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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

(Mark One)

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

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

For the fiscal year ended ____________________________OR

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

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

COMMISSION FILE NUMBER: ______________

AMG OIL LTD.(Exact
name of Registrant as specified in its charter)

Not applicable(Translation of
Registrants name into English)

Canada(Jurisdiction of incorporation
or organization)

Suite 901, 30 St. Clair Avenue WestToronto,
Ontario, Canada, M4V 3A1(Address of principal executive offices)

Alan FriedmanSuite 901, 30 St. Clair Avenue WestToronto, Ontario, Canada, M4V 3A1Telephone: +1 416 250
1955Facsimile: +1 416 250 6330E-mail:
afriedman@adiraenergy.com(Name, Telephone, Email and/or Facsimile
number and Address of Company Contact Person)

Securities registered or to be registered pursuant to section
12(b) of the Act:

|Title of each Class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                | Not applicable                           

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

Common Shares(Title of Class)

Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act:

N/A(Title of Class)

- 1 -

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The number of outstanding shares of each of the issuers classes
of capital or common stock as of September 1, 2009was 62,240,001 common
shares.

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

Yes [   ]       No
[X]

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

Yes [   ]       No
[   ]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

Yes [X]         No
[   ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act. (Check one):

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

Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:

International Financial
      Reporting Standards as issued by theU.S. GAAP [   ]
    International Accounting
      Standards Board [   ]
    Other [X]


If Other has been checked in response to the previous
question, indicate by check mark which financial statement item the
registrant has elected to follow.

Item 17 [X]       Item 18 [ 
 ]

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

Yes [ 
 ]           No [ 
 ]   N/A

__________

2

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TABLE OF CONTENTS

|                                                |                                                                                    | Page No
|----------------------------------------------- | ---------------------------------------------------------------------------------- | -------
|                                                |                                                                                    |        
|GENERAL                                         | - 4 -                                                                             
|                                                |                                                                                    |        
|NOTE REGARDING
      FORWARD LOOKING STATEMENTS | - 4 -                                                                             
|                                                |                                                                                    |        
|PART I                                          | - 6 -                                                                             
|                                                |                                                                                    |        
|ITEM 1                                          | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                              | - 6 -  
|ITEM
      2                                    | OFFER STATISTICS AND EXPECTED TIMETABLE                                            | - 8 -  
|ITEM
      3                                    | KEY INFORMATION                                                                    | - 8 -  
|ITEM 4                                          | INFORMATION ON THE COMPANY                                                         | - 24 - 
|ITEM 4A                                         | UNRESOLVED STAFF COMMENTS                                                          | - 32 - 
|ITEM 5                                          | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                       | - 33 - 
|ITEM 6                                          | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                         | - 38 - 
|ITEM 7                                          | MAJOR SHAREHOLDER AND RELATED PARTY TRANSACTIONS                                   | - 48 - 
|ITEM 8                                          | FINANCIAL INFORMATION                                                              | - 51 - 
|ITEM 9                                          | THE OFFER AND LISTING                                                              | - 52 - 
|ITEM 10                                         | ADDITIONAL INFORMATION                                                             | - 54 - 
|ITEM 11                                         | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                         | - 72 - 
|ITEM 12                                         | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                             | - 73 - 
|                                                |                                                                                    |        
|PART II                                         | - 73 -                                                                            
|                                                |                                                                                    |        
|ITEM
      13                                   | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                                    | - 73 - 
|ITEM 14                                         | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
      AND USE OF PROCEEDS | - 73 - 
|ITEM
      15                                   | CONTROLS AND PROCEDURES                                                            | - 73 - 
|ITEM
      16A                                  | AUDIT COMMITTEE FINANCIAL EXPERTS                                                  | - 73 - 
|ITEM
      16B                                  | CODE OF ETHICS                                                                     | - 73 - 
|ITEM
      16C                                  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                             | - 73 - 
|ITEM
      16D                                  | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                         | - 74 - 
|ITEM
      16E                                  | PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
      PURCHASERS        | - 74 - 
|                                                |                                                                                    |        
|PART III                                        | - 74 -                                                                            
|                                                |                                                                                    |        
|ITEM 17                                         | FINANCIAL STATEMENTS                                                               | - 74 - 
|ITEM 18                                         | FINANCIAL STATEMENTS                                                               | - 74 - 
|ITEM 19                                         | EXHIBITS                                                                           | - 75 - 

