----

----

| Nevada                                                        |   | 66-0349372                       |
|---------------------------------------------------------------|--------|----------------------------------|
| (State of other jurisdiction ofincorporation or organization) |   | (IRS EmployerIdentification No.) |

| Large accelerated filer | o | Accelerated filer         | o      |
|-------------------------|---|---------------------------|--------|
| Non-accelerated filer   | o | Smaller reporting company | þ |

----

----

----

|         |          |                                                                                                               |    | PAGE   |
|--------------|---------------|--------------------------------------------------------------------------------------------------------------------|--------------|--------|
| PART I       |          |                                                                                                               |         |   |
|         | Item 1.       | Business                                                                                                           |    | 4      |
|         | Item 1A. | Risk Factors                                                                                                       |    | 6      |
|         | Item 1B. | Unresolved Staff Comments                                                                                          |    | 12     |
|         | Item 2.       | Properties                                                                                                         |    | 16     |
|         | Item 3.       | Legal Proceedings                                                                                                  |    | 16     |
|         | Item 4.       | Reserved                                                                                                           |         | 16     |
| PART II      |          |                                                                                                               |    |   |
|         | Item 5.       | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |    | 17     |
|         | Item 6.       | Selected Financial Data                                                                                            |    | 19     |
|         | Item 7.       | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        |    | 19     |
|         | Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                         |    | 25     |
|         | Item 8.       | Financial Statements and Supplementary Data                                                                        |    | 25     |
|         | Item 9.       | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                               |    | 25     |
|         | Item 9A. | Controls and Procedures                                                                                            |    | 25     |
|         | Item 9A(T)    | Controls and Procedures                                                                                            |         | 26     |
|         | Item 9B. | Other Information                                                                                                  |    | 27     |
| PART III     |          |                                                                                                               |    |   |
|         | Item 10.      | Directors, Executive Officers and Corporate Governance                                                             |    | 27     |
|         | Item 11.      | Executive Compensation                                                                                             |    | 28     |
|         | Item 12.      | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     |    | 29     |
|         | Item 13.      | Certain Relationships and Related Transactions, and Director Independence                                          |    | 29     |
|         | Item 14.      | Principal Accountant Fees and Services                                                                             |    | 29     |
| PART IV |          |                                                                                                               |    |   |
|         | Item 15. | Exhibits and Financial Statement Schedules                                                                         |    | 30     |

----

|   | • | risks associated with our international operations; |
|--------|---------|-----------------------------------------------------|

|   | • | significant movements in foreign currency exchange rates; |
|--------|---------|-----------------------------------------------------------|

|   | • | changes in the general economy, including the current global economic downturn, as well as the cyclical nature of global alternative energy markets; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | availability and cost of raw materials, parts and components that may be used in our products; |
|--------|---------|------------------------------------------------------------------------------------------------|

|   | • | the competitive environment in our industry; |
|--------|---------|----------------------------------------------|

|   | • | our ability to identify, finance, acquire and successfully integrate attractive installation targets; |
|--------|---------|-------------------------------------------------------------------------------------------------------|

|   | • | our ability to manage and grow our business and the execution of our business and growth strategies; |
|--------|---------|------------------------------------------------------------------------------------------------------|

|   | • | loss of key management; |
|--------|---------|-------------------------|

|   | • | our ability and the ability of our strategic partners to access required capital at a reasonable cost; |
|--------|---------|--------------------------------------------------------------------------------------------------------|

|   | • | our ability to expand our business in our targeted markets; |
|--------|---------|-------------------------------------------------------------|

|   | • | our financial performance; |
|--------|---------|----------------------------|

|   | • | our ability to identify, address and remediate any material weaknesses in our internal control over financial reporting; and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------|

|   | • | others risks and factors, listed in Item 1A. Risk Factors in Part I of this Form 10-K. |
|--------|---------|----------------------------------------------------------------------------------------|

----

----

----

| ·   | manufacture products in a manner that will enable it to be profitable; |
|--------------------|------------------------------------------------------------------------|

| ·   | establish many of the business functions necessary to operate, including sales, marketing, manufacturing, administrative and financial functions; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | establish appropriate financial controls; |
|--------------------|-------------------------------------------|

| ·   | respond effectively to competitive pressures; or |
|--------------------|--------------------------------------------------|

| ·   | raise the capital necessary to implement its business plan. |
|--------------------|-------------------------------------------------------------|

----

| ·   | the revenues generated by products that it manufactures; |
|--------------------|----------------------------------------------------------|

| ·   | the costs required to develop its manufacturing processes; |
|--------------------|------------------------------------------------------------|

| ·   | the expenses it incurs in manufacturing and placing its products; |
|--------------------|-------------------------------------------------------------------|

| ·   | the costs associated with any expansion of its business; |
|--------------------|----------------------------------------------------------|

| ·   | the costs associated with capital expenditures; and |
|--------------------|-----------------------------------------------------|

| ·   | the number and timing of any acquisitions or other strategic transactions. |
|--------------------|----------------------------------------------------------------------------|

----

|     ·       | the issuance of new equity securities pursuant to its recent issuance of shares for a technology license, or a future offering; |
|--------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

|     ·       | changes in interest rates; |
|--------------------------------------------------------------------|----------------------------|

|     ·       | competitive developments, including announcements by competitors of new products or services or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; |
|--------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     ·       | variations in quarterly operating results; |
|--------------------------------------------------------------------|--------------------------------------------|

|     ·       | changes in financial estimates by securities analysts; |
|--------------------------------------------------------------------|--------------------------------------------------------|

|     ·       | the depth and liquidity of the market for the Company's common stock; |
|--------------------------------------------------------------------|-----------------------------------------------------------------------|

|     ·       | investor perceptions of the Company and the alternative energy industry generally; and |
|--------------------------------------------------------------------|----------------------------------------------------------------------------------------|

|     ·       | general economic and other national conditions. |
|--------------------------------------------------------------------|-------------------------------------------------|

----

----

|     ·       | our possible inability to achieve the output and efficiency levels for our supplemental wind energy generation systems that we have projected; and |
|--------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|     ·       | shutdown due to a breakdown or failure of equipment or processes, violation of permit requirements (whether through operations or change in law), operator error or catastrophic events such as fires, explosions, floods or other similar occurrences affecting us, our supplemental wind energy generation systems or third parties upon which our business may depend. |
|--------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|     ·       | equipment problems or other problems which affect the ability of our supplemental wind energy generation systems to operate; |
|--------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|

|     ·       | implementation of additional or more stringent environmental compliance measures; or |
|--------------------------------------------------------------------|--------------------------------------------------------------------------------------|

|     ·       | the market introduction of new and competing products which may be more efficient and cost effective than our supplemental wind energy generation systems. |
|--------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                            |   | As at December 31, 2010 |       |   | As at September 30, 2010 |   |      | As at June 30, 2010 |   |   | As at March 31, 2010 |   |   | As at December 31, 2009 |      |   | As at September 30, 2009 |   |      | As at June 30, 2009 |   |   | As at March 31, 2009 |   |
|-----------------------------------------------------------------|--------|------------------------------|------------|--------|-------------------------------|--------|-----------|------------------------------------|--------|--------|--------------------------------|--------|--------|------------------------------|-----------|--------|-------------------------------|--------|-----------|-------------------------------|--------|--------|--------------------------------|--------|
| Balance Sheets prior to Restatement                             |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |
|                                                            |   | $                            |       |   | $                             |   |      | $                                  |   |   | $                              |   |   | $                            |      |   | $                             |   |      | $                             |   |   | $                              |   |
|  ASSETS                                                    |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  CURRENT ASSETS                                            |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  Cash                                                      |   |                         | 14,988     |   |                          |   | 105,216   |                               |   |   | 113,401                        |   |   |                         | 28,003    |   |                          |   | 36,730    |                          |   |   | 40,546                         |   |   |   | 49,396 |   |   |   | 65,314 |   |
|                                                            |   |                         | 14,988     |   |                          |   | 105,216   |                               |   |   | 113,401                        |   |   |                         | 28,003    |   |                          |   | 36,730    |                          |   |   | 40,546                         |   |   |   | 49,396 |   |   |   | 65,314 |   |
|                                                            |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  License for SWEG technology, net of amortization (Note 4) |   |                         | 2,074,544  |   |                          |   | 2,156,797 |                               |   |   | 2,218,187                      |   |   |                         | 2,279,577 |   |                          |   | 1,725,967 |                          |   |   | 1,778,288                      |   |   |   | 1,824,678 |   |   |   | - |   |
|                                                            |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|                                                            |   |                         | 2,089,532  |   |                          |   | 2,262,013 |                               |   |   | 2,331,588                      |   |   |                         | 2,307,580 |   |                          |   | 1,762,697 |                          |   |   | 1,818,834                      |   |   |   | 1,874,074 |   |   |   | 65,314 |   |
|                                                            |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  LIABILITIES                                               |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  CURRENT LIABILITIES                                       |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  Accounts payable and accrued liabilities (Note 5)         |   |                         | 13,269     |   |                          |   | 8,268     |                               |   |   | 7,500                          |   |   |                         | 9,500     |   |                          |   | 14,568    |                          |   |   | 5,000                          |   |   |   | 9,200 |   |   |   | 4,224 |   |
|  Payable to Boreas Research Corporation (Note 9)      |   |                         | 540,000    |   |                          |   | 600,000   |                               |   |   | 600,000                        |   |   |                         | 600,000   |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  Loans from stockholder (Note 7 ( c ) and Note 6)          |   |                         | -          |   |                          |   | 258,313   |                               |   |   | 258,313                        |   |   |                         | 258,313   |   |                          |   | 258,313   |                          |   |   | 258,313                        |   |   |   | 258,313 |   |   |   | 258,313 |   |
|                                                            |   |                         | 553,268    |   |                          |   | 866,581   |                               |   |   | 865,813                        |   |   |                         | 867,813   |   |                          |   | 272,881   |                          |   |   | 263,313                        |   |   |   | 267,513 |   |   |   | 262,537 |   |
|                                                            |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  STOCKHOLDERS’ EQUITY                                |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|                                                            |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  Capital Stock (Note 7)                                    |   |                         | 99,765     |   |                          |   | 99,665    |                               |   |   | 99,665                         |   |   |                         | 99,665    |   |                          |   | 99,665    |                          |   |   | 99,665                         |   |   |   | 99,665 |   |   |   | 765 |   |
|  Additional paid-in Capital                                |   |                         | 2,552,872  |   |                          |   | 2,285,701 |                               |   |   | 2,285,701                      |   |   |                         | 2,185,801 |   |                          |   | 2,185,801 |                          |   |   | 2,185,801                      |   |   |   | 2,185,801 |   |   |   | 397,096 |   |
|  Deficit, accumulated during the development stage         |   |                         | (1,116,389 | )      |                          |   | (990,004  | )                                  |   |   | (919,676                       | )      |   |                         | (845,698  | )      |                          |   | (795,650  | )                             |   |   | (729,945                       | )      |   |   | (678,905 | ) |   |   | (595,084 | ) |
|  Total FNEC Shareholders' Equity                           |   |                         | 1,536,248  |   |                          |   | 1,395,362 |                               |   |   | 1,465,690                      |   |   |                         | 1,439,767 |   |                          |   | 1,489,816 |                          |   |   | 1,555,521                      |   |   |   | 1,606,561 |   |   |   | (197,223 | ) |
|  Non-controlling interest                                  |   |                         | 15         |   |                          |   | 70        |                               |   |   | 85                             |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|                                                            |   |                         | 1,536,263  |   |                          |   | 1,395,432 |                               |   |   | 1,465,775                      |   |   |                         | 1,439,767 |   |                          |   | 1,489,816 |                          |   |   | 1,555,521                      |   |   |   | 1,606,561 |   |   |   | (197,223 | ) |
|                                                            |   |                         |       |   |                          |   |      |                               |   |   |                           |   |   |                         |      |   |                          |   |      |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|                                                            |   |                         | 2,089,532  |   |                          |   | 2,262,013 |                               |   |   | 2,331,588                      |   |   |                         | 2,307,580 |   |                          |   | 1,762,697 |                          |   |   | 1,818,834                      |   |   |   | 1,874,074 |   |   |   | 65,314 |   |

