hodgden & Associates and
pursuant to an agreement with Hodgden & Associates, a mutual area of
interest is established to cover the entire leases in addition to some of the
surrounding areas. Mr. Hodgden and Dr. Knight received the sum of $80,000 from
us and Hodgden & Associates sold and assigned to us an 80% net revenue
interest (100% working interest) in these three leases. The landowner royalty on
each of these leases was 12.5% and Hodgden & Associates retained an
overriding royalty interest of 7.5% in each lease. We were expected to drill a
minimum of 10 wells on these leases and we were to drill and establish
production on each lease before the expiration date of each lease.

We commenced a 10-well drilling program for these leases in
September 2008. We have drilled four wells in Ellsworth, Kansas and received net
sales proceeds of approximately $90,000 from test production of 2,620 barrels
from two of these wells between October 2008 and January 2009. Since January
2009, operations (and therefore production) have been suspended due to the need
for implementation of water disposal facilities for which further funding was
not available.

On October 14, 2008, through our wholly owned subsidiary, Fox
Petroleum, Inc., a Kansas corporation, we entered into two oil and gas lease
agreements with Bryant T. Wires and Rosalie Wires. Pursuant to the agreements,
we acquired two oil and gas leases for the lands located in the county of
Ellsworth in Kansas in consideration of $10 per acre for total consideration of
$3,200. Each of these two leases contains about 160 acres. The leases will
remain in force for a term of two years and, after the first two years, as long
as oil or gas are or can be produced, if any. On October 21, 2008, we registered
the above two leases with the Register of Deeds of Ellsworth County of State of
Kansas. We were required to deliver Mr. and Mrs. Wires, as a royalty, 1/8th of
part of all oil produced and saved from the leased premises, if any, or at our
option may pay them for such 1/8th royalty the market price at the wellhead for
oil of like grade and gravity prevailing on the day such oil is run into the
pipeline or into storage tanks. We were also required to pay Mr. and Mrs. Wires,
as a royalty, 1/8th of the proceeds received by us from the sale of gas produced
from the lands leased, if any. The leases are paid-up leases and may be
maintained during the first two years without further payments or drilling
operations.

As stated above, under threat of immediate foreclosure, we sold
and assigned to TCF Oil and Gas Corp., a Florida corporation owned by Trafalgar,
all of our properties located in Ellsworth County, Kansas in consideration of
the payment of $100 from TCF Oil and Gas to us and of the simultaneous execution
by Trafalgar of a covenant not to sue us for an in personam judgment under the
obligations evidenced or secured by the various loan documents between Trafalgar
and us. Therefore, we today do not own any oil and gas leases in Kansas.

UK North Sea

The Bourbon Prospect

On November 8, 2007, through our wholly owned UK subsidiary,
Fox Energy Exploration Limited, we entered into a farm-in agreement with Valiant
North Sea Limited and Petrofac Energy Developments Limited. Pursuant to the
farm-in agreement, Valiant North Sea Limited and Petrofac Energy Developments
Limited agreed to assign a total of 46% interest in the southern part of block
211/17 located in the UK North Sea. In consideration for the 46% interest, we
agreed to pay for 89% of the cost of drilling an exploration well on the
southern part of the block and perform certain related works to the drilling an
exploration well. Our primary target for the exploration well was the Bourbon
prospect located in the southern part of block 211/17.

Under a separate agreement with Aimwell Energy Ltd., we agreed
to transfer a 4.6% interest out of above 46% interest to Aimwell when we acquire
the 46% interest from Valiant and Petrofac. Following the transfer of the 4.6%
interest to Aimwell, we agreed to pay Aimwells share of all costs, expenses,
liabilities, and obligations arising in respect of the operations on the
southern part of block 211/17 until a field development plan is formally
approved by the UK Secretary of State responsible for such matters, for the
development of a discovery of petroleum in the block. Thereafter, our company
and Aimwell agreed each to be responsible for its respective share of costs.
Michael Rose and Robert Frost, who were directors of our company from May 5,
2008 to April 2, 2009, are the beneficial owners and directors of Aimwell.

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10

Effective February 27, 2009, Valiant North Sea and Petrofac
Energy Developments terminated the farm-in agreement. We, however, intend to
continue our efforts to fund the drilling program in the southern part of block
211/17. Should these efforts be successful, we intend to recommence discussions
with Valiant North Sea and Petrofac Energy Developments with a view to putting
in place a new agreement. There is no guarantee that such efforts will be
successful and, if successful, that such a new agreement will be put in
place.

On April 15, 2008, we signed a letter of commitment with
Senergy Limited, an international integrated oil services company, to utilize
the Byford Dolphin semi-submersible drilling rig to drill a well on our Bourbon
prospect. Senergy countersigned the letter of commitment on May 5, 2008. On May
20, 2008, we signed a new letter of commitment with Senergy, which was
countersigned by Senergy on May 21, 2008. We agreed to commit to the use of a
drilling rig commencing no earlier than October 1, 2008 for a total rig cost of
$8,910,000. We also committed to enter into a well project management and
integrated services contract for the management of a well program on the rig. We
are also obligated to pay a fee of $1.75% of the operating rig rate, for the
duration of the use of the rig, if we use the rig, but not the integrated
project management services of Senergy. We also committed to enter into a side
letter agreement with Senergy and its other clients who will be using the rig to
share any mobilization and demobilization or other costs that can be reasonably
and equitably be shared on a pro-rata basis (based on days the rig is used).

We have incurred substantial costs (approximately $10,910,000)
under this letter of commitment, which was entered into to fulfill our
obligations under the farm-in agreement with Valiant North Sea and Petrofac
Energy Developments and may be liable to incur a further $2,000,000 in penalties
for our failure to fulfill our commitment for the use of the rig. This
additional amount has been accrued in full as at February 28, 2009. We are
currently negotiating an MOU with Senergy to convert this debt into a strategic
alliance between the companies whereby we will contract to have Senergy as a
preferred contractor, we will offer Senergy a revenue stream and an option to
participate in our stock. There is no guarantee that we will negotiate and agree
upon a binding agreement.

Blackhawk Investments Limited

On November 19, 2008, Blackhawk Investments Limited, a party
related to Carbon Energy, agreed in a written commitment to irrevocably
underwrite our commitment to Senergy Limited in respect of all costs related to
the drilling of the 211/17 Bourbon prospect in a sum not to exceed $30,000,000.
The first tranche of $15,000,000 was to be transferred to us no later than
November 30, 2008 with the balance arriving no later than March 2009. To date,
we have received no funding whatsoever from either Carbon Energy or Blackhawk.
We are currently reviewing our legal position and any associated remedies
relating to this.

Block 13/17 Concession

On November 12, 2008 we were formally notified by the UK
Department of Energy and Climate Change of our success in the 25th Seaward
Licensing Round Awards, the rights to explore and develop the block 13/17
concession in the North Sea by the UK government. License obligations were to
obtain 3D seismic over the block and to carry out geological and seismic
modeling before firming up a drilling location. We would have had four years in
which to drill or drop the license.

On September 5, 2008 our subsidiary, Fox Energy Exploration
Limited, entered into another letter agreement with Aimwell Energy Ltd.,
relating to the participation in an application made for blocks 13/17 &
210/20e. Pursuant to the letter agreement, we would have had a 90% interest in
the blocks and Aimwell would have had a 10% interest. We would have paid
Aimwells 10% share of all costs, expenses, liabilities and obligations arising
in respect of operations jointly conducted by us and Aimwell in respect of each
license block until a field development plan is formally approved by the UK
Secretary of State responsible for such matters, for the development of a
discovery of petroleum in the blocks. Thereafter, our company and Aimwell would
each be responsible for its respective share of costs, with us being responsible
for 90% of the costs and Aimwell responsible for its 10% share of the costs. We
agreed to be named as operator of all blocks (subject to the approval by the UK
government) and to negotiate and execute a joint operating agreement in respects
of the licenses no later than 6 months following the award of the licenses. We
agreed to pay a consideration of £32,000 to Aimwell for preparation of the
application documentation for the blocks. We also agreed to pay a further
consideration of £50,000 to Aimwell per each block awarded to both companies by
the UK government to cover an initial three months technical management of each
block by Aimwell.

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11

On May 1, 2009, we received notification from the UK Department
of Energy and Climate Change that the offer of this license in the 25th round
had been withdrawn due to the recognized failure of the subscription agreement
and our inability to show real access to proper funding or any material change
in the circumstances relating to our having adequate funding arrangements in
place to perform the work programme attached to the license application. We are
reviewing this withdrawal and we expect to appeal this decision based upon the
understanding that a one year period was permitted under the award to procure
such adequate funding arrangements. There is no guarantee that such appeal
will be successful.

The Anglesey Prospect

On July, 31, 2007, through our wholly owned UK subsidiary, Fox
Energy Exploration Limited, we acquired a total of 33.33% interests in a UK
petroleum production license under a farm-in agreement dated June 8, 2007 with
Granby Enterprises Limited and Atlantic Petroleum UK Limited. The license P1211
covers blocks 14/9a and 14/14b located in the UK North Sea. In consideration for
the farm-in interest, we agreed to fund 100% of the high resolution 2D seismic
survey and pseudo 3D processing over the license and our 33.33% share of the
license budget costs from June 1, 2007. In addition to the acquisition of the
33.33% interest in the license, we obtained an exclusive, non-transferable
option to acquire an additional 26.67% interest in the license. We have declined
to take up this option.

Pursuant to this farm-in agreement, we paid more than
$2,000,000 cost for the hi-density 2D seismic survey over the Anglesey prospect
located in the license. We acquired the seismic data on the Anglesey prospect
and further to analysis of all relevant data by the parties to the agreement, it
was decided that economic viability of the project could not be proven, and we
relinquished the license on February 1, 2009.

UK Onshore License

On June 3, 2008, we acquired four 10 km x 10 km UK onshore
license blocks in the south of England. The UK government made available this
Petroleum Exploration and Development License and awarded the blocks totaling
400 km2 to our company and Aimwell Energy Ltd. in the latest round of
onshore licensing. In return for the license, we will have to shoot 60 km of 2D
seismic within the 6-year term of the license. Interpretation and analysis of
the seismic data acquired will help further define the prospect, after which we
will have an option to drill a well, or simply relinquish the license. While the
tendering process for the aforementioned seismic acquisition obligation has been
put on hold we expect it to resume in the second half of 2009.

On September 5, 2008 our subsidiary, Fox Energy Exploration
Limited, entered into a letter agreement with Aimwell Energy Ltd. (two of our
former directors, Michael Rose and Robert Frost, are the beneficial owners and
directors of Aimwell), relating to the participation in four UK onshore license
blocks in the south of England, which have been awarded to both companies by the
UK government in May 2008. Pursuant to the letter agreement, we have a 90%
interest in the four blocks and Aimwell has a 10% interest. We will pay
Aimwells 10% share of all costs, expenses, liabilities and obligations arising
in respect of operations jointly conducted by us and Aimwell in respect of each
license block until a filed development plan is formally approved by the UK
Secretary of State responsible for such matters, for the development of a
discovery of petroleum in the blocks. Thereafter, our company and Aimwell will
each be responsible for its respective share of costs, with us being responsible
for 90% of the costs and Aimwell responsible for its 10% share of the costs. We
agreed to be named as operator of all blocks (subject to the approval by the UK
government) and to negotiate and execute a joint operating agreement in respects
of the licenses no later than 6 months following the award of the licenses. We
agreed to pay a consideration of £10,000 per block awarded (a total of £40,000
for all four blocks) to Aimwell on receipt of an appropriate invoice from
Aimwell to cover past technical costs and an initial 3 months technical
management of the blocks by Aimwell.

Alaska

Leases Acquired from Daniel Donkel and Samuel
Cade

Cook Inlet, Alaska

On October 10, 2007, through Fox Petroleum (Alaska) Inc., we
entered into a lease purchase agreement with Daniel Donkel and Samuel Cade to
acquire six oil and gas leases located in the Cook Inlet, Alaska in
consideration for

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12

$750,000. These leases are subject to a total of 5% overriding
royalty interests to Daniel Donkel and Samuel Cade and a royalty of 16.67% to
the State of Alaska. Acquisitions of three oil and gas leases that had been
issued were completed effective March 1, 2008. The other three oil and gas
leases have been issued later, and are now assigned to us.

Our primary focus in Alaska is the Catchers Mitt prospect
located in the Cook Inlet, Alaska. We have put into place a four-stage
development program on the Catchers Mitt prospect in order to begin drilling.

Stage one was the purchase of a magnetic airborne survey over
the area. Fugro Airborne Surveys Corp. carried out the survey, which covered
approximately 1,869 line miles. We analyzed this data in order to optimize our
understanding of where potential reserves were best defined thus enhancing our
choice of drilling locations. Stage two was our acquisition of a detailed
gravity survey from Photo Gravity Corporation in order to acquire in depth data
regarding the structures and formations on the leases.

Stage three involved the re-interpretation of original and
offset well logs. Our geologists worked with data originally collected from test
wells that were initiated in the early stages of the prospects exploration. We
reprocessed and reinterpreted this information using the latest available
technology to improve our ability to decide upon exact zones and targets for
drilling and producing hydrocarbons.

Stage four was the purchase of the available seismic data on
the leases, which was completed in July 2008 for approximately $200,000.

We had also planned to drill 2 wells during the 2009-2010
drilling season. Hodgden & Associates is currently finishing the geology and
geophysical studies. These studies have enabled us to optimize well location
selection. We are actively seeking finance to drill the wells but to date have
been unsuccessful.

North Slope, Alaska

On October 10, 2007, our wholly owned subsidiary, Fox Petroleum
(Alaska) Inc., entered into a purchase agreement with Daniel Donkel and Samuel
Cade to acquire a 100% working interest on 8 oil and gas leases located in the
North Slope, Alaska in consideration for $250,000 and 80,000 shares of our
common stock. On November 2, 2007, the purchase agreement was amended to add Fox
Petroleum Inc. as a party to the purchase agreement. These leases are subject to
a total of 5% overriding royalty interests to Daniel Donkel and Samuel Cade and
a royalty of 16.67% to the State of Alaska. Acquisitions of these 8 oil and gas
leases were completed effective March 1, 2008.

We are currently seeking to acquire all available data on these
leases, such as seismic, gravity, and magnetic data, which we plan to tie in
with the existing well logs and other offset and analog data.

Leases Acquired from Fox Petroleum LLC

On August 14, 2007, we acquired 11 oil and gas leases in North
Slope, Alaska under the lease purchase and sale agreement that we entered into
with Fox Petroleum LLC on May 29, 2007. Effective March 1, 2008, we acquired
12th oil and gas lease under the agreement. These leases have been assigned to
our wholly owned subsidiary, Fox Petroleum (Alaska) Inc. We have combined 100%
working interests in these 12 state-issued oil and gas leases subject to a
royalty of 16.67% to the State of Alaska and a private royalty of 5%. We intend
to conduct an exploration and appraisal program on these 12 oil and gas
leases.

We have already met with industry specialists in Alaska to
discuss the co-ordination of our exploration program with them.

We aim to analyze as much quality information as is available
to us from the many geophysical surveys, well drilling and testing activities
that have already taken place in or around the leases since serious exploration
and appraisal commenced in the region.

Thereafter, we intend to model the geological structure
surrounding and including the leases based on the direct and offset data
available to us.

Annual Rental Payments for Leases in
Alaska

On January 30, 2009, we entered into an agreement with Daniel
Donkel and Samuel Cade regarding twelve oil and gas leases in the State of
Alaska, which were sold by Messrs. Donkel and Cade to us.

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13

Under the terms of the agreement, Messrs. Donkel and Cade
agreed to use their best efforts to make, on our behalf, annual rental payments
for the twelve leases totaling up to $64,980 on or before the due date of each
payment. The payments were due on February 1, 2009 and were paid by Messrs.
Donkel and Cade on February 1, 2009.

We agreed to repay to them by March 2, 2009 any portion of the
payments made by them. The repayment amount is subject to an 18% interest rate
per annum. We also granted them a security interest in our right, title, and
interest in the twelve leases. We further agreed to transfer and assign 25% of
our right, title, and interest in the twelve leases to Mr. Donkel and 75% of our
right, title, and interest in the twelve leases to Mr. Cade in the event of our
failure to pay the repayment amount in a timely manner.

To date we have not been in a position to reimburse Messrs.
Donkel and Cade. Before the end of May 2009, we entered into a letter agreement
with Messrs. Cade and Donkel extending repayment deadline to August 14, 2009
within which we have to repay the annual rental payments made by them on
February 1, 2009 together with interest. In order to obtain the extension, we
executed the lease assignments for all of the above twelve oil and gas leases
and delivered them into escrow with the attorney of Messrs. Cade and Donkel.

We also had lease payments unpaid totalling $25,126 for five
leases which were due by March 1, 2009. We also had to pay further $25,790 for
Alaska lease payments for three leases by June 1, 2009.

As of May 16, 2009 and May 29, 2009, we entered into agreements
with Messrs. Donkel and Cade whereby they paid lease rental fees of $25,126 for
five leases which were due by March 1, 2009 and lease rental fees of $25,790 for
three leases which were due by June 1, 2009, respectively, on behalf of our
company. Under the agreements we have until August 14, 2009 to repay them in
full including any accrued interest. The amount paid on our behalf is subject to
an 18% interest rate per annum. If we fail to pay them the leases will
automatically be assigned to them under the lease assignment agreements signed
by us and held in escrow by Messrs. Donkel and Cade.

Spears Gas Unit 2, Well #1

On October 9, 2007, we entered into a subscription agreement
with Trius Energy, LLC, pursuant to which we acquired a 22.5% joint venture
interest in a gas well called the Spears Gas Unit 2, Well #1 in the Gomez Field,
Pecos County, Texas in consideration for $500,000. The joint venture consists of
Trius Energys 72.75% working interest in the Spears Gas Unit 2, Well #1 and was
formed to reopen the gas well.

Drilling activities commenced in November 2007 for the
reworking of the gas well and initial test production from the gas well took
place in early January 2008. The well has been dormant since then and is still
shut in. Trius Energy is unable to finance the well further and is currently
seeking additional finance/partners to continue works. We are unable to assist
at this moment due to our own financial difficulties.

General Note

There are issues relating to the entire arrangements with
Carbon Energy, Blackhawk and Libertas which are as yet unclear to our company
and therefore we are currently reviewing our legal position and any associated
remedies relating to these arrangements.

Our Current Business

We are a development stage company engaged in the
identification, acquisition, exploration, and, if warranted, development of
prospective oil and gas properties. We have oil and gas leases in Alaska,
interests in a UK onshore license, and joint venture interests in a gas well in
Texas.

In addition to the exploration and development activities in
the U.S. and U.K., we are also seeking opportunities in other global regions
with a particular focus and interest in the emerging market sector. We believe
that there are many small field developments available which are in the already
proven/near production stage where our strategic development skills and the
experience of our management team would give us an advantage compared to
comparably sized oil companies. Our search has highlighted several prospects in
Russia and the Commonwealth of

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Independent States as well as the Caspian region as a whole
which are not the subject of a confidentiality agreement with the principals who
hold the rights/licenses to the various fields. We would also consider entering
into a joint venture to develop a small oil field in this area if the economics
and political risk meet our criteria. We are in advanced discussions with
several groups in order to either enter into a sales purchase agreement to
acquire a producing asset or to join a joint venture group to participate in the
purchase of a producing asset in this region. There is no assurance that we will
enter into such an agreement or join such a joint venture group.

There is no assurance that a commercially viable oil and gas
reserve exists on any of our current and future properties, and a great deal of
further exploration will be required before a final evaluation as to the
economic and legal feasibility for our future exploration is determined. To
date, we do not know if an economically viable oil and gas reserve exist on any
of our properties and there is no assurance that we will discover one.

Our plan of operation is to conduct exploration work on each of
our properties in order to ascertain whether any of them possesses commercially
exploitable quantities of oil and gas reserves. There can be no assurance that
such oil and gas reserves exist on any of our properties.

Even if we complete our proposed exploration programs on our
properties and we are successful in identifying an oil and gas reserve, we will
have to spend substantial funds on further drilling and engineering studies
before we will know whether we have a commercially viable oil and gas
reserve.

Competition

We are a development stage company engaged in the acquisition
of prospective oil and gas properties. We compete with other companies for both
the acquisition of prospective properties and the financing necessary to develop
such properties.

We conduct our business in an environment that is highly
competitive and unpredictable. In seeking out prospective properties, we have
encountered intense competition in all aspects of our business as we compete
directly with other development stage companies as well as established
international companies. Many of our competitors are national or international
companies with far greater resources, capital and access to information than us.
Accordingly, these competitors may be able to spend greater amounts on the
acquisition of prospective properties and on the exploration and development of
such properties. In addition, they may be able to afford greater geological
expertise in the exploration and exploitation of oil and gas properties. This
competition could result in our competitors having resource properties of
greater quality and attracting prospective investors to finance the development
of such properties on more favorable terms. As a result of this competition, we
may become involved in an acquisition with more risk or obtain financing on less
favorable terms.

Government Regulation

The exploration and development of oil and gas properties is
subject to various United States federal, state and local and foreign
governmental regulations. We may from time to time, be required to obtain
licenses and permits from various governmental authorities in regards to the
exploration of our property interests.

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

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and we are unable to predict the ultimate cost of compliance
with these requirements or their effect on our operations.

Employees

We have two full-time employees and one part time employee. We
have two executive officers. Richard Moore serves as our President and Chief
Executive Officer. William MacNee serves as our Chief Operating Officer.

We periodically hire independent contractors to execute our
acquisition, exploration and development, if any, activities. We may hire
additional employees when circumstances warrant.

Item 1A. Risk Factors.

In addition to other information in this annual report, the
following risk factors should be carefully considered in evaluating our business
because such factors may have a significant impact on our business, operating
results, liquidity and financial condition. As a result of the risk factors set
forth below, actual results could differ materially from those projected in any
forward looking statements. Additional risks and uncertainties not presently
known to us, or that we currently consider to be immaterial, may also impact our
business, operating results, liquidity and financial condition. If any such
risks occur, our business, operating results, liquidity and financial condition
could be materially affected in an adverse manner. Under such circumstances, the
trading price of our securities could decline, and you may lose all or part of
your investment.

Risks Relating To Our Business and the Oil and Gas
Industry

Our financial condition is precarious and we have no
access to capital to repay our debt or fund our current or ongoing operations.
Unless we can secure additional capital and renegotiate the terms of our
outstanding debts, we may be required to discontinue our operations at any
time.

As of February 28, 2009, we had cash of $6,205 and had a
working capital deficit of $20,681,505. We do not have any credit available to
us nor have we identified other sources of capital and it is unlikely, given our
current financial condition and the ongoing global financial crisis, that we
will secure any additional credit or capital. Unless we can secure additional
capital and renegotiate the terms of our outstanding debts, we may be required
to discontinue our operations at any time. If we discontinue our operations, our
stockholders will lose the entire amount of their investments in our
company.

Our independent auditors have expressed substantial doubt
about our ability to continue as a going concern, which may hinder our ability
to obtain future financing.

We incurred net losses of $32,209,932 and $2,628,203 for the
years ended February 28, 2009 and February 29, 2008, respectively. At February
28, 2009, we had accumulated a deficit of $34,957,426 and had a working capital
deficit of $20,681,505.

Because we are in the development stage, have not yet achieved
profitable operations and are dependent on our ability to raise capital from
stockholders or other sources to meet our obligations and repay our liabilities
arising from normal business operations when they come due, in their report on
our audited financial statements for the years ended February 28, 2009 and
February 29, 2008, our independent auditors included an explanatory paragraph
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosure describing the
circumstances that led to this disclosure by our independent auditors.

If we are required for any reason to repay our
outstanding secured convertible debentures or any other indebtedness, we would
be required to deplete our working capital, if available, or raise additional
funds. Our failure to repay the convertible debentures or any other
indebtedness, if required, could require the sale of substantial assets of our
company in addition to legal action against our company.

If we are required to repay the secured convertible debentures
or any other indebtedness for any reason, we would be required to use our
limited working capital and raise additional funds. If we are unable to repay
the secured

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convertible debentures or any other indebtedness when required,
we may be required to sell substantial assets of our company. In addition, the
lenders could commence legal action against our company and foreclose on all of
our assets to recover the amounts due. Any such sale or legal action would
require our company to curtail or possibly cease our operations.

We have had a history of losses and no revenue to date,
which trend may continue and may negatively impact our ability to achieve our
business objectives.

We have experienced net losses since inception, and expect to
continue to incur substantial losses for the foreseeable future. To date, we
have not generated any significant revenues from our operations. We will not be
able to generate significant revenues in the immediate future. As a result, our
management expects the business to continue to experience negative cash flow for
the foreseeable future and cannot predict when, if ever, our business might
become profitable. We need to raise additional funds, and such funds may not be
available on commercially acceptable terms, if at all. If we are unable to raise
funds on acceptable terms, we may not be able to execute our business plan, take
advantage of future opportunities, or respond to competitive pressures or
unanticipated requirements. This may seriously harm our business, financial
condition and results of operations.

We are a development stage company with a limited
operating history, which may hinder our ability to successfully meet our
objectives.

We are a development stage company with only a limited
operating history upon which to base an evaluation of our current business and
future prospects. We have only begun engaging in the oil and gas exploration and
development business since February 2007 and our company does not have an
established history of locating and developing properties that have oil and gas
reserves. As a result, the revenue and income potential of our business is
unproven. In addition, because of our limited operating history, we have limited
insight into trends that may emerge and affect our business. Errors may be made
in predicting and reacting to relevant business trends and we will be subject to
the risks, uncertainties and difficulties frequently encountered by early-stage
companies in evolving markets. We may not be able to successfully address any or
all of these risks and uncertainties. Failure to adequately do so could cause
our business, results of operations and financial condition to suffer.

Market conditions or operation impediments may hinder our
access to oil and gas markets or delay our potential production.

The marketability of potential production from our properties
depends in part upon the availability, proximity and capacity of pipelines,
natural gas gathering systems and processing facilities. This dependence is
heightened where this infrastructure is less developed. Therefore, even if
drilling results are positive in certain areas of our oil and gas properties, a
new gathering system may need to be built to handle the potential volume of oil
and gas produced. We might be required to shut in wells, at least temporarily,
for lack of a market or because of the inadequacy or unavailability of
transportation facilities. If that were to occur, we would be unable to realize
revenue from those wells until arrangements were made to deliver production to
market.

Even if we are able to establish any oil or gas reserves on our
properties, our ability to produce and market oil and gas is affected and also
may be harmed by:

- inadequate pipeline transmission facilities or carrying capacity;
- government regulation of natural gas and oil production;
- government transportation, tax and energy policies;
- changes in supply and demand; and
- general economic conditions.