__________

3

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GENERAL

This Form 20-F is filed as a Form 20-F Shell Company Report
report by AMG Oil Ltd. following the completion of the acquisition of Adira
Energy Corp. on August 31, 2009, as a result of which AMG Oil ceased to be a
shell company, as defined in Rule 12b-2 of the Exchange Act.

In this Form 20-F, references to:

- AMG means AMG Oil Ltd., a Canadian federal corporation
- Adira means Adira Energy together with its wholly owned subsidiaries
  Adira Israel and Adira Service
- Adira Energy means Adira Energy Corp., an Ontario corporation
- Adira Israel means Adira Energy Israel Ltd., an Israel corporation
- Adira Service means Adira Israel Energy Service Ltd., an Israel corporation
- We, us, our, and the Company mean AMG together with Adira Energy

AMG has historically used U.S. dollar as its reporting currency.
  Adira Energy has used Canadian dollars as its reporting currency. All references
  in this document to “dollars” or “$” are to United States
  dollars and all references to “CDN$” are to Canadian dollars, unless
  otherwise indicated.

Except as noted, the information set forth in this Form 20-F is
as of September 1, 2009 and all information included in this document should
only be considered correct as of such date.

NOTE REGARDING FORWARD LOOKING STATEMENTS

Much of the information included in this Form 20-F includes or
is based upon estimates, projections or other forward looking statements. Such
forward looking statements include any projections or estimates made by us and
our management in connection with our business operations. These statements
relate to future events or our future financial performance. In some cases you
can identify forward-looking statements by terminology such as may, should,
expects, plans, anticipates, believes, estimates, predicts,
potential or continue or the negative of those terms or other comparable
terminology. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein. Such estimates, projections or
other forward looking statements involve various risks and uncertainties and
other factors, including the risks in the section titled Risk Factors below,
that may cause our actual results, levels of activities, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements. We caution the reader that important factors in some
cases have affected and, in the future, could materially affect actual results
and cause actual results to differ materially from the results expressed in any
such estimates, projections or other forward looking statements. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform those statements to actual results.

- 4 -

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The statements contained in Item 4.B.  the Business
Overview, Item 5  Operating and Financial Review and Prospects and Item 11 
Quantitative and Qualitative Disclosures About Market Risk are inherently
subject to a variety of risks and uncertainties that could cause actual results,
performance or achievements to differ significantly.







- 5 -

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PART I

ITEM
1           IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

A.           Directors
and Senior Management

The names, business addresses and functions of our directors
and senior management are:

Name and
      Business Address
    FunctionDennis Bennie Suite 901 30 St. Clair Avenue West
      Toronto, Ontario M4V 3A1
    Director (Chairman)Daniel Bloch Suite 1800, 181 Bay Street
      Toronto, Ontario M5J 2T9
    SecretaryBrook Cole Suite 901 30 St. Clair Avenue West
      Toronto, Ontario M4V 3A1
    Interim Chief Financial OfficerIlan Diamond Suite 901 30 St. Clair Avenue West
      Toronto, Ontario M4V 3A1
    Chief Executive Officer and DirectorAlan Friedman Suite 901 30 St. Clair Avenue West
      Toronto, Ontario M4V 3A1
    Executive Vice-President and DirectorDenny Johnson 1113 S. Range Avenue, Suite
      110-163 Denham Springs, LA 70726 USA
    Senior Vice-President, Exploration and
      DevelopmentColin Kinley 7285 West 132 Street Suite 240
      Overland Park, KS 66213
    Senior Vice-President, OperationsGlen Perry 6510 Abrams Road Dallas, TX
      75231 USA
    Chairman Technical Advisory Board


- 6 -

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B.           Advisers

Not applicable.