----

|                                                            |   | As at December 31, 2010 |     |   | As at September 30, 2010 |   |     | As at June 30, 2010 |   |   | As at March 31, 2010 |   |   | As at December 31, 2009 |     |   | As at September 30, 2009 |   |     | As at June 30, 2009 |   |   | As at March 31, 2009 |   |
|-----------------------------------------------------------------|--------|------------------------------|----------|--------|-------------------------------|--------|----------|------------------------------------|--------|--------|--------------------------------|--------|--------|------------------------------|----------|--------|------------------------------------|--------|----------|-------------------------------|--------|--------|--------------------------------|--------|
| Balance Sheets after Restatement                                |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |
|                                                            |   | $                            |     |   | $                             |   |     | $                                  |   |   | $                              |   |   | $                            |     |   | $                                  |   |     | $                             |   |   | $                              |   |
|  ASSETS                                                    |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  CURRENT ASSETS                                            |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  Cash                                                      |   |                         | 14,988   |   |                          |   | 105,216  |                               |   |   | 113,401                        |   |   |                         | 28,003   |   |                               |   | 36,730   |                          |   |   | 40,546                         |   |   |   | 49,396 |   |   |   | 65,314 |   |
|                                                            |   |                         | 14,988   |   |                          |   | 105,216  |                               |   |   | 113,401                        |   |   |                         | 28,003   |   |                               |   | 36,730   |                          |   |   | 40,546                         |   |   |   | 49,396 |   |   |   | 65,314 |   |
|                                                            |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  License for SWEG technology, net of amortization (Note 4) |   |                         | 200      |   |                          |   | 100      |                               |   |   | 100                            |   |   |                         | 100      |   |                               |   | 100      |                          |   |   | 100                            |   |   |   | 100 |   |   |   | - |   |
|                                                            |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|                                                            |   |                         | 15,188   |   |                          |   | 105,316  |                               |   |   | 113,501                        |   |   |                         | 28,103   |   |                               |   | 36,830   |                          |   |   | 40,646                         |   |   |   | 49,496 |   |   |   | 65,314 |   |
|                                                            |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  LIABILITIES                                               |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  CURRENT LIABILITIES                                       |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  Accounts payable and accrued liabilities (Note 5)         |   |                         | 13,269   |   |                          |   | 8,269    |                               |   |   | 7,500                          |   |   |                         | 9,499    |   |                               |   | 14,568   |                          |   |   | 5,000                          |   |   |   | 9,201 |   |   |   | 4,224 |   |
|  Payable to Boreas Research Corporatio (Note 9)            |   |                         | 540,000  |   |                          |   | 600,000  |                               |   |   | 600,000                        |   |   |                         | 600,000  |   |                               |   | -        |                          |   |   | -                              |   |   |   | - |   |   |   | - |   |
|  Loans from stockholder (Note 7 ( c ) and Note 6)          |   |                         | -        |   |                          |   | 258,313  |                               |   |   | 258,313                        |   |   |                         | 258,313  |   |                               |   | 258,313  |                          |   |   | 258,313                        |   |   |   | 258,313 |   |   |   | 258,313 |   |
|                                                            |   |                         | 13,269   |   |                          |   | 266,582  |                               |   |   | 265,813                        |   |   |                         | 267,812  |   |                               |   | 272,881  |                          |   |   | 263,313                        |   |   |   | 267,514 |   |   |   | 262,537 |   |
|                                                            |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  STOCKHOLDERS’ EQUITY                                |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|                                                            |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|  Capital Stock (Note 7)                                    |   |                         | 99,765   |   |                          |   | 99,665   |                               |   |   | 99,665                         |   |   |                         | 99,665   |   |                               |   | 99,665   |                          |   |   | 99,665                         |   |   |   | 99,665 |   |   |   | 765 |   |
|  Additional paid-in Capital                                |   |                         | 103,329  |   |                          |   | (169,705 | )                             |   |   | (169,705                       | )      |   |                         | (269,604 | )      |                               |   | 330,296  |                          |   |   | 330,296                        |   |   |   | 330,296 |   |   |   | 397,096 |   |
|  Deficit, accumulated during the development stage         |   |                         | (741,249 | )      |                          |   | (691,226 | )                                  |   |   | (682,273                       | )      |   |                         | (669,670 | )      |                               |   | (666,012 | )                             |   |   | (652,628                       | )      |   |   | (647,979 | ) |   |   | (595,084 | ) |
|  Total FNEC Shareholders' Equity                           |   |                         | 1,845    |   |                          |   | (161,366 | )                                  |   |   | (152,413                       | )      |   |                         | (239,709 | )      |                               |   | (236,051 | )                             |   |   | (222,667                       | )      |   |   | (218,018 | ) |   |   | (197,223 | ) |
|  Non-controlling interest                                  |   |                         | 74       |   |                          |   | 100      |                               |   |   | 100                            |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|                                                            |   |                         | 1,919    |   |                          |   | (161,266 | )                                  |   |   | (152,313                       | )      |   |                         | (239,709 | )      |                               |   | (236,051 | )                             |   |   | (222,667                       | )      |   |   | (218,018 | ) |   |   | (197,223 | ) |
|                                                            |   |                         |     |   |                          |   |     |                               |   |   |                           |   |   |                         |     |   |                               |   |     |                          |   |   |                           |   |   |   |   |   |   |   |   |   |
|                                                            |   |                         | 15,188   |   |                          |   | 105,316  |                               |   |   | 113,501                        |   |   |                         | 28,103   |   |                               |   | 36,830   |                          |   |   | 40,646                         |   |   |   | 49,496 |   |   |   | 65,314 |   |

----

|                                                        |   | Year Ended December 31, 2010 |       |   | 3-month period December 31, 2010 |   |       | 3-month period September 30, 2010 |   |   | 3-month period June 30, 2010 |   |   | 3-month period March 31, 2010 |       |   | Year Ended December 31, 2009 |   |       | 3-month period December 31, 2009 |   |   | 3-month period September 30, 2009 |   |   | 3-month period June 30, 2009 |       |   | 3-month period March 31, 2009 |   |
|-------------------------------------------------------------|--------|----------------------------------------|------------|--------|--------------------------------------------|--------|------------|----------------------------------------|--------|--------|--------------------------------------------------|--------|--------|----------------------------------------------|------------|--------|----------------------------------------|--------|------------|--------------------------------------------|--------|--------|----------------------------------------|--------|--------|--------------------------------------------------|------------|--------|----------------------------------------------|--------|
|                                                        |   |                                   |       |   |                                       |   |       |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   |                                   |   |   |                                             |       |   |                                         |   |
| Income Statements prior to Restatement                      |   |                                   |       |   |                                       |   |       |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   |                                   |   |   |                                             |       |   |                                         |   |
|                                                        |   | $                                      |       |   | $                                          |   |       | $                                      |   |   | $                                                |   |   | $                                            |       |   | $                                      |   |       | $                                          |   |   | $                                      |   |   | $                                                |       |   | $                                            |   |
| Interest Income                                             |   |                                   | (20        | )      |                                       |   | (1         | )                                      |   |   | (2                                               | )      |   |                                         | (5         | )      |                                   |   | (12        | )                                          |   |   | (5                                     | )      |   |                                             | 69         |   |                                         |   | (10 | ) |   |   | (30 | ) |   |   | (34 | ) |
|  Forgiveness of accounts payable and loans             |   |                                   | -          |   |                                       |   | -          |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   | -                                      |   |   |                                             | -          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|  General and Administrative expenses                   |   |                                   | 60,121     |   |                                       |   | 37,034     |                                   |   |   | 7,152                                            |   |   |                                         | 12,608     |   |                                   |   | 3,670      |                                       |   |   | 81,136                                 |   |   |                                             | 13,315     |   |                                         |   | 4,659 |   |   |   | 52,925 |   |   |   | 10,237 |   |
|  Loss on Foreign Exchange                              |   |                                   | -          |   |                                       |   | (1,803     | )                                      |   |   | 1,803                                            |   |   |                                         |       |   |                                   |   |       |                                       |   |   | -                                      |   |   |                                             | -          |   |                                         |   | - |   |   |   |   |   |   |   |   |   |
|  Amortization                                          |   |                                   | 5,000      |   |                                       |   | (164,171   | )                                      |   |   | 61,390                                           |   |   |                                         | 61,390     |   |                                   |   | 46,390     |                                       |   |   | 129,638                                |   |   |                                             | 52,321     |   |                                         |   | 46,390 |   |   |   | 30,927 |   |   |   | - |   |
|  Project development costs (Note 10)                   |   |                                   | 14,820     |   |                                       |   | 14,820     |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   | -                                      |   |   |                                             |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|  Interest Expense                                      |   |                                   | -          |   |                                       |   | -          |                                   |   |   | -                                                |   |   |                                         | -          |   |                                   |   | -          |                                       |   |   | -                                      |   |   |                                             |       |   |                                         |   |   |   |   |   |   |   |   |   | - |   |
|                                                        |   |                                   | (79,921    | )      |                                       |   | 114,121    |                                   |   |   | (70,343                                          | )      |   |                                         | (73,993    | )      |                                   |   | (50,048    | )                                          |   |   | (210,769                               | )      |   |                                             | (65,705    | )      |                                         |   | (51,039 | ) |   |   | (83,822 | ) |   |   | (10,203 | ) |
| Net loss attributable to non-controlling interest           |   |                                   | (30        | )      |                                       |   | -          |                                   |   |   | (15                                              | )      |   |                                         | (15        | )      |                                   |   |       |                                       |   |   | -                                      |   |   |                                             | -          |   |                                         |   | - |   |   |   | - |   |   |   |   |   |
| Net loss attributable to FNEC Shareholders                  |   |                                   | (79,891    | )      |                                       |   | 114,121    |                                   |   |   | (70,328                                          | )      |   |                                         | (73,978    | )      |                                   |   | (50,048    | )                                          |   |   | (210,769                               | )      |   |                                             | (65,705    | )      |                                         |   | (51,039 | ) |   |   | (83,822 | ) |   |   | (10,203 | ) |
|                                                        |   |                                   |       |   |                                       |   |       |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   |                                   |   |   |                                             |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per share, basic and diluted                       |   | $                                      | (0.00      | )      |                                       | $      | 0.00       |                                   |   | $      | (0.00                                            | )      |   | $                                            | (0.00      | )      |                                   | $      | (0.00      | )                                          |   | $      | (0.00                                  | )      |   | $                                                | (0.00      | )      |                                         | $      | (0.00 | ) |   | $ | (0.00 | ) |   | $ | (0.01 | ) |
| Weighted average common shares outstanding                  |   |                                   | 99,746,598 |   |                                       |   | 99,746,598 |                                   |   |   | 99,665,228                                       |   |   |                                         | 99,665,228 |   |                                   |   | 99,665,228 |                                       |   |   | 60,645,228                             |   |   |                                             | 60,645,228 |   |                                         |   | 99,665,228 |   |   |   | 40,969,624 |   |   |   | 765,228 |   |
|                                                        |   |                                   |       |   |                                       |   |       |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   |                                   |   |   |                                             |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                    |   |                                   | (79,921    | )      |                                       |   | 114,121    |                                   |   |   | (70,343                                          | )      |   |                                         | (73,993    | )      |                                   |   | (50,048    | )                                          |   |   | (210,769                               | )      |   |                                             | (65,705    | )      |                                         |   | (51,039 | ) |   |   | (83,822 | ) |   |   | (10,203 | ) |
| Other Comprehensive Loss                                    |   |                                   | -          |   |                                       |   | -          |                                   |   |   | -                                                |   |   |                                         | -          |   |                                   |   |       |                                       |   |   | -                                      |   |   |                                             |       |   |                                         |   | - |   |   |   | - |   |   |   |   |   |
| Comprehensive Loss                                          |   |                                   | (79,921    | )      |                                       |   | 114,121    |                                   |   |   | (70,343                                          | )      |   |                                         | (73,993    | )      |                                   |   | (50,048    | )                                          |   |   | (210,769                               | )      |   |                                             | (65,705    | )      |                                         |   | (51,039 | ) |   |   | (83,822 | ) |   |   | (10,203 | ) |
| Comprehensive Loss attributable to non-controlling interest |   |                                   | (30        | )      |                                       |   | -          |                                   |   |   | (15                                              | )      |   |                                         | (15        | )      |                                   |   |       |                                       |   |   | -                                      |   |   |                                             |       |   |                                         |   | - |   |   |   | - |   |   |   |   |   |
| Comprehensive Loss attributable to FNEC Shareholders        |   |                                   | (79,891    | )      |                                       |   | 114,121    |                                   |   |   | (70,328                                          | )      |   |                                         | (73,978    | )      |                                   |   | (50,048    | )                                          |   |   | (210,769                               | )      |   |                                             | (65,705    | )      |                                         |   | (51,039 | ) |   |   | (83,822 | ) |   |   | (10,203 | ) |