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Our future performance is dependent upon our ability to
identify, acquire and develop oil and gas properties, the failure of which could
result in under use of capital and losses.

Our future performance depends upon our ability to identify,
acquire and develop oil and gas reserves that are economically recoverable. Our
success will depend upon our ability to acquire working and revenue interests in
properties upon which oil and gas reserves are ultimately discovered in
commercial quantities, and our ability to develop prospects that contain proven
oil and gas reserves to the point of production. Without successful acquisition
and exploration activities, we will not be able to develop oil and gas reserves
or generate revenues. We cannot provide you with any assurance that we will be
able to identify and acquire oil and gas reserves on acceptable terms, or that
oil and gas deposits will be discovered in sufficient quantities to enable us to
recover our exploration and development costs or sustain our business.

The successful acquisition and development of oil and gas
properties requires an assessment of recoverable reserves, future oil and gas
prices and operating costs, potential environmental and other liabilities, and
other factors. Such assessments are necessarily inexact and their accuracy
inherently uncertain. In addition, no assurance can be given that our
exploration and development activities will result in the discovery of any
reserves.

We have a very small management team and the loss of any
member of our team may prevent us from implementing our business plan in a
timely manner.

We currently have two executive officers and a limited number
of full time employees and consultants upon whom our success largely depends. We
do not maintain key person life insurance policies on our executive officers or
consultants, the loss of which could seriously harm our business, financial
condition and results of operations. In such an event, we may not be able to
recruit personnel to replace our executive officers or consultants in a timely
manner, or at all, on acceptable terms.

If we are unable to successfully recruit qualified
managerial and field personnel having experience in oil and gas exploration, we
may not be able to continue our operations.

In order to successfully implement and manage our business
plan, we will depend upon, among other things, successfully recruiting qualified
managerial and field personnel having experience in the oil and gas exploration
business. Competition for qualified individuals is intense. We may not be able
to find, attract and retain qualified personnel on acceptable terms. If we are
unable to find, attract and retain qualified personnel with technical expertise,
our business operations could suffer.

We will have substantial capital requirements that, if
not met, may hinder our growth and operations.

Our future growth depends on our ability to make large capital
expenditures for the exploration and development of our natural gas and oil
properties. Future cash flows and the availability of financing will be subject
to a number of variables, such as:

- the success of our planned projects on North Slope and Cook Inlet in
  Alaska, in Texas and Kansas, in the UK;
- success in locating and producing reserves; and
- prices of natural gas and oil.

Financing might not be available in the future, or we might not
be able to obtain necessary financing on acceptable terms, if at all. If
sufficient capital resources are not available, we might be forced to curtail
our drilling and other activities or be forced to sell some assets on an
untimely or unfavorable basis, which would have an adverse affect on our
business, financial condition and results of operations.

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If we obtain additional financing, our existing
stockholders may suffer substantial dilution or we may not have sufficient funds
to pay the interest on our current or future debt.

Additional financing sources will be required in the future to
fund developmental and exploratory drilling. Issuing equity securities to
satisfy our financing requirements could cause substantial dilution to our
existing stockholders.

Additional debt financing could lead to:

- a substantial portion of operating cash flow being dedicated to the payment
  of principal and interest;
- being more vulnerable to competitive pressures and economic downturns; and
- restrictions on our operations.

If we incur indebtedness, our ability to meet our debt
obligations and reduce our level of indebtedness depends on future performance.
General economic conditions, oil and gas prices and financial, business and
other factors affect our operations and future performance. Many of these
factors are beyond our control. We cannot assure you that we will be able to
generate sufficient cash flow to pay the interest on our current or future debt
or that future working capital, borrowings or equity financing will be available
to pay or refinance such debt. Factors that will affect our ability to raise
cash through an offering of our capital stock or a refinancing of our debt
include financial market conditions, the value of our assets and performance at
the time we need capital. We cannot assure you that we will have sufficient
funds to make such payments. If we do not have sufficient funds and are
otherwise unable to negotiate renewals of our borrowings or arrange additional
financing, we might have to sell significant assets. Any such sale could have a
material adverse effect on our business and financial results.

We may not be able to determine reserve potential or
identify liabilities associated with our properties in Alaska, Texas, the UK
and/or other future properties. We may also not be able to obtain protection
from vendors against possible liabilities, which could cause us to incur
losses.

Although we have reviewed and evaluated our properties in
Alaska, Texas, and the UK, such review and evaluation might not necessarily
reveal all existing or potential problems. This is also true for any future
acquisitions made by us. Inspections may not always be performed on every well,
and environmental problems, such as groundwater contamination, are not
necessarily observable even when an inspection is undertaken. Even when problems
are identified, a vendor may be unwilling or unable to provide effective
contractual protection against all or part of those problems, and we may assume
environmental and other risks and liabilities in connection with the acquired
properties.

If we or our operators fail to maintain adequate
insurance, our business could be materially and adversely affected.

Our operations are subject to risks inherent in the oil and gas
industry, such as blowouts, cratering, explosions, uncontrollable flows of oil,
gas or well fluids, fires, pollution, earthquakes and other environmental risks.
These risks could result in substantial losses due to injury and loss of life,
severe damage to and destruction of property and equipment, pollution and other
environmental damage, and suspension of operations. We could be liable for
environmental damages caused by previous property owners. As a result,
substantial liabilities to third parties or governmental entities may be
incurred, the payment of which could have a material adverse effect on our
financial condition and results of operations.

Any prospective drilling contractor or operator which we hire
will be required to maintain insurance of various types to cover our operations
with policy limits and retention liability customary in the industry. Therefore,
we do not plan to acquire our own insurance coverage for such prospects. The
occurrence of a significant adverse event on such prospects that is not fully
covered by insurance could result in the loss of all or part of our investment
in a particular prospect which could have a material adverse effect on our
financial condition and results of operations.

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The oil and gas industry is highly competitive, and we
may not have sufficient resources to compete effectively.

The oil and gas industry is highly competitive. We compete with
oil and natural gas companies and other individual producers and operators, many
of which have longer operating histories and substantially greater financial and
other resources than we do, as well as companies in other industries supplying
energy, fuel and other needs to consumers. Our larger competitors, by reason of
their size and relative financial strength, can more easily access capital
markets than we can and may enjoy a competitive advantage in the recruitment of
qualified personnel. They may be able to absorb the burden of any changes in
laws and regulation in the jurisdictions in which we do business and handle
longer periods of reduced prices for oil and gas more easily than we can. Our
competitors may be able to pay more for oil and gas leases and properties and
may be able to define, evaluate, bid for and purchase a greater number of leases
and properties than we can. Further, these companies may enjoy technological
advantages and may be able to implement new technologies more rapidly than we
can. Our ability to acquire additional properties in the future will depend upon
our ability to conduct efficient operations, evaluate and select suitable
properties, implement advanced technologies and consummate transactions in a
highly competitive environment.

Exploration and production activities are subject to
certain environmental regulations which may prevent or delay the commencement or
continuance of our operations.

In general, our exploration and production activities are
subject to certain federal, state, local, and foreign laws and regulations
relating to environmental quality and pollution control. Such laws and
regulations increase the costs of these activities and may prevent or delay the
commencement or continuance of a given operation. Specifically, we are subject
to legislation regarding emissions into the environment, water discharges and
storage and disposition of hazardous wastes. In addition, legislation has been
enacted which requires well and facility sites to be abandoned and reclaimed to
the satisfaction of state authorities. However, such laws and regulations are
frequently changed and any such changes may have material adverse effects on our
activities. We are unable to predict the ultimate cost of compliance with such
laws and regulations. Generally, environmental requirements do not appear to
affect us any differently or to any greater or lesser extent than other
companies in the industry. To date we have not been required to spend any
material amount on compliance with environmental regulations. However, we may be
required to do so in future and this may affect our ability to expand or
maintain our operations.

Any change to government regulation/administrative
practices may have a negative impact on our ability to operate and our
profitability.

The business of oil and gas exploration and development is
subject to substantial regulation under federal, state, local and foreign laws
relating to the exploration for, and the development, upgrading, marketing,
pricing, taxation, and transportation of oil and gas and related products and
other matters. Amendments to current laws and regulations governing operations
and activities of oil and gas exploration and development operations could have
a material adverse impact on our business. In addition, there can be no
assurance that income tax laws, royalty regulations and government incentive
programs related to our oil and gas properties and the oil and gas industry
generally, will not be changed in a manner which may adversely affect our
progress and cause delays, inability to explore and develop or abandonment of
these interests.

Permits, leases, licenses, and approvals are required from a
variety of regulatory authorities at various stages of exploration and
development. There can be no assurance that the various government permits,
leases, licenses and approvals sought will be granted in respect of our
activities or, if granted, will not be cancelled or will be renewed upon expiry.
There is no assurance that such permits, leases, licenses, and approvals will
not contain terms and provisions which may adversely affect our exploration and
development activities.

Shortages of rigs, equipment, supplies and personnel
could delay or otherwise adversely affect our cost of operations or our ability
to operate according to our business plans.

If drilling activity increases worldwide, a shortage of
drilling and completion rigs, field equipment and qualified personnel could
develop. These costs have recently increased sharply and could continue to do
so. The demand for and wage rates of qualified drilling rig crews generally rise
in response to the increasing number of active rigs in service and could
increase sharply in the event of a shortage. Shortages of drilling and
completion rigs, field equipment or qualified personnel could delay, restrict or
curtail our exploration and development operations, which could in turn harm our
operating results.

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20

The geographic concentration of all of our properties in
Alaska, Texas, and the UK subjects us to an increased risk of loss of revenue or
curtailment of production from factors affecting those areas.

The geographic concentration of all of our leasehold interests
in Alaska, our joint venture interests in Texas, our UK onshore license means
that our properties could be affected by the same event should the regions
experience:

- severe weather;
- delays or decreases in production, the availability of equipment,
  facilities or services;
- delays or decreases in the availability of capacity to transport, gather or
  process production; or
- changes in the regulatory environment.

The oil and gas exploration and production industry is
historically a cyclical industry and market fluctuations in the prices of oil
and gas could adversely affect our business.

Prices for oil and gas tend to fluctuate significantly in
response to factors beyond our control. These factors include:

- weather conditions in the United States and wherever our property interests
  are located;
- economic conditions, including demand for petroleum-based products, in the
  United States and the rest of the world;
- actions by OPEC, the Organization of Petroleum Exporting Countries;
- political instability in the Middle East and other major oil and gas
  producing regions;
- governmental regulations, both domestic and foreign;
- domestic and foreign tax policy;
- the pace adopted by foreign governments for the exploration, development,
  and production of their national reserves;
- the price of foreign imports of oil and gas;
- the cost of exploring for, producing and delivering oil and gas;
- the discovery rate of new oil and gas reserves;
- the rate of decline of existing and new oil and gas reserves;
- available pipeline and other oil and gas transportation capacity;
- the ability of oil and gas companies to raise capital;
- the overall supply and demand for oil and gas; and
- the availability of alternate fuel sources.

Changes in commodity prices may significantly affect our
capital resources, liquidity and expected operating results. Price changes will
directly affect revenues and can indirectly impact expected production by
changing the amount of funds available to reinvest in exploration and
development activities. Reductions in oil and gas prices not only reduce
revenues and profits, but could also reduce the quantities of reserves that are
commercially recoverable. Significant declines in prices could result in
non-cash charges to earnings due to impairment.

Changes in commodity prices may also significantly affect our
ability to estimate the value of producing properties

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21

for acquisition and divestiture and often cause disruption in
the market for oil and gas producing properties, as buyers and sellers have
difficulty agreeing on the value of the properties. Price volatility also makes
it difficult to budget for and project the return on acquisitions and the
development and exploitation of projects. We expect that commodity prices will
continue to fluctuate significantly in the future.

Exploratory drilling involves many risks that are outside
our control which may result in a material adverse effect on our business,
financial condition or results of operations.

The business of exploring for and producing oil and gas
involves a substantial risk of investment loss. Drilling oil and gas wells
involves the risk that the wells may be unproductive or that, although
productive, the wells may not produce oil or gas in economic quantities. Other
hazards, such as unusual or unexpected geological formations, pressures, fires,
blowouts, power outages, sour gas leakage, loss of circulation of drilling
fluids or other conditions may substantially delay or prevent completion of any
well. Adverse weather conditions can also hinder drilling operations. A
productive well may become uneconomic if water or other deleterious substances
are encountered that impair or prevent the production of oil or gas from the
well. In addition, production from any well may be unmarketable if it is
impregnated with water or other deleterious substances. There can be no
assurance that oil and gas will be produced from the properties in which we have
interests.

We are dependent upon the efforts of various third
parties that we do not control and, as a result, we may not be able to control
the timing of development efforts, associated costs, or the rate of production
of reserves (if any).

The success of our business depends upon the efforts of various
third parties that we do not control. At present, we act as the operator for
several of our projects, but we may also need to contract many service providers
such as rig and drilling contractors. As a result, we may have limited ability
to exercise influence over the operations of the properties or their associated
costs. Our dependence on the operator and, where applicable, other working
interest owners for these projects and our limited ability to influence
operations and associated costs could prevent the realization of our targeted
returns on capital in drilling or acquisition activities. The success and timing
of development and exploitation activities on properties operated by others
depend upon a number of factors that will be largely outside of our control,
including:

- the timing and amount of capital expenditures;
- the operators expertise and financial resources;
- approval of other participants in drilling wells;
- selection of technology;
- the rate of production of the reserves; and
- the availability of suitable drilling rigs, drilling equipment, production
  and transportation infrastructure, and qualified operating personnel.

We will rely upon various companies to provide us with
technical assistance and services. We will also rely upon the services of
geologists, geophysicists, chemists, engineers and other scientists to explore
and analyze oil and gas prospects to determine a method in which the oil and gas
prospects may be developed in a cost-effective manner. Although our management
has relationships with a number of third-party service providers, we cannot
assure you that we will be able to continue to rely on such persons. If any of
these relationships with third-party service providers are terminated or are
unavailable on commercially acceptable terms, we may not be able to execute our
business plan.

We may be unable to retain our leases or licenses and
working interests in our leases or licenses, which would result in significant
financial losses to our company.

In general, our properties are held under oil and gas leases or
licenses. If we fail to meet the specific requirements of each lease or license,
such lease or license may terminate or expire. We cannot assure you that any of
the obligations required to maintain each lease or license will be met. The
termination or expiration of our leases or licenses will

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22

harm our business. Our property interests will terminate unless
we fulfill certain obligations under the terms of our leases or licenses and
other agreements related to such properties. If we are unable to satisfy these
conditions on a timely basis, we may lose our rights in these properties. The
termination of our interests in these properties will harm our business. In
addition, we will need significant funds to meet capital requirements for the
exploration activities that we intend to conduct on our properties.

Title deficiencies could render our leases worthless
which could have adverse effects on our financial condition or results of
operations.

The existence of a material title deficiency can render a lease
worthless and can result in a large expense to our business. It is our practice
in acquiring oil and gas leases or undivided interests in oil and gas leases to
forgo the expense of retaining lawyers to examine the title to the oil or gas
interest to be placed under lease or already placed under lease. Instead, we
rely upon the judgment of oil and gas landmen who perform the field work in
examining records in the appropriate governmental office before attempting to
place under lease a specific oil or gas interest. We do not anticipate that we,
or the person or company acting as operator of the wells located on the
properties that we lease or may lease in the future, will obtain counsel to
examine title to the lease until the well is about to be drilled. As a result,
we may be unaware of deficiencies in the marketability of the title to the
lease. Such deficiencies may render the lease worthless.

Risks Relating to Our Common Stock

If we fail to file our required filings with the
Securities and Exchange Commission in an accurate and timely manner, our common
stock may be no longer quoted on the OTC Bulletin Board. If this happens, our
stockholders would have difficulty in reselling any of their shares.

If we fail to file our required filings with the Securities and
Exchange Commission in an accurate and timely manner, the Financial Industry
Regulatory Authority may determine that our common stock is no longer eligible
for quotation on the OTC Bulletin Board and remove our common stock from the OTC
Bulletin Board quotations. If this happens, then market makers would no longer
be able to enter quotations for our common stock through the OTC Bulletin Board
and our stockholders would have difficulty in reselling any of their shares.

A prolonged decline in the price of our common stock
could affect our ability to raise further working capital and adversely impact
our ability to continue operations.

A prolonged decline in the price of our common stock could
reduce liquidity of our common stock and reduce our ability to raise capital.
Because a significant portion of our operations have been and will be financed
through the sale of equity securities, a decline in the price of our common
stock could be especially detrimental to our liquidity and our operations. Such
reductions may force us to reallocate funds from other planned uses and may have
a significant negative effect on our business plan and operations, including our
ability to continue our current operations. If our stock price declines, we can
offer no assurance that we will be able to raise additional capital or generate
funds from operations sufficient to meet our obligations. If we are unable to
raise sufficient capital in the future, we may not be able to have the resources
to continue our normal operations.

The market price for our common stock may also be affected by
our ability to meet or exceed expectations of analysts or investors. Any failure
to meet these expectations, even if minor, may have a material adverse effect on
the market price of our common stock.

If we issue additional shares in the future, it will
result in the dilution of our existing shareholders.

Our articles of incorporation authorize the issuance of up to
90,000,000 shares of common stock with a par value of $0.001 per share and we
plan to increase our authorized capital from 90,000,000 shares of common stock
with a par value of $0.001 to 500,000,000 shares of common stock with a par
value of $0.001. Our board of directors may choose to issue some or all of such
shares to acquire one or more businesses or to provide additional financing in
the future. The issuance of any such shares will reduce the book value and
market price of the outstanding shares of our common stock. If we issue any such
additional shares, such issuance will reduce the proportionate ownership and
voting power of all current shareholders. Further, such issuance may result in a
change of control of our corporation.

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23

Trading of our stock may be restricted by the Securities
Exchange Commissions penny stock regulations, which may limit a stockholders
ability to buy and sell our common stock.

The Securities and Exchange Commission has adopted regulations
which generally define penny stock to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission, which provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

The FINRA sales practice requirements may also limit a
stockholders ability to buy and sell our stock.

In addition to the penny stock rules described above,
Financial Industry Regulatory Authority or FINRA has adopted rules that require
that in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customers financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. The FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.

Our common stock is illiquid and the price of our common
stock may be negatively impacted by factors which are unrelated to our
operations.

Our common stock currently trades on a limited basis on the OTC
Bulletin Board. Trading of our stock through the OTC Bulletin Board is
frequently thin and highly volatile. There is no assurance that a sufficient
market will develop in our stock, in which case it could be difficult for
stockholders to sell their stock. The market price of our common stock could
fluctuate substantially due to a variety of factors, including market perception
of our ability to achieve our planned growth, quarterly operating results of our
competitors, trading volume in our common stock, changes in general conditions
in the economy and the financial markets or other developments affecting our
competitors or us. In addition, the stock market is subject to extreme price and
volume fluctuations. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their
operating performance and could have the same effect on our common stock.

Because of the early stage of development and the nature
of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally
because of the nature of our business and the early stage of our development. We
are engaged in the business of identifying, acquiring, exploring and, if
warranted, developing commercial reserves of oil and gas. Our properties are in
the exploration stage only and are without known reserves of oil and gas.
Accordingly, we have not generated any revenues nor have we realized a profit
from

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24

our operations to date and there is little likelihood that we
will generate any revenues or realize any profits in the short term. Any
profitability in the future from our business will be dependent upon locating
and developing economic reserves of oil and gas, which itself is subject to
numerous risk factors as set forth herein. Since we have not generated any
revenues, we will have to raise additional monies through the sale of our equity
securities or debt in order to continue our business operations.

We do not intend to pay dividends on any investment in
the shares of stock of our company.

We have never paid any cash dividends and currently do not
intend to pay any dividends for the foreseeable future. To the extent that we
require additional funding currently not provided for in our financing plan, our
funding sources may prohibit the payment of a dividend. Because we do not intend
to declare dividends, any gain on an investment in our company will need to come
through an increase in the stocks price. This may never happen and investors
may lose all of their investment in our company.

Carbon Energy and/or Trafalgars control may prevent our
other stockholders from causing a change in the course of our operations and may
affect the price of our common stock.

As long as Carbon Energy and/or Trafalgar controls more than
50% of our common stock, they will be able to elect our entire board of
directors, control all matters that require a shareholder vote (such as mergers,
acquisitions and other business combinations, and the future issuance of our
shares) and exercise a significant amount of influence over our management and
operations. Therefore, the ability of our other stockholders to cause a change
in the course of our operation is eliminated. As such, the value attributable to
the right to vote is limited.

Risks Related to Our Company

Our disclosure controls and procedures and internal
control over financial reporting are not effective, which problem may cause our
financial reporting to be unreliable and lead to misinformation being
disseminated to the public.

Our management evaluated our disclosure controls and procedures
as of February 28, 2009 and concluded that as of that date, our disclosure
controls and procedures and our internal control over financial reporting were
not effective. If such ineffective controls are not promptly corrected in the
future, our ability to report quarterly and annual financial results or other
information required to be disclosed on a timely and accurate basis may be
adversely affected. Also such ineffective controls could cause our financial
reporting to be unreliable and lead to misinformation being disseminated to the
public. Investors relying upon this misinformation may make an uninformed
investment decision.

Our by-laws contain provisions indemnifying our officers
and directors.

Our by-laws provide the indemnification of our directors and
officers to the fullest extent legally permissible under the Nevada corporate
law against all expenses, liability and loss reasonably incurred or suffered by
him in connection with any action, suit or proceeding. Furthermore, our by-laws
provide that our board of directors may cause our company to purchase and
maintain insurance for our directors and officers, and we have implemented
director and officer insurance coverage.

Our by-laws do not contain anti-takeover provisions and
thus our management and directors may change if there is a take-over of our
company.

We do not currently have a shareholder rights plan or any
anti-takeover provisions in our by-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company. If there is a take-over of
our company, our management and directors may change.

Because most of our directors and officers are residents
of other countries other than the United States, investors may find it difficult
to enforce, within the United States, any judgments obtained against our
directors and officers.

Most of our directors and officers are nationals and/or
residents of countries other than the United States, and all or a substantial
portion of such persons assets are located outside the United States. As a
result, it may be difficult for

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25

investors to enforce within the United States any judgments
obtained against our officers or directors, including judgments predicated upon
the civil liability provisions of the securities laws of the United States or
any state thereof.

Item 1B. Unresolved Staff Comments.

Not Applicable.

Item 2. Properties.

Executive Offices

Our executive and head offices are located at 64 Knightsbridge,
London SW1X 7JF, England, UK. We lease our offices on a virtual basis only
paying £287.50 per month including value added tax. Our current premises are
inadequate for our current operations and we anticipate that we will require
additional premises in the foreseeable future.

Oil and Gas Properties

We have no reserves on any of our oil and gas properties.

North Slope, Alaska

On October 10, 2007, our wholly owned subsidiary, Fox Petroleum
(Alaska) Inc., entered into a purchase agreement with Daniel Donkel and Samuel
Cade to acquire a 100% working interest on eight oil and gas leases located in
the North Slope, Alaska in consideration for $250,000 and 80,000 shares of our
common stock. On November 2, 2007, the purchase agreement was amended to add Fox
Petroleum Inc. as a party to the purchase agreement. These leases are subject to
a total of 5% overriding royalty interests to Daniel Donkel and Samuel Cade and
a royalty of 16.67% to the State of Alaska. Acquisitions of these eight oil and
gas leases were completed effective March 1, 2008.

The eight leases under the purchase agreement comprise
approximately 40,747 acres. These leases expire between January 31, 2012 and
February 29, 2012.

On August 14, 2007, we acquired 11 oil and gas leases in North
Slope, Alaska under the lease purchase and sale agreement that we entered into
with Fox Petroleum LLC on May 29, 2007. Effective March 1, 2008, we acquired a
12th oil and gas lease under the agreement. These leases have been assigned to
our wholly owned subsidiary, Fox Petroleum (Alaska) Inc. We have combined 100%
working interests in these 12 state-issued oil and gas leases subject to a
royalty of 16.67% to the State of Alaska and a private royalty of 5%. We intend
to conduct an exploration and appraisal program on these 12 oil and gas
leases.

The 12 leases under the lease purchase and sale agreement
comprise approximately 32,490 acres. One of these leases expires on August 31,
2012, eight of these leases expire on January 31, 2014, and three of these
leases expire on February 29, 2014. There are no work commitments. We are
required to pay $1 per acre in the first year then increasing by $0.50 per annum
up to $3 in the fifth year in order to maintain the leases.

Cook Inlet, Alaska

On October 10, 2007, through Fox Petroleum (Alaska) Inc., we
entered into a lease purchase agreement with Daniel Donkel and Samuel Cade to
acquire six oil and gas leases located in the Cook Inlet, Alaska in
consideration for $750,000. These leases are subject to a total of 5% overriding
royalty interests to Daniel Donkel and Samuel Cade and a royalty of 16.67% to
the State of Alaska. Acquisitions of three oil and gas leases that had been
issued were completed effective March 1, 2008. The other three oil and gas
leases have been issued later, and are now assigned to us.

The six leases under the lease purchase agreement comprise
approximately 46,000 acres. All of these leases expire on September 30,
2013.

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UK Onshore License

On June 3, 2008, we acquired four 10 km x 10 km UK onshore
license blocks in the south of England. The UK government made available this
Petroleum Exploration and Development License and awarded the blocks totaling
400 km2 to our company and Aimwell Energy Ltd. in the latest round of
onshore licensing. In return for the license, we will have to shoot 60 km of 2D
seismic within the 6-year term of the license. Interpretation and analysis of
the seismic data acquired will help further define the prospect, after which we
will have an option to drill a well, or simply relinquish the license.

Item 3. Legal Proceedings

Except for claims, if any, arising out of our letter of
commitment with Senergy Limited (as disclosed elsewhere in this annual report)
and trade creditor related debt for our operations in Kansas (as disclosed
elsewhere in this annual report), we know of no material, existing or pending
legal proceedings to which we are a party or of which any of our property is the
subject.

There are no material proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial stockholder,
or any associate of such director, officer, affiliate, or stockholder, is a
party adverse to us or has a material interest adverse to us.

Item 4. Submission of Matters to a Vote of Security
Holders.

During the fourth quarter of our fiscal year ended February 28,
2009, there was no matter which was submitted to a vote of our stockholders.

PART II

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

Market Information

Our common stock is quoted on the OTC Bulletin Board under the
symbol FXPT.OB. On February 5, 2007, we changed our name to Fox Petroleum
Inc. upon completion of our merger with our wholly owned subsidiary, Fox
Petroleum Inc. and our trading symbol was changed to FXPE.OB. On April 21,
2008, we effected a 1-for-5 reverse stock split of our authorized, issued and
outstanding common stock and our trading symbol was changed to FXPT.OB.