C.           Auditor

The names and addresses of our auditors for each of the three
preceding years and their governing professional body memberships are:

Name and
      Address
    Governing Professional Body
    Audit PeriodDeVisser Gray LLP Chartered Accountants 401-905
      West Pender Street Vancouver, British Columbia, Canada, V6C
      1L6
    Institute of Chartered Accountants of British
      Columbia Registered with the Canadian Public Accountability Board (Canada)
      and the Public Company Accounting Oversight Board (US)
    Period ended April 30, 2009 (with respect to
      Adira Energy Corp.)Smythe Ratcliffe LLP Chartered Accountants 355
      Burrard Street Vancouver, British Columbia, Canada, V6C 2G8
    Institute of Chartered Accountants of British
      Columbia Registered with the Canadian Public Accountability Board (Canada)
      and the Public Company Accounting Oversight Board (US)
    Years ended September 30, 2008, 2007 and 2006
      (with respect to AMG Oil Ltd.)


- 7 -

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ITEM
2           OFFER STATISTICS
AND EXPECTED TIMETABLE

Not applicable.

ITEM
3           KEY
INFORMATION

A.           Selected
Financial Data

AMG Oil Ltd.

The selected historical financial information presented in the
table below for each of the fiscal years ended September 30, 2008, 2007, 2006,
2005 and 2004 is derived from the audited consolidated financial statements of
the Company. The audited consolidated financial statements of AMG for the fiscal
years ended September 30, 2008, 2007 and 2006 are included in AMGs annual
report on Form 20-F for the year ended September 30, 2008. The audited
consolidated financial statements of AMG for the fiscal years ended September
30, 2005 and 2004 are included in previous filings. The selected financial
information presented below should be read in conjunction with AMGs audited
consolidated financial statements and the notes thereto, and with the
information appearing under the headings, Information on the Company and
Operating and Financial Review and Prospects.

Under US GAAP (in US$)

Year Ended September 302008
      
      
      2007
      
      
      2006
      
      
      2005
      
      
      2004$
      
      
      $
      
      
      $
      
      
      $
      
      
      $Balance Sheet DataCash and Cash Equivalents
      
      1,104,364
      
      
      1,318,132
      
      
      1,348,282
      
      
      14,526
      
      
      22,407Working Capital
      
      1,062,473
      
      
      1,307,442
      
      
      1,332,922
      
      
      10,138
      
      
      28,911Total Assets
      
      1,104,471
      
      
      1,318,282
      
      
      1,348,282
      
      
      15,760
      
      
      35,049Total Liabilities
      
      41,998
      
      
      10,690
      
      
      15,360
      
      
      5,622
      
      
      6,138Total Stockholders Equity
      
      1,062,473
      
      
      1,307,592
      
      
      1,332,922
      
      
      10,138
      
      
      28,911Operating DataRevenues
      
      Nil
      
      
      Nil
      
      
      Nil
      
      
      Nil
      
      
      NilExpenses
      
      (258,180
      )
      
      (90,640
      )
      
      (68,046
      )
      
      (19,133
      )
      
      (64,468
      )Other ItemsNet Loss from ContinuingOperations
      
      (282,659
      )
      
      (25,330
      )
      
      (36,173
      )
      
      (18,773
      )
      
      (64,089
      )Net Loss fromDiscontinued Operations
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -Net and ComprehensiveLoss
      
      (282,659
      )
      
      (25,330
      )
      
      (36,173
      )
      
      (18,773
      )
      
      (64,089
      )Basic Loss per Share****- From ContinuingOperations
      
      (0.01
      )
      
      (0.00
      )
      
      (0.00
      )
      
      (0.00
      )
      
      (0.00
      )****- From DiscontinuedOperations
      
      (0.00
      )
      
      (0.00
      )
      
      (0.00
      )
      
      (0.00
      )
      
      (0.00
      )


We have never declared or paid any cash or other dividends.

- 8 -

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Adira Energy Corp.