|                                                        |   | Year Ended December 31, 2010 |       |   | 3-month period December 31, 2010 |   |       | 3-month period September 30, 2010 |   |   | 3-month period June 30, 2010 |   |   | 3-month period March 31, 2010 |       |   | Year Ended December 31, 2009 |   |       | 3-month period December 31, 2009 |   |   | 3-month period September 30, 2009 |   |   | 3-month period June 30, 2009 |       |   | 3-month period March 31, 2009 |   |
|-------------------------------------------------------------|--------|----------------------------------------|------------|--------|--------------------------------------------|--------|------------|----------------------------------------|--------|--------|--------------------------------------------------|--------|--------|----------------------------------------------|------------|--------|----------------------------------------|--------|------------|--------------------------------------------|--------|--------|----------------------------------------|--------|--------|--------------------------------------------------|------------|--------|---------------------------------------------------|--------|
|                                                        |   |                                   |       |   |                                       |   |       |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   |                                   |   |   |                                             |       |   |                                              |   |
| Income Statements after restatement                         |   |                                   |       |   |                                       |   |       |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   |                                   |   |   |                                             |       |   |                                              |   |
|                                                        |   | $                                      |       |   | $                                          |   |       | $                                      |   |   | $                                                |   |   | $                                            |       |   | $                                      |   |       | $                                          |   |   | $                                      |   |   | $                                                |       |   | $                                                 |   |
| Interest Income                                             |   |                                   | (20        | )      |                                       |   | (1         | )                                      |   |   | (2                                               | )      |   |                                         | (5         | )      |                                   |   | (12        | )                                          |   |   | (5                                     | )      |   |                                             | 69         |   |                                              |   | (10 | ) |   |   | (30 | ) |   |   | (34 | ) |
|  Forgiveness of accounts payable and loans             |   |                                   | -          |   |                                       |   | -          |                                   |   |   | -                                                |   |   |                                         | -          |   |                                   |   | -          |                                       |   |   | -                                      |   |   |                                             | -          |   |                                              |   | - |   |   |   | - |   |   |   | - |   |
|  General and Administrative expenses                   |   |                                   | 60,463     |   |                                       |   | 37,034     |                                   |   |   | 7,152                                            |   |   |                                         | 12,608     |   |                                   |   | 3,670      |                                       |   |   | 81,136                                 |   |   |                                             | 13,315     |   |                                              |   | 4,659 |   |   |   | 52,925 |   |   |   | 10,237 |   |
|  Loss on Foreign Exchange                              |   |                                   | -          |   |                                       |   | (1,803     | )                                      |   |   | 1,803                                            |   |   |                                         | -          |   |                                   |   | -          |                                       |   |   | -                                      |   |   |                                             | -          |   |                                              |   | - |   |   |   | - |   |   |   | - |   |
|  Project development costs                             |   |                                   | 14,820     |   |                                       |   | 14,820     |                                   |   |   | -                                                |   |   |                                         | -          |   |                                   |   | -          |                                       |   |   | -                                      |   |   |                                             | -          |   |                                              |   | - |   |   |   | - |   |   |   | - |   |
|  Interest Expense                                      |   |                                   | -          |   |                                       |   | -          |                                   |   |   | -                                                |   |   |                                         | -          |   |                                   |   | -          |                                       |   |   | -                                      |   |   |                                             | -          |   |                                              |   | - |   |   |   | - |   |   |   | - |   |
|                                                        |   |                                   | (75,263    | )      |                                       |   | (50,049    | )                                      |   |   | (8,953                                           | )      |   |                                         | (12,603    | )      |                                   |   | (3,658     | )                                          |   |   | (81,131                                | )      |   |                                             | (13,384    | )      |                                              |   | (4,649 | ) |   |   | (52,895 | ) |   |   | (10,203 | ) |
| Net loss attributable to non-controlling interest           |   |                                   | (26        | )      |                                       |   | (26        | )                                      |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   | -                                      |   |   |                                             | -          |   |                                              |   | - |   |   |   | - |   |   |   |   |   |
| Net loss attributable to FNEC Shareholders                  |   |                                   | (75,237    | )      |                                       |   | (50,023    | )                                      |   |   | (8,953                                           | )      |   |                                         | (12,603    | )      |                                   |   | (3,658     | )                                          |   |   | (81,131                                | )      |   |                                             | (13,384    | )      |                                              |   | (4,649 | ) |   |   | (52,895 | ) |   |   | (10,203 | ) |
|                                                        |   |                                   |       |   |                                       |   |       |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   |                                   |   |   |                                             |       |   |                                              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per share, basic and diluted                       |   | $                                      | (0.00      | )      |                                       | $      | (0.00      | )                                      |   | $      | (0.00                                            | )      |   | $                                            | (0.00      | )      |                                   | $      | (0.00      | )                                          |   | $      | (0.00                                  | )      |   | $                                                | (0.00      | )      |                                              | $      | (0.00 | ) |   | $ | (0.00 | ) |   | $ | (0.01 | ) |
| Weighted average common shares outstanding                  |   |                                   | 99,746,598 |   |                                       |   | 99,746,598 |                                   |   |   | 99,665,228                                       |   |   |                                         | 99,665,228 |   |                                   |   | 99,665,228 |                                       |   |   | 60,645,228                             |   |   |                                             | 60,645,228 |   |                                              |   | 99,665,228 |   |   |   | 40,969,624 |   |   |   | 765,228 |   |
|                                                        |   |                                   |       |   |                                       |   |       |                                   |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   |                                   |   |   |                                             |       |   |                                              |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                    |   |                                   | (75,263    | )      |                                       |   | (50,049    | )                                      |   |   | (8,953                                           | )      |   |                                         | (12,603    | )      |                                   |   | (3,658     | )                                          |   |   | (81,131                                | )      |   |                                             | (13,384    | )      |                                              |   | (4,649 | ) |   |   | (52,895 | ) |   |   | (10,203 | ) |
| Other Comprehensive Loss                                    |   |                                   | -          |   |                                       |   | -          |                                   |   |   | -                                                |   |   |                                         | -          |   |                                   |   |       |                                       |   |   | -                                      |   |   |                                             |       |   |                                              |   | - |   |   |   | - |   |   |   |   |   |
| Comprehensive Loss                                          |   |                                   | (75,263    | )      |                                       |   | (50,049    | )                                      |   |   | (8,953                                           | )      |   |                                         | (12,603    | )      |                                   |   | (3,658     | )                                          |   |   | (81,131                                | )      |   |                                             | (13,384    | )      |                                              |   | (4,649 | ) |   |   | (52,895 | ) |   |   | (10,203 | ) |
| Comprehensive Loss attributable to non-controlling interest |   |                                   | (26        | )      |                                       |   | (26        | )                                      |   |   |                                             |   |   |                                         |       |   |                                   |   |       |                                       |   |   | -                                      |   |   |                                             |       |   |                                              |   | - |   |   |   | - |   |   |   |   |   |
| Comprehensive Loss attributable to FNEC Shareholders        |   |                                   | (75,237    | )      |                                       |   | (50,023    | )                                      |   |   | (8,953                                           | )      |   |                                         | (12,603    | )      |                                   |   | (3,658     | )                                          |   |   | (81,131                                | )      |   |                                             | (13,384    | )      |                                              |   | (4,649 | ) |   |   | (52,895 | ) |   |   | (10,203 | ) |