The following table shows the quarterly range of high and low
bid information for our common stock over the fiscal quarters for the last two
fiscal years and the subsequent interim period as quoted on the OTC Bulletin
Board. We obtained the following high and low bid information from the OTC
Bulletin Board. These over-the-counter market quotations reflect inter-dealer
prices without retail mark-up, mark-down or commission, and may not represent
actual transactions. Investors should not rely on historical prices of our
common stock as an indication of its future price performance. On July 14, 2009,
the closing price of our common stock as reported by the OTC Bulletin Board was
$0.108 per share.

Quarter Ended
    Bid High
    Bid Low05/31/2007
    $7.50
    $3.0008/31/2007
    $14.9
    $5.0511/30/2007
    $17.8
    $4.3502/29/2008
    $6.75
    $2.3505/31/2008
    $4.82
    $0.7808/31/2008
    $4.15
    $1.1511/30/2008
    $1.83
    $0.3002/28/2009
    $0.65
    $0.2505/31/2009
    $0.395
    $0.18


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Holders of Common Stock

As of July 13, 2009, we had approximately 42 holders of record
of our common stock holding 84,668,245 shares of our common stock. Our transfer
agent and registrar for our common stock is Empire Stock Transfer Inc., 2470 St.
Rose Pkwy, Suite 304, Henderson, NV 89074.

Dividends

We have never declared or paid any cash dividends or
distributions on our capital stock. We currently intend to retain our future
earnings, if any, to support operations and to finance expansion and therefore
we do not anticipate paying any cash dividends on our common stock in the
foreseeable future.

There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada Revised Statutes,
however, do prohibit us from declaring dividends where, after giving effect to
the distribution of the dividend, we would not be able to pay our debts as they
become due in the usual course of business, or our total assets would be less
than the sum of our total liabilities plus the amount that would be needed to
satisfy the rights of shareholders who have preferential rights superior to
those receiving the distribution.

Securities Authorized for Issuance under Equity Compensation
Plans or Individual Compensation Arrangements

The following table summarizes certain information regarding
our equity compensation plan or individual compensation arrangements as at
February 28, 2009:

Equity Compensation Plan InformationPlan Category
    Number of securities to
      be issued upon exercise of outstanding options,
      warrants and rights (a)
    Weighted-average
      exercise price of outstanding options,
      warrants and rights (b)
    Number of securities remaining
      available for future issuance under equity
      compensation plans (excluding securities reflected
      in column (a))Equity compensation plans approved by security
      holders
    Nil
    Nil
    NilEquity
      compensation plans not approved by security holders
    Nil
    Nil
    NilTotal
    Nil
    Nil
    Nil


Recent Sales of Unregistered Securities

During the fourth quarter of our fiscal year ended February 28,
2009, we have not sold any equity securities that were not registered under the
Securities Act of 1933 that were not previously reported in a quarterly report
on Form 10-Q or in a current report on Form 8-K.

Purchases of Equity Securities by Our Company and Affiliated
Purchasers

None.

Item 6. Selected Financial Data.

Not applicable.

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

You should read the following discussion and analysis in
conjunction with the audited financial statements and notes thereto included in
this annual report. The discussion contains forward-looking statements that
involve risk and uncertainties. Our actual results and the timing of certain
events could differ materially from those discussed in these forward-looking
statements as a result of certain factors, including, but not limited to, those
set forth herein and elsewhere in this annual report.

Corporate Overview

We are a development stage company engaged in the
identification, acquisition, exploration, and, if warranted, development of
prospective oil and gas properties. We have oil and gas leases in Alaska,
interests in the UK onshore license, and joint venture interests in a gas well
in Texas.

Anticipated Cash Requirements

We estimate our minimum operating expenses and working capital
requirements for the next 12 month period to be as follows:

Estimated Operating Expenses For the Next 12
      Month PeriodExploration Costs
    $
    250,000Employee and Consultant Compensation
    
    324,000Professional Fees
    
    150,000General and Administrative Expenses
    
    300,000Current Liabilities due in the next 12
      months
    
    21,289,775Total
    $
    22,313,775


Exploration Costs

We estimate that our Alaska lease rental fees for the next 12
months to be $250,000. In addition, we could incur additional exploration costs
depending on the level of the financing that we obtain.

Employee and Consultant Compensation

We estimate that our employee and consultant compensation
expenses for the next 12 month period will be approximately $324,000.

Professional Fees

We estimate our legal and accounting expenses for the next 12
month period to be approximately $150,000.

General and Administrative Expenses

We anticipate spending approximately $300,000 on general and
administrative costs in the next 12 month period. These costs primarily consist
of expenses such as lease payments, office supplies and office equipment, and
travel expenses.

Current Liabilities

As of February 28, 2009, we had the current liabilities of
$21,289,775 which are due in the next 12 months.

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29

Results of Operation

Revenues

From our inception on November 4, 2004 to February 28, 2009, we
had no operating revenues.

Expenses

The major components of our expenses for the years ended
February 28, 2009 and February 29, 2008 are outlined in the table below:

|                                                                         |   | Year Ended   |   |   | Year Ended   | 
|------------------------------------------------------------------------ | - | ------------ | - | - | ------------ | 
|                                                                         |   | February 28, |   |   | February 29, | 
|Expenses:                                                                |   | 2009         |   |   | 2008         | 
|Accounting and audit fees                                                | $ | 157,725      |   | $ | 63,417       | 
|Accretion of convertible debt discount                                   |   | 2,575,492    |   |   | -            | 
|Advertising and public relations                                         |   | 300,384      |   |   | 1,700,375    | 
|Bank charges                                                             |   | 9,690        |   |   | 9,684        | 
|Consulting fees                                                          |   | 426,532      |   |   | 208,798      | 
|Filing and transfer agent                                                |   | 25,653       |   |   | 10,577       | 
|Finance fees                                                             |   | 4,437,101    |   |   | -            | 
|Foreign exchange                                                         |   | (73,073      | ) |   |              | 
|Writedown of oil & gas interests                                         |   | 9,458,413    |   |   | -            | 
|Insurance                                                                |   | 52,955       |   |   | 19,635       | 
|Interest on notes payable                                                |   | 652,245      |   |   | -            | 
|Legal fees                                                               |   | 361,068      |   |   | 135,734      | 
|Loss on failure to perform obligations
      under oil & gas commitments |   | 12,910,000   |   |   | -            | 
|Management fees                                                          |   | 642,021      |   |   | 185,440      | 
|Office and miscellaneous                                                 |   | 221,037      |   |   | 167,336      | 
|Travel and entertainment                                                 |   | 131,770      |   |   | 136,563      | 

Accretion of convertible debt discount

Accretion of convertible debt discount is a non-cash expense
which was incurred as a result of the convertible notes issued during the year
ended February 28, 2009. There were no issuances of convertible notes during the
year ended February 29, 2008 and as a result there was no accretion of
convertible debt discount for the year then ended.

Advertising and public relations
expenses

The decrease in advertising and public relations expenses for
the year ended February 28, 2009 as compared to the year ended February 29, 2008
was primarily due to less printing and distribution of our brochures and
newsletter.

Consulting fees

The increase in the consulting fees for the year ended February
28, 2009 as compared to the year ended February 29, 2008 was primarily due to
hiring of additional technical people for the year ended February 28, 2009.

Finance Fees

Financing fees consists of the beneficial conversion features
recorded during the year ended February 28, 2009 on the convertible debentures
issued and then amended during the year then ended. During the year ended
February 29, 2008 there were no issuances of convertible debentures and thus no
financing fees incurred during the year then ended.

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30

Writedown of oil & gas interests

The write down of oil and gas properties during the year ended
February 28, 2009 consisted of the following write downs: North Slope, Alaska;
$2,401,282 (2008 - $Nil), Anglesey, UK; $2,512,856 (2008 - $Nil), Cook Inlet,
Alaska; $1,061,727 (2008 - $Nil), South Bourbon, UK; $1,419,627 (2008 - $Nil),
Genesco-Edwards, Kansas; $1,975,567 (2008 - $Nil); 25th Round License Blocks
13/17 & 210/20e and UK; $87,354 (2008 - $Nil).

Insurance

The insurance expenses were for directors and officers
insurance coverage. The increase in the insurance expenses for the year ended
February 28, 2009 as compared to the year ended February 29, 2008 was primarily
due to the increased number of officers and directors during the year ended
February 28, 2009.

Legal fees

The increase in the legal fees for the year ended February 28,
2009 as compared to the year ended February 29, 2008 was primarily due to
additional legal support for raising financing during the year ended February
28, 2009.

Loss on failure to perform obligations under oil &
gas commitments

During the year ended February 28, 2009, the Company incurred
substantial costs (approximately $10,910,000) under a letter of commitment with
Senergy Limited, which was entered into to fulfill the Companys obligations
under the farm-in agreement with Valiant North Sea and Petrofac Energy
Developments and the Company may be liable to incur a further $2,000,000 in
penalties (which was also expensed and accrued during the year) for its failure
to fulfill its commitment for the use of the rig.

Management fees

The increase in the management fees for the year ended February
28, 2009 as compared to the year ended February 29, 2008 was primarily due to
greater staffing level during the year ended February 28, 2009.

Liquidity and Capital Resources

|Working Capital     |   | Year       |  |   | Year     | 
|------------------- | - | ---------- |  | - | -------- | 
|                    |   | Ended      |  |   | Ended    | 
|                    |   | February   |  |   | February | 
|                    |   | 28,        |  |   | 29,      | 
|                    |   | 2009       |  |   | 2008     | 
|Current Assets      | $ | 163,923    |  | $ | 364,685  | 
|Current Liabilities | $ | 21,289,775 |  | $ | 694,494  | 
|Working Capital     | $ | 20,681,505 |  | $ | 329,809  | 

As of February 28, 2009, we held a cash balance of $6,205 and a
working capital deficit of $20,681,505, compared to a cash balance of $301,601
and a working capital deficit of $329,809 as of February 29, 2008. We have
suffered recurring losses from inception.

Financing from EuroEnergy Growth Capital S.A.

On May 17, 2007, we entered into a share issuance agreement
with EuroEnergy Growth Capital S.A. whereby EuroEnergy agreed to advance up to
$8,000,000 to our company under our drawdown requests, in exchange for units of
our common stock. Pursuant to the agreement, the price of a unit is equal to 80%
of the volume weighted average of the closing price of common stock as quoted on
Yahoo! Finance for the 10 banking days immediately preceding the date of our
drawdown request. Each unit consists of one common share and one warrant. One
warrant will entitle EuroEnergy to purchase one additional common share at an
exercise price equal to 125% of the unit

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31

price. The warrants will be exercisable for three years from
the date of issue. For the fiscal year ended February 29, 2008, we received the
funds from EuroEnergy in the aggregate amount of $6,050,000 after giving
EuroEnergy a total of 14 drawdown requests.

Subsequent to the fiscal year ended February 29, 2008,
EuroEnergy requested its financing to us to be debt financing instead of equity
financing because of changes in market conditions. As a result, we obtained
funds from EuroEnergy by issuing promissory notes and entering into a loan
agreement.

We issued a total of three promissory notes dated April 1,
2008, May 1, 2008, and May 23, 2008 to EuroEnergy for the loans in the principal
amounts of $250,000, $150,000, and $50,000, respectively. The principal amounts
of the loans were to be paid on the earlier of (i) the date that we obtain
equity financing from a third party in the minimum amount of $1,000,000 net to
our company, or (ii) one year anniversary of the date of the promissory notes.
For the period from the date of advance of the loan up to and including the date
that we repay the loan, interest will accrue on the loan on the balance of
principal outstanding at the rate of 10% per annum, calculated and compounded
monthly not in advance, until paid. Interest will be payable in a balloon
payment on the date that we repay the loan.

On June 12, 2008, we entered into a loan agreement with
EuroEnergy for the $450,000 loan that EuroEnergy provided us on May 30, 2008.
Pursuant to the loan agreement, we agreed to pay the principal and interest to
EuroEnergy in full by August 31, 2008. However, if we have cash available from
our operations or raise funds from any third party in a private placement of
equity or debt of at least $1,000,000, we agreed to use the net proceeds from
such events to repay the principal and interest then outstanding. The loan bears
interest at 12% per annum, calculated annually. The loan is secured by all of
our assets. On June 23, 2008, pursuant to the loan agreement, we issued to
EuroEnergy Growth Capital S.A. 150,000 restricted shares of our common stock as
additional compensation for the loan.

Under the share issuance agreement with EuroEnergy, we may not
obtain financing from anyone other than EuroEnergy for 24 months from the date
of the share issuance agreement with EuroEnergy, without the prior written
consent of EuroEnergy. EuroEnergy also retains first right of refusal, relating
to any future financing of our company. On April 22, 2008, EuroEnergy gave us a
written consent to seek alternative financing and on June 18, 2008, EuroEnergy
accepted the terms of the debenture issued to Trafalgar Capital Specialized
Investment Fund, Luxembourg, discussed below.

EuroEnergy has agreed, in light of the current market climate,
to extend the term of the agreement until we are able to raise further
financing. Other terms of loans remain.

Financing from Trafalgar Capital Specialized Investment
Fund, Luxembourg

On June 24, 2008, we entered into a securities purchase
agreement with Trafalgar Capital Specialized Investment Fund, Luxembourg
pursuant to which we sold to Trafalgar $2,500,000 of a senior secured
convertible redeemable debenture. Pursuant to the terms of the securities
purchase agreement, we agreed to pay to Trafalgar a legal and documentation
review fee of $17,500, a due diligence fee of $10,000, a warrant to purchase
500,000 shares of our common stock for five years at an exercise price of
$2.9851 (issued), a commitment fee equal to 7% of the principal amount of the
debenture, a facility fee equal to 2% of the principal amount of the debenture,
and 200,000 restricted shares of our common stock (issued). In connection with
the securities purchase agreement, we executed a nonbinding term sheet to enter
into a committed equity facility with Trafalgar, which would be entered into
upon the debenture being repaid in full by us.

Effective October 31, 2008 we amended the securities purchase
agreement and related transaction documents dated June 24, 2008 (collectively,
the Original Transaction Documents) between us and Trafalgar. The amendment
and certain related transaction documents (collectively, the Amended
Transaction Documents) are dated October 31, 2008 and were executed and
delivered to us by Trafalgar on November 11, 2008.

Under the Amended Transaction Documents, we sold to Trafalgar
$3,500,000 of secured convertible redeemable debentures consisting of (i) the
original debenture sold to Trafalgar under the Original Transaction Documents in
the principal amount of $2,500,000, which was amended and extended such that the
debenture was separated into two debentures, each of which are for a total
principal amount of $1,250,000 (the Amended Debentures); and (ii) a

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32

new debenture in the total principal amount of $1,000,000 (the
New Debenture and together with the Amended Debentures, the Debentures).

The Amended Debentures mature as to $1,250,000 on April 30,
2009 (later extended to October 31, 2009) and $1,250,000 on April 30, 2010 and
bear an annual interest rate of 10% compounded monthly until the unpaid
principal is paid. Trafalgar is entitled, at its option, to convert and sell the
principal amount of the Amended Debenture plus accrued interest into shares of
our common stock at the price per share equal to the lesser of (i) 100% of the
volume weighted average price as quoted by Bloomberg L.P. on October 31, 2008,
or (ii) 80% of the lowest daily closing volume weighted average price as quoted
by Bloomberg L.P. during the 5 trading days immediately preceding the date of
conversion. In no event will Trafalgar be entitled to convert the Amended
Debentures for a number of shares of our common stock in excess of that number
of shares of our common stock, upon giving effect to such conversion, would
cause the aggregate number of shares of our common stock beneficially owned by
Trafalgar and its affiliates to exceed 9.99% of the outstanding shares of our
common stock following such conversion without our approval. We may redeem the
Amended Debentures provided that our common stock is trading below 100% of the
volume weighted average price as quoted by Bloomberg L.P. on October 31, 2008 at
the time we give Trafalgar the redemption notice, by paying the unpaid principal
and interest accrued to such date and a prepayment premium of 15% redemption
premium on the amount redeemed. We must redeem the entire principal amount
outstanding on only one of the Amended Debentures on April 30, 2009 at a 15%
redemption premium; there is no mandatory redemption requirement for the other
Amended Debenture.

The New Debenture matures on October 31, 2010 and bears an
annual interest rate of 10% compounded monthly until the unpaid principal is
paid. An event of default occurs if (i) we fail to pay amounts due under the New
Debenture, (ii) our transfer agent fails to issue freely tradeable common stock
to Trafalgar within 3 days of our receiving a notice of conversion or exercise
after our registration statement is declared effective, (iii) we fail to comply
with any of our other agreements in the New Debenture for 5 business days after
receiving notice to comply, (iv) we enter into bankruptcy or become insolvent,
or (v) we breach any of covenants under the securities purchase agreement and do
not cure within 5 business days of receiving a written notice of the breach.
Upon an event of default, Trafalgar may accelerate full repayment of the New
Debenture outstanding and accrued interest thereon. Also, Trafalgar is entitled,
at its option, to convert and sell the principal amount of the New Debenture
plus accrued interest into shares of our common stock at the price per share
equal to the lesser of (i) 100% of the volume weighted average price as quoted
by Bloomberg L.P. on October 31, 2008, or (ii) 80% of the lowest daily closing
volume weighted average price as quoted by Bloomberg L.P. during the 5 trading
days immediately preceding the date of conversion. However, if we issue or sell
shares of our common stock without consideration or for a consideration per
share less than the bid price of our common stock determined immediately prior
to its issuance, the conversion price will be reset to 85% of such sales price
if the reset price is lower than the conversion price. In no event will
Trafalgar be entitled to convert the New Debenture for a number of shares of our
common stock in excess of that number of shares of our common stock, upon giving
effect to such conversion, would cause the aggregate number of shares of our
common stock beneficially owned by Trafalgar and its affiliates to exceed 9.99%
of the outstanding shares of our common stock following such conversion without
our approval. We may redeem the debentures provided that our common stock is
trading below 100% of the volume weighted average price as quoted by Bloomberg
L.P. on October 31, 2008 at the time we give Trafalgar the redemption notice, by
paying the unpaid principal and interest accrued to such date and a prepayment
premium of 15% redemption premium on the amount redeemed. We must begin
redeeming the New Debenture monthly beginning on January 31, 2009 by making
equal payments of principal over the term of the New Debenture plus any
outstanding interest payments and at a 15% redemption premium on the principal
redeemed each month. So long as any of the principal of or interest on the New
Debenture remains unpaid, we may not, without the prior consent of Trafalgar,
(i) issue or sell shares of our common stock without consideration or for a
consideration per share less than the bid price of our common stock determined
immediately prior to its issuance, (ii) issue or sell any warrant, option,
right, contract, call, or other security instrument granting the holder thereof,
the right to acquire our common stock without consideration or for a
consideration less than our common stocks bid price value determined
immediately prior to its issuance, (iii) enter into any security instrument
granting the holder a security interest in any of our or our subsidiarys
assets, (iv) permit any of our subsidiaries to enter into any security
instrument granting the holder a security interest in any assets of such
subsidiary, (v) file any registration statement on Form S-8, or (vi) incur any
additional debt or permit any of our subsidiaries to incur any additional debt
without Trafalgars prior written consent.

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33

Our use of the $1,000,000 received pursuant to the New
Debenture will require the prior written approval of Trafalgar. Upon the
disbursement of the $1,000,000 relating to the purchase of the New Debenture, we
paid to Trafalgar one interest payment due on each of the three Debentures,
which was paid directly from the proceeds of the closing for the Amended
Transaction Documents.

We agreed to enter into a lock box agreement covering revenue
generated by us which shall be executed prior to November 21, 2008. Failure by
our company to execute such lock box agreement is deemed an event of default
under Amended Transaction Documents including the Debentures and the Pledge and
Escrow Agreement. We have negotiated the terms of this agreement with Trafalgar
and we expect that the lock box agreement will be in place to receive first
revenue.

The original warrant issued by us to Trafalgar was amended and
replaced such that it is exercisable for a total of 2,000,000 shares of common
stock at an exercise price of $0.001 per share. Also, we agreed to register the
shares of common stock into which the warrant is exercisable within thirty days
of October 31, 2008, subject to compliance with Rule 415 as promulgated under
the Securities Act of 1933, as amended, or any Rule 415 comments or restrictions
placed by the Securities and Exchange Commission on the registration statement
for the shares underlying the warrant.

We agreed to issue to Trafalgar 2,500,000 shares of common
stock (issued). Also, we agreed to register such shares of common stock within
thirty days of October 31, 2008, subject to compliance with Rule 415 as
promulgated under the Securities Act of 1933, as amended, or any Rule 415
comments or restrictions placed by the Securities and Exchange Commission on the
registration statement for such shares.

We entered into a Pledge and Escrow Agreement with Trafalgar
and James G. Dodrill II, P.A. as escrow agent, whereby we agreed to issue to
Trafalgar an additional 15,000,000 shares of common stock (the Pledged
Shares), which shall serve as additional pledged property under the Security
Agreement, as amended, between us and Trafalgar. The Pledged Shares will be held
by the escrow agent until the full payment of all amounts due to Trafalgar under
the Debentures or the termination or expiration of the Pledge and Escrow
Agreement. Upon the occurrence of an event of default under the Debentures, the
Securities Purchase Agreement, the Pledge and Escrow Agreement, the Security
Agreement and all other contracts between our company and Trafalgar, Trafalgar
will be entitled to receive physical delivery of the Pledged Shares, vote the
Pledged Shares, to receive dividends and other distributions thereon, to sell
the Pledged Shares, and to enjoy all other rights and privileges incident to the
ownership of the Pledged Shares. Upon full payment of all amounts due to
Trafalgar under the Debentures, the Pledge Agreement and Trafalgars security
interest and rights in and to the Pledged Shares will terminate.

Also in connection with the Amended Transaction Documents: (i)
we gave Trafalgar the first right of refusal to provide additional funding to
us; (ii) we agreed to enter into an exclusive investment banking agreement with
Trafalgar Capital Advisors, an affiliate of Trafalgar, within ten business days
of October 31, 2008, and as of the date of this quarterly report, we are
currently negotiating the terms of this agreement with Trafalgar Capital
Advisors; (iii) we agreed to pay a legal and documentation review fee to James
G. Dodrill II, P.A. of $7,500, which was paid directly from the proceeds of the
closing for the Amended Transaction Documents; (iv) we entered into a side
letter agreement whereby we agreed to redeem all of the Debentures if we
successfully complete an equity financing for gross amounts of a minimum of $5
million; and (v) we entered into irrevocable transfer agent instructions with
our transfer agent.

We failed to make most payments due to Trafalgar Capital
Specialized Investment Fund, Luxembourg under the various loan arrangements
(approximately $196,000 in scheduled principal, premium and interest repayments
at February 28, 2009). We later were not in a position to repay the $1,250,000
principal due at the end of April 2009 under a loan agreement with Trafalgar
(which would have left $2,250,000 principal outstanding).

We have also incurred trade creditor and direct salary related
debt of over $1,000,000 to date for our operations in Kansas. Several of these
key trade creditors have issued mechanical liens against our facilities in
Kansas.

Subsequently, Trafalgar and we have commenced negotiations to
amend the various loan arrangements to avoid default notices and legal action
having to be taken. In principle, we have been asked by Trafalgar to assign our

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34

leases in Kansas to Trafalgar in return for a loan
rescheduling, Trafalgars realizing the 15,000,000 shares of our common stock
pledged under an earlier loan document with Trafalgar and a covenant not to sue
by Trafalgar.

As a result, in April 30, 2009, we and Trafalgar entered into
amendment to the securities purchase agreement, secured debenture, registration
rights agreement and security agreement, whereby Trafalgar agreed to extend the
maturity date of a secured debenture in the principal amount of $1,250,000 until
October 31, 2009 from April 30, 2009. In consideration for Trafalgars agreeing
to extend the maturity date of that secured debenture, we released 15,000,000
shares of our common stock from escrow to Trafalgar as payment of an extension
fee. These shares were originally intended to serve as additional pledged
property under the security agreement that we entered into with Trafalgar in
connection with the sale of the debentures to Trafalgar and in fact were
described by Trafalgar as being made available for a CEF type arrangement to
repay creditors. This was later reneged on by Trafalgar.

Partners Consulting, Inc.

On May 8, 2008 we entered into a consulting agreement with
Partners Consulting, Inc., a Florida corporation, with a view to introducing our
company to potential new investors. We engaged Partners Consulting, Inc. on a 90
day exclusive basis commencing on May 8, 2008. The consideration payable is 6%
of the gross proceeds from any financing whose funding source is introduced by
Partners Consulting, Inc., payable in cash and by issuance of share purchase
warrants equal to 6% of the gross proceeds. The warrants will have a cashless
exercise and will be priced at market value as of the date of the financing and
with a minimum expiry period of three years. In addition, if the financing is
facilitated through an investment banker introduced by Partners Consulting,
Inc., the consideration payable is reduced to 3% of the gross proceeds for cash
and 3% of the gross proceeds for share purchase warrants. We also agreed to pay
Partners Consulting, Inc. share purchase warrants equal to 50,000 shares of our
common stock for the services of Partners Consulting, Inc. relating to the
assembling, formatting, and compiling certain presentation documentation. These
warrants will have a cashless exercise and will be priced at the market value as
of May 8, 2008, exercisable in 90 days, and have a minimum expiry period of
three years. In the event that Partners Consulting, Inc. introduces our company
to potential new investors for successful financing, Partners Consulting, Inc.
has the right to represent us as a finder in all subsequent equity or debt
financing undertaken by us, for two years from May 8, 2008, on an exclusive
basis for a 180 day period from formal engagement of Partners Consulting, Inc.
in respect of each such subsequent financing round. The consulting agreement is
for a period of one year. On June 27, 2008, we paid $150,000 to Partners
Consulting, Inc. for financing from Trafalgar Capital Specialized Investment
Fund, Luxembourg. In addition, we are required to issue warrants for financing
from Trafalgar Capital Specialized Investment Fund, Luxembourg, pursuant to the
consulting agreement with Partners Consulting, Inc.

Pollard Financial Ltd.