The selected historical financial information presented in the
table below for the period ended April 30, 2009 is derived from the audited
consolidated financial statements of Adira Energy included herein. The selected
financial information presented below should be read in conjunction with the
Adira Energys audited consolidated financial statements and the notes thereto,
and with the information appearing under the headings, Information on the
Company and Operating and Financial Review and Prospects.

Under US GAAP (in CDN $)

|                          |  |  |  |  | April 30 |   |  |  | 
|------------------------- |  |  |  |  | -------- | - |  |  | 
|                          |  |  |  |  | 2009     |   |  |  | 
|                          |  |  |  |  | CDN $    |   |  |  | 
|Balance Sheet Data        |  |  |  |  |          |   |  |  | 
|Cash and Cash Equivalents |  |  |  |  | 424,167  |   |  |  | 
|Working Capital           |  |  |  |  | 317,614  |   |  |  | 
|Total Assets              |  |  |  |  | 453,168  |   |  |  | 
|Total Liabilities         |  |  |  |  | 135,553  |   |  |  | 
|Total Stockholders Equity |  |  |  |  | 317,615  |   |  |  | 
|                          |  |  |  |  |          |   |  |  | 
|Operating Data            |  |  |  |  |          |   |  |  | 
|Revenues                  |  |  |  |  | Nil      |   |  |  | 
|Expenses                  |  |  |  |  | (807,385 | ) |  |  | 
|Net Loss                  |  |  |  |  | (807,385 | ) |  |  | 
|Basic Loss per Share      |  |  |  |  | (0.05    | ) |  |  | 
|- From Continuing         |  |  |  |  |          |   |  |  | 
|Operations                |  |  |  |  | (0.0     | ) |  |  | 
|- From Discontinued       |  |  |  |  |          |   |  |  | 
|Operations                |  |  |  |  | (0.00    | ) |  |  | 

Adira Energy has never declared or paid any cash or other
dividends.

Exchange Rate

The exchange rate between the Canadian dollar and the U.S.
dollar was CDN$1.1048 per US$1.00 (or US$0.9051 per CDN$1.00) as of September 2,
2009.

The average exchange rates for the financial years of the
Company listed above (based on the average exchange rate for each period using
the average of the exchange rates on the last day of each month during the
period in accordance with the exchange rates provided by the Bank of Canada are
as follows:

2008
    2007
    2006
    2005
    2004Year End (1)
    1.2180
    0.9913
    1.1654
    1.1630
    1.2020Average
    1.0660
    1.0748
    1.1341
    1.2116
    1.3015High (2)
    1.3008
    1.1878
    1.1794
    1.2734
    1.4003Low (2)
    0.9711
    0.9066
    1.0948
    1.1427
    1.1746


The high and low exchange rates between the Canadian dollar and
the U.S. dollar for the past six months (provided by the Bank of Canada) are as
follows:

- 9 -

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Month
      Exchange rate CDN$ per US$1.00High
      LowAugust 2009
      1.1121
      1.0670July 2009
      1.1725
      1.0763June 2009
      1.1640
      1.0789May009
      1.1954
      1.0898April 2009
      1.2707
      1.1875March 2009
      1.3066
      1.2192


B.          
Capitalization and Indebtedness

Information regarding the capitalization and indebtedness will
be provided by an amendment to this Form 20-F.

C.           Reasons
for the Offer and Use of Proceeds

Not applicable.

D.          
Risk Factors

An investment in our Securities is highly speculative and
involves a high degree of risk. Our Company may face a variety of risks that may
affect our operations or financial results and many of those risks are driven by
factors that we cannot control or predict. Before investing in our Company's
Securities Investors should carefully consider the following risks. If any of
the following risks actually occurs, our Company's business, prospects,
financial condition and results of operations could be materially adversely
affected. In that case, investors may lose all or a part of their
investment.

Risks Associated with the Company

Our independent auditors have referred to circumstances
which might result in doubt about our ability to continue as a going concern,
which may hinder our ability to obtain future financing.