----

| Before Restatement                                                                                                                                                                                                                                                                                                                                                                                           |   | Year Ended December 31, 2010 |     |   | 3-month period December 31, 2010 |   |     | 3-month period September 30, 2010 |   |   | 3-month period June 30, 2010 |   |   | 3-month period March 31, 2010 |    |   | Year Ended December 31, 2009 |   |     | 3-month period December 31, 2009 |   |   | 3-month period September 30, 2009 |   |   | 3-month period June 30, 2009 |    |   | 3-month period March 31, 2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|----------|--------|--------------------------------------------|--------|----------|----------------------------------------|--------|--------|---------------------------------------------|--------|--------|----------------------------------------------|---------|--------|-----------------------------------|--------|----------|--------------------------------------------|--------|--------|----------------------------------------|--------|--------|---------------------------------------------|---------|--------|----------------------------------------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                     |   |                              | (80,263  | )      |                                       |   | 114,121  |                                   |   |   | (70,343                                     | )      |   |                                         | (73,993 | )      |                              |   | (50,048  | )                                          |   |   | (210,769                               | )      |   |                                        | (65,705 | )      |                                         |   | (51,040 | ) |   |   | (83,821 | ) |   |   | (10,203 | ) |
| Adjustments for items not affecting cash                                                                                                                                                                                                                                                                                                                                                                     |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|     Amortization                                                                                                                                                                                                                                                                                                                                                                              |   |                              | 5,000    |   |                                       |   | (164,171 | )                                      |   |   | 61,390                                      |   |   |                                         | 61,390  |   |                              |   | 46,390   |                                       |   |   | 129,638                                |   |   |                                        | 52,321  |   |                                         |   | 46,390 |   |   |   | 30,927 |   |   |   | - |   |
|      Shares issued for services        rendered                                                                                                                                                                                                                                                                                                       |   |                              | 14,820   |   |                                       |   | 14,820   |                                   |   |   | -                                           |   |   |                                         | -       |   |                              |   | -        |                                       |   |   | 32,000                                 |   |   |                                        | -       |   |                                         |   | - |   |   |   | 32,000 |   |   |   | - |   |
|      Forgiveness of accounts        payable and loans                                                                                                                                                                                                                                                                                                 |   |                              | (258,313 | )      |                                       |   | (258,313 | )                                      |   |   | -                                           |   |   |                                         | -       |   |                              |   | -        |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|      Increase (decrease) in accounts         payable and accrued liabilities                                                                                                                                                                                                                                                                          |   |                              | (1,299   | )      |                                       |   | 5,000    |                                   |   |   | 769                                         |   |   |                                         | (1,999  | )      |                              |   | (5,069   | )                                          |   |   | 739                                    |   |   |                                        | 9,568   |   |                                         |   | (4,200 | ) |   |   | 4,976 |   |   |   | (9,605 | ) |
|                                                                    |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                        |   |                              | (320,055 | )      |                                       |   | (288,542 | )                                      |   |   | (8,184                                      | )      |   |                                         | (14,602 | )      |                              |   | (8,727   | )                                          |   |   | (48,392                                | )      |   |                                        | (3,816  | )      |                                         |   | (8,850 | ) |   |   | (15,918 | ) |   |   | (19,808 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Loans from Shareholders                                                                                                                                                                                                                                                                                                                                                                                      |   |                              | -        |   |                                       |   | -        |                                   |   |   | -                                           |   |   |                                         | -       |   |                              |   | -        |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Proceeds from sale of capital stock                                                                                                                                                                                                                                                                                                                                                                          |   |                              | 258,313  |   |                                       |   | 258,313  |                                   |   |   | -                                           |   |   |                                         | -       |   |                              |   | -        |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Payment on the Note Payable to Boreas                                                                                                                                                                                                                                                                                                                                                                        |   |                              | (600,000 | )      |                                       |   | -        |                                   |   |   | -                                           |   |   |                                         | -       |   |                              |   | (600,000 | )                                     |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Loan from Boreas Research    Corporation                                                                                                                                                                                                                                                                                                                                                 |   |                              | 540,000  |   |                                       |   | (60,000  | )                                 |   |   | -                                           |   |   |                                         | -       |   |                              |   | 600,000  |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds of sale of minority interest in subsidiary                                                                                                                                                                                                                                                                                                                                                          |   |                              | 100,000  |   |                                       |   | -        |                                   |   |   |                                        |   |   |                                         | 100,000 |   |                              |   |     |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by financing activities                                                                                                                                                                                                                                                                                                                                                                    |   |                              | 298,313  |   |                                       |   | 198,313  |                                   |   |   | -                                           |   |   |                                         | 100,000 |   |                              |   | -        |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                                                                                                                                                                                                                                                                                                                                                              |   |                              | (21,742  | )      |                                       |   | (90,229  | )                                      |   |   | (8,184                                      | )      |   |                                         | 85,398  |   |                              |   | (8,727   | )                                          |   |   | (48,392                                | )      |   |                                        | (3,816  | )      |                                         |   | (8,850 | ) |   |   | (15,918 | ) |   |   | (19,808 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                                                                                                                                                                                                                                                                                                                                                    |   |                              | 36,730   |   |                                       |   | 105,217  |                                   |   |   | 113,401                                     |   |   |                                         | 28,003  |   |                              |   | 36,730   |                                       |   |   | 85,122                                 |   |   |                                        | 40,546  |   |                                         |   | 49,396 |   |   |   | 65,314 |   |   |   | 85,122 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| CASH, END OF PERIOD                                                                                                                                                                                                                                                                                                                                                                                          |   |                              | 14,988   |   |                                       |   | 14,988   |                                   |   |   | 105,217                                     |   |   |                                         | 113,401 |   |                              |   | 28,003   |                                       |   |   | 36,730                                 |   |   |                                        | 36,730  |   |                                         |   | 40,546 |   |   |   | 49,396 |   |   |   | 65,314 |   |

----

| After Restatement                                                                                                                                                                                                                                                                                                                                                                                                  |   | Year Ended December 31, 2010 |     |   | 3-month period December 31, 2010 |   |     | 3-month period September 30, 2010 |   |   | 3-month period June 30, 2010 |   |   | 3-month period March 31, 2010 |    |   | Year Ended December 31, 2009 |   |     | 3-month period December 31, 2009 |   |   | 3-month period September 30, 2009 |   |   | 3-month period June 30, 2009 |    |   | 3-month period March 31, 2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|----------|--------|--------------------------------------------|--------|----------|----------------------------------------|--------|--------|---------------------------------------------|--------|--------|----------------------------------------------|---------|--------|-----------------------------------|--------|----------|--------------------------------------------|--------|--------|----------------------------------------|--------|--------|---------------------------------------------|---------|--------|----------------------------------------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                           |   |                              | (75,263  | )      |                                       |   | (50,049  | )                                      |   |   | (8,953                                      | )      |   |                                         | (12,603 | )      |                              |   | (3,658   | )                                          |   |   | (81,131                                | )      |   |                                        | (13,384 | )      |                                         |   | (4,649 | ) |   |   | (52,895 | ) |   |   | (10,203 | ) |
| Adjustments for items not affecting cash                                                                                                                                                                                                                                                                                                                                                                           |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|      Shares issued for services        rendered                                                                                                                                                                                                                                                                                                             |   |                              | 14,820   |   |                                       |   | 14,820   |                                   |   |   | -                                           |   |   |                                         | -       |   |                              |   | -        |                                       |   |   | 32,000                                 |   |   |                                        | -       |   |                                         |   | - |   |   |   | 32,000 |   |   |   | - |   |
|      Shares issued for debt   forgiveness                                                                                                                                                                                                                                                                                               |   |                              | (258,313 | )      |                                       |   | (258,313 | )                                      |   |   | -                                           |   |   |                                         | -       |   |                              |   | -        |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|      Increase (decrease) in accounts       payable and accrued liabilities                                                                                                                                                                                                                                                                                       |   |                              | (1,299   | )      |                                       |   | 5,000    |                                   |   |   | 769                                         |   |   |                                         | (1,999  | )      |                              |   | (5,069   | )                                          |   |   | 739                                    |   |   |                                        | 9,568   |   |                                         |   | (4,201 | ) |   |   | 4,977 |   |   |   | (9,605 | ) |
|                                                                     |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                              |   |                              | (320,055 | )      |                                       |   | (288,542 | )                                      |   |   | (8,184                                      | )      |   |                                         | (14,602 | )      |                              |   | (8,727   | )                                          |   |   | (48,392                                | )      |   |                                        | (3,816  | )      |                                         |   | (8,850 | ) |   |   | (15,918 | ) |   |   | (19,808 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from isuance of capital stock                                                                                                                                                                                                                                                                                                                                                                        |   |                              | 258,313  |   |                                       |   | 258,313  |                                   |   |   | -                                           |   |   |                                         | -       |   |                              |   | -        |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Acquisition of India technology license                                                                                                                                                                                                                                                                                                                                                                            |   |                              | (600,000 | )      |                                       |   | -        |                                   |   |   | -                                           |   |   |                                         | -       |   |                              |   | (600,000 | )                                     |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Loan from Boreas Research Corporation                                                                                                                                                                                                                                                                                                                                                                              |   |                              | 540,000  |   |                                       |   | (60,000  | )                                      |   |   | -                                           |   |   |                                         | -       |   |                              |   | 600,000  |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds of sale of non-controlling interest in subsidiary                                                                                                                                                                                                                                                                                                                                                    |   |                              | 100,000  |   |                                       |   | -        |                                   |   |   |                                        |   |   |                                         | 100,000 |   |                              |   |     |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by financing activities                                                                                                                                                                                                                                                                                                                                                                          |   |                              | 298,313  |   |                                       |   | 198,313  |                                   |   |   | -                                           |   |   |                                         | 100,000 |   |                              |   |     |                                       |   |   | -                                      |   |   |                                        | -       |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                                                                                                                                                                                                                                                                                                                                                                    |   |                              | (21,742  | )      |                                       |   | (90,229  | )                                      |   |   | (8,184                                      | )      |   |                                         | 85,398  |   |                              |   | (8,727   | )                                          |   |   | (48,392                                | )      |   |                                        | (3,816  | )      |                                         |   | (8,850 | ) |   |   | (15,918 | ) |   |   | (19,808 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                                                                                                                                                                                                                                                                                                                                                          |   |                              | 36,730   |   |                                       |   | 105,217  |                                   |   |   | 113,401                                     |   |   |                                         | 28,003  |   |                              |   | 36,730   |                                       |   |   | 85,122                                 |   |   |                                        | 40,546  |   |                                         |   | 49,396 |   |   |   | 65,314 |   |   |   | 85,122 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                               |   |                              |     |   |                                       |   |     |                                   |   |   |                                        |   |   |                                         |    |   |                              |   |     |                                       |   |   |                                   |   |   |                                        |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| CASH, END OF PERIOD                                                                                                                                                                                                                                                                                                                                                                                                |   |                              | 14,988   |   |                                       |   | 14,988   |                                   |   |   | 105,217                                     |   |   |                                         | 113,401 |   |                              |   | 28,003   |                                       |   |   | 36,730                                 |   |   |                                        | 36,730  |   |                                         |   | 40,546 |   |   |   | 49,396 |   |   |   | 65,314 |   |