On September 25, 2008, our wholly owned subsidiary, Fox Energy
Exploration Limited, entered into a letter agreement with Pollard Financial Ltd.
pursuant to which Pollard Financial Ltd. agreed to provide general corporate
finance services with respect to Fox Energy Exploration Limiteds financing
needs and listing on the TSX Venture Exchange via entering into definitive and
binding agreement with a capital pool company in Canada. The term of the letter
agreement was for a period of twelve months, and thereafter, renewable monthly
at the option of Fox Energy Exploration Limited. In consideration for the
services of Pollard Financial Ltd., Fox Energy Exploration Limited agreed to:
(i) pay an engagement fee of 25,000 shares of common stock of Fox Petroleum
Inc., payable upon signing of the letter agreement; (ii) pay 7% in cash of the
gross proceeds of the financing, to be deducted from the gross proceeds, and
paid upon the closing of each and any portion of the financing; (iii) issue
common stock warrants equal to 7% of the gross proceeds, with the warrants
having a cashless exercise and being priced as mutually agreed upon by Fox
Energy Exploration Limited and Pollard Financing Ltd. at the time of each
closing and having a term of two years; and (iv) pay a corporate finance fee of
100,000 shares of common stock of Fox Petroleum Inc., payable upon completion of
the qualifying transaction with the capital pool company. Any amounts due and
payable under the letter agreement and outstanding for in excess of 45 calendar
days will accrue interest at the rate of 1.5% per month, compounding on a
monthly basis. Fox Energy Exploration Limited also agreed to reimburse all
reasonable out of pocket costs, charges and expenses, including travel, incurred
by Pollard Financial Ltd. in the performance of its obligations under the letter
agreement.

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35

Future Financing

We have no access to capital to repay our debt or fund our
current or ongoing operations. Unless we can secure additional capital and
renegotiate the terms of our outstanding debts, we may be required to
discontinue our operations at any time.

There are no assurances that we will be able to obtain funds
required for our continued operations. There can be no assurance that additional
financing will be available to us when needed or, if available, that it can be
obtained on commercially reasonable terms. If we are not able to obtain
additional financing on a timely basis, we will be unable to conduct our
operations as planned, and we will not be able to meet our other obligations as
they become due. In such event, we will be forced to scale down or perhaps even
cease our operations.

Going Concern

Because we are in the development stage, have not yet achieved
profitable operations and are dependent on our ability to raise capital from
stockholders or other sources to meet our obligations and repay our liabilities
arising from normal business operations when they become due, in their report on
our audited financial statements for the years ended February 28, 2009 and
February 29, 2008, our independent auditors included an explanatory paragraph
regarding substantial doubt about our ability to continue as a going concern.
Our financial statements contain additional note disclosure describing the
circumstances that lead to this disclosure by our independent auditors.

Off-Balance Sheet Arrangements

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

Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.

Not Applicable.

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36

Item 8. Financial Statements and Supplementary Data.

---

FOX PETROLEUM INC.

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2009 and February 29, 2008

(Stated in US Dollars)

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
  FIRM

To the Stockholders,
  Fox Petroleum Inc.
  (A Development
  Stage Company)

We have audited the accompanying consolidated balance sheets of
  Fox Petroleum Inc. (the Company) (A Development Stage Company) and its
  subsidiaries as of February 28, 2009 and February 29, 2008 and the related
  consolidated statements of operations, cash flows and stockholders' equity
  (deficiency) for the years then ended and for the period from November 4, 2004
  (Date of Inception) to February 28, 2009. 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 the standards of the
  Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform the audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. The Company
  is not required to have, nor were we engaged to perform, an audit of its
  internal control over financial reporting. Our audit included consideration of
  internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose of
  expressing an opinion on the effectiveness of the Companys internal control
  over financial reporting. Accordingly, we express no such opinion. An audit also
  includes examining, on a test basis, evidence supporting the amounts and
  disclosures in the financial statements, assessing the accounting principles
  used and significant estimates made by management, as well as evaluating the
  overall financial statement presentation. We believe that our audits provide a
  reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects the financial position of Fox
  Petroleum Inc. as of February 28, 2009 and February 29, 2008 and the results of
  its operations and its cash flows for the years then ended and for the period
  from November 4, 2004 (Date of Inception) to February 28, 2009, in conformity
  with accounting principles generally accepted in the United States of
  America.

The accompanying financial statements referred to above have
  been prepared assuming that the Company will continue as a going concern. As
  discussed in Note 1 to the consolidated financial statements, the Company had an
  accumulated deficit of $34,957,426 and negative working capital of $20,681,505
  at February 28, 2009. The Company is in the development stage, has not yet
  achieved profitable operations and is dependent on its ability to raise capital
  from stockholders or other sources to meet its obligations and repay its
  liabilities arising from normal business operations when they come due. These
  factors, along with other matters as set forth in Note 1, raise substantial
  doubt that the Company will be able to continue as a going concern. The
  financial statements do not include any adjustments that might result from the
  outcome of these uncertainties.

/s/ BDO Dunwoody LLP

Chartered Accountants

Vancouver, Canada 
  July 14, 2009

BDODunwoodyLLP isa
  LimitedLiabilityPartnershipregisteredinOntario

---

|FOX PETROLEUM INC.                     
|---------------------------------------
|(A Development Stage Company)          
|CONSOLIDATED BALANCE SHEETS            
|February 28, 2009 and February 29, 2008
|(Stated in US Dollars)                 

|ASSETS                                                                   |  
|------------------------------------------------------------------------ | -
|                                                                         |  
|                                                                         |  
|Current                                                                  |  
|Cash  general                                                           | $
| restricted                                                             |  
|VAT refund and other receivables                                         |  
|Prepaid expenses                                                         |  
|                                                                         |  
|                                                                         |  
|Oil and gas interests  Note 4                                           |  
|                                                                         |  
|                                                                         | $
|                                                                         |  
|LIABILITIES                                                              |  
|                                                                         |  
|Current                                                                  |  
|Accounts payable
      and accrued liabilities  Notes 5, 6 and 8(d)     | $
|Due to related parties  Note 6                                          |  
|Notes payable 
      Note 5                                             |  
|                                                                         |  
|                                                                         |  
|Fees payable in stock and warrants  Notes 5(e), 8(c), (e)
      and (f) |  
|                                                                         |  
|                                                                         |  
|                                                                         |  
|STOCKHOLDERS EQUITY                                                     |  
|                                                                         |  
|Capital stock  Notes 4, 5, 6, 7, 8 and 10                               |  
|Authorized:                                                              |  
|90,000,000 common shares, par value $0.001 per share                     |  
|Issued and
      outstanding:                                            |  
|69,818,245 common shares (February 29, 2008: 14,968,245)                 |  
|Additional paid-in capital                                               |  
|Stock Subscriptions Receivable  Note 7(a)                               |  
|Deficit accumulated during the development
      stage                   |  
|                                                                         |  
|                                                                         |  
|                                                                         |  
|                                                                         | $

Subsequent Events  Notes 4 and 5
  Contingencies  Notes 1
  and 8 (d) 
  Commitments  Notes 4, 5, 6, 7 and 8

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                                                            
|------------------------------------------------------------------------------
|(A Development Stage Company)                                                 
|CONSOLIDATED STATEMENTS OF OPERATIONS                                         
|for the years ended February 28, 2009 and February 29,
      2008 and         
|for the period November 4, 2004 (Date of Inception) to
      February 28, 2009
|(Stated in US Dollars)                                                        

|                                                |   |              |   |   |              |   |   | November 4,   |  
|----------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------- | -
|                                                |   |              |   |   |              |   |   | 2004 (Date of |  
|                                                |   | Year ended   |   |   | Year ended   |   |   | Inception) to |  
|                                                |   | February 28, |   |   | February 29, |   |   | February 28,  |  
|                                                |   | 2009         |   |   | 2008         |   |   | 2009          |  
|                                                |   |              |   |   |              |   |   | (Cumulative)  |  
|                                                |   |              |   |   |              |   |   |               |  
|Expenses                                        |   |              |   |   |              |   |   |               |  
|Accounting and audit fees                       | $ | 157,725      |   | $ | 63,417       |   | $ | 254,655       |  
|Accretion of
      convertible debt discount   |   |              |   |   |              |   |   |               |  
|Note 5(e)                                       |   | 2,575,492    |   |   | -            |   |   | 2,575,492     |  
|Advertising and public
      relations          |   | 300,384      |   |   | 1,700,375    |   |   | 2,000,759     |  
|Bank charges                                    |   | 9,690        |   |   | 9,684        |   |   | 20,012        |  
|Consulting fees  Note
      6                  |   | 426,532      |   |   | 208,798      |   |   | 635,330       |  
|Filing and transfer agent                       |   | 25,653       |   |   | 10,577       |   |   | 42,338        |  
|Finance fees  Notes 5
      and 8(c)           |   | 4,437,101    |   |   | -            |   |   | 4,437,101     |  
|Foreign exchange                                |   | (73,073      | ) |   | -            |   |   | (73,073       | )
|Writedown of oil &
      gas interests  Note 4 |   | 9,458,413    |   |   | -            |   |   | 9,458,413     |  
|Insurance                                       |   | 52,955       |   |   | 19,635       |   |   | 72,590        |  
|Interest on notes
      payable                 |   | 652,245      |   |   | -            |   |   | 652,245       |  
|Legal fees                                      |   | 361,068      |   |   | 135,734      |   |   | 524,926       |  
|Loss on failure to
      perform obligations    |   |              |   |   |              |   |   |               |  
|under oil & gas
      commitments  Note 8(d)   |   | 12,910,000   |   |   | -            |   |   | 12,910,000    |  
|Management fees  Note
      6                  |   | 642,021      |   |   | 185,440      |   |   | 851,461       |  
|Mineral property acquisition and                |   |              |   |   |              |   |   |               |  
|exploration
      costs                         |   | -            |   |   | -            |   |   | 17,000        |  
|Office and miscellaneous                        |   | 221,037      |   |   | 167,336      |   |   | 398,281       |  
|Travel and
      entertainment                  |   | 131,770      |   |   | 136,563      |   |   | 268,333       |  
|                                                |   |              |   |   |              |   |   |               |  
|Loss for the period before other items          |   | (32,289,013  | ) |   | (2,637,559   | ) |   | (34,045,863   | )
|                                                |   |              |   |   |              |   |   |               |  
|Other items:                                    |   |              |   |   |              |   |   |               |  
|Gain on recovery of VAT receivable              |   | 78,451       |   |   | -            |   |   | 78,451        |  
|Interest and other
      income                 |   | 630          |   |   | 9,356        |   |   | 9,986         |  
|                                                |   |              |   |   |              |   |   |               |  
|Net loss for the period                         | $ | (32,209,932  | ) | $ | (2,628,203   | ) | $ | (34,957,426   | )
|                                                |   |              |   |   |              |   |   |               |  
|Basic and diluted loss per share                | $ | (2.03        | ) | $ | (0.22        | ) |   |               |  
|                                                |   |              |   |   |              |   |   |               |  
|Weighted average number of shares               |   |              |   |   |              |   |   |               |  
|outstanding                                     |   | 15,886,053   |   |   | 12,418,848   |   |   |               |  

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                                                            
|------------------------------------------------------------------------------
|(A Development Stage Company)                                                 
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                         
|for the years ended February 28, 2009 and February 29,
      2008 and         
|for the period November 4, 2004 (Date of Inception) to
      February 28, 2009
|(Stated in US Dollars)                                                        

|                                                     |   |              |   |   |              |   |   | November 4,   |  
|---------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------- | -
|                                                     |   |              |   |   |              |   |   | 2004 (Date of |  
|                                                     |   | Year ended   |   |   | Year ended   |   |   | Inception) to |  
|                                                     |   | February 28, |   |   | February 29, |   |   | February 28,  |  
|                                                     |   | 2009         |   |   | 2008         |   |   | 2009          |  
|                                                     |   |              |   |   |              |   |   | (Cumulative)  |  
|Operating Activities                                 |   |              |   |   |              |   |   |               |  
|Net loss for the period                              | $ | (32,209,932  | ) | $ | (2,628,203   | ) | $ | (34,957,426   | )
|Donated services
      and rent                      |   | -            |   |   | -            |   |   | 21,000        |  
|Accretion of convertible debt
      discount         |   | 2,575,492    |   |   | -            |   |   | 2,575,492     |  
|Fees payable in
      stock and warrants             |   | 9,494        |   |   | 35,000       |   |   | 44,494        |  
|Finance fees paid in stock and
      warrants        |   | 3,636,257    |   |   | -            |   |   | 3,636,257     |  
|Writedown of oil &
      gas interests               |   | 9,458,413    |   |   | -            |   |   | 9,458,413     |  
|Gain on recovery of VAT receivable
      written-off |   | (78,451      | ) |   | -            |   |   | (78,451       | )
|Change in
      non-cash working capital balances    |   |              |   |   |              |   |   |               |  
|related to operations:                               |   |              |   |   |              |   |   |               |  
|VAT refund and other receivables                     |   | (79,267      | ) |   | -            |   |   | (79,267       | )
|Prepaid expenses                                     |   | 63,084       |   |   | (63,084      | ) |   | -             |  
|Accounts payable and accrued liabilities             |   | 15,972,267   |   |   | 194,079      |   |   | 16,206,813    |  
|                                                     |   |              |   |   |              |   |   |               |  
|Net cash used in operating activities                |   | (652,643     | ) |   | (2,462,208   | ) |   | (3,172,675    | )
|                                                     |   |              |   |   |              |   |   |               |  
|Investing Activities                                 |   |              |   |   |              |   |   |               |  
|Increase in oil and gas
      interests              |   | (4,317,445   | ) |   | (3,405,242   | ) |   | (7,722,687    | )
|Decrease
      (increase) in restricted cash         |   | 24,532       |   |   | (30,000      | ) |   | (5,468        | )
|                                                     |   |              |   |   |              |   |   |               |  
|Net cash used in investing activities                |   | (4,292,913   | ) |   | (3,435,242   | ) |   | (7,728,155    | )
|                                                     |   |              |   |   |              |   |   |               |  
|Financing Activities                                 |   |              |   |   |              |   |   |               |  
|Issuance of common shares                            |   | -            |   |   | 6,050,000    |   |   | 6,196,900     |  
|Advances from
      related parties                  |   | 4,025        |   |   | -            |   |   | 34,000        |  
|Proceeds from notes payable                          |   | 4,670,667    |   |   | -            |   |   | 4,670,667     |  
|                                                     |   |              |   |   |              |   |   |               |  
|Net cash provided by financing activities            |   | 4,674,692    |   |   | 6,050,000    |   |   | 10,901,567    |  
|                                                     |   |              |   |   |              |   |   |               |  
|Increase (decrease) in cash during the period        |   | (270,864     | ) |   | 152,550      |   |   | 737           |  
|                                                     |   |              |   |   |              |   |   |               |  
|Cash, beginning of period                            |   | 271,601      |   |   | 119,051      |   |   | -             |  
|                                                     |   |              |   |   |              |   |   |               |  
|Cash, end of period                                  | $ | 737          |   | $ | 271,601      |   | $ | 737           |  

Non-cash transactions  Note 10

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                                                            
|------------------------------------------------------------------------------
|(A Development Stage Company)                                                 
|INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
      (DEFICIENCY)    
|for the period November 4, 2004 (Date of Inception) to
      February 28, 2009
|(Stated in US Dollars)                                                        

|                                                       |                 |  |           |                |  |       |           |  |           |             |   |   | Deficit       |   |   |            |  |           |            |  
|------------------------------------------------------ | --------------- |  | --------- | -------------- |  | ----- | --------- |  | --------- | ----------- | - | - | ------------- | - | - | ---------- |  | --------- | ---------- | -
|                                                       |                 |  |           |                |  |       |           |  |           |             |   |   | Accumulated   |   |   |            |  |           |            |  
|                                                       |                 |  |           |                |  |       |           |  |           | Additional  |   |   | During the    |   |   |            |  |           |            |  
|                                                       |                 |  |           | *Common Shares |  |       | Paid-in   |  |           | Development |   |   | Subscriptions |   |   |            | 
|                                                       |                 |  |           | Number         |  |       | Par Value |  |           | Capital     |   |   | Stage         |   |   | Receivable |  |           | Total      |  
|                                                       |                 |  |           |                |  |       |           |  |           |             |   |   |               |   |   |            |  |           |            |  
|Capital stock issued for cash                          |  at $0.0008333 |  |           | 5,880,000      |  | $     | 5,880     |  | $         | (980        | ) | $ | -             |   | $ | -          |  | $         | 4,900      |  
|                                                       |  at $0.0083333 |  |           | 3,840,000      |  |       | 3,840     |  |           | 28,160      |   |   | -             |   |   | -          |  |           | 32,000     |  
|                                                       |  at $0.0833333 |  |           | 120,000        |  |       | 120       |  |           | 9,880       |   |   | -             |   |   | -          |  |           | 10,000     |  
|Donated services and rent                              |                 |  |           | -              |  |       | -         |  |           | 3,000       |   |   | -             |   |   | -          |  |           | 3,000      |  
|Net loss for the period                                |                 |  |           | -              |  |       | -         |  |           | -           |   |   | (18,821       | ) |   | -          |  |           | (18,821    | )
|                                                       |                 |  |           |                |  |       |           |  |           |             |   |   |               |   |   |            |  |           |            |  
|Balance, February 28, 2005                             |                 |  |           | 9,840,000      |  |       | 9,840     |  |           | 40,060      |   |   | (18,821       | ) |   | -          |  |           | 31,079     |  
|Donated services and rent                              |                 |  |           | -              |  |       | -         |  |           | 9,000       |   |   | -             |   |   | -          |  |           | 9,000      |  
|Net loss for the year                                  |                 |  |           | -              |  |       | -         |  |           | -           |   |   | (45,915       | ) |   | -          |  |           | (45,915    | )
|                                                       |                 |  |           |                |  |       |           |  |           |             |   |   |               |   |   |            |  |           |            |  
|Balance, February 28, 2006                             |                 |  |           | 9,840,000      |  |       | 9,840     |  |           | 49,060      |   |   | (64,736       | ) |   | -          |  |           | (5,836     | )
|Capital stock issued for cash                          |  at $5.00      |  |           | 20,000         |  |       | 20        |  |           | 99,980      |   |   | -             |   |   | -          |  |           | 100,000    |  
|Donated services and rent                              |                 |  |           | -              |  |       | -         |  |           | 9,000       |   |   | -             |   |   | -          |  |           | 9,000      |  
|Net loss for the year                                  |                 |  |           | -              |  |       | -         |  |           | -           |   |   | (54,555       | ) |   | -          |  |           | (54,555    | )
|                                                       |                 |  |           |                |  |       |           |  |           |             |   |   |               |   |   |            |  |           |            |  
|Balance, February 28, 2007                             |                 |  |           | 9,860,000      |  |       | 9,860     |  |           | 158,040     |   |   | (119,291      | ) |   | -          |  |           | 48,609     |  
|Capital stock issued for oil and
      gas interests  |                 |  | 4,000,000 |                |  | 4,000 |           |  | 997,702   |             |   | - |               |   | - |            |  | 1,001,702 |           
|Note 4(a)                                              |                 |  |           |                |  |       |           |  |           |             |   |   |               |   |   |            |  |           |            |  
|Capital stock issued for cash 
      Note 7           |                 |  | 1,028,245 |                |  | 1,028 |           |  | 6,048,972 |             |   | - |               |   | - |            |  | 6,050,000 |           
|Capital stock issued for oil and gas                   |                 |  |           |                |  |       |           |  |           |             |   |   |               |   |   |            |  |           |           
|Interests  Note 4(a)                                  |  at $12.05     |  |           | 80,000         |  |       | 80        |  |           | 963,920     |   |   | -             |   |   | -          |  |           | 964,000    |  
|Net loss for the year                                  |                 |  |           | -              |  |       | -         |  |           | -           |   |   | (2,628,203    | ) |   | -          |  |           | (2,628,203 | )
|                                                       |                 |  |           |                |  |       |           |  |           |             |   |   |               |   |   |            |  |           |            |  
|Balance, February 29, 2008                             |                 |  |           | 14,968,245     |  |       | 14,968    |  |           | 8,168,634   |   |   | (2,747,494    | ) |   | -          |  |           | 5,436,108  |  

Contd

SEE ACCOMPANYING NOTES

---

Continued

|FOX PETROLEUM INC.                                                            
|------------------------------------------------------------------------------
|(A Development Stage Company)                                                 
|INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
      (DEFICIENCY)    
|for the period November 4, 2004 (Date of Inception) to
      February 28, 2009
|(Stated in US Dollars)                                                        

|                                                 |            |  |         |                |  |     |           |  |           |             |  |   | Deficit       |   |   |             |   |           |             |  
|------------------------------------------------ | ---------- |  | ------- | -------------- |  | --- | --------- |  | --------- | ----------- |  | - | ------------- | - | - | ----------- | - | --------- | ----------- | -
|                                                 |            |  |         |                |  |     |           |  |           |             |  |   | Accumulated   |   |   |             |   |           |             |  
|                                                 |            |  |         |                |  |     |           |  |           | Additional  |  |   | During the    |   |   |             |   |           |             |  
|                                                 |            |  |         | *Common Shares |  |     | Paid-in   |  |           | Development |  |   | Subscriptions |   |   |             |  
|                                                 |            |  |         | Number         |  |     | Par Value |  |           | Capital     |  |   | Stage         |   |   | Receivable  |   |           | Total       |  
|                                                 |            |  |         |                |  |     |           |  |           |             |  |   |               |   |   |             |   |           |             |  
|Balance, February 29, 2008                       |            |  |         | 14,968,245     |  | $   | 14,968    |  | $         | 8,168,634   |  | $ | (2,747,494    | ) | $ | -           |   | $         | 5,436,108   |  
|Capital stock issued for finance fee - Note 5(c) |            |  | 150,000 |                |  | 150 |           |  | 514,350   |             |  | - |               |   | - |             |   | 514,500   |            
|                                                 |  at $3.43 |  |         |                |  |     |           |  |           |             |  |   |               |   |   |             |   |           |             |  
|Capital stock issued pursuant to convertible     |            |  |         |                |  |     |           |  |           |             |  |   |               |   |   |             |   |           |            
|Debenture Note 5(e)                              |  at $1.63 |  |         | 200,000        |  |     | 200       |  |           | 326,504     |  |   | -             |   |   | -           |   |           | 326,704     |  
|                                                 |  at $0.39 |  |         | 2,500,000      |  |     | 2,500     |  |           | 962,598     |  |   | -             |   |   | -           |   |           | 965,098     |  
|Capital stock subscribed  Note 7
      (a) (ii) |            |  |         |                |  |     |           |  |           |             |  |   |               |   |   |             |   |           |            
|                                                 |  at $0.50 |  |         | 52,000,000     |  |     | 52,000    |  |           | 25,948,000  |  |   | -             |   |   | (26,000,000 | ) |           | -           |  
|Discount of convertible debt
      payable      |            |  |         |                |  |     |           |  |           |             |  |   |               |   |   |             |   |           |            
|Note 5(e)                                        |            |  |         | -              |  |     | -         |  |           | 512,588     |  |   | -             |   |   | -           |   |           | 512,588     |  
|Beneficial conversion feature 
      Note 5(e)  |            |  | -       |                |  | -   |           |  | 1,388,320 |             |  | - |               |   | - |             |   | 1,388,320 |            
|Discount of convertible debt payable            |            |  |         |                |  |     |           |  |           |             |  |   |               |   |   |             |   |           |            
|Note 5(e)                                        |            |  |         | -              |  |     | -         |  |           | 771,101     |  |   | -             |   |   | -           |   |           | 771,101     |  
|Beneficial conversion feature  Note 5(e)        |            |  | -       |                |  | -   |           |  | 1,710,300 |             |  | - |               |   | - |             |   | 1,710,300 |            
|Net loss for the period                          |            |  |         | -              |  |     | -         |  |           | -           |  |   | (32,209,932   | ) |   | -           |   |           | (32,209,932 | )
|                                                 |            |  |         |                |  |     |           |  |           |             |  |   |               |   |   |             |   |           |             |  
|Balance, February 28, 2009                       |            |  |         | 69,818,245     |  | $   | 69,818    |  | $         | 40,302,395  |  | $ | (34,957,426   | ) | $ | (26,000,000 | ) | $         | (20,585,213 | )

|* | The common stock issued has been retroactively restated
      to reflect a reverse split of 1 new share for 5 old shares, effective
      April 21, 2008. The par value of common stock and additional paid-in
      capital has been retroactively restated to reflect these
      changes.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                            
|----------------------------------------------
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|                                              

|Note 1 | Nature of Operations and Ability to Continue
      as a Going Concern
|------ | ---------------------------------------------------------------------

The Company was incorporated in the
  State of Nevada on November 4, 2004 and is in the development stage. The Company
  has oil and gas interests in Alaska, North Sea and Texas and has not yet
  determined whether these properties contain reserves that are economically
  recoverable. The recoverability of amounts from the properties will be dependent
  upon the discovery of economically recoverable reserves, confirmation of the
  Companys interest in the underlying properties, the ability of the Company to
  obtain necessary financing to satisfy the expenditure requirements under the
  property agreements and to complete the development of the properties and upon
  future profitable production or proceeds for the sale thereof.

These financial statements have been
  prepared in accordance with generally accepted accounting principles applicable
  to a going concern, which assumes that the Company will be able to meet its
  obligations and continue its operations for its next fiscal year. Realization
  values may be substantially different from carrying values as shown and these
  financial statements do not give effect to adjustments that would be necessary
  to the carrying values and classification of assets and liabilities should the
  Company be unable to continue as a going concern. At February 28, 2009, the
  Company has negative working capital and will require funds to sustain
  operations over the next twelve months. The Company is dependent on its ability
  to raise capital from shareholders or other sources to meet its obligations and
  repay its liabilities arising from normal business operations when they come
  due, for which there can be no assurances that it will be successful in raising
  the required funds. The Company has yet to achieve profitable operations, has
  accumulated losses of $34,957,426 since its inception and expects to incur
  further losses in the development of its business, all of which casts
  substantial doubt about the Companys ability to continue as a going concern.
  The Companys ability to continue as a going concern is dependent upon its
  ability to generate future profitable operations and/or to obtain the necessary
  financing to meet its obligations, totaling $21,289,775, and repay its
  liabilities arising from normal business operations when they come due.
  Management has no formal plan in place to address this concern but considers
  that the Company will be able to obtain additional funds by equity financing
  and/or related party advances, however there is no assurance of additional
  funding being available or on acceptable terms, if at all. No adjustments have
  been made to the amounts reported in the financial statements for the outcome of
  this uncertainty.

|Note 2 | Summary of Significant Accounting
      Policies
|------ | ------------------------------------------------

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

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 2                                        

|Note 2 | Summary of Significant Accounting Policies (contd)
|------ | ----------------------------------------------------

Development Stage
  Activities

The Company is a development stage
  company as defined in the Statement of Financial Accounting Standard (SFAS)
  No. 7, Accounting and Reporting by Development Stage Enterprises, as it is
  devoting substantially all of its efforts to establish a new business and
  planned principal operations have not commenced. All losses accumulated since
  inception have been considered as part of the Companys development stage
  activities.