Adira Energy incurred a net loss of CDN $807,385 for the period
  ended April 30, 2009. At April 30 2009, Adira Energy had an accumulated deficit
  of CDN $807,385. These circumstances raise doubt about our ability to continue
  as a going concern, as described in the Note 1 to our consolidated financial
  statements for the period ended April 30, 2009, which are included herein. Although
  our consolidated financial statements refer to circumstances which might raise
  doubt about our ability to continue as a going concern, they do not reflect
  any adjustments that might result if we are unable to continue our business.

We are an early-stage oil and gas exploration company
without revenues. Our ability to continue in business depends upon our continued
ability to obtain significant financing from external sources and the success of
our exploration efforts and any production efforts resulting therefrom, none of
which can be assured.

We are an early-stage oil and gas exploration company without
any revenues, and there can be no assurance of our ability to develop and
operate our projects profitably. We have historically depended entirely upon
capital infusion from the issuance of equity securities to provide the cash
needed to fund our operations, but we cannot assure you that we will be able to
continue to do so. Our ability to continue in

- 10 -

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business depends upon our continued ability to obtain
significant financing from external sources and the success of our exploration
efforts and any production efforts resulting therefrom. Any reduction in our
ability to raise equity capital in the future would force us to reallocate funds
from other planned uses and could have a significant negative effect on our
business plans and operations, including our ability to continue our current
exploration activities.

While we may in the future generate additional working
capital through the development, operation, sale or possible syndication of our
current property or any future properties, there is no assurance that our
Company will be successful in generating positive cash flow, or if successful,
that any such funds will be available for distribution to shareholders or to
fund further exploration and development programs.

We have had negative cash flows from operations, and our
current resources are not sufficient to fund our operations on an ongoing basis.
Our business operations may fail if our actual cash requirements exceed our
estimates and we are not able to obtain further financing.

We will require significant capital to complete our
seismic surveys, drill test wells, and to build the necessary infrastructure to
commence operations if our exploration activities result in the discovery of
sufficient oil and gas reserves to justify their exploitation and development.

Our Company has had negative cash flows from operations. Since
inception, we have not earned any revenues from operations, and due to the
length of time between the discovery of oil and gas reserves and their
exploitation and development, we do not anticipate earning revenues from
operation in the near future. To date, we have incurred significant expenses. As
at September 1, 2009, we had cash on hand of US$2.6 million. We have sufficient
funds to complete preliminary exploration on our Hula property in Israel, as
outline in the plan of operations described herein. However, we anticipate that
we will have to seek additional financing to fund the advanced exploration on
our property, if warranted. Further, we cannot assure you that our actual cash
requirements will not exceed our estimates, and in any case we will require
additional financing to bring our interests into commercial operation, finance
working capital, meet our contractual minimum expenditures and pay for operating
expenses and capital requirements until we achieve a positive cash flow.
Additional capital also may be required in the event we incur any significant
unanticipated expenses.

In light of our operating history, and under the current
capital and credit market conditions, we may not be able to obtain additional
equity or debt financing on acceptable terms if and when we need it. Even if
financing is available, it may not be available on terms that are favorable to
us or in sufficient amounts to satisfy our requirements.

If we require, but are unable to obtain, additional financing
  in the future, we may be unable to implement our business plan and our growth
  strategies, respond to changing business or economic conditions, withstand adverse
  operating results, and compete effectively. More importantly, if we are unable
  to raise further financing when required, our planned exploration activities
  may have to be scaled down or even ceased, and our ability to generate revenues
  in the future would be negatively affected.

Our lack of diversification increases the risk of an
investment in us, and our financial condition and results of operations may
deteriorate if we fail to diversify.

Our business focus is on oil and gas exploration on a single
property in Israel. As a result, we lack diversification, in terms of both the
nature and geographic scope of our business. We will likely be impacted more
acutely by factors affecting our industry or the regions in which we operate
than we would if our business were more diversified. If we cannot diversify our
operations, our financial condition and results of operations could deteriorate.

- 11 -

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We may not effectively manage the growth necessary to
execute our business plan.

Our business plan anticipates a significant increase in