----

| Year ended December 31, 2010                                   |   | High   |   |   | Low    |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|      4th quarter, ended December 31, 2010  |   | $      | 0.05   |   |   | $      | 0.05 |   |
|      3rd quarter, ended September 30, 2010 |   | $      | 0.51   |   |   | $      | 0.05 |   |
|      2nd quarter, ended June 30, 2010      |   | $      | 1.01   |   |   | $      | 0.04 |   |
|      1st quarter, ended March 31, 2010     |   | $      | 1.01   |   |   | $      | 0.04 |   |
|                                                           |   |   |   |   |   |   |   |   |
| Year ended December 31, 2009                                   |   |   |   |   |   |   |   |   |
|      4th quarter, ended December 31, 2009  |   | $      | 1.10   |   |   | $      | 0.32 |   |
|      3rd quarter, ended September 30, 2009 |   | $      | 3.00   |   |   | $      | 1.01 |   |
|      2nd quarter, ended June 30, 2009      |   | $      | 1.02   |   |   | $      | 0.31 |   |
|      1st quarter, ended March 31, 2009     |   | $      | 1.55   |   |   | $      | 0.30 |   |

----

| Plan 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)] (c) |
|----------------------------------------------------------|-------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity compensationplans approved bysecurity holders     |   None                                                                                |   N/A                                                                 |   None                                                                                                                                |
| Equity compensationplans not approvedby security holders |   None                                                                                |   N/A                                                                 |   2,170,000 Common Shares                                                                                                             |
| Total                                                    | None                                                                                            | N/A                                                                             | 2,170,000 Common Shares                                                                                                                         |

----

----

----

| *   | Product Research and Development, primarily related to refining wind turbine assembly system designs, and establishing a supply chain and production. We estimate product development related expenses for the next twelve months will be approximately $100,000. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *   | Marketing, including efforts to present our products to potential end users, direct marketing and attendance at trade shows as discussed above.  We estimate initial marketing expenses for the next twelve months will be approximately $200,000. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *   | Research and Development costs consist of developing and testing our company website. We estimate that research and development costs for the next twelve months will be approximately $2,000. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *   | Office, assembly and warehouse space, to accommodate our development and production plans as discussed above.  We estimate that our facilities cost and utilities for the next twelve month will be approximately $100,000. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *   | General working capital, materials, inventory, labor and consulting costs of approximately $1,750,000. |
|---------------|--------------------------------------------------------------------------------------------------------|

----

----

----

----

----

|   | -      | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;                                                                                                                                                                      |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                  |
|   | -      | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
|   |   |                                                                                                                                                                                                                                                                                                                  |
|   | -      | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.                                                                                                       |

----

----

|   Name and principal position                                                                                                                                                                                                                                 |   | Year   |   | Salary |   |   | Bonus  |   |   | Stock awards |   |   | Option awards |   |   | Nonequity incentive plan compensation |   |   | Nonqualified deferred compensation earnings |   |   | All other compensation |   |   | Total  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------------|--------|--------|---------------|--------|--------|---------------------------------------|--------|--------|---------------------------------------------|--------|--------|------------------------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                               |   |   |   | ($)    |   |   | ($)    |   |   | ($)          |   |   | ($)           |   |   | ($)                                   |   |   | ($)                                         |   |   | ($)                    |   |   | ($)    |   |
| Gregory Sheller,                                                                                                                                                                                                                                                   |   | 2010   |   | $      | 0      |   |   | $      | 0      |         |   | $      | 0             |   |   | $                                     | 0      |   |                                        | $      | 0      |                   |   | $      | 0      |   |   | $ | 0 |   |   | $ | 0 |   |
| President CEO                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |         |   |   |          |   |   |                                  |   |   |                                        |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |         |   |   |          |   |   |                                  |   |   |                                        |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Peter Wanner,                                                                                                                                                                                                                                                      |   | 2010   |   | $      | 0      |   |   | $      | 0      |         |   | $      | 0             |   |   | $                                     | 0      |   |                                        | $      | 0      |                   |   | $      | 0      |   |   | $ | 0 |   |   | $ | 0 |   |
| Chief Financial Officer                                                                                                                                                                                                                                            |   | 2009   |   | $      | 0      |   |   | $      | 0      |         |   | $      | 32,000        | (1)    |   | $                                     | 0      |   |                                        | $      | 0      |                   |   | $      | 0      |   |   | $ | 0 |   |   | $ | 32,000 |   |
|                                             |   |   |   |   |   |   |   |   |   |         |   |   |          |   |   |                                  |   |   |                                        |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gianni Caputo,                                                                                                                                                                                                                                                     |   | 2010   |   | $      | 0      |   |   | $      | 0      |         |   | $      | 0             |   |   | $                                     | 0      |   |                                        | $      | 0      |                   |   | $      | 0      |   |   | $ | 0 |   |   | $ | 0 |   |
| Vice President                                                                                                                                                                                                                                                     |   | 2009   |   | $      | 0      |   |   | $      | 0      |         |   | $      | 0             |   |   | $                                     | 0      |   |                                        | $      | 0      |                   |   | $      | 0      |   |   | $ | 0 |   |   | $ | 0 |   |

----

| Title of Class | Name and Address of Beneficial Owner                                     | Amount and Nature of Beneficial Ownership(1) | Percent of Class |
|----------------|--------------------------------------------------------------------------|----------------------------------------------|------------------|
| Common         | Lubi Investments, Inc.(2)1551 Second Street Sarasota, Florida 34236 | 85,462,000                                   | 85.58%           |
| Common         | Gregory Sheller1551 Second StreetSarasota FL 34236                       | 40,000                                       | 0.04%            |
| Common         | Gianni Caputo1551 Second StreetSarasota FL 34236                         | 296,400                                      | 0.30%            |
| Common         | Peter Wanner, 44 Greystone Crescent, Georgetown, ON Canada L7G1 G9       | 165,000                                      | 0.17%            |
| Common         | Directors and officers as a group                                        | 85,963,400                                   | 86.08%           |

----

| (a)   | The following documents are filed as part of this report: |
|-----------------|-----------------------------------------------------------|

| (b)   | Exhibits included or incorporated by reference herein are set forth in the following Exhibit Index.  Exhibits referred to as "Previously Filed" are incorporated herein by reference. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        |   |                              |   |             |
|-------------|--------|-----------------------------------|--------|------------------|
| Exhibit No. |   | Document                          |   | Location         |
| 3.1         |   | Articles of Incorporation         |   | Previously Filed |
| 3.2         |   | Bylaws                            |   | Previously Filed |
| 4.1         |   | S-8 Registration Filed 02/25/2005 |   | Previously Filed |
| 4.2         |   | S-8 Registration Filed 04/11/2005 |   | Previously Filed |
| 19          |   | DEF 14-C Information Statement    |   | Previously Filed |
| 21          |   | Subsidiaries of the Registrant    |   | Included         |
| 31.1        |   | Sect. 302 Certification           |   | Included         |
| 31.2        |   | Sect. 302 Certification           |   | Included         |
| 32.1        |   | Sect. 906 Certification           |   | Included         |
| 32.2        |   | Sect. 906 Certification           |   | Included         |

----

| Registrant:   | FIRST NATIONAL ENERGY CORPORATION |                     |
|-------------------------|-----------------------------------|--------------------------|
|                    |                              |                     |   |
| Date: May 25, 2011 | By:                               | /s/ Gregory Sheller |   |
|                    |                              | /s/ Gregory Sheller      |   |
|                    |                              | Gregory Sheller          |   |
|                    |                              | Chief Executive Officer  |   |

|               |   |                    |   |
|--------------------|--------|-------------------------|--------|
| Date: May 25, 2011 | By:    | /s/ Gregory Sheller     |   |
|               |   | Gregory Sheller         |   |
|               |   | Chief Executive Officer |   |
|               |   |                    |   |

|               |   |                    |
|--------------------|--------|-------------------------|
|               |   |                    |   |
| Date: May 25, 2011 | By:    | /s/ Peter Wanner        |   |
|               |   | Peter Wanner            |   |
|               |   | Chief Financial Officer |   |
|               |   |                    |   |

----

----

----

----

| Report of Independent Registered Public Accounting Firm                                                                                                                                      |   | F-2             |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|
|                                                                                                                                                                                         |   |            |
| Consolidated Balance Sheets as at December 31, 2010 and December 31, 2009 (restated)                                                                                                         |   | F-3             |
|                                                                                                                                                                                         |   |            |
| Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2010 and December 31, 2009 (restated) and for the cumulative period (restated) since inception |   | F-4             |
|                                                                                                                                                                                         |   |            |
| Consolidated Statements of Cash Flows for the years ended December 31, 2010 and December 31, 2009 (restated) and for the cumulative period (restated) since inception                        |   | F- 5       |
|                                                                                                                                                                                         |   |            |
| Consolidated Statements of Stockholders’ Equity (Deficiency) for the years ended December 31, 2010 and December 31, 2009 (restated) and for the period since inception                 |   | F-6 – F-9 |
|                                                                                                                                                                                         |   |            |
| Notes to Consolidated Financial Statements                                                                                                                                                   |   | F-10 - F-20     |

----

----

|                                      | “SCHWARTZ LEVITSKY FELDMAN LLP”      |
|-------------------------------------------|--------------------------------------------------|
| Toronto, Ontario,CanadaMay 25, 2011  | Chartered AccountantsLicensed Public Accountants |