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

Principles of Consolidation

These consolidated financial
  statements include the accounts of the Company and Fox Energy Exploration
  Limited, a wholly-owned inactive subsidiary incorporated in England and Wales on
  May 17, 2007, Fox Petroleum (Alaska) Inc., a wholly-owned inactive subsidiary
  incorporated in Alaska, U.S.A. on April 18, 2007 and Fox Petroleum Inc., a
  wholly-owned inactive subsidiary incorporated in Kansas, U.S.A. on July 10,
  2008. All significant inter-company transactions and balances have been
  eliminated.

Oil and Gas Interests

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

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

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

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 3                                        

|Note 2 | Summary of Significant Accounting Policies (contd)
|------ | ----------------------------------------------------

Oil and Gas Interests
  (contd)

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

Future net cash flows from proved
  reserves using period-end, non-escalated prices and costs are discounted to
  present value and compared to the carrying value of oil and gas properties.

Proceeds from a sale of petroleum and
  natural gas properties are applied against capitalized costs, with no gain or
  loss recognized, unless such a sale would alter the rate of depletion by more
  than 25%. Royalties paid net of any tax credits received are netted with oil and
  gas sales.

During the year ended February 28,
  2009, the Company wrote down its oil and gas interests by $9,458,413 (2008 -
  $Nil).

Asset Retirement
  Obligations

The Company has adopted SFAS No. 143,
  Accounting for Asset Retirement Obligations, which requires that asset
  retirement obligations (ARO) associated with the retirement of a tangible
  long-lived asset, including natural gas and oil properties, be recognized as
  liabilities in the period in which it is incurred and becomes determinable, with
  an offsetting increase in the carrying amount of the associated assets. The cost
  of tangible long-lived assets, including the initially recognized ARO, is
  depleted, such that the cost of the ARO is recognized over the useful life of
  the assets. The ARO is recorded at fair value, and accretion expense is
  recognized over time as the discounted fair value is accreted to the expected
  settlement value.

The fair value of the ARO is measured
  using expected future cash flow, discounted at the Companys credit-adjusted
  risk-free interest rate. As at February 28, 2009 and February 29, 2008, the
  Company has determined it has no asset retirement obligations.

Environmental Costs

Environmental expenditures that relate
  to current operations are expensed or capitalized as appropriate. Expenditures
  that relate to an existing condition caused by past operations, and which do not
  contribute to current or future revenue generation, are expensed. Liabilities
  are recorded when environmental assessments and/or remedial efforts are
  probable, and the cost can be reasonably estimated. Generally, the timing of
  these accruals coincides with the earlier of completion of a feasibility study
  or the Companys commitments to a plan of action based on the then known facts.
  There have been no environmental expenses incurred by the Company.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 4                                        

|Note 2 | Summary of Significant Accounting Policies (contd)
|------ | ----------------------------------------------------

Advertising Costs

Advertising costs are expensed as
  incurred or concurrent with the first time the advertisement takes place.

Foreign Currency
  Translation

The Company uses the United States of
  America dollar as its functional and reporting currency for consistency with
  registrants of the Securities and Exchange Commission (SEC) and in accordance
  with SFAS No. 52.

Assets and liabilities denominated in
  a foreign currency are translated at the exchange rate in effect at the year-end
  and capital accounts are translated at historical rates. Income statement
  accounts are translated at the average rates of exchange prevailing during the
  year. The resulting translation adjustment is included in the Comprehensive
  Income Account in Stockholders Equity, if applicable.

Transactions undertaken in currencies
  other than the functional currency of the Company are translated using the
  exchange rate in effect as of the transaction date. Any exchange gains or losses
  are included in other income or expenses on the Statement of Operations, if
  applicable.

Income Taxes

The Company uses the assets and
  liability method of accounting for income taxes pursuant to SFAS No. 109
  Accounting for Income Taxes. Under the assets and liability method of SFAS No.
  109, deferred tax assets and liabilities are recognized for the future tax
  consequences attributable to temporary differences between the financial
  statements carrying amounts of existing assets and liabilities and their
  respective tax bases. Deferred tax assets and liabilities are measured using
  enacted tax rates expected to apply to taxable income in the years in which
  those temporary differences are expected to be recovered or settled.

On March 1, 2007 the Company adopted
  the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in
    Income Taxes  An Interpretation of FASB Statement No. 109(FIN 48), which
  have been applied to all income tax positions commencing from that date. FIN 48
  provides detailed guidance for the financial statement recognition, measurement
  and disclosure of uncertain tax positions recognized in an enterprises
  financial statements in accordance with SFAS 109. Income tax positions must meet
  a more-likely-than-not recognition threshold at the effective date to be
  recognized upon the adoption of FIN 48 and in subsequent periods. The Company
  recognizes potential accrued interest and penalties related to unrecognized tax
  benefits within operations as income tax expense. The adoption of FIN 48 did not
  have a material impact on the Companys financial position, results of
  operations or cash flows.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 5                                        

|Note 2 | Summary of Significant Accounting Policies (contd)
|------ | ----------------------------------------------------

Income Taxes (contd)

Prior to 2007, the Company determined
  its income tax contingencies in accordance with SFAS No. 5, Accounting for
    Contingencies. The Company recorded estimated tax liabilities to the extent
  the contingencies were probable and could be reasonably estimated.

Basic Loss Per Share

The Company reports basic loss per
  share in accordance with the SFAS No. 128, Earnings Per Share. Basic loss per
  share is computed using the weighted average number of shares outstanding during
  the period. Diluted loss per share is computed similar to basic loss per share
  except that the denominator is increased to include the number of additional
  common shares that would have been outstanding if the dilutive potential common
  shares had been issued. In addition, in computing the dilutive effect of
  convertible securities, the numerator is adjusted to add back any convertible
  preferred dividend and the after-tax amount of interest in the period associated
  with any convertible debt. The numerator is also adjusted for any other changes
  in income or loss that would result from the assumed conversion of these
  potential common shares. Common share equivalents represent the dilutive effect
  of the assumed exercise of the outstanding stock options and warrants, using the
  treasury stock method, at either the beginning of the respective period
  presented or the date of issuance, whichever is later, and only if the common
  stock equivalents are considered dilutive based upon the Companys net loss
  position at the calculation date. At February 28, 2009, the Company had
  3,048,246 (2008  1,048,246) common share equivalents in respect to warrants.
  Because the Company incurred a loss diluted loss per share is the same as basic
  loss per share.

Fair Value of Financial
  Instruments

The Company follows SFAS No. 157, Fair
  Value Measurements for all financial assets and liabilities and non-financial
  assets and liabilities that are recognized or disclosed at fair value in the
  financial statements on a recurring basis (at least annually). SFAS No. 157
  defines fair value, establishes a framework for measuring fair value in
  generally accepted accounting principles, and expands disclosures about fair
  value measurements.

This statement does not require any
  new fair value measurements, but provides guidance on how to measure fair value
  by providing a fair value hierarchy used to classify the source of the
  information. See Note 3  Financial Instruments.

The Company also follows SFAS No. 159,
  The Fair Value Option for Financial Assets and Financial Liabilities-Including
  an amendment of FASB Statement No. 115. SFAS No. 159 gives us the irrevocable
  option to elect fair value for the initial and subsequent measurement for
  certain financial assets and liabilities on a contract-by-contract basis with
  the difference

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 6                                        

|Note 2 | Summary of Significant Accounting Policies (contd)
|------ | ----------------------------------------------------

Fair Value of Financial Instruments (contd)_

between the carrying value before
  election of the fair value option and the fair value recorded upon election as
  an adjustment to beginning retained earnings. As of February 28, 2009, the
  Company had not elected the fair value option for any eligible financial asset
  or liability.

New Accounting Standards

Recently Adopted Accounting
  Pronouncements

In June 2007, the Emerging Issues Task
  Force (EITF) reached a consensus on EITF No. 07-03, Accounting for
  Non-refundable Advance Payments for Goods or Services to Be Used in Future
  Research and Development Activities (EITF 07-03). EITF 07- 03 specifies the
  timing of expense recognition for non-refundable advance payments for goods or
  services that will be used or rendered for research and development activities.
  EITF 07-03 was effective for fiscal years beginning after December 15, 2007. The
  adoption of EITF 07-03 did not have a material impact on the Companys financial
  position and results of operations.

Recent Accounting Pronouncements
  Not Yet Adopted

In June 2008, the FASB reached
  consensus on EITF Issue No. 07-05 (EITF 07-05), Determining Whether an
  Instrument (or embedded feature) Is Indexed to an Entitys Own Stock.. EITF
  07-05 clarifies the determination of whether an instrument (or an embedded
  feature) is indexed to an entitys own stock, which would qualify as a scope
  exception under SFAS 133. EITF 07-05 is effective for financial statements
  issued for fiscal years beginning after December 15, 2008. Early adoption of
  EITF 07-05 is not permitted. The Company is evaluating the impact the adoption
  of EITF 07-05 will have on its financial position, results of operations and
  cash flows.

In May 2008, the FASB issued FSP No.
  APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in
  Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1). FSP
  APB 14-1 applies to convertible debt instruments that, by their stated terms,
  may be settled in cash (or other assets) upon conversion, including partial cash
  settlement, unless the embedded conversion option is required to be separately
  accounted for as a derivative under SFAS 133. Convertible debt instruments
  within the scope of FSP APB 14-1 are not addressed by the existing APB 14. FSP
  APB 14-1 requires that the liability and equity components of convertible debt
  instruments within the scope of FSP APB 14-1 be separately accounted for in a
  manner that reflects the entitys nonconvertible debt borrowing rate. This
  requires an allocation of the convertible debt proceeds between the liability
  component and the embedded conversion option (i.e., the equity component). The
  difference between the principal amount of the debt and the amount of the
  proceeds allocated to the liability component will be reported as a debt
  discount and subsequently amortized to earnings over the instruments expected
  life using the effective interest method. FSP APB 14-1 is effective for the
  Companys fiscal year beginning March 1, 2009 and will be applied
  retrospectively to all periods presented. The Company is currently evaluating
  the effects of adopting FSP APB 14-1.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 7                                        

|Note 2 | Summary of Significant Accounting Policies (contd)
|------ | ----------------------------------------------------

New Accounting Standards
  (contd)

Recent Accounting Pronouncements
  Not Yet Adopted - (contd)

In May 2008, the FASB issued SFAS No.
  162, The Hierarchy of Generally Accepted Accounting Principles (SFAS No. 162).
  SFAS No. 162 is intended to improve financial reporting by identifying a
  consistent framework, or hierarchy, for selecting accounting principles to be
  used in preparing financial statements that are presented in conformity with
  U.S. generally accepted accounting principles for nongovernmental entities. SFAS
  No. 162 is effective 60 days following the SEC's approval of the Public Company
  Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of
  Present Fairly in Conformity with Generally Accepted Accounting Principles. The
  Company does not expect there to be any significant impact of adopting SFAS 162
  on its financial position, cash flows and results of operations.

In March 2008, the FASB issued
  Statement of Financial Accounting Standards (SFAS) No. 161, Disclosures about
  Derivative Instruments and Hedging Activities, an amendment of FASB Statement
  No. 133, which requires additional disclosures about the objectives of the
  derivative instruments and hedging activities, the method of accounting for such
  instruments under SFAS No. 133 and its related interpretations, and a tabular
  disclosure of the effects of such instruments and related hedged items on
  financial position, financial performance and cash flows. SFAS No. 161 is
  effective for fiscal years and interim periods beginning after November 15,
  2008. The adoption of SFAS 161 should have no effect on the financial position
  and results of operations of the Company.

In January 2008, Staff Accounting
  Bulletin (SAB) 110, Share-Based Payment was issued. Registrants may
  continue, under certain circumstances, to use the simplified method in
  developing estimates of the expected term of share options as initially allowed
  by SAB 107, Share-Based Payment. The adoption of SAB 110 had no effect on the
  financial position and results of operations of the Company.

In December 2007, the FASB issued SFAS
  No. 141 (Revised) Business Combinations. SFAS 141 (Revised) establishes
  principles and requirements for how the acquirer of a business recognizes and
  measures in its financial statements the identifiable assets acquired, the
  liabilities assumed, and any non-controlling interest in the acquiree. The
  statement also provides guidance for recognizing and measuring the goodwill
  acquired in the business combination and determines what information to disclose
  to enable users of the financial statements to evaluate the nature and financial
  effects of the business combination. The guidance will become effective for the
  first fiscal year beginning after December 15, 2008. The Companys management is
  in the process of evaluating the impact SFAS 141 (Revised) will have on the
  Companys financial statements upon adoption.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 8                                        

|Note 2 | Summary of Significant Accounting Policies (contd)
|------ | ----------------------------------------------------

New Accounting Standards
  (contd)

Recent Accounting Pronouncements
  Not Yet Adopted - (contd)

In December 2007, the FASB issued SFAS
  No. 160 Non-controlling Interests in Consolidated Financial Statements-an
  amendment of ARB No. 51. SFAS 160 establishes accounting and reporting
  standards for the non-controlling interest in a subsidiary and for the
  deconsolidation of a subsidiary. The guidance will become effective for the
  first fiscal year beginning after December 15, 2008. The Companys management is
  in the process of evaluating the impact SFAS 160 will have on the Companys
  financial statements upon adoption.

In December 2007, the Emerging Issues
  Task Force (EITF) reached a consensus on EITF No. 07-01, Accounting for
  Collaborative Arrangements Related to the Development and Commercialization of
  Intellectual Property (EITF 07-01). EITF 07-01 discusses the appropriate
  income statement presentation and classification for the activities and payments
  between the participants in arrangements related to the development and
  commercialization of intellectual property. The sufficiency of disclosure
  related to these arrangements is also specified. EITF 07-01 is effective for
  fiscal years beginning after December 15, 2008. As a result, EITF 07-01 was
  effective for the Company as of January 1, 2009. The Company expects that the
  adoption of EITF 07-01 will have minimal, if any, impact on its financial
  position and results of operations. The Company does not expect there to be any
  significant impact of adopting EITF 07-01 on its financial position, cash flows
  and results of operations..

In April 2008, the FASB issued FSP
  142-3, Determination of the Useful Life of Intangible Assets. This FSP 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. The intent
  of this FSP is to improve the consistency between the useful life of a
  recognized intangible asset under Statement 142 and the period of expected cash
  flows used to measure the fair value of the asset under FASB Statement No. 141
  (Revised 2007), Business Combinations, and other U.S. generally accepted
  accounting principles (GAAP). This FSP is effective for financial statements
  issued for fiscal years beginning after December 15, 2008, and interim periods
  within those fiscal years. Early adoption is prohibited. The Company does not
  expect the adoption of FAS 142-3 to have a material effect on its results of
  operations and financial condition.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 9                                        

|Note 3 | Financial Instruments
|------ | ---------------------

The Company adopted SFAS No. 157 on
  March 1, 2008 for all financial assets and liabilities and non-financial assets
  and liabilities that are recognized or disclosed at fair value in the financial
  statements on a recurring basis (at least annually). SFAS No. 157 defines fair
  value, establishes a framework for measuring fair value, and expands disclosures
  about fair value measurements.

SFAS No. 157 defines fair value as the
  price that would be received upon sale of an asset or paid upon transfer of a
  liability in an orderly transaction between market participants at the
  measurement date and in the principal or most advantageous market for that asset
  or liability. The fair value should be calculated based on assumptions that
  market participants would use in pricing the asset or liability, not on
  assumptions specific to the entity. In addition, the fair value of liabilities
  should include consideration of non-performance risk including the Companys own
  credit risk.

In addition to defining fair value,
  SFAS No. 157 expands the disclosure requirements around fair value and
  establishes a fair value hierarchy for valuation inputs. The hierarchy
  prioritizes the inputs into three levels based on the extent to which inputs
  used in measuring fair value are observable in the market. Each fair value
  measurement is reported in one of the three levels which is determined by the
  lowest level input that is significant to the fair value measurement in its
  entirety. These levels are:

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

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

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

The Company holds no Level 1 or Level
  2 financial assets or liabilities.

The carrying value of the Companys
  financial assets and liabilities which consist of cash, other receivables,
  accounts payable and accrued liabilities, notes payable and due to related
  parties in managements opinion approximate their fair value due to the short
  maturity of such instruments. Unless otherwise noted, it is managements opinion
  that the Company is not exposed to significant interest, exchange or credit
  risks arising from these financial instruments.

At February 28, 2009, Company had net
  monetary liabilities of $1,484,996 (2008 - $83,156) denominated in UK pounds and
  $108,082 (2008 - $59,564) denominated in Canadian dollars. The Company does not
  hold any hedge positions against these amounts.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 10                                       

|Note 4 | Oil and Gas Interests
|------ | ---------------------

| |                                         |   | February 28, 2009 |  
| | --------------------------------------- | - | ----------------- | -
| |                                         |   | United            |  
| |                                         |   | States            |  
| |                                         |   |                   |  
| | Unproved properties                     |   |                   |  
| | - acquisition costs                     | $ | 3,701,871         |  
| | - exploration costs                     |   | 2,347,394         |  
| |                                         |   |                   |  
| |                                         |   | 6,049,265         |  
| | Less: Write-down of oil & gas interests |   | (5,438,576        | )
| | Less: Incidental revenue                |   | (90,689           | )
| |                                         |   |                   |  
| |                                         | $ | 520,000           |  

| |                     |   | February 29, 2008 | 
| | ------------------- | - | ----------------- | 
| |                     |   | United            | 
| |                     |   | States            | 
| |                     |   |                   | 
| | Unproved properties |   |                   | 
| | - acquisition costs | $ | 3,533,282         | 
| | - exploration costs |   | 67,168            | 
| |                     |   |                   | 
| |                     | $ | 3,600,450         | 

| | a) | North Slope, Alaska                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | On May 29, 2007, the Company entered into a Lease
      Purchase and Sale Agreement with a company to acquire a combined 100%
      working interest in 12 state-issued oil and gas leases in the North Slope
      of Alaska. These leases are subject to a royalty of 16.66667% to the State
      of Alaska and a private royalty equal to 5% of net revenue. In
      consideration for the oil and gas leases, the Company issued 4,000,000
      restricted common shares of the Company valued at $1,001,702, the
      transferors historical cost. The valuation is based the SEC Staff
      Accounting Bulletin, Topic 5, G.                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | Pursuant to underlying agreements on the property, the
      Company is obligated to drill one test well to at least 10,000 feet on or
      before November 14, 2011, four test wells to at least 4,000 feet on or
      before February 20, 2012, and one test well to at least 4,000 feet on or
      before January 16, 2012. The Company is currently unable to quantify an
      estimate of the cost of these wells.                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | By a purchase agreement dated October 10, 2007 and
      amended November 2, 2007, the Company acquired 8 additional oil and gas
      leases in the North Slope of the State of Alaska for $850,000 including
      cash of $250,000 and $600,000 paid by the issuance of 80,000 common shares
      of the Company. The fair value of the shares issued was $964,000 (based on
      the quoted market price of the Companys common shares on the transaction
      date) and consequently a further $364,000 has been recorded for this
      portion of the purchase agreement. These leases are subject to a royalty
      of 16.66667% to the State of Alaska and a private royalty equal to 5%. Two
      of the leases acquired pursuant to this agreement are part of the Cook
      Inlet project described below.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 11                                       

|Note 4 | Oil and Gas Interests  (contd)
|------ | --------------------------------

| | a) | North Slope, Alaska  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | On January 30, 2009, the Company, entered into an
      agreement with the original lease vendors (the Payers) regarding twelve
      of the North Slope oil and gas leases (the Twelve Leases). Under the
      terms of the Agreement, the Payers agreed to use their best efforts to
      make, on the Company's behalf, annual rental payments for the Twelve
      Leases totaling up to $64,980 on or before the February 1, 2009 due
      date.                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | The Company agreed to repay to the Payers by March 2,
      2009 any portion of the Payments made by the Payers (the "Repayment
      Amount"). The Repayment Amount is subject to an 18% interest rate per
      annum. The Company also granted the Payers a security interest in the
      Company's right, title, and interest in the Twelve Leases. The Company
      further agreed to transfer and assign its right, title, and interest in
      the Twelve Leases to the Payers in the event of the Company's failure to
      pay the Repayment Amount in a timely manner.                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | Subsequent to February 28, 2009, Company failed to pay
      the Repayment Amount and by an agreement dated May 14, 2009, the Payers
      agreed to extend the repayment date until August 14, 2009 in return for
      the lease assignment documents for the Twelve Leases being executed and
      delivered into escrow.                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | Subsequent to February 28, 2009, the Company entered into
      an agreement dated May 16, 2009 with the Payers in respect of five of the
      remaining North Slope oil and gas leases (the Five Leases). Pursuant to
      this agreement, the Payers made annual lease payments totaling $25,126 for
      the Five Leases on behalf of the Company. The amount paid on behalf of the
      Company is subject to an 18% interest rate per annum. The Company also
      executed an assignment to the Payers of the Company's right, title, and
      interest in the Five Leases to be delivered into escrow in the event the
      Company fails to repay the payers by August 14, 2009.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | The Company can provide no assurance that it will be able
      to obtain financing arrangements to repay the Payers by August 14, 2009
      and consequently, all costs incurred of $2,401,282 (2008 - $Nil) were
      written off on the statement of operations during the year ended February
      28, 2009.                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | b) | Anglesey, North Sea, United Kingdom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | Pursuant to a farm-in agreement dated June 8, 2007, the
      Company agreed to acquire a 33.33% interest in two UK petroleum production
      licenses (Licenses). The Licenses are located in the UK North Sea and
      have since been merged into one traditional license. As consideration for
      the Licenses, the Company agreed to fund 100% of the seismic costs and its
      33.33% share of the License budget costs as agreed by the parties. The
      Company also has the option to acquire an additional 26.67% interest in
      the Licenses by paying an additional 46.67% of the dry-hole costs of an
      exploration well.                                         

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 12                                       

|Note 4 | Oil and Gas Interests (contd)
|------ | -------------------------------

| | b) | Anglesey, North Sea, United Kingdom  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The option is effective from completion of the transfer
      of the assigned interest to the Company and shall continue to be valid and
      exercisable until 28 days after receipt by the Company of the processed
      seismic data and final interpretation.                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | During the year ended February 28, 2009, the Company
      returned the Licenses to the UK government and consequently all costs
      incurred of $2,512,856 (2008 - $Nil) were written-off on the statement of
      operations during the year ended February 28, 2009.                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | c) | Spears Gas Well, Texas, United States                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | Pursuant to a subscription agreement dated October 9,
      2007, the Company acquired a 22.5% joint venture interest in a gas well
      called the Spears Gas Unit 2, Well #1 in the Gomez Field, Pecos County,
      Texas in consideration for US$500,000.                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | As at February 28, 2009, the gas well is shut-in awaiting
      further financing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | d) | Cook Inlet, Alaska, United States                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | By a purchase agreement dated October 10, 2007, the
      Company acquired 6 oil and gas leases located in Cook Inlet of the State
      of Alaska for $750,000, payable in installments on or before March 7,
      2008. At November 30, 2008, the Company had paid $750,000. Included in
      these leases were 3 unissued leases that the vendors owned the rights
      thereto. The leases are subject to a royalty of 16.66667% to the State of
      Alaska and a private royalty equal to 5% of net revenue.                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | Subsequent to February 28, 2009, the Company entered into
      an agreement dated May 29, 2009 with the Payers in respect of three these
      oil and gas leases (the Three Leases). Pursuant to this agreement, the
      Payers made annual lease payments totaling $25,780 for the Three Leases on
      behalf of the Company. The amount paid on behalf of the Company is subject
      to an 18% interest rate per annum. The Company also executed an assignment
      to the Payers of the Company's right, title, and interest in the Five
      Leases to be delivered into escrow in the event the Company fails to repay
      the payers by August 14, 2009.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The Company can provide no assurance that it will be able
      to obtain financing arrangements to repay the Payers by August 14, 2009
      and consequently, all costs incurred of $1,061,727 (2008 - $Nil) were
      written-off on the statement of operations during the year ended February
      28, 2009.                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | e) | South Bourbon, North Sea, United Kingdom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | On November 16, 2007, the Company entered into a farm-out
      agreement dated November 8, 2007 wherein the Company would be assigned a
      total of 46% interest in a license block in the UK North Sea. In
      consideration for the assignment, the Company must pay for 89% of the cost
      of drilling and exploration well.                                                                                                                                                                                                                                                                                                                                     

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 13                                       

|Note 4 | Oil and Gas Interests (contd)
|------ | -------------------------------

| | e) | South Bourbon, North Sea, United Kingdom 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The Company is also required to pay for 46% of license
      costs. On January 24, 2008, the Company agreed to jointly participate with
      another company to identify a potential farm- in or acquisition
      opportunity and transferred a 4.6% carried interest in the license block
      to that company until a full development plan is approved by the U.K.
      government. Thereafter, that company will be responsible for its 4.6%
      share of the costs (10% of the Companys interest). Subsequent to the
      transfer, this company became related to the Company as two of its
      beneficial owners became directors of the Company.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | During the year ended February 28, 2009, the license
      holders terminated the Farm-out agreement effective February 27, 2009.
      Consequently, all costs incurred of $1,419,627 (2008 - $Nil) were written
      off on the statement of operations during the year ended February 28,
      2009.                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | f) | Genesco-Edwards, Kansas, United States                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | By a letter agreement dated February 27, 2008, the
      Company purchased an 80% net revenue interest in three oil leases in
      Ellsworth County, Kansas, USA by the payment of $80,000. The leases are
      subject to a landowner royalty of 12.5% and an overriding royalty of 7.5%
      retained by vendors. The Company was required to drill at least one well
      on each lease before the leases expire on November 19, 2008, November 19,
      2009 and November 30, 2009 or pay the vendor a penalty of
      $150,000.                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | During the year ended February 28, 2009 the Company had
      drilled four wells on these leases and earned incidental revenue of
      $90,689 from two of these wells, which was credited against oil and gas
      interests on the consolidated balance sheet as a result of the wells not
      yet reaching full commercial production. Since January 2009 production has
      been suspended due to the need for implementation of water disposal
      facilities for which further funding is not currently available.                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | During the year ended February 28, 2009, two trade
      creditors issued mechanical liens against the oil and gas leases and its
      facilities for non payment of outstanding invoices totaling
      $528,079.                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Subsequent to February 28, 2009, the Company assigned its
      interest in these oil and gas leases to a creditor in return for a loan
      rescheduling (Note 5) and entering into an agreement not to sue the
      Company for defaulting on a loan agreement. The creditor also received
      15,000,000 common shares pledged as security from the Companys treasury
      against the notes payable.                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Pursuant to the above, costs incurred of $1,975,567 (2008
      - $Nil) were written-off on the statement of operations and deficit for
      the year ended February 28, 2009 leaving a net book value of $20,000
      recovered subsequent to year end for the sale of certain furniture and
      equipment held for use on the property.                                                                                                                                                                                                                                                                                                                     

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 14                                       

|Note 4 | Oil and Gas Interests (contd)
|------ | -------------------------------

| | g) | UK Onshore, United Kingdom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | On June 3, 2008, the Company was granted a 90% interest
      in four UK petroleum production licenses, located in the south of England.
      In order to maintain the licenses, the Company must undertake seismic
      exploration estimated to cost $500,000 within the six year term of the
      license.                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | Pursuant to a letter agreement dated September 5, 2008,
      the Company will pay 100% of all costs, expenses, liabilities and
      obligations arising in respect of operations conducted in respect of each
      license block until a filed development plan is formally approved by the
      UK Secretary of State responsible for such matters, for the development of
      a discovery of petroleum in the blocks. Thereafter, the Company will each
      be responsible for 90% of all costs, expenses, liabilities and
      obligations.    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | h) | 25thRound License Blocks 13/17 & 210/20e,
      United Kingdom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | Pursuant to a letter agreement dated September 5, 2008,
      the Company was granted a 90% interest in an application made for four UK
      petroleum production licenses. In order to maintain the licenses, the
      Company must carry out geological and seismic modeling before forming up a
      drilling location and must begin drilling within the four year term of the
      license.                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | Pursuant to the letter agreement, the Company will pay
      100% of all costs, expenses, liabilities and obligations arising in
      respect of operations conducted in respect of each license block until a
      filed development plan is formally approved by the UK Secretary of State
      responsible for such matters, for the development of a discovery of
      petroleum in the blocks. Thereafter, the Company will each be responsible
      for 90% of all costs, expenses, liabilities and obligations.                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | On November 12, 2008 Fox was formally notified by the UK
      Department of Energy and Climate Change (DECC) of its success in the 25th
      Seaward Licensing Round Awards, the rights to explore and develop the
      block 13/17 concession in the North Sea by the UK government.                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | On May 1, 2009 Fox received notification from the UK
      Department of Energy and Climate Change that this Secretary of States
      offer of this license in the 25thround had been withdrawn due
      to fact that they consider there to have been a material change in the
      circumstances relating to Fox having adequate funding arrangements already
      in place. Consequently, all costs incurred of $87,354 (2008 - $Nil) were
      written-off on the statement of operations and deficit for the year ended
      February 28, 2009.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 15                                       

|Note 5 | Notes Payable
|------ | -------------

| |                                            |   |           |   |   | February 28, |  |   | February 29, | 
| | ------------------------------------------ | - | --------- | - | - | ------------ |  | - | ------------ | 
| |                                            |   |           |   |   | 2009         |  |   | 2008         | 
| |                                            |   |           |   |   |              |  |   |              | 
| | Promissory notes (a), (b), (c)             |   |           |   | $ | 450,000      |  | $ | -            | 
| | Loan agreement (d)                         |   |           |   |   | 450,000      |  |   | -            | 
| | Convertible notes payable (e)              | $ | 3,500,000 |   |   |              |  |   |              | 
| | Add: liquidating damages due under         |   |           |   |   |              |  |   |              | 
| | registration
      rights agreement        |   | 270,667   |   |   |              |  |   |              | 
| | Less: financing costs                      |   | (75,545   | ) |   |              |  |   |              | 
| | Add: amortization of
      financing costs |   | 75,545    |   |   | 3,770,667    |  |   | -            | 
| |                                            |   |           |   |   |              |  |   |              | 
| |                                            |   |           |   | $ | 4,670,667    |  | $ | -            | 

| | a) | On April 2, 2008 the Company was loaned $250,000 by the
      issuance of a promissory note, to be paid on the earlier of (i) the date
      that the Company obtains equity financing from a third party in the
      minimum amount of $1,000,000 net to the Company, or (ii) April 1, 2009.
      For the period from the date of advance of the loan up to and including
      the date that the loan is repaid, interest will accrue on the balance of
      principal outstanding at the rate of 10% per annum, compounded monthly.
      Interest will be payable in a balloon payment on the date the loan is
      repaid. The note is unsecured.         
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | Subsequent to February 28, 2009, this loan has not been
      repaid as the lender has agreed to extend the terms of the loan until the
      Company is able to obtain further financing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b) | On May 6, 2008 the Company was loaned $150,000 by the
      issuance of a promissory note, to be paid on the earlier of (i) the date
      that the Company obtains equity financing from a third party in the
      minimum amount of $1,000,000 net to the company, or (ii) May 1, 2009. For
      the period from the date of advance of the loan up to and including the
      date that the loan is repaid, interest will accrue on the loan on the
      balance of principal outstanding at the rate of 10% per annum, compounded
      monthly. Interest will be payable in a balloon payment on the date the
      loan is repaid. The note is unsecured. 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | Subsequent to February 28, 2009, this loan has not been
      repaid as the lender has agreed to extend the terms of the loan until the
      Company is able to obtain further financing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | c) | On May 23, 2008 the Company was loaned $50,000 by the
      issuance of a promissory note, to be paid on the earlier of (i) the date
      that the Company obtains equity financing from a third party in the
      minimum amount of $1,000,000 net to the company, or (ii) May 23, 2009. For
      the period from the date of advance of the loan up to and including the
      date that the loan is repaid, interest will accrue on the loan on the
      balance of principal outstanding at the rate of 10% per annum, compounded
      monthly. Interest will be payable in a balloon payment on the date the
      loan is repaid. The note is unsecured.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | Subsequent to February 28, 2009, this loan has not been
      repaid as the lender has agreed to extend the terms of the loan until the
      Company is able to obtain further financing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 16                                       

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | d) | On May 30, 2008 the Company was loaned $450,000 pursuant
      to a loan agreement. The principal and interest is to be paid on the
      earlier of (i) cash being available from operations, (ii) the date that
      the Company obtains equity or debt financing from a third party in the
      minimum amount of $1,000,000, or (iii) November 30, 2008. This loan bears
      interest at 12% per annum, calculated annually. The loan is secured by the
      Companys assets. As additional compensation for the loan, the Company
      issued to the lender 150,000 common shares of the Company. The fair value
      of these shares was determined to be $514,500 based on the quoted market
      price of the shares on the date of issuance and was recorded as a
      financing fee on the consolidated statement of operations.                                                                                                                                                                                                                                                                                                             
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | Subsequent to February 28, 2009, this loan has not been
      repaid as the lender has agreed to extend the terms of the loan until the
      Company is able to obtain further financing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | e) | Pursuant to an Amendment to Securities Purchase
      Agreement, Secured Debenture, Registration Rights Agreement and Security
      Agreement dated October 31, 2008 ("Amendment Agreement"), the Company
      amended a Securities Purchase Agreement, Debentures, a Registration Rights
      Agreement, an Escrow Agreement and a Pledge and Escrow Agreement
      ("Original Agreements") all originally dated June 24, 2008. Under the
      Amendment Agreement the Company issued three secured convertible
      debentures totaling $3,500,000 consisting of two Amended Debentures and
      one New Debenture:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | (i) Amended Debentures - $2,500,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | The Original Debenture which was a $2,500,000 senior
      secured convertible note was amended on November 11, 2008 into two
      debentures each of which are for a total principal amount of $1,250,000
      (the Amended Debentures).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | The Amended Debentures bear interest at 10% per annum,
      compounded monthly. The principal and any unpaid accrued interest owing on
      the debentures are convertible into common stock of the Company in the
      event of a default or at the option of the holder at the rate of the
      lesser of i) 100% of the volume weighted average stock price (VWAP) on
      the date of issuance and ii) at 85% of the lowest daily closing VWAP as
      quoted by Bloomberg L.P. during the 5 trading days immediately preceding
      the conversion date. The Amended Debentures also contain a redemption
      option whereby the Company can redeem the Amended Debentures provided its
      common stock is trading below 100% of the VWAP as quoted by Bloomberg L.P
      on October 31, 2008 by paying the unpaid principal and interest accrued
      and a prepayment premium of 15%. The Company must redeem the entire
      principal amount outstanding on one of the Amended Debentures on April 30,
      2009 at a 15% redemption premium; however, there is no mandatory
      redemption premium on the second Amended Debenture.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | In consideration for the holder's agreement to extend the
      maturity date of the original convertible debt from October 24, 2008 to
      April 30, 2009, the Company cancelled the original 500,000 warrants issued
      in connection with the Original Debenture and replaced them with 2,000,000
      warrants with a term of 5 years and a decreased exercise price of
      $0.001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 17                                       

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | e) |  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The exercise price is subject to an adjustment if, during
      the term of the warrants, the Company issues shares, options or
      convertible securities for consideration less than the exercise price,
      then the exercise price will be adjusted to 85% of such consideration.
      Additional warrants will be issued if the Company becomes in default under
      the transaction agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The Company determined the allocation of the net proceeds
      of the Original convertible debenture based on the relative fair value of
      the convertible debenture, the 500,000 share purchase warrants and the
      200,000 common shares. The fair value of the warrants of $910,000 and the
      common shares of $580,000 were determined using the Black-Scholes
      valuation model and the quoted market price of the shares on the date of
      issuance, respectively. The resulting discount of $839,292, which was the
      relative fair value of the proceeds allocated to the discount, was being
      accreted over the term of the debenture. The assumptions used in the
      Black-Scholes calculation are as follows: expected life  5 years;
      volatility  78.26%; Dividend rate  0%; and risk free interest rate is
      0.95%.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The Company recorded a beneficial conversion feature of
      $1,388,320 with respect to the Original Debentures pursuant to EITF 98-5 Accounting for Convertible Securities with Beneficial Conversion
        Features or Contingently Adjustable Conversion Ratios. The conversion
      feature was contingently exercisable in an event of default of the
      debenture; which occurred on October 24, 2008 when the debenture came due
      but was not repaid by the Company. Therefore the amount was recorded as a
      financing fee during the year ended February 28, 2009.                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The Company determined the allocation of the net proceeds
      of the Amended Debentures based on the relative fair value of the
      convertible debenture, the share purchase warrants and the common shares.
      The fair value of the warrants of $1,578,000 and the common shares of
      $1,975,000 were determined using the Black-Scholes valuation model and the
      quoted market price of the shares on the date of issuance, respectively.
      The resulting discount of $1,736,199, which was the relative fair value of
      the proceeds allocated to this discount, was being accreted over the term
      of the debentures. The assumptions used in the Black-Scholes calculation
      are as follows: expected life  5 years; volatility  78.26%; Dividend
      rate  0%; and risk free interest rate is 3.52%.                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The Company was required to pay to the investor at
      closing of the Original Agreements: $17,500 in legal costs, a $10,000 due
      diligence fee, a 7% commitment fee and a 2% facility fee, 500,000 share
      purchase warrants and 200,000 shares of common stock. Finders fees of
      $150,000 and 52,265 share purchase warrants were paid to Partners
      Consulting in connection with the Original Agreements pursuant to a finder
      agreement dated February 15, 2008. This amount is included in fees payable
      in stock and warrants at February 28, 2009. The warrants expire three
      years from the date of issuance.                                                                                                                                                                                                                 

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 18                                       

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | e) |  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | At the closing of the Amended Debentures, the Company
      also issued 2,500,000 shares of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | In no event shall the Holder be entitled to convert this
      Debenture for a number of shares of Common Stock in excess of that number
      of shares of Common Stock which, upon giving effect to such conversion,
      would cause the aggregate number of shares of Common Stock beneficially
      owned by the Holder and its affiliates to exceed 9.99% of the outstanding
      shares of the Common Stock following such conversion without the approval
      of the Company.                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | Upon the occurrence of an Event of Default by the
      Company, the Holder has the option to elect that the interest due and
      payable be paid in cash or in stock at the rate of 85% of the lower of:
      (i) the VWAP on the date the interest payment is due; or (ii) if the
      interest payment is not made when due, the VWAP on the date the interest
      payment is made.                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | The Debentures are secured by all of the assets and
      property of the Company and its subsidiaries pursuant to a Security
      Agreement. The debentures were further secured by a Pledge and Escrow
      Agreement pursuant to which 15,000,000 common shares of the Company are
      being held in escrow on behalf of the investor and have been recorded at
      $nil consideration.                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | Further, the debenture is subject to a currency
      adjustment clause whereby the exchange rate between the US Dollar and the
      Euro will be fixed at the date of closing and if the exchange rate moves
      unfavorably for the holder of the debenture, the Company will be required
      to adjust conversion and redemption rates to compensate the holder for any
      such loss.                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | The debenture also contains certain restrictions on the
      Company for new share or debt issuances as long as any principal or
      interest amount remains outstanding on the debenture.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | The New Debenture and has a principal amount of
      $1,000,000 and matures on October 31, 2010 (the New Debenture). The New
      Debenture bears interest at a rate of 10% per annum compounded monthly.
      The principal and any unpaid accrued interest owing on the debentures are
      convertible into common stock of the Company in the event of a default or
      at the option of the holder at the rate of the lesser of i) 100% of the
      volume weighted average stock price on the date of issuance and ii) at 85%
      of the lowest daily closing VWAP as quoted by Bloomberg L.P. during the 5
      trading days immediately preceding the conversion
      date.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 19                                       

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | e) |  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The Company may redeem any or all of the New Debenture at
      any time, provided that the Common Stock is trading below the Fixed Price
      at the time the Company gives the Holder the redemption notice, by paying
      the unpaid principal and interest accrued and a prepayment premium of 15%
      redemption premium on the amount redeemed. In any case, the Company must
      redeem the $1,000,000 debenture maturing October 31, 2010 in equal monthly
      installments commencing January 31, 2009 until maturity at a 15%
      redemption premium.                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | At the closing of the New Debentures the Company
      incurred: $7,500 in legal costs, a $45,000 commitment fee, a $1,000 due
      diligence fee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The Company recorded a beneficial conversion feature of
      $1,710,300 with respect to the Original Debentures. The amount was being
      amortized over the term of the debentures, however after an event of
      default (see below), the entire amount was immediately recognized into
      income as a financing fee during the year ended February 28,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | Pursuant to the securities purchase agreement, the
      Company entered into a freestanding investor registration rights agreement
      dated June 24, 2008 and amended October 31, 2008. Under the terms of this
      agreement, the Company must have registered at least three (3) times the
      number of shares which are anticipated to be issued upon conversion of the
      Debentures issued and shares of common stock issuable to the purchaser
      upon exercise of the warrants. The Company has the obligation to use their
      best efforts to keep the registration of these securities effective by the
      SEC until all of the securities had been sold by the purchaser. Failure to
      meet this obligation would result in the Company incurring liquidated
      damages in the amount of 2% of the liquidated value of the debentures for
      each 30 day period registration of the securities is not
      effective.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | Under the provisions of FSP EITF 00-19-2 Accounting for
      Registration Payment Arrangements (EITF 00-19-2), the Company is
      required to separately recognize and measure a contingent obligation in
      respect of the liquidating damages in accordance with FASB No.5
      Accounting for Contingencies and FSB Interpretation No.14 Reasonable
      Estimation of the Amount of a Loss. At February 28, 2009, an amount of
      $270,667 has been recognized as the Company has determined that a loss is
      probable because the Company has failed to maintain effectiveness of its
      registration statement.                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | Included in accounts payable and accrued liabilities at
      February 28, 2009 is $429,167 (2008 - $Nil) for accrued interest and
      redemption premiums on these notes payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | During the year ended February 28, 2009, the Company
      failed to make any of the required redemption payments on the New
      Debenture. This triggered a default, which resulted in all of the
      debentures immediately becoming due and payable and the remaining
      discounts on the debentures were immediately recognized in
      income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 20                                       

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | e) |  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Subsequent to February 28, 2009, the Company did not
      repay the $1,250,000 debenture that matured on April 30, 2009.                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | As consideration for entering into negotiations to effect
      a loan rescheduling and the holder entering into an agreement not to sue,
      the Company assigned its interest in certain oil and gas leases to the
      holder (Note 4g). The holder also received the 15,000,000 common shares
      pledged as security against for debentures valued at $4,650,000, being the
      market value on the date they were released from
      escrow.

| |                                    |   | Face       |   |   |            |   |   | Deferred        |   |   | Carrying   |  
| | ---------------------------------- | - | ---------- | - | - | ---------- | - | - | --------------- | - | - | ---------- | -
| |                                    |   | Amount     |   |   | Discount   |   |   | Financing Costs |   |   | Value      |  
| | Balance, March 1, 2008             | $ | -          |   | $ | -          |   | $ | -               |   | $ | -          |  
| | Issuance of Original Debenture,    |   |            |   |   |            |   |   |                 |   |   |            |  
| | June 24, 2008                      |   | 2,500,000  |   |   | (839,292   | ) |   | (252,500        | ) |   | 1,408,208  |  
| |                                    |   |            |   |   |            |   |   |                 |   |   |            |  
| | Commissions paid  cash            |   | -          |   |   | -          |   |   | (150,000        | ) |   | (150,000   | )
| | Finders fees  warrants           |   | -          |   |   | -          |   |   | (7,592          | ) |   | (7,592     | )
| | Event of default, October 24, 2008 |   |            |   |   |            |   |   |                 |   |   |            |  
| | Beneficial conversion feature      |   | -          |   |   | -          |   |   | (1,388,320      | ) |   | (1,388,320 | )
| | Accretion of debt discount         |   | -          |   |   | 839,292    |   |   | 1,798,412       |   |   | 2,637,704  |  
| | Extinguishment of Original         |   |            |   |   |            |   |   |                 |   |   |            |  
| | debenture, October 31, 2008        |   | (2,500,000 | ) |   | -          |   |   | -               |   |   | (2,500,000 | )
| | Issuance of Amended Debentures     |   | 3,500,000  |   |   | (1,736,200 | ) |   | (53,500         | ) |   | 1,710,300  |  
| | Beneficial conversion feature      |   | -          |   |   | -          |   |   | (1,710,300      | ) |   | (1,710,300 | )
| | Commissions paid  cash            |   | -          |   |   | -          |   |   | (60,000         | ) |   | (60,000    | )
| | Finders fee  warrants            |   | -          |   |   | -          |   |   | (15,545         | ) |   | (15,545    | )
| | Event of default, January 31, 2009 |   |            |   |   |            |   |   |                 |   |   |            |  
| | Accretion of debt discount         |   | -          |   |   | 1,736,200  |   |   | 1,839,345       |   |   | 3,575,545  |  
| | Liquidating
      damages          |   | 270,667    |   |   | -          |   |   | -               |   |   | 270,667    |  
| | Balance, February 28, 2009         | $ | 3,770,667  |   | $ | -          |   | $ | -               |   | $ | 3,770,667  |  

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 21                                       

|Note 6 | Related Party Transactions Note 8
|------ | ----------------------------------

The officers of the Company provide
  consulting and management services to the Company as follows:

| |                          |   |              |  |   |              |  |   | November 4,   | 
| | ------------------------ | - | ------------ |  | - | ------------ |  | - | ------------- | 
| |                          |   | Year         |  |   | Year         |  |   | 2004 (Date of | 
| |                          |   | ended        |  |   | ended        |  |   | Inception) to | 
| |                          |   | February 28, |  |   | February 29, |  |   | February 28,  | 
| |                          |   | 2009         |  |   | 2008         |  |   | 2009          | 
| |                          |   |              |  |   |              |  |   |               | 
| | Consulting fees          | $ | 240,129      |  | $ | 154,728      |  | $ | 394,857       | 
| | Management fees          |   | 642,021      |  |   | 185,440      |  |   | 851,461       | 
| | Office and miscellaneous |   | -            |  |   | -            |  |   | 7,000         | 
| |                          |   |              |  |   |              |  |   |               | 
| |                          | $ | 882,150      |  | $ | 340,168      |  | $ | 1,253,318     | 

Included in accounts payable and
  accrued liabilities at February 28, 2009 is $504,293 (February 29, 2008:
  $22,438) owed to directors of the Company and companies with common directors of
  the Company for expenses incurred on behalf of the Company and for unpaid
  management and consulting fees.

The amounts due to related parties are
  unsecured, non-interest bearing and have no specific terms for repayment. These
  amounts were due to the director of the Company and a company controlled by a
  director of the Company.

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

| | i)   | a fee of $1,000 per month;                                                 
| | ---- | ---------------------------------------------------------------------------
| | ii)  | 1,000 restricted shares of the common stock of the
      Company per month;
| | iii) | a fee of $1,000 per each quarterly board meeting
      attended.           

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
|------ | --------------------------------------

Effective January 11, 2007 the Company
  completed a forward stock split of the authorized, issued and outstanding shares
  of common stock on a six new for one old basis. Authorized capital increased
  from 75,000,000 common shares to 450,000,000 common shares. Effective April 21,
  2008 the Company completed a reverse stock split of authorized, issued and
  outstanding shares of common stock on a one new for five old basis. Authorized
  capital decreased from 450,000,000 to 90,000,000. In January 2009, the Company
  obtained shareholder approval to amend its authorized share capital from
  90,000,000 common shares, par value $0.001 to 500,000,000 common shares, par
  value $0.001. These financial statements have been retroactively restated to
  reflect reverse stock split, however the increase in authorized share capital
  will not become effective until not less than 20 days after the information
  statement regarding the increase is first mailed to stockholders and until the
  appropriate filing is made with the Nevada Secretary of State. Subsequent to
  February 28, 2009, these required filings had not been made but it is
  managements intention to do so.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 22                                       

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
       (contd)
|------ | -------------------------------------------------------

| | a) | Share Issuance Agreements:
| | -- | --------------------------
| |    |                           
| |    | i)                        
| |    |                           
| |    |                           

| |                    |  | Number of |  | Issue  |  |   | Total     | 
| | ------------------ |  | --------- |  | ------ |  | - | --------- | 
| | Issue Date         |  | Units     |  | Price  |  |   | Proceeds  | 
| |                    |  |           |  |        |  |   |           | 
| | May 17, 2007       |  | 377,358   |  | $5.30  |  | $ | 2,000,000 | 
| | August 1, 2007     |  | 31,056    |  | $8.05  |  |   | 250,000   | 
| | September 18, 2007 |  | 44,199    |  | $9.05  |  |   | 400,000   | 
| | September 18, 2007 |  | 52,133    |  | $10.55 |  |   | 550,000   | 
| | September 27, 2007 |  | 28,708    |  | $10.45 |  |   | 300,000   | 
| | October 26, 2007   |  | 16,381    |  | $12.21 |  |   | 200,000   | 
| | October 26, 2007   |  | 21,097    |  | $11.85 |  |   | 250,000   | 
| | October 26, 2007   |  | 35,897    |  | $9.75  |  |   | 350,000   | 
| | November 28, 2007  |  | 47,337    |  | $8.45  |  |   | 400,000   | 
| | January 16, 2008   |  | 43,478    |  | $3.45  |  |   | 150,000   | 
| | January 24, 2008   |  | 96,154    |  | $5.20  |  |   | 500,000   | 
| | January 30, 2008   |  | 48,387    |  | $3.10  |  |   | 150,000   | 
| | February 11, 2008  |  | 89,286    |  | $2.80  |  |   | 250,000   | 
| | February 26, 2008  |  | 96,774    |  | $3.10  |  |   | 300,000   | 
| |                    |  |           |  |        |  |   |           | 
| |                    |  | 1,028,245 |  |        |  | $ | 6,050,000 | 

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 23                                       

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
       (contd)
|------ | -------------------------------------------------------

| | a) | Share Issuance Agreement:  (contd)
| | -- | ------------------------------------
| |    |                                     
| |    | i)                                  
| |    |                                     
| |    |                                     

Number of
      ExerciseWarrants
      Price
      Expiry Date20,000
      $ 6.25
      February 23, 2010377,358
      $ 6.65
      May 17, 201031,056
      $ 10.05
      August 1, 201044,199
      $ 11.30
      September 10, 201052,133
      $ 13.20
      September 10, 201028,708
      $ 13.05
      October 1, 201016,381
      $ 15.25
      October 26, 201021,097
      $ 14.80
      October 26, 201035,897
      $ 12.20
      October 26, 201047,337
      $ 10.55
      November 28, 201043,478
      $ 4.30
      January 16, 201196,154
      $ 6.50
      January 24, 201148,387
      $ 3.90
      January 30, 201189,286
      $ 3.50
      February 11, 201196,775
      $ 3.90
      February 26, 20112,000,000
      $ 0.001
      October 31, 20133,048,246


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

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 24                                       

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
       (contd)
|------ | -------------------------------------------------------

| | a) | Share Issuance Agreement:  (contd)
| | -- | ------------------------------------
| |    |                                     
| |    | ii)                                 
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     
| |    |                                     

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 25                                       

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
       (contd)
|------ | -------------------------------------------------------

| | b) | Share Purchase Warrants                                                                                                                                          
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                  
| |    | The summary of the changes in the Companys share
      purchase warrants for the periods ended February 28, 2009 and February 29,
      2008 is presented below:

| |                           |  | February 28, 2009 |  |          | February 29, 2008 | 
| | ------------------------- |  | ----------------- |  | -------- | ----------------- | 
| |                           |  |                   |  | Weighted |                   | 
| |                           |  |                   |  | Average  |                   | 
| |                           |  | Number of         |  | Exercise |                   | 
| |                           |  | Warrants          |  | Price    |                   | 
| |                           |  |                   |  |          |                   | 
| | Balance, beginning of the |  |                   |  |          |                   | 
| | year                      |  | 1,048,246         |  | $7.34    |                   | 
| | Issued                    |  | 2,000,000         |  | $0.001   |                   | 
| |                           |  |                   |  |          |                   | 
| | Balance, end of year      |  | 3,048,246         |  | $2.53    |                   | 

The weighted average remaining life of
  the warrants at February 28, 2009 is 3.61 years (February 29, 2008: 2.57
  years).

A finder's fee of $60,000 and 52,265
  share purchase warrants exercisable at $2.87 for a period of three years from
  the date of issuance (6% of proceeds) were paid to Partners Consulting in
  connection with the Original Debenture (Note 5(e)) pursuant to a finder
  agreement dated February 15, 2008. The fair value of the warrants was determined
  using the Black-Scholes valuation model. The assumptions used in the
  Black-Scholes calculation are as follows: expected life  3 years; volatility 
  143.11%; Dividend rate 0%; and risk free interest rate is 1.4% . At February
  28, 2009 these warrants had not yet been issued and are included in fees payable
  in stock and warrants.