----

----

| FIRST NATIONAL ENERGY CORPORATION                               |   |
|-----------------------------------------------------------------|--------|
| (Formerly First National Power Corporation)                     |   |
| (A Development Stage Company)                                   |   |
| Consolidated Balance Sheets                                     |   |
| As of December 31, 2010 and 2009 (restated)                     |   |
| (Amounts expressed in US Dollars)                               |   |
|                                                            |   |
|                                                            |   | December 31 |   |   | December 31 |   |
|                                                            |   | 2010 |   |   | 2009 |   |
|                                                            |   |   |   |   | (restated) |   |
|                                                            |   |   | $ |   |   |   | $ |   |
|  ASSETS                                                    |   |   |   |   |   |   |   |   |
|       CURRENT ASSETS              |   |   |   |   |   |   |   |   |
|  Cash                                                      |   |   | 14,988 |   |   |   | 36,730 |   |
|                                                            |   |   |   |   |   |   |   |   |
|  License for SWEG technology, net of amortization (Note 4) |   |   | 200 |   |   |   | 100 |   |
|                                                            |   |   |   |   |   |   |   |   |
|                                                            |   |   | 15,188 |   |   |   | 36,830 |   |
|                                                            |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |
|  LIABILITIES                                               |   |   |   |   |   |   |   |   |
|      CURRENT LIABILITIES               |   |   |   |   |   |   |   |   |
|  Accounts payable and accrued liabilities (Note 5)         |   |   | 13,269 |   |   |   | 14,568 |   |
|  Loan payable to Boreas Research Corporation (Note 9) |   |   | 540,000 |   |   |   |   |   |
|  Loan from stockholder (Note 6 and 7 ( c ))                |   |   | - |   |   |   | 258,313 |   |
|                                                            |   |   | 553,269 |   |   |   | 272,881 |   |
|                                                            |   |   |   |   |   |   |   |   |
|  Going Concern (Note 2)                                    |   |   |   |   |   |   |   |   |
|  Other Contingent Liabilities (Note 13)                    |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |
|  STOCKHOLDERS’ EQUITY (DEFICIENCY)                   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |
|  Capital Stock (Note 7)                                    |   |   | 99,765 |   |   |   | 99,665 |   |
|  Additional paid-in Capital                                |   |   | 103,329 |   |   |   | 330,296 |   |
|  Deficit accumulated during the development stage          |   |   | (741,249 | ) |   |   | (666,012 | ) |
|  Total Stockholders' Equity (Deficit) of the Company       |   |   | (538,155 | ) |   |   | (236,051 | ) |
|  Non-controlling interest                                  |   |   | 74 |   |   |   | - |   |
|                                                            |   |   | (538,081 | ) |   |   | (236,051 | ) |
|                                                            |   |   |   |   |   |   |   |   |
|                                                            |   |   | 15,188 |   |   |   | 36,830 |   |

----

| FIRST NATIONAL ENERGY CORPORATION                                                                              |
|----------------------------------------------------------------------------------------------------------------|
| (Formerly First National Power Corporation)                                                                    |
| (A Development Stage Company)                                                                                  |
| Consolidated Statements of Operations and Comprehensive Loss                                                   |
| For the years ended December 31, 2010 and 2009 (restated) and the (restated) cumulative period since inception |
| (Amounts expressed in US Dollars)                                                                              |

|                                                        |   |
|-------------------------------------------------------------|--------|
|                                                        |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |
|                                                        |   | Cumulative |   |   |   |   |   |   |   |
|                                                        |   | Since |   |   |   |   |   |   |   |
|                                                        |   | Inception |   |   | 2010 |   |   | 2009 |   |
|                                                        |   | (restated) |   |   |   |   |   | (restated) |   |
|                                                        |   |   | $ |   |   |   | $ |   |   |   | $ |   |
| OPERATING EXPENSES                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                             |   |   | (6,924 | ) |   |   | (20 | ) |   |   | (5 | ) |
| Forgiveness of accounts payable and loans                   |   |   | (47,394 | ) |   |   | - |   |   |   | - |   |
| General and administrative expenses                         |   |   | 504,110 |   |   |   | 60,463 |   |   |   | 81,136 |   |
| Loss on foreign exchange                                    |   |   | 580 |   |   |   | - |   |   |   | - |   |
| Project development costs (Note 9)                          |   |   | 287,677 |   |   |   | 14,820 |   |   |   | - |   |
| Interest Expense                                            |   |   | 3,226 |   |   |   | - |   |   |   | - |   |
| Amortization                                                |   |   | - |   |   |   | - |   |   |   | - |   |
| NET LOSS                                                    |   |   | 741,275 |   |   |   | 75,263 |   |   |   | 81,131 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to non-controlling interest           |   |   | (26 | ) |   |   | (26 | ) |   |   | - |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to the Company                        |   |   | 741,249 |   |   |   | 75,237 |   |   |   | 81,131 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per share, basic and diluted                       |   |   |   |   |   | $ | 0.00 |   |   | $ | 0.00 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding                  |   |   |   |   |   |   | 99,746,598 |   |   |   | 60,645,228 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE LOSS                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                    |   |   | 741,275 |   |   |   | 75,263 |   |   |   | 81,131 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Loss                                    |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Loss                                          |   |   | 741,275 |   |   |   | 75,263 |   |   |   | 81,131 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Loss attributable to non-controlling interest |   |   | (26 | ) |   |   | (26 | ) |   |   | - |   |
| Comprehensive Loss attributable to the Company              |   |   | 741,249 |   |   |   | 75,237 |   |   |   | 81,131 |   |

----

| FIRST NATIONAL ENERGY CORPORATION                                                                                           |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|
| (Formerly First National Power Corporation)                                                                                 |   |
| (A Development Stage Company)                                                                                               |   |
| Consolidated Statements of Cash Flows                                                                                       |   |
| For the Years ended December 31, 2010 and December 31, 2009 (restated) and the (restated) cumulative period since inception |   |
| (Amounts expressed in US Dollars)                                                                                           |   |

|                                                                  |   |
|-----------------------------------------------------------------------|--------|
|                                                                  |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Cumulative |   |   |   |   |   |   |   |
|                                                                  |   | Since |   |   |   |   |   |   |   |
|                                                                  |   | Inception |   |   | 2010 |   |   | 2009 |   |
|                                                                  |   | (restated) |   |   |   |   |   | (restated) |   |
|                                                                  |   |   | $ |   |   |   | $ |   |   |   | $ |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net loss                                                        |   |   | (741,275 | ) |   |   | (75,263 | ) |   |   | (81,131 | ) |
|  Adjustments for items not affecting cash                        |   |   |   |   |   |   |   |   |   |   |   |   |
|  Shares issued for services rendered                             |   |   | 347,210 |   |   |   | 14,820 |   |   |   | 32,000 |   |
|  Shares issued for debt forgiveness                              |   |   | (258,313 | ) |   |   | (258,313 | ) |   |   |   |   |
|  Forgiveness of accounts payable and loans                       |   |   | (47,394 | ) |   |   | - |   |   |   | - |   |
|  Increase (decrease) in accounts payable and accrued liabilities |   |   | 17,268 |   |   |   | (1,299 | ) |   |   | 739 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net cash used in operating activities                           |   |   | (682,504 | ) |   |   | (320,055 | ) |   |   | (48,392 | ) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  CASH FLOWS FROM FINANCING ACTIVITIES                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loan from Stockholders                                          |   |   | 301,708 |   |   |   | - |   |   |   |   |   |
|  Proceeds from issuance of capital stock                         |   |   | 355,784 |   |   |   | 258,313 |   |   |   |   |   |
|  Loan from Boreas Research Corporation, net                      |   |   | 540,000 |   |   |   | 540,000 |   |   |   |   |   |
|  Acquisition of India technology license                         |   |   | (600,000 | ) |   |   | (600,000 | ) |   |   |   |   |
|  Proceeds of sale of non-controlling interest in subsidiary      |   |   | 100,000 |   |   |   | 100,000 |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net cash provided by financing activities                       |   |   | 697,492 |   |   |   | 298,313 |   |   |   | - |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  NET INCREASE (DECREASE) IN CASH                                 |   |   | 14,988 |   |   |   | (21,742 | ) |   |   | (48,392 | ) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  Cash, beginning of period                                       |   |   | - |   |   |   | 36,730 |   |   |   | 85,122 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  CASH, END OF PERIOD                                             |   |   | 14,988 |   |   |   | 14,988 |   |   |   | 36,730 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  INCOME TAXES PAID                                               |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|  INTEREST PAID                                                   |   |   | 3,226 |   |   |   | - |   |   |   | - |   |

----

| FIRST NATIONAL ENERGY CORPORATION                                                                                |
|------------------------------------------------------------------------------------------------------------------|
| (Formerly First National Power Corporation)                                                                      |
| (A Development Stage Company)                                                                                    |
| Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)                                    |
| For the Years ended December 31, 2010 and December 31, 2009 (restated) and the (restated) period since Inception |
| (Amounts expressed in US Dollars)                                                                                |

|                                    |   | Common stock - dollar amount at par value |   |   | Common stock - number of shares |   |      | Common stock subscribed |   |   |  Additional paid-in capital |   |   |  Deficit accumulated during the development stage |   |   | Total stockholders' equity (deficit) of the Company |   |    | Non-controlling interests |   |   |  Total stockholders' equity (deficit) |   |
|-----------------------------------------|--------|-------------------------------------------|--------|--------|---------------------------------|--------|-----------|-------------------------|--------|--------|----------------------------------|--------|--------|--------------------------------------------------------|--------|--------|----------------------------------------------------------|--------|---------|---------------------------|--------|--------|--------------------------------------------|--------|
|                                    |   |  $                                   |   |   |                            |   |      |                    |   | $      |                             |   |   | $                                                      |   |   |                                                     | $      |    |                      |   | $      |                                       |   |   | $ |   |   |   | $ |   |
|                                    |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   |    |                      |   |   |                                       |   |   |   |   |   |   |   |   |
|  Balance at November 16, 2000      |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   |    |                      |   |   |                                       |   |   |   |   |   |   |   |   |
|  Issuance of common stock for cash |   |                                      | 100    |   |                            |   | 100,000   |                    |   |   |                             |   |   |                                                   | 900    |   |                                                     |   |    |                      |   |   | 1,000                                      |   |   |   |   |   |   |   | 1,000 |   |
|  Net Loss for the Period           |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   | (968    | )                         |   |   | (968                                       | )      |   |   |   |   |   |   | (968 | ) |
|                                    |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   |    |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2000   |   |                                      | 100    |   |                            |   | 100,000   |                    |   |   | -                                |   |   |                                                   | 900    |   |                                                     |   | (968    | )                         |   |   | 32                                         |   |   |   | - |   |   |   | 32 |   |
|                                    |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   |    |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Issuance of stock for cash        |   |                                      | 400    |   |                            |   | 400,000   |                    |   |   |                             |   |   |                                                   | 3,600  |   |                                                     |   |    |                      |   |   | 4,000                                      |   |   |   |   |   |   |   | 4,000 |   |
|  Issuance of stock for cash        |   |                                      | 700    |   |                            |   | 700,000   |                    |   |   |                             |   |   |                                                   | 6,300  |   |                                                     |   |    |                      |   |   | 7,000                                      |   |   |   |   |   |   |   | 7,000 |   |
|  Issuance of stock for cash        |   |                                      | 850    |   |                            |   | 850,000   |                    |   |   |                             |   |   |                                                   | 7,650  |   |                                                     |   |    |                      |   |   | 8,500                                      |   |   |   |   |   |   |   | 8,500 |   |
|  Currency Translation              |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   | 100    |   |                                                     |   |    |                      |   |   | 100                                        |   |   |   |   |   |   |   | 100 |   |
|  Net Loss for the Year             |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   | (23,954 | )                         |   |   | (23,954                                    | )      |   |   |   |   |   |   | (23,954 | ) |
|                                    |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   |    |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2001   |   |                                      | 2,050  |   |                            |   | 2,050,000 |                    |   |   | -                                |   |   |                                                   | 18,550 |   |                                                     |   | (24,922 | )                         |   |   | (4,322                                     | )      |   |   | - |   |   |   | (4,322 | ) |
|                                    |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   |    |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Expiration of recission offer for |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   |    |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|    sale of stock         |   |                                      | 64     |   |                            |   | 63,536    |                    |   |   |                             |   |   |                                                   | 6,290  |   |                                                     |   |    |                      |   |   | 6,354                                      |   |   |   |   |   |   |   | 6,354 |   |
|  Net Loss for the Year             |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   | (26,047 | )                         |   |   | (26,047                                    | )      |   |   |   |   |   |   | (26,047 | ) |
|                                    |   |                                      |   |   |                            |   |      |                    |   |   |                             |   |   |                                                   |   |   |                                                     |   |    |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2002   |   |                                      | 2,114  |   |                            |   | 2,113,536 |                    |   |   | -                                |   |   |                                                   | 24,840 |   |                                                     |   | (50,969 | )                         |   |   | (24,015                                    | )      |   |   | - |   |   |   | (24,015 | ) |