A finder's fee of $60,000 and 76,923
  share purchase warrants exercisable at $0.78 for a period of three years from
  the date of issuance (6% of additional proceeds) were paid to Partners
  Consulting in connection with the Amended Debentures (Note 5(e) pursuant to a
  finder agreement dated February 15, 2008. The fair value of the warrants was
  determined using the Black-Scholes valuation model. The assumptions used in the
  Black-Scholes calculation are as follows: expected life  3 years; volatility 
  143.11%; Dividend rate 0%; and risk free interest rate is 1.4% . At February
  28, 2009 these warrants had not yet been issued and are included in fees payable
  in stock and warrants.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 26                                       

|Note 8 | Commitments Notes 4, 5, 7 and 10
|------ | ---------------------------------

| | a) | By an agreement dated May 22, 2007, the Company engaged
      an independent analyst to provide continuing research coverage regarding
      the Company beginning May 22, 2007 until May 31, 2009. The Company is
      required to pay $5,000 (paid) before commencement of work and twenty-four
      installments of $1,750.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | b) | By agreements dated June 8, 2007, the Company agreed to
      pay three directors of the Company a total amount of $20,000 per month for
      an indefinite period for consulting and management services to the
      Company. The agreements may be terminated at any time with cause and with
      three months notice without cause. On October 19, 2007 two of these
      agreements where amended one from $12,000 to £9,000 ($17,900) per month
      and another from $5,000 per month to £7,000 ($13,900). All other terms
      remained the same.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | c) | On May 8, 2008 the Company entered into a consulting
      agreement with Partners Consulting Inc. (PCI), a Florida Corporation, to
      introduce the Company to potential new investors. The consideration
      payable to PCI is warrants to purchase 50,000 shares of common stock due
      upon signing the agreement. In addition, PCI will receive 6% of the gross
      proceeds from any potential financing, payable in cash and share purchase
      warrants equal to 6% of the gross proceeds. In the event a financing is
      facilitated through an investment banker introduced by PCI, PCI will
      instead receive 3% of the gross proceeds, payable in cash and share
      purchase warrants equal to 3% of the gross proceeds. All warrants will
      have a cashless exercise and will be priced at market value as of the date
      of the financing and with a minimum expiry period of three years. The
      consulting agreement is for a period of one year.                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | At February 28, 2009, the Company had not yet issued the
      warrants for 50,000 common shares due upon signing of the agreement but
      the fair value of these warrants was determined to be $7,344, which was
      included in fees payable in stock and warrants at February 28, 2009. These
      warrants are exercisable at $2.77 and will expire three years from the
      date of issuance. The fair value of these warrants was determined using
      the Black Scholes valuation model. The assumptions used in the
      Black-Scholes calculation are as follows: expected life  3 years;
      volatility  143.11%; Dividend rate  0%; and risk free interest rate is
      1.4%.                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | d) | On May 21, 2008, the Company signed a letter of
      commitment whereby the Company agreed to commit to the use of a drilling
      rig commencing no earlier than October 1, 2008 for a total cost of
      $8,910,000 which has been accrued in accounts payable and accrued
      liabilities as at February 28, 2009. The Company also committed to enter
      into a well project management and integrated services contract for the
      management of a well program on the rig. The Company is also obligated to
      pay a fee of 1.75% of the operating rig rate in acknowledgement of the
      value provided with the rig opportunity, if the Company uses the rig, but
      not the integrated project management services. The Company also incurred
      and accrued penalties of $2,000,000 as compensation for lost revenues of
      the rig owners for its failure to fulfill its obligations under the rig
      provision contract and may be liable to pay up to an additional $2,000,000
      for its share of additional costs incurred by the rig owners during the
      Companys allotted rig slot.

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 27                                       

|Note 8 | Commitments Notes 4, 5, 7 and 10 
      (contd)
|------ | --------------------------------------------------

| | d) | continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | This additional $2,000,000 amount is subject to a
      commercial discussion between the parties involved and has been accrued at
      February 28, 2009 as it is likely that it will be incurred. As a result a
      total of $12,910,000 has been recorded as a loss on failure to perform
      obligations under oil & gas commitments and has been charged to the
      statement of operations.                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | e) | By a bonus agreement dated May 22, 2008, the Company
      agreed to issue 5,000 common shares and £5,000 ($10,000) (paid during the
      year ended February 29, 2008) to an officer and director of the Company as
      a performance bonus. At February 28, 2009, the Company had not yet issued
      the shares due. The fair value of the shares was determined to be $22,150,
      which was included in fees payable in stock and warrants at February 28,
      2009.                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | f) | During the year ended February 28, 2009, the Company
      recorded a recovery of $20,000 (2007: $Nil) for the change in fair value
      of 50,000 common shares issuable pursuant to Board of Advisors (BOA)
      agreements dated November 17, 2007 as compensation to the members of the
      BOA. An amount of $15,000 is included in fees payable in stock and
      warrants at February 28, 2009 for these shares.                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | g) | By an investor relations consulting service agreement
      dated September 1, 2008 and later verbally amended, the Company agreed to
      pay $6,000 per month for services relating to investor relations and
      corporate communications, identification of projects of interest and basic
      project management for an initial period of nine months beginning on
      September 1, 2008. Following the initial period of nine months, the
      contract will continually and automatically be renewed for additional nine
      month periods until it is terminated by either party.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | h) | On December 4, 2008, the Company sent a letter to the
      directors of Minmet PLC (Minmet), an Irish company, with an offer to
      purchase the entire issued and to be issued share capital of Minmet at
      £0.12 per share in exchange for common shares of the Company. The offer is
      subject to the Company completing, to its satisfaction, both technical and
      legal due diligence on the proposed transaction and Minmet.                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | This offer is subject to (i) approval of the board of
      Minmet; and (ii) final approval of the Company's board of directors. This
      acquisition was also conditioned on a final due diligence review and a
      signed acquisition agreement between the Company and Tucumcari Investments
      Limited for the acquisition of a 75% ownership interest in an oil and gas
      field in Tucumcari, New Mexico to close simultaneously with the
      acquisition of Minmet.                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | The Company is currently conducing due diligence of
      Minmet before progressing to a final agreement between the companies, and
      believe it is unlikely to pursue this
      opportunity.                                                                                                                                                                                                                                                                                                                                                                                                 

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 28                                       

|Note 9 | Deferred Income Taxes
|------ | ---------------------

At February 28, 2009, the Company has
  accumulated net operating losses in the United States of America totaling
  approximately $8,200,000 which are available to reduce taxable income in future
  taxation years.

The Company's income tax expense for
  the years ended February 28, 2009 and February 28, 2008 differed from the United
  States statutory rates:

| |                                                          |   | 2009        |   |   | 2008     |  
| | -------------------------------------------------------- | - | ----------- | - | - | -------- | -
| |                                                          |   |             |   |   |          |  
| | Effective tax rate                                       |   | 34%         |   |   | 35%      |  
| |                                                          |   |             |   |   |          |  
| | Statutory rate applied to loss before
      income taxes | $ | (10,951,400 | ) | $ | (920,000 | )
| | Increase in income taxes resulting from:                 |   |             |   |   |          |  
| | Income taxed at other than
      statutory rate          |   | (138,500    | ) |   |          |  
| | Non-deductible expenses                                  |   | 962,400     |   |   | 12,000   |  
| | Effect of reduction in statutory rate                    |   | 26,500      |   |   | -        |  
| | Change in valuation allowance                            |   | 10,101,000  |   |   | 908,000  |  
| |                                                          |   |             |   |   |          |  
| | Income tax expense                                       | $ | -           |   | $ | -        |  

The significant components of the
  Companys deferred tax assets are as follows:

| |                                                         |   | 2009        |   |   | 2008     |  
| | ------------------------------------------------------- | - | ----------- | - | - | -------- | -
| |                                                         |   |             |   |   |          |  
| | Deferred tax assets                                     |   |             |   |   |          |  
| | Net operating losses carryforward                       | $ | 2,309,000   |   | $ | 942,000  |  
| | Undeducted financing
      costs                        |   | 89,000      |   |   | -        |  
| | Oil and gas properties                                  |   | 3,357,000   |   |   | -        |  
| | Accounts payable and
      accrued liabilities add back |   | 5,263,000   |   |   | -        |  
| | Unrealized foreign exchange                             |   | 25,000      |   |   | -        |  
| | Less: valuation allowance                               |   | (11,043,000 | ) |   | (942,000 | )
| |                                                         |   |             |   |   |          |  
| | Net deferred tax assets                                 | $ | -           |   | $ | -        |  

These losses expire as follows:

| | Year of Expiry |   | Loss      | 
| | -------------- | - | --------- | 
| | 2024           | $ | 16,000    | 
| | 2025           |   | 36,000    | 
| | 2027           |   | 46,000    | 
| | 2028           |   | 2,593,000 | 
| | 2029           |   | 4,098,000 | 
| |                |   |           | 
| |                | $ | 6,790,000 | 

---

|Fox Petroleum Inc.                            
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|February 28, 2009 and February 29, 2008       
|(Stated in US Dollars)                        
|Page 29                                       

|Note 9 | Deferred Income Taxes  (contd)
|------ | --------------------------------

The amount taken into income as
  deferred tax assets must reflect that portion of the income tax loss
  carryforwards that is more likely-than-not to be realized from future
  operations. The Company has chosen to provide an allowance of 100% against all
  available income tax loss carryforwards, regardless of their time of expiry.

On February 28, 2007, the Company
  adopted FASB Interpretation No. 48,"Accounting for Uncertainty in Income Taxes"
  ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute
  for the recognition and measurement of tax positions taken or expected to be
  taken in income tax returns. FIN 48 also provides guidance on de-recognition of
  income tax assets and liabilities, classification of current and deferred income
  tax assets and liabilities, and accounting for interest and penalties associated
  with tax positions.

The Company files income tax returns
  in the U.S. federal jurisdiction, various state and foreign jurisdictions. The
  Company's tax returns are subject to tax examinations by U.S. federal and state
  tax authorities, or examinations by foreign tax authorities until respective
  statute of limitation. The Company is subject to tax examinations by tax
  authorities for all taxation years ending on or after February 28, 2007.

The Company may be liable to pay
  withholding tax of up to $21,250 plus penalties and interest for interest
  payments made to a non-resident of the U.S. during the year ended February 28,
  2009 and $10,000 plus penalties and interest for failure to file foreign
  affiliate reporting forms for the year ended February 29, 2008.

|Note 10 | Non-cash Transactions Note 5
|------- | -----------------------------

Investing and financing activities
  that do not have a direct impact on current cash flows are excluded from the
  statements of cash flows. The following transactions have been excluded from the
  statement of cash flows;

| | a) | During the year ended February 28, 2009, Nil (2008 -
      4,080,000) common shares valued at $Nil (2008 - $1,965,702) were issued as
      consideration for the acquisition of oil and gas
      interests;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the year ended February 28,
  2009, $Nil (2008 - $Nil) was paid for income taxes.

During the year ended February 28,
  2009, $141,667 (2008 - $Nil) was paid for interest on notes payable.

---

37

Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.

None.

Item 9A(T). Controls and Procedures.

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of
1934, we have carried out an evaluation of the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this annual
report, being February 28, 2009. This evaluation was carried out under the
supervision and with the participation of our management, including our
President and Chief Executive Officer.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commissions rules and forms. Disclosure controls
and procedures include controls and procedures designed to ensure that
information required to be disclosed in our companys reports filed under the
Securities Exchange Act of 1934 is accumulated and communicated to management,
including our President and Chief Executive Officer, to allow timely decisions
regarding required disclosure.

Our management does not expect that our disclosure controls or
our internal controls over financial reporting will prevent all error and fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, but no absolute, assurance that the objectives of a control system
are met. Further, any control system reflects limitations on resources, and the
benefits of a control system must be considered relative to its costs. These
limitations also include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of a
control. A design of a control system is also based upon certain assumptions
about potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
may not be detected.

Based upon that evaluation, our President and Chief Executive
Officer concluded that our disclosure controls and procedures were ineffective
as of the end of the period covered by this annual report.

Managements Report on Internal Control over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rule 13a-15(f)
under the Securities Exchange Act of 1934). Management has assessed the
effectiveness of our internal control over financial reporting as of February
28, 2009 based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
As a result of this assessment, management concluded that, as of February 28,
2009, our internal control over financial reporting was not effective. Our
management identified the following material weaknesses in our internal control
over financial reporting, which are indicative of many small companies with
small staff: (i) inadequate segregation of duties and effective risk assessment;
and (ii) insufficient written policies and procedures for accounting and
financial reporting with respect to the requirements and application of both US
GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our
internal control over financial reporting. During the period covered by this
annual report on Form 10-K, we have not been able to remediate the material
weaknesses identified above. To remediate such weaknesses, we plan to implement
the following changes during our fiscal year ending February 28, 2010: (i)
appoint additional qualified personnel to address inadequate segregation of
duties and ineffective risk management; and (ii) adopt sufficient written
policies and procedures for accounting and financial reporting. The remediation
efforts set out in (i) is largely dependent upon our securing additional
financing to cover

---

38

the costs of implementing the changes required. If we are
unsuccessful in securing such funds, remediation efforts may be adversely
affected in a material manner.

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

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial
reporting that occurred during our fourth fiscal quarter ended February 28, 2009
that have materially affected, or are reasonably likely to materially affect our
internal control over financial reporting.

Item 9B. Other Information.

Please read this annual report on Form 10-K for the information
required to be disclosed in a report on Form 8-K, but not reported.

PART III

Item 10. Directors, Executive Officers and Corporate
Governance.

Directors and Executive Officers

The following individuals serve as our directors and executive
officers. All directors of our company hold office until the next annual meeting
of our shareholders or until their successors have been elected and qualified.
The executive officers of our company are appointed by our board of directors
and hold office at the pleasure of our board of directors.

Name
    Position Held with our Company
    Age
    Date First Elected or AppointedRichard Moore
    President, Chief Executive Officer,
      Chairman, and Director
    50
    June 8, 2007William MacNee
    Chief Operating Officer and Director
    54
    May 5, 2008John Spence
    Director
    59
    May 5, 2008Jeffrey Sternberg
    Director
    64
    April 21, 2009


Business Experience

The following is a brief account of the education and business
experience of our directors and executive officers during at least the past five
years, indicating their business experience, principal occupations during the
period, and the names and principal businesses of the organizations by which
they were employed.

Richard Moore

Richard Moore has served as our chairman since May 5, 2008 and
president, chief executive officer and a director since June 8, 2007. He is an
oil and gas industry veteran with nearly 30 years experience across almost every
aspect of the industry in both commercial and technical activities. Before
becoming our president and chief executive officer, he worked as a consultant to
the oil industry on new field development and as a lecturer in Russian
universities and academies, where he taught both business and personal career
development, comparing the methods used by the Eastern and Western business
communities. From 1998 to 2004, he worked with Chaparral Resources, Inc./KAZ
Commertz Group. He held the position of vice president-finance and chief
financial officer of Chaparral Resources, Inc., a publicly listed company in the
U.S., since November 2002. He also served as finance director for Closed Type
JSC Karakudukmunay, an operating subsidiary of Chaparral Resources, Inc. from
1998 to 2003.

---

39

William MacNee

William MacNee has served as our chief operating officer and a
director since May 5, 2008. He has a Ph.D. in electrical engineering, he brings
more than 30 years of international oil, gas, metals and minerals experience. He
has worked throughout North and South America, Western Africa, Eastern Siberia
and extensively in Kazakhstan and Kyrgystan. He is skilled at project
management, with knowledge in the areas of facilities planning, construction and
implementation, gathering systems, process engineering and production operations
planning and processing. From April 2006 to April 2008, he was on contract to
Petrofac International and was based in Eastern Siberia as their Operations
Manager on the Kovytka gas field for the client TNKBP. From March 2003 to March
2006, he held the position of Project Manager for Arctic Construction
International where he handled contracts in the Tengiz field for Chevron and
also in the Kashagan oil field for the Northern Constructors Consortium.

He received his Doctor of Science (Ph.D.) with Electrical
Engineering Major at Concordia College and University, USA in July 2003.

John Spence

John Spence has served as a director since May 5, 2008. For 25
years he drilled locations across the United States as a contractor, consultant
and for the second half of his career, as a senior manager and member of the
Parker Drilling Company team. In the latter part of his career, he has worked in
the international arena and in particular Russia and Eastern Europe with
drilling operations in the Ukraine, Sakhalin and Kazakhstan. Since September
2006, he has been a consultant drilling manager of Ken Sary LLP  Kazakhstan.
From March 2006 to September 2006, he was a consultant drilling manager of KKM 
Kazakhstan. From August 2004 to January 2006, he was a consultant drilling
manager of Uzpec  Uzbekistan. From September 1999 to May 2004, he was a
consultant drilling manager of KKM  Kazakhstan.

Jeffrey Sternberg

Effective April 21, 2009, the holders of a majority of the
outstanding shares of our common stock appointed Jeffrey Sternberg to our board
of directors.

Jeffrey I. Sternberg has over three decades of experience in
manufacturing and distribution and spent a large part of his career in Asian
markets setting up distribution channels for various international companies,
including, seven years as Senior Vice President of Herbko International.

In addition and simultaneous with this experience, Mr.
Sternberg has held several senior board positions on small to mid cap publicly
traded companies. Mr. Sternbergs most recent post was as president & chief
executive officer of Advantage Capital Development Corp. He has been managing
member of Phoenix Capital Partners LLC since June 2002. Other past board posts
include, director, Americana Distribution, director Kachina Gold Corp and
director, Tech Laboratories Inc. Mr. Sternberg currently serves as director for
New Media Lottery Service (NWMD.OB) which is quoted on the OTCBB.

Mr. Sternberg currently works as a financial services
consultant in Miami, Florida. Mr. Sternberg is active in various charitable
organizations throughout South Florida and is an avid golfer.

Mr. Sternberg attended the University of Miami.

Family Relationships

There are no family relationships between any director or
executive officer.

Involvement in Certain Legal Proceedings

None of our directors and executive officers has been involved
in any of the following events during the past five years:

|1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

40

|2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offenses);                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                
|3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
|   |                                                                                                                                                                                                                                                                                                                                
|4. | being found by a court of competent jurisdiction (in a
      civil action), the Securities and Exchange Commission or the Commodity
      Futures Trading Commission to have violated a federal or state securities
      or commodities law, and the judgment has not been reversed, suspended, or
      vacated.             

Compliance with Section 16(a) of the Securities Exchange Act
of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires
our executive officers and directors and persons who own more than 10% of our
common stock to file with the Securities and Exchange Commission initial
statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our common stock and other equity
securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and
greater than 10% shareholders are required by the Securities and Exchange
Commission regulations to furnish us with copies of all Section 16(a) reports
that they file.

Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe
that during fiscal year ended February 28, 2009, all filing requirements
applicable to our officers, directors and greater than 10% percent beneficial
owners were complied with, with the exception of the following:

Name
    Number of Late
      Reports
    Number of Transactions Not Reported on
      a Timely Basis
    Failure to File Required
      FormsRichard Moore
    1
    10
    NilAlexander Craven
    3
    20
    NilWilliam MacNee
    1
    1
    NilRobert Frost
    Nil
    1
    1Michael Rose
    1
    1
    NilJohn Spence
    1
    1Jonathan Wood
    1
    1
    NilEuroEnergy Growth Capital S.A.
    Nil
    1
    1Trafalgar Capital Specialized
      Investment Fund, Luxembourg
    Nil
    1
    1Carbon Energy Investments Limited
    Nil
    2
    2


Corporate Governance

Code of Ethics

Effective April 17, 2008, our board of directors adopted a code
of conduct and ethics that applies to all directors, officers, and employees.
Our code of conduct and ethics was filed as an exhibit to our current report on
Form 8-K filed with the Securities and Exchange Commission on May 9, 2008.

---

41

Audit Committee and Audit Committee Financial
Expert

We have an audit committee which consists of John Spence. We do
not have any audit committee member that qualifies as an audit committee
financial expert. Given our current financial difficulties, it has been very
difficult to attract anyone who can serve as an audit committee financial
expert.

Item 11. Executive Compensation.

The particulars of compensation paid to the following
persons:

| | (a) | our principal executive officer;                                                                                                                                                                                                       
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                        
| | (b) | each of our two most highly compensated executive
      officers who were serving as executive officers at the end of the year
      ended February 28, 2009; and                                                                      
| |     |                                                                                                                                                                                                                                        
| | (c) | up to two additional individuals for whom disclosure
      would have been provided under (b) but for the fact that the individual
      was not serving as our executive officer at the end of the year ended
      February 28, 2009,

who we will collectively refer to as the named executive
officers, for our fiscal years ended February 28, 2009 and February 29, 2008,
are set out in the following summary compensation table:

SUMMARY COMPENSATION
      TABLEName and Principal Position
    Year
    Salary($)
    **Bonus**($)
    Stock
      **Awards**($)
    Option**Awards** ($)
    Non-Equity **Incentive
      Plan**Compensation ($)
    Nonqualified Deferred
      **Compensation** Earnings ($)
    All Other Compensation($)
    **Total**
      ($)Richard Moore(1)President and Chief
      Executive Officer
    2009 
      2008
    282,696(5)
      169,340(8)
    9,831(6)
      10,000
    22,150 
      Nil
    Nil 
      Nil
    Nil 
      Nil
    Nil 
      Nil
    Nil 
      Nil
    314,677 
    179,340William MacNee(2)Chief Operating
      Officer
    2009 
      2008
    172,424(7)
      N/A
    Nil 
      N/A
    Nil 
      N/A
    Nil 
      N/A
    Nil 
      N/A
    Nil 
      N/A
    Nil 
      N/A
    172,424 
    N/AJonathan Wood(3)Former Chief Financial
      Officer
    2009 
      2008
    152,763(8)
      N/A
    Nil 
      N/A
    Nil 
      N/A
    Nil 
      N/A
    Nil 
      N/A
    Nil 
      N/A
    Nil 
      N/A
    152,763 
    N/AAlexander Craven Former Executive Vice President
      and Compliance Officer
    2009 
      2008
    232,605(5)
      103,740(8)
    Nil 
      Nil
    Nil 
      Nil
    Nil 
      Nil
    Nil 
      Nil
    Nil 
      Nil
    Nil 
      Nil
    232,605 
      103,740


|(1)Richard Moore was appointed as our president
      and chief executive officer on June 8, 2007.                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)William MacNee was appointed as our chief
      operating officer and director on May 5, 2008.                                                                                                      
|(3)Jonathan Wood was appointed as our chief
      financial officer on July 11, 2008 and as our director on May 5, 2008. He
      resigned as our chief financial officer and director on May 14, 2009.
|(4)Alexander Craven resigned as our executive
      vice president, compliance officer, secretary, treasurer, and director on
      February 18, 2009.                                                 
|(5)GBP to USD converted at an average exchange
      rate of 1.7450 during the year ended February 28, 2009.                                                                                           
|(6)GBP to USD converted at the exchange rate of
      1.9662 on the date the transaction took place                                                                                                    
|(7)GBP to USD converted at an average exchange
      rate of 1.7242 over the period of compensation.                                                                                                   
|(8)GBP to USD converted at an average exchange
      rate of 1.6974 over the period of compensation.                                                                                                   

Employment Agreements

Richard Moore

On June 8, 2007, we entered into an employment agreement with
Richard Moore, pursuant to which Mr. Moore serves as our president and chief
executive officer. Pursuant to the employment agreement, we paid Mr. Moore

---

42

$12,000 per month and agreed to reimburse him for all
reasonable travelling and other expenses incurred by him in connection with his
services to us. Mr. Moore was required to work a minimum of three days per week
for us and is entitled to a minimum annual vacation of four weeks. The term of
the agreement is for an indefinite period and the agreement may be terminated
with or without cause.

On October 19, 2007, we amended the employment agreement to
increase the salary of Mr. Moore to £9,000 per month, payable in £4,500
bi-monthly installments, in arrears, commencing November 1, 2007. Mr. Moore
agreed to work for a minimum of 5 days per week for us.

Effective June 1, 2008, Mr. Moores salary was increased to
£15,000 per month.

By a bonus agreement dated May 22, 2008, we agreed to issue
5,000 shares of our common stock and paid £5,000 during the year ended February
29, 2008 to Richard Moore as a performance bonus. We have not yet issued the
shares due.

William MacNee and Jonathan Wood

On May 1, 2008 and June 1, 2008, William MacNee and Jonathan
Wood respectively commenced employment with us on a full time basis. Mr. MacNee
assumed the position of chief operating officer and Mr. Wood that of chief
financial officer. They both received a salary of £10,000 per month. On May 14,
2009, Mr. Wood resigned as our chief financial officer and director.

Alexander Craven

Since January 2007, Alexander Craven had received a salary of
$5,000 per month and, on June 8, 2007, we entered into a written consulting
agreement with Alexander Craven, pursuant to which we agreed to pay Mr. Craven
$5,000 per month and all reasonable travelling and other expenses incurred by
him in connection with his duties to us.

On October 19, 2007, we amended the consulting agreement to
increase the fee to £7,000 monthly, commencing October 1, 2007.

Effective June 1, 2008, Mr. Cravens salary was increased to
£12,500 per month. On February 18, 2009, Mr. Craven resigned as our executive
vice president, compliance officer, secretary, treasurer, and director.

Board of Advisors

Effective August 17, 2008, we appointed William MacNee, Robert
Frost, Michael Rose, John Spence, and Jonathan Wood to our board of advisors. We
also entered into board of advisors agreements with Aimwell Energy Limited (a
company controlled by Robert Frost and Michael Rose), Black Gold Consulting Inc.
(a company controlled by William MacNee), John Spence, and Jonathan Wood,
whereby we agreed to grant 20,000, 10,000, 10,000, and 10,000 shares of our
common stock, respectively, for each completed year of the services.

Effective May 5, 2008, all five of them became our directors
and the board of advisors was dissolved. Also effective June 10, 2008, we
entered into board of advisors termination agreements, whereby we terminated the
board of advisors agreements and agreed to issue 20,000, 10,000, 10,000, 10,000
shares of our common stock to Aimwell Energy Limited, Black Gold Consulting
Inc., John Spence, and Jonathan Wood, respectively, for the services performed
by them.

Stock Option Plan

Currently, we do not have a stock option plan in favor of any
director, officer, consultant or employee of our company.

Stock Options

We did not grant any options or stock appreciation rights
during our fiscal year ended February 28, 2009.

---

43

Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Values

There were no options exercised during our fiscal year ended
February 28, 2009 by any officer or director of our company.

Director Compensation

The table below shows the compensation of our directors who
were not our named executive officers for our last completed fiscal year ended
February 28, 2009:

Name
    Fees Earned or Paid in
      Cash ($)
    Stock Awards
      ($)
    Option Awards
      ($)
    Non-Equity Incentive
      Plan Compensation ($)
    Nonqualified Deferred
      Compensation Earnings ($)
    All other
      Compensation ($)
    Total ($)Robert
      Frost(1)
    8,000
    Nil
    Nil
    Nil
    Nil
    Nil
    8,000Michael
      Rose(1)
    8,000
    Nil
    Nil
    Nil
    Nil
    Nil
    8,000John Spence
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil


(1) Robert Frost and Michael Rose resigned as our
directors effective April 2, 2009.

Effective May 6, 2008, we adopted a compensation policy for our
independent directors pursuant to which we compensate each independent director
(i) a fee of $1,000 per month, (ii) 1,000 restricted shares of our common stock
per month, and (iii) a fee of $1,000 per each quarterly board meeting attended.
On May 6, 2008, our board of directors determined that Robert Frost, Michael
Rose, John Spence, and Jonathan Wood are independent directors. On July 11,
2008, our board of directors determined that Jonathan Wood no longer qualified
as an independent director of our company because of his appointment as our
Chief Financial Officer.

We have no present formal plan for compensating our
non-independent directors for their services in their capacities as
directors.

Directors are entitled to reimbursement for reasonable travel
and other out-of-pocket expenses incurred in connection with attendance at
meetings of our board of directors. The board of directors may award special
remuneration to any director undertaking any special services on behalf of our
company other than services ordinarily required of a director. Members of
special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.

Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.

The following tables set forth, as of July 13, 2009, certain
information with respect to the beneficial ownership of our common stock by each
of our current directors and our named executive officers and by each
stockholder known by us to be the beneficial owner of more than 5% of our common
stock.

Directors and Executive OfficersName of Beneficial Owner
    Title of Class
    Amount and Nature of Beneficial
      Ownership
    Percent of Class(1)Richard Moore President, Chief
      Executive Officer, Director and Chairman
    Common Stock
    611,084(2)
    0.72%William MacNee Chief Operating Officer
      and Director
    Common Stock
    Nil
    Nil


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44

Directors and Executive OfficersName of Beneficial Owner
    Title of Class
    Amount and Nature ofBeneficial Ownership
    Percent ofClass(1)John Spence Director
    Common Stock
    Nil
    NilJeffrey Sternberg Director
    Common Stock
    Nil
    NilAlexander Craven Former Executive Vice
      President, Compliance Officer and Director
    Common Stock
    1,637,874
    1.93%Jonathan Wood Former Chief Financial
      Officer and Director
    Common Stock
    Nil
    NilDirectors and Executive Officers as aGroup (4 persons)
    Common Stock
    611,084(2)
    0.72%


|(1) | Based on 84,668,245 shares of our common stock issued and
      outstanding as of July 13, 2009. Beneficial ownership is determined in
      accordance with the rules of the Securities and Exchange Commission and
      generally includes voting or investment power with respect to securities.
      Except as otherwise indicated, we believe that the beneficial owners of
      shares of our common stock listed above, based on information furnished by
      such owners, have sole investment and voting power with respect to such
      shares, subject to community property laws where applicable.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(2) | Does not include 500,000 shares of our common stock, the
      proceeds from the sale of which shares would be applied against legal and
      audit fees and, if there is any money remaining, a portion of back salary
      to the officers and management of our company.                                                                                                                                                                                                                                                                                                                                       

5% or More StockholderName and Address ofBeneficial Owner
    Title of Class
    Amount and Nature ofBeneficial Ownership
    Percent of
      Class(1)Carbon Energy Investments Limited 31-32
      Ely Place London EC1N 6TD, UK
    Common Stock
    32,000,000
    37.8%Trafalgar Capital Specialized Investment
      Fund 
      8-10 Rue Mathias Hardt, BP 3023 L-1030, Luxembourg
    Common Stock
    19,700,000 (2)
    22.7% (2)Libertas Capital Ventures Limited 16
      Berkeley Street London W1J8DZ, UK
    Common Stock
    20,000,000
    23.6%


|(1) | Based on 84,668,245 shares of our common stock issued and
      outstanding as of July 13, 2009. Shares of our common stock subject to
      options or warrants currently exercisable, or exercisable within 60 days,
      are counted as outstanding for computing the percentage of the person
      holding such options or warrants but not counted
as
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

45

|    | outstanding for computing the percentage of any other
      person. Beneficial ownership is determined in accordance with the rules of
      the Securities and Exchange Commission and generally includes voting or
      investment power with respect to securities. Except as otherwise
      indicated, we believe that the beneficial owners of shares of our common
      stock listed above, based on information furnished by such owners, have
      sole investment and voting power with respect to such shares, subject to
      community property laws where applicable.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | Includes warrant to purchase 2,000,000 shares of our
      common stock at an exercise price of $0.001 per
share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Change in Control

Except as disclosed below, we are not aware of any arrangements
the operation of which may at a subsequent date result in a change in control of
our company.

If we cancel 32,000,000 shares of our common stock issued to
Carbon Energy Investments Limited and 20,000,000 shares of our common stock
issued to Libertas Capital Ventures Limited (as disclosed elsewhere in this
annual report), Trafalgar Capital Specialized Investment Fund will own
approximately 54% of the issued and outstanding shares of our common stock.

Item 13. Certain Relationships and Related Transactions, and
Director Independence.

Transactions with related persons

Other than as disclosed below and elsewhere, there has been no
transaction, since March 1, 2007, or currently proposed transaction, in which we
were or are to be a participant and the amount involved exceeds the lesser of
$120,000 or one percent of the average of our total assets at year end for the
last two completed fiscal years, and in which any of the following persons had
or will have a director or indirect material interest.

| | (i)   | any director or executive officer of our
  company;                                                                                          
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                              
| | (ii)  | any beneficial owner of shares carrying more than 5% of
      the voting rights attached to our outstanding shares of common stock;
      and
| |       |                                                                                                                                              
| | (iii) | any member of the immediate family (including spouse,
      parents, children, siblings and in-laws) of any of the foregoing
      persons.  

Richard Bullock

Richard Bullock was our chairman and director from June 8, 2007
to May 1, 2008 and owns 26.7% of the issued and outstanding shares of our common
stock as of June 10, 2008.

On May 29, 2007, we entered into the lease purchase and sale
agreement with Fox Petroleum LLC, a Nevada company, to acquire a combined 100%
working interests in 12 state-issued oil and gas leases in North Slope, Alaska.
These leases are subject to a royalty of 16.67% to the State of Alaska and a
private royalty equal to 5%. In consideration for the oil and gas leases, we
issued 20,000,000 (4,000,000 post-reverse stock split) restricted common shares
of our company to Richard Bullock, the 100% owner of Fox Petroleum LLC.
Acquisitions of 11 oil and gas leases under the agreement with Fox Petroleum LLC
was completed on August 14, 2007, while that of 12th oil and gas lease was
completed effective March 1, 2008. These leases have been assigned to our wholly
owned subsidiary, Fox Petroleum (Alaska) Inc.

On June 8, 2007, we entered into a consulting agreement with
Richard Bullock, our former Chairman and director, pursuant to which we pay Mr.
Bullock $3,000 per month and all reasonable travelling and other expenses
actually and properly incurred by him in connection with his duties. On May 1,
2008, we terminated this agreement.

Compensation of Executive Officers and
Directors

For information regarding compensation of our executive
officers and directors, please see Item 10. Executive Compensation.

---

46

Aimwell Energy Limited

Michael Rose and Robert Frost, our former directors, are the
beneficial owners and directors of Aimwell Energy Ltd. For information regarding
our transactions with Aimwell Energy Limited, please see Item 1. Business. and
Item 2. Properties.

EuroEnergy Growth Capital S.A.

EuroEnergy Growth Capital S.A. owns 1,028,245 shares of our
common stock and warrants to purchase 1,208,245 shares of our common stock.

For information regarding our transactions with EuroEnergy
Growth Capital S.A., please see Item 6. Managements Discussion and Analysis or
Plan of Operation - Liquidity and Capital Resources.

Trafalgar Capital Specialized Investment Fund

Trafalgar Capital Specialized Investment Fund owns 17,700,000
shares of our common stock and warrant to purchase 2,000,000 share of our common
stock.

For information regarding our transactions with Trafalgar,
please see Item 1. Business. and Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations.

Carbon Energy Investments Limited

Carbon Energy Investments Limited owns 32,000,000 shares of our
common stock.

For information regarding our transactions with Carbon Energy,
please see Item 1. Business.

Libertas Capital Ventures Limited

Libertas Capital Ventures Limited owns 20,000,000 shares of our
common stock.

For information regarding our transactions with Libertas
Capital Ventures, please see Item 1. Business.

Director Independence

Our board of directors is presently composed of four directors,
consisting of Richard Moore, William MacNee, John Spence, and Jeffrey
Sternberg.

John Spence and Jeffrey Sternberg are the independent directors
under a definition of independent director of the American Stock Exchange.
John Spence is the sole member of the audit committee, the compensation
committee and nominating committee. He is independent under the applicable
committee independence standards of the American Stock Exchange.

Item 14. Principal Accounting Fees and Services.

Audit Fees

The aggregate fees billed or expected to be billed for the most
recently completed fiscal years ended February 28, 2009 and February 29, 2008
for professional services rendered by the principal accountant for the audit of
our annual financial statements and review of the financial statements included
in our quarterly reports on Form 10-QSB and services that are normally provided
by the accountant in connection with statutory and regulatory filings or
engagements for these fiscal periods were as follows:

Year EndedFebruary 28, 2009
    February 29, 2008Audit Fees
    $141,710
    $51,595Audit Related Fees
    Nil
    NilTax Fees
    Nil
    Nil


---

47

All Other Fees
    Nil
    NilTotal
    $141,710
    $51,595


Pre-Approval Policies and Procedures

Our board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before such services were
rendered.

Our board of directors has considered the nature and amount of
fees billed by our independent auditors and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
our independent auditors independence.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

Exhibit No.
    Description(3)
    (i) Articles of Incorporation and (ii) By-laws3.1
    Articles of Incorporation (incorporated by reference to
      an exhibit to our registration statement on Form SB-2 filed on August 19,
      2005)3.2
    Certificate of change filed with the Secretary of State
      of Nevada on January 2, 2007 and which is effective on January 11, 2007
      (incorporated by reference to an exhibit to our current report on Form 8-
      K filed on January 12, 2007)3.3
    Article of Merger filed with the Secretary of State of
      Nevada on January 11, 2007 (incorporated by reference to an exhibit to our
      current report on Form 8-K filed on February 7, 2007)3.4
    Certificate of Change filed with the Secretary of State
      of Nevada on April 4, 2008 (incorporated by reference to an exhibit to our
      current report on Form 8-K filed on April 21, 2008)3.5
    Amended and Restated Bylaws (incorporated by reference to
      an exhibit to our current report on Form 8- K filed on April 30, 2008)(10)
    Material Contracts10.1
    Private Placement Subscription Agreement dated February
      23, 2007 (incorporated by reference to an exhibit to our current report on
      Form 8-K filed on June 1, 2007)10.2
    Lease Purchase and Sale Agreement dated May 29, 2007
      (incorporated by reference to an exhibit to our current report on Form 8-K
      filed on May 31, 2007)10.3
    Share Issuance Agreement dated May 17, 2007 (incorporated
      by reference to an exhibit to our current report on Form 8-K filed on June
      1, 2007)10.4
    Farm-In Agreement dated June 8, 2007 (incorporated by
      reference to an exhibit to our annual report on Form 10-KSB filed on June
      13, 2007)10.5
    Employment Agreement dated June 11, 2007 (incorporated by
      reference to an exhibit to our annual report on Form 10-KSB filed on June
      13, 2007)


---

48

10.6
    Escrow Agreement dated June 8, 2007 (incorporated by
      reference to an exhibit to our annual report on Form 10-KSB filed on June
      13, 2007)10.7
    Consulting Agreement dated June 12, 2007 (incorporated by
      reference to an exhibit to our annual report on Form 10- KSB filed on June
      13, 2007)10.8
    Consulting Agreement dated June 12, 2007 (incorporated by
      reference to an exhibit to our annual report on Form 10- KSB filed on June
      13, 2007)10.9
    Subscription Agreement between Trius Energy, LLC and our
      company (incorporated by reference to an exhibit to our current report on
      Form 8-K filed on October 19, 2007)10.10
    Amendment to Employment Agreement dated October 19, 2007
      (incorporated by reference to an exhibit to our quarterly report on Form
      10-QSB filed on October 22, 2007)10.11
    Amendment to Consulting Agreement dated October 19, 2007
      (incorporated by reference to an exhibit to our quarterly report on Form
      10-QSB filed on October 22, 2007)10.12
    Farm-Out Agreement dated November 8, 2007 between Valiant
      North Sea Limited, Petrofac Energy Developments Limited and Fox Energy
      Exploration Limited (incorporated by reference to an exhibit to our
      current report on Form 8-K filed on November 23, 2007)10.13
    Purchase Agreement (North Slope Leases) dated October 10,
      2007 (incorporated by reference to an exhibit to our current report on
      Form 8-K filed on November 28, 2007)10.14
    Amendment Agreement No. 1 to Purchase Agreement (North
      Slope Leases) dated November 2, 2007 (incorporated by reference to an
      exhibit to our current report on Form 8-K filed on November 28,
    2007)10.15
    Purchase Agreement (Cook Inlet) dated October 10, 2007
      (incorporated by reference to an exhibit to our current report on Form 8-K
      filed on November 28, 2007)10.16
    Finder Agreement with Partners Consulting, Inc. dated
      February 15, 2008 (incorporated by reference to an exhibit to our current
      report on Form 8-K filed on March 21, 2008)10.17
    Promissory Note dated April 1, 2008 to EuroEnergy Growth
      Capital S.A. (incorporated by reference to an exhibit to our current
      report on Form 8-K filed on May 9, 2008)10.18
    Letter of Commitment with Senergy Limited (incorporated
      by reference to an exhibit to our current report on Form 8-K filed on May
      9, 2008)10.19
    Promissory Note dated May 1, 2008 to EuroEnergy Growth
      Capital S.A. (incorporated by reference to an exhibit to our current
      report on Form 8-K filed on May 21, 2008)10.20
    Bonus Agreement dated May 22, 2008 between Richard Moore
      and our company (incorporated by reference to an exhibit to our current
      report on Form 8-K filed on May 28, 2008)10.21
    Agreement of Intention to Sell/Purchase the
      Geneseo-Edwards Program between Hodgden & Associates and our company
      (incorporated by reference to an exhibit to our current report on Form 8-K
      filed on May 29, 2008)10.22
    Promissory Note dated May 23, 2008 to EuroEnergy Growth
      Capital S.A. (incorporated by reference to an exhibit to our current
      report on Form 8-K filed on June 6, 2008)10.23
    Board of Advisors Agreement dated July 19, 2007 with
      Aimwell Energy Limited (incorporated by reference to an exhibit to our
      annual report on Form 10-KSB filed on June 13,
2008)


---

49

10.24
    Board of Advisors Agreement dated July 19, 2007 with
      Black Gold Consulting Inc. (incorporated by reference to an exhibit to our
      annual report on Form 10-KSB filed on June 13, 2008)10.25
    Board of Advisors Agreement dated August 2007 with John
      Spence (incorporated by reference to an exhibit to our annual report on
      Form 10-KSB filed on June 13, 2008)10.26
    Board of Advisors Agreement dated August 2007 with
      Jonathan Wood (incorporated by reference to an exhibit to our annual
      report on Form 10-KSB filed on June 13, 2008)10.27
    Board of Advisors Termination Agreement dated June 10,
      2008 with Aimwell Energy Limited (incorporated by reference to an exhibit
      to our annual report on Form 10-KSB filed on June 13, 2008)10.28
    Board of Advisors Termination Agreement dated June 10,
      2008 with Black Gold Consulting Inc.( incorporated by reference to an
      exhibit to our annual report on Form 10-KSB filed on June 13,
  2008)10.29
    Board of Advisors Termination Agreement dated June 10,
      2008 with John Spence (incorporated by reference to an exhibit to our
      annual report on Form 10-KSB filed on June 13, 2008)10.30
    Board of Advisors Termination Agreement dated June 10,
      2008 with Jonathan Wood (incorporated by reference to an exhibit to our
      annual report on Form 10-KSB filed on June 13, 2008)10.31
    Agreement dated January 24, 2008 with Aimwell Energy
      limited (incorporated by reference to an exhibit to our annual report on
      Form 10-KSB filed on June 13, 2008)10.32
    Loan Agreement with EuroEnergy Growth Capital S.A.
      (incorporated by reference to an exhibit to our annual report on Form
      10-KSB filed on June 13, 2008)10.33
    Senior Secured Convertible Redeemable Debenture dated
      June 24, 2008 issued by our company to Trafalgar Capital Specialized
      Investment Fund, Luxembourg (incorporated by reference to an exhibit to
      our quarterly report on Form 10-Q filed on July 21, 2008)10.34
    Warrant dated June 24, 2008 issued by our company to
      Trafalgar Capital Specialized Investment Fund, Luxembourg (incorporated by
      reference to an exhibit to our quarterly report on Form 10-Q filed on July
      21, 2008)10.35
    Securities Purchase Agreement dated June 24, 2008 between
      Trafalgar Capital Specialized Investment Fund, Luxembourg and our company
      (incorporated by reference to an exhibit to our quarterly report on Form
      10-Q filed on July 21, 2008)10.36
    Registration Rights Agreement dated June 24, 2008 between
      Trafalgar Capital Specialized Investment Fund, Luxembourg and our company
      (incorporated by reference to an exhibit to our quarterly report on Form
      10-Q filed on July 21, 2008)10.37
    Escrow Agreement dated June 24, 2008 between Trafalgar
      Capital Specialized Investment Fund, Luxembourg, The Law Office of James
      G. Dodrill II, P.A. and our company (incorporated by reference to an
      exhibit to our quarterly report on Form 10-Q filed on July 21,
  2008)10.38
    Security Agreement dated June 24, 2008 between Trafalgar
      Capital Specialized Investment Fund, Luxembourg and our company
      (incorporated by reference to an exhibit to our quarterly report on Form
      10-Q filed on July 21, 2008)10.39
    Irrevocable Transfer Agent Instructions dated June 18,
      2008 between Empire Stock Transfer Inc. and our company (incorporated by
      reference to an exhibit to our quarterly report on Form 10-Q filed on July
      21, 2008)


---

50

10.40
    General Assignment of Contracts and Leases dated June 18,
      2008 between Trafalgar Capital Specialized Investment Fund, FIS and our
      company (incorporated by reference to an exhibit to our quarterly report
      on Form 10-Q filed on July 21, 2008)10.41
    Consulting Agreement with Partners Consulting, Inc. dated
      May 8, 2008 (incorporated by reference to an exhibit to our quarterly
      report on Form 10-Q filed on July 21, 2008)10.42
    Letter of Commitment with Senergy Limited (incorporated
      by reference to an exhibit to our quarterly report on Form 10-Q filed on
      July 21, 2008)10.43
    Investor Relations Consulting Service Agreement dated
      September 1, 2008 between our company and Benaterra Communications Inc.
      (incorporated by reference to an exhibit to our current report on Form 8-K
      filed on September 12, 2008)10.44
    Investor Relations Consulting Service Agreement dated
      June 1, 2007 between our company and Senergy Communications Inc.
      (incorporated by reference to an exhibit to our current report on Form 8-K
      filed on September 12, 2008)10.45
    Transaction Proposal and Exclusivity Agreement dated
      September 26, 2008 between Ballyliffin Capital Corp., Fox Energy
      Exploration Limited, and Fox Petroleum Inc. (incorporated by reference to
      an exhibit to our current report on Form 8-K filed on October 1,
    2008)10.46
    Letter Agreement dated September 25, 2008 between Fox
      Energy Exploration Limited and Pollard Financial Ltd. (incorporated by
      reference to an exhibit to our current report on Form 8-K filed on October
      1, 2008)10.47
    Amendment to June 24, 2008 Financing Documents between
      Fox Petroleum Inc. and Trafalgar Capital Specialized Investment Fund,
      Luxembourg (incorporated by reference to an exhibit to our current report
      on Form 8-K filed on November 21, 2008)10.48
    Amended Debenture No. 1 - $1.25 million principal amount
      (incorporated by reference to an exhibit to our current report on Form 8-K
      filed on November 21, 2008)10.49
    Amended Debenture No. 2 - $1.25 million principal amount
      (incorporated by reference to an exhibit to our current report on Form 8-K
      filed on November 21, 2008)10.50
    New Debenture - $1 million principal amount (incorporated
      by reference to an exhibit to our current report on Form 8-K filed on
      November 21, 2008)10.51
    Replacement Warrant (incorporated by reference to an
      exhibit to our current report on Form 8-K filed on November 21,
    2008)10.52
    Amended Security Agreement (incorporated by reference to
      an exhibit to our current report on Form 8-K filed on November 21,
      2008)10.53
    Pledge and Escrow Agreement (incorporated by reference to
      an exhibit to our current report on Form 8-K filed on November 21,
      2008)10.54
    Side Letter Agreement (incorporated by reference to an
      exhibit to our current report on Form 8-K filed on November 21,
    2008)10.55
    Irrevocable Transfer Agent Instructions (incorporated by
      reference to an exhibit to our current report on Form 8-K filed on
      November 21, 2008)


---

51

10.56
    Subscription Agreement with Carbon Energy Investments
      Limited dated November 5, 2008 (incorporated by reference to an exhibit to
      our current report on Form 8-K filed on January 7, 2009)10.57
    Agreement for the Purchase of Shares in Alaska Oil &
      Gas Resources Limited dated November 5, 2008 (incorporated by reference to
    an exhibit to our current report on Form 8-K filed on January 7, 2009)10.58
    Amendment Agreement for the Purchase of Shares of Alaska
      Oil & Gas Resources Limited dated November 2008 (incorporated by
      reference to an exhibit to our current report on Form 8-K filed on January
      7, 2009)10.59
    Letter Agreement with Carbon Energy Investments Limited
      dated December 10, 2008 (incorporated by reference to an exhibit to our
      current report on Form 8-K filed on January 7, 2009)10.60
    Letter agreement between Fox Energy Exploration Limited
      and Aimwell Energy Limited dated September 5, 2008 (incorporated by
      reference to an exhibit to our quarterly report on Form 10-Q filed on
      January 21, 2009)10.61
    Letter agreement between Fox Energy Exploration Limited
      and Aimwell Energy Limited dated September 5, 2008 (incorporated by
      reference to an exhibit to our quarterly report on Form 10-Q filed on
      January 21, 2009)10.62
    Oil and Gas Lease Agreement dated October 14, 2008
      (incorporated by reference to an exhibit to our quarterly report on Form
      10-Q filed on January 21, 2009)10.63
    Oil and Gas Lease Agreement dated October 14, 2008
      (incorporated by reference to an exhibit to our quarterly report on Form
      10-Q filed on January 21, 2009)10.64*
    Amendment to Securities Purchase Agreement, Secured
      Debenture, Registration Rights Agreement and Security Agreement dated
      April 2009 between our company and Trafalgar Capital Specialized
    Investment Fund, Luxembourg10.65*
    Bill of Sale and Assignment in Lieu of Foreclosure
      between our company and TCF Oil and Gas Corp.10.66*
    Certificate of Seller by our company10.67*
    Covenant Not To Sue dated April 6, 2009 between our
      company and Trafalgar Capital Specialized Investment Fund, FIS10.68*
    Agreement relating to Alaska Oil and Gas Leases dated May
      14, 200910.69*
    Agreement relating to Alaska Oil and Gas Leases dated May
      16, 200910.70*
    Agreement relating to Alaska Oil and Gas Leases dated May
      29, 200910.71*
    Agreement between our company and Trafalgar Capital
      Advisory Partners LLP relating to the appointment of Trafalgar Capital
      Advisory Partners LLP as Introducer/Advisor14.1
    Code of Conduct and Ethics (incorporated by reference to
    an exhibit to our current report on Form 8-K filed on May 9, 2008)(21)
    Subsidiaries21.1
    Fox Petroleum (Alaska) Inc., incorporated in Alaska21.2
    Fox Energy Exploration Limited, incorporated in England
      and Wales


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52

21.3
    Fox
      Petroleum, Inc., incorporated in Kansas(31)
    Section 302 Certification31.1*
    Section 302 Certification of Richard Moore(32)
    Section 906 Certification32.1*
    Section 906 Certification of Richard Moore(99)
    Additional Exhibits99.1
    Audit Committee Charter (incorporated by
      reference to an exhibit to our current report on Form 8-K filed on May 9,
      2008)99.2
    Compensation Committee Charter (incorporated by
      reference to an exhibit to our current report on Form 8-K filed on May 9,
      2008)99.3
    Nominating Committee Charter (incorporated by
      reference to an exhibit to our current report on Form 8- K filed on May 9,
      2008)99.4
    Letter from Blackhawk Investments Limited dated
      November 19, 2008 (incorporated by reference to an exhibit to our
      quarterly report on Form 10-Q filed on January 21, 2009)99.5
    Letter to Minmet Plc regarding Proposed Offer
      for the Shares of Minmet Plc. dated December 4, 2008 (incorporated by
      reference to an exhibit to our quarterly report on Form 10-Q filed on
      January 21, 2009)


*Filed herewith

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53

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

FOX PETROLEUM INC.

|/s/ Richard Moore                                                    | 
|-------------------------------------------------------------------- | 
|By: Richard Moore                                                    | 
|President, Chief Executive Officer, Chairman, and                    | 
|Director                                                             | 
|(Principal Executive Officer, Principal Financial Officer,
      and | 
|Principal Accounting Officer)                                        | 
|Date: July 15, 2009                                                  | 

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

|/s/ Richard Moore                                                    | 
|-------------------------------------------------------------------- | 
|By: Richard Moore                                                    | 
|President, Chief Executive Officer, Chairman, and                    | 
|Director                                                             | 
|(Principal Executive Officer, Principal Financial Officer,
      and | 
|Principal Accounting Officer)                                        | 
|Date: July 15, 2009                                                  | 
|                                                                     | 
|                                                                     | 
|                                                                     | 
|/s/ William MacNee                                                   | 
|By: William MacNee                                                   | 
|Chief Operating Officer and Director                                 | 
|Date: July 15, 2009                                                  | 
|                                                                     | 
|                                                                     | 
|                                                                     | 
|/s/ Jeffrey Sternbert                                                | 
|By: Jeffrey Sternberg                                                | 
|Director                                                             | 
|Date: July 15, 2009                                                  | 

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