----

| FIRST NATIONAL ENERGY CORPORATION                                                                                |
|------------------------------------------------------------------------------------------------------------------|
| (Formerly First National Power Corporation)                                                                      |
| (A Development Stage Company)                                                                                    |
| Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)                                    |
| For the Years ended December 31, 2010 and December 31, 2009 (restated) and the (restated) period since Inception |
| (Amounts expressed in US Dollars)                                                                                |

|                                      |   | Common stock - dollar amount at par value |   |   | Common stock - number of shares |   |       | Common stock subscribed |   |   | Additional paid-in capital |   |   |  Deficit accumulated during the development stage |    |   | Total stockholders' equity (deficit) of the Company |   |     | Non-controlling interests |   |   |  Total stockholders' equity (deficit) |   |
|-------------------------------------------|--------|-------------------------------------------|--------|--------|---------------------------------|--------|------------|-------------------------|--------|--------|----------------------------|--------|--------|--------------------------------------------------------|---------|--------|----------------------------------------------------------|--------|----------|---------------------------|--------|--------|--------------------------------------------|--------|
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |
|                                      |   |  $                                   |   |   |                            |   |       |                    |   | $      |                       |   |   | $                                                      |    |   |                                                     | $      |     |                      |   | $      |                                       |   |   | $ |   |   |   | $ |   |
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |   |   |   |   |   |   |   |
|  Stock split 5:1                     |   |                                      | 8,454  |   |                            |   | 8,454,144  |                    |   |   |                       |   |   |                                                   | (8,454  | )      |                                                     |   |     |                      |   |   | -                                          |   |   |   |   |   |   |   |   |   |
|  Shares issued for services rendered |   |                                      | 200    |   |                            |   | 200,000    |                    |   |   |                       |   |   |                                                   | 79,800  |   |                                                     |   |     |                      |   |   | 80,000                                     |   |   |   |   |   |   |   | 80,000 |   |
|  Net Loss for the Year               |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   | (107,245 | )                         |   |   | (107,245                                   | )      |   |   |   |   |   |   | (107,245 | ) |
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2003     |   |                                      | 10,768 |   |                            |   | 10,767,680 |                    |   |   | -                          |   |   |                                                   | 96,186  |   |                                                     |   | (158,214 | )                         |   |   | (51,260                                    | )      |   |   | - |   |   |   | (51,260 | ) |
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Stock split 7:1                     |   |                                      | 64,606 |   |                            |   | 64,606,080 |                    |   |   |                       |   |   |                                                   | (64,606 | )      |                                                     |   |     |                      |   |   | -                                          |   |   |   |   |   |   |   | - |   |
|  Shares issued for services rendered |   |                                      | 30     |   |                            |   | 30,000     |                    |   |   |                       |   |   |                                                   | 15,870  |   |                                                     |   |     |                      |   |   | 15,900                                     |   |   |   |   |   |   |   | 15,900 |   |
|  Shares subscribed                   |   |                                      |   |   |                            |   |       |                    |   |   | 146                        |   |   |                                                   | 70,371  |   |                                                     |   |     |                      |   |   | 70,517                                     |   |   |   |   |   |   |   | 70,517 |   |
|  Shares issued for services rendered |   |                                      | 44     |   |                            |   | 43,000     |                    |   |   |                       |   |   |                                                   | 9,956   |   |                                                     |   |     |                      |   |   | 10,000                                     |   |   |   |   |   |   |   | 10,000 |   |
|  Net Loss for the Year               |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   | (75,414  | )                         |   |   | (75,414                                    | )      |   |   |   |   |   |   | (75,414 | ) |
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2004     |   |                                      | 75,448 |   |                            |   | 75,446,760 |                    |   |   | 146                        |   |   |                                                   | 127,777 |   |                                                     |   | (233,628 | )                         |   |   | (30,257                                    | )      |   |   | - |   |   |   | (30,257 | ) |
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Shares issued for services rendered |   |                                      | 830    |   |                            |   | 830,000    |                    |   |   |                       |   |   |                                                   | 193,160 |   |                                                     |   |     |                      |   |   | 193,990                                    |   |   |   |   |   |   |   | 193,990 |   |
|  Net Loss for the Year               |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   | (208,886 | )                         |   |   | (208,886                                   | )      |   |   |   |   |   |   | (208,886 | ) |
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2005     |   |                                      | 76,278 |   |                            |   | 76,276,760 |                    |   |   | 146                        |   |   |                                                   | 320,937 |   |                                                     |   | (442,514 | )                         |   |   | (45,153                                    | )      |   |   | - |   |   |   | (45,153 | ) |
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Net Loss for the Year               |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   | (32,962  | )                         |   |   | (32,962                                    | )      |   |   |   |   |   |   | (32,962 | ) |
|                                      |   |                                      |   |   |                            |   |       |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                      |   |   |                                       |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2006     |   |                                      | 76,278 |   |                            |   | 76,276,760 |                    |   |   | 146                        |   |   |                                                   | 320,937 |   |                                                     |   | (475,476 | )                         |   |   | (78,115                                    | )      |   |   | - |   |   |   | (78,115 | ) |

----

| FIRST NATIONAL ENERGY CORPORATION                                                                                |
|------------------------------------------------------------------------------------------------------------------|
| (Formerly First National Power Corporation)                                                                      |
| (A Development Stage Company)                                                                                    |
| Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)                                    |
| For the Years ended December 31, 2010 and December 31, 2009 (restated) and the (restated) period since Inception |
| (Amounts expressed in US Dollars)                                                                                |

|                                             |   | Common stock - dollar amount at par value |    |   | Common stock - number of shares |   |        | Common stock subscribed |   |   | Additional paid-in capital |   |   |  Deficit accumulated during the development stage |    |   | Total stockholders' equity (deficit) of the Company |   |     |  Non-controlling interests |   |   | Total stockholders' equity (deficit) |   |
|--------------------------------------------------|--------|-------------------------------------------|---------|--------|---------------------------------|--------|-------------|-------------------------|--------|--------|----------------------------|--------|--------|--------------------------------------------------------|---------|--------|----------------------------------------------------------|--------|----------|---------------------------------|--------|--------|--------------------------------------|--------|
|                                             |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                            |   |   |                                 |   |
|                                             |   |  $                                   |    |   |                            |   |        |                    |   | $      |                       |   |   | $                                                      |    |   |                                                     | $      |     |                            |   | $      |                                 |   |   | $ |   |   |   | $ |   |
|                                             |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |
|  Issue shares bought under subscription     |   |                                      | 146     |   |                            |   | 146,000     |                    |   |   | (146                       | )      |   |                                                   |    |   |                                                     |   |     |                            |   |   | -                                    |   |   |   |   |   |   |   | - |   |
|  Net Loss for the Year                      |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   | (30,760  | )                               |   |   | (30,760                              | )      |   |   |   |   |   |   | (30,760 | ) |
|                                             |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2007            |   |                                      | 76,424  |   |                            |   | 76,422,760  |                    |   |   | -                          |   |   |                                                   | 320,937 |   |                                                     |   | (506,236 | )                               |   |   | (108,875                             | )      |   |   | - |   |   |   | (108,875 | ) |
|                                             |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |   |
|  Shares issued for services rendered        |   |                                      | 100     |   |                            |   | 100,000     |                    |   |   |                       |   |   |                                                   | 400     |   |                                                     |   |     |                            |   |   | 500                                  |   |   |   |   |   |   |   | 500 |   |
|  Net Loss for the year                      |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   | (78,645  | )                               |   |   | (78,645                              | )      |   |   |   |   |   |   | (78,645 | ) |
|                                             |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2008            |   |                                      | 76,524  |   |                            |   | 76,522,760  |                    |   |   | -                          |   |   |                                                   | 321,337 |   |                                                     |   | (584,881 | )                               |   |   | (187,020                             | )      |   |   | - |   |   |   | (187,020 | ) |
|                                             |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |   |
|                                             |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |   |
|  Reverse Stock split 1:100                  |   |                                      | (75,759 | )      |                            |   | (75,757,532 | )                       |   |   |                       |   |   |                                                   | 75,759  |   |                                                     |   |     |                            |   |   | -                                    |   |   |   |   |   |   |   | - |   |
|  Shares issued for services rendered        |   |                                      | 100     |   |                            |   | 100,000     |                    |   |   |                       |   |   |                                                   | 31,900  |   |                                                     |   |     |                            |   |   | 32,000                               |   |   |   |   |   |   |   | 32,000 |   |
|  Purchase of SWEG license for shares        |   |                                      | 98,800  |   |                            |   | 98,800,000  |                    |   |   |                       |   |   |                                                   | (98,700 | )      |                                                     |   |     |                            |   |   | 100                                  |   |   |   |   |   |   |   | 100 |   |
|  Net Loss for the Year                      |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   | (81,131  | )                               |   |   | (81,131                              | )      |   |   |   |   |   |   | (81,131 | ) |
|                                             |   |                                      |    |   |                            |   |        |                    |   |   |                       |   |   |                                                   |    |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2009 - restated |   |                                      | 99,665  |   |                            |   | 99,665,228  |                    |   |   | -                          |   |   |                                                   | 330,296 |   |                                                     |   | (666,012 | )                               |   |   | (236,051                             | )      |   |   | - |   |   |   | (236,051 | ) |

----

| FIRST NATIONAL ENERGY CORPORATION                                                                                |
|------------------------------------------------------------------------------------------------------------------|
| (Formerly First National Power Corporation)                                                                      |
| (A Development Stage Company)                                                                                    |
| Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)                                    |
| For the Years ended December 31, 2010 and December 31, 2009 (restated) and the (restated) period since Inception |
| (Amounts expressed in US Dollars)                                                                                |

|                                                 |   | Common stock - dollar amount at par value |   |   | Common stock - number of shares |   |       |  Common stock subscribed |   |   |  Additional paid-in capital |   |   | Deficit accumulated during the development stage |     |   | Total stockholders' equity (deficit) of the Company |   |     |  Non-controlling interests |   |   | Total stockholders' equity (deficit) |   |
|------------------------------------------------------|--------|-------------------------------------------|--------|--------|---------------------------------|--------|------------|-------------------------------|--------|--------|----------------------------------|--------|--------|--------------------------------------------------|----------|--------|----------------------------------------------------------|--------|----------|---------------------------------|--------|--------|--------------------------------------|--------|
|                                                 |   |                                      |   |   |                            |   |       |                          |   |   |                             |   |   |                                             |     |   |                                                     |   |     |                            |   |   |                                 |   |
|                                                 |   |  $                                   |   |   |                            |   |       |                          |   | $      |                             |   |   | $                                                |     |   |                                                     | $      |     |                            |   | $      |                                 |   |   | $ |   |   |   | $ |   |
|                                                 |   |                                      |   |   |                            |   |       |                          |   |   |                             |   |   |                                             |     |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |
|  Shares issued in exchange for debt forgiveness |   |                                      | 100    |   |                            |   | 100,000    |                          |   |   |                             |   |   |                                             | 258,213  |   |                                                     |   |     |                            |   |   | 258,313                              |   |   |   |   |   |   |   | 258,313 |   |
|  Return of shares for cancellation              |   |                                      | (296   | )      |                            |   | (296,400   | )                             |   |   |                             |   |   |                                             | 296      |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   | - |   |
|  Shares issued for services rendered            |   |                                      | 296    |   |                            |   | 296,400    |                          |   |   |                             |   |   |                                             | 14,524   |   |                                                     |   |     |                            |   |   | 14,820                               |   |   |   |   |   |   |   | 14,820 |   |
|  Sale of non-controlling interest in subsidiary |   |                                      |   |   |                            |   | 100,000    |                          |   |   |                             |   |   |                                             | 99,900   |   |                                                     |   |     |                            |   |   | 99,900                               |   |   |   | 100 |   |   |   | 100,000 |   |
|  Purchase of SWEG technology license            |   |                                      |   |   |                            |   |       |                          |   |   |                             |   |   |                                             | (599,900 | )      |                                                     |   |     |                            |   |   | (599,900                             | )      |   |   |   |   |   |   | (599,900 | ) |
|  Net Loss for the Year                          |   |                                      |   |   |                            |   |       |                          |   |   |                             |   |   |                                             |     |   |                                                     |   | (75,237  | )                               |   |   | (75,237                              | )      |   |   | (26 | ) |   |   | (75,263 | ) |
|                                                 |   |                                      |   |   |                            |   |       |                          |   |   |                             |   |   |                                             |     |   |                                                     |   |     |                            |   |   |                                 |   |   |   |   |   |   |   |   |   |
|  Balance as of December 31, 2010                |   |                                      | 99,765 |   |                            |   | 99,865,228 |                          |   |   | -                                |   |   |                                             | 103,329  |   |                                                     |   | (741,249 | )                               |   |   | (538,155                             | )      |   |   | 74 |   |   |   | (538,081 | ) |

----

| a) | Description of the Business |
|----|-----------------------------|

| b) | Purchase of Technology License |
|----|--------------------------------|

----

| c) | Further Purchase of Technology License |
|----|----------------------------------------|

----

| d)  | Restatement of 2009 Results |
|----------|-----------------------------|

|                                             |   | Original Presentation |      |   | Restatement Adjustment |   |       | Restated Amount |   |
|--------------------------------------------------|--------|-----------------------|-----------|--------|------------------------|--------|------------|-----------------|--------|
| Balance Sheet                                    |   |                  |      |   |                   |   |       |            |   |
| License of SWEG technology - asset value         |   |                  | 1,855,605 |   |                   |   | (1,855,505 | )               |   |   | 100 |   |
| License amortization                             |   |                  | 129,638   |   |                   |   | (129,638   | )               |   |   | - |   |
| License of SWEG Technology - net of amortization |   |                  | 1,725,967 |   |                   |   | (1,725,867 | )               |   |   | 100 |   |
| Total Assets                                     |   |                  | 1,762,697 |   |                   |   | (1,725,867 | )               |   |   | 36,830 |   |
| Additional Paid-in Capital                       |   |                  | 2,185,801 |   |                   |   | (1,855,505 | )               |   |   | 330,296 |   |
| Total Stockholders' Euqity (Deficit)             |   |                  | 1,489,816 |   |                   |   | (1,725,867 | )               |   |   | (236,051 | ) |
|                                             |   |                  |      |   |                   |   |       |            |   |   |   |   |
| Statement of Operations                          |   |                  |      |   |                   |   |       |            |   |   |   |   |
| Amortization                                     |   |                  | 129,638   |   |                   |   | (129,638   | )               |   |   | - |   |
| Net Loss and Comprehensive Loss                  |   |                  | (210,769  | )      |                   |   | 129,638    |            |   |   | (81,131 | ) |
| Net Loss per share, basic and diluted            |   |                  | (0.00     | )      |                   |   | (0.00      | )               |   |   | (0.00 | ) |
|                                             |   |                  |      |   |                   |   |       |            |   |   |   |   |
| Changes in Stockholders Equity (Deficit)         |   |                  |      |   |                   |   |       |            |   |   |   |   |
| Purcahse of SWEG license for shares              |   |                  | 1,756,805 |   |                   |   | (1,855,505 | )               |   |   | (98,700 | ) |
| Net loss for the period                          |   |                  | (210,769  | )      |                   |   | 129,638    |            |   |   | (81,131 | ) |
| Total Stockholders' equity (deficit)             |   |                  | 1,489,816 |   |                   |   | (1,725,867 | )               |   |   | (236,051 | ) |

----

| a)  | Basis of Consolidation |
|----------|------------------------|

| b)  | Use of Estimates |
|----------|------------------|

----

| c)  | Project Development Costs |
|----------|---------------------------|

| d)  | Financial Instruments |
|----------|-----------------------|

| e)  | Income Taxes |
|----------|--------------|

| f)  | Earnings or Loss Per Share |
|----------|----------------------------|

| g)  | Comprehensive Income (Loss) |
|----------|-----------------------------|

----

| h)  | Intangible Assets |
|----------|-------------------|

| i)  | Impairment of Long Lived Assets |
|----------|---------------------------------|

| j)  | Development Stage Company |
|----------|---------------------------|

| k)  | Recent Accounting Pronouncements |
|----------|----------------------------------|

----

----

|                              |   | 2010   |   |   |                     |   |   | 2009           |   |
|-----------------------------------|--------|--------|--------|--------|--------------------------|--------|--------|----------------|--------|
|                              |   | Cost   |   |   | Accumulated Amortization |   |   | Net Book Value |   |   | Net Book Value |   |
|                              |   |   |   |   |                     |   |   |           |   |   |   |   |
| North American Technology License |   | $      | 100    |   |                     | $      | -      |           |   | $ | 100 |   |   | $ | 100 |   |
| India Technology License          |   |   | 100    |   |                     |   | -      |           |   | $ | 100 |   |   | $ | 100 |   |
|                              |   | $      | 200    |   |                     | $      | -      |           |   | $ | 200 |   |   | $ | 200 |   |

|                      |   | 2010   |   |   | 2009   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|
|                      |   |   |   |   |   |   |
| Accrued Professional Fees |   | $      | 13,269 |   |   | $      | 14,568 |   |

----

| a)  | Authorized |
|----------|------------|

| b)  | Issued |
|----------|--------|

| c)  | Changes to Issued Share Capital |
|----------|---------------------------------|

| (i)   | During the year ended December 31, 2010, the Company had the following changes to its Issued Share Capital: |
|-----------------|-------------------------------------------------------------------------------------------------------------|

| -   | On December 12, 2010, the Company issued 100,000 shares in full settlement of an outstanding debt to an existing Stockholder. The agreed upon per share value of the settlement was $2.58313 per share. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | On April 14, 2010, the Company’s majority owned subsidiary Pavana Power Corporation (“Pavana”) issued 100,000 units, at a price of $1.00 per unit, to an arm’s length purchaser for gross proceeds of $100,000 as part of a private placement for up to $1,000,000.  Each unit consists of one common share and one common share purchase warrant entitling the holder to purchase one warrant share at an exercise price of $0.50 per share. The warrants are exercisable on the date of issuance of the units for a period of 1 (one) year until April 14, 2011. This resulted in a non-controlling interest holding of 0.1% of Pavana with the balance of the outstanding shares held by First National Energy Corporation. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | A retiring president of the Company asked that upon his retirement, his 296,400 shares be returned to treasury for cancellation. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------|

| -   | The Company issued 296,400 shares to a consultant that has been working on further development of the SWEG technology. The service was valued at $14,820 and is included in project development costs. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | During the year ended December, 31, 2009, the Company had the following changes to its Issued Share Capital: |
|------------------|--------------------------------------------------------------------------------------------------------------|

| -   | Issued 100,000 shares for officer fees. This was valued at $32,000 and is included in General and administrative expenses. |
|---------------|----------------------------------------------------------------------------------------------------------------------------|

| -   | Issued 98,800,000 shares valued at $.001 par value per share for the purchase of the North American SWEG technology license (See Note 1 (b)). |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

| a)  | Deferred Income Taxes |
|----------|-----------------------|

|                                               |   | 2010   |     |   | 2009       |   |
|----------------------------------------------------|--------|--------|----------|--------|------------|--------|
|                                               |   |   |     |   | (restated) |   |
| Operating losses available to offset future taxes  |   | $      | 307,218  |   |       | $      | 243,587 |   |
| Tax basis of license in excess of accounting basis |   |   | 580,117  |   |       |   | 602,832 |   |
| Valuation allowance                                |   |   | (887,335 | )      |       |   | (846,419 | ) |
| Net Deferred Assets                                |   | $      | -        |   |       | $      | - |   |

| b)  | Current Income Taxes |
|----------|----------------------|

|                                                            |   | 2010   |    |   | 2009       |   |
|-----------------------------------------------------------------|--------|--------|---------|--------|------------|--------|
|                                                            |   |   |    |   | (restated) |   |
|  Amounts calculated at statutory rates - 34% (35% in 2009) |   | $      | (27,289 | )      |       | $      | (27,585 | ) |
|  Permanent differences                                     |   |   | 5,039   |   |       |   | 10,880 |   |
|                                                            |   |   | (22,250 | )      |       |   | (16,705 | ) |
| Change in valuation allowance                                   |   |   | 22,250  |   |       |   | 16,705 |   |
|                                                            |   | $      | -       |   |       | $      | - |   |

| c)   | Income tax losses carried forward |
|----------------|-----------------------------------|

| 2030  |   | $      | 187,150 |   |
|-------|--------|--------|---------|--------|
| 2029  |   |   | 131,602 |   |
| 2028  |   |   | 78,645  |   |
| 2027  |   |   | 30,760  |   |
| 2026  |   |   | 32,912  |   |
| 2025  |   |   | 208,887 |   |
| 2024  |   |   | 233,627 |   |
| Total |   | $      | 903,583 |   |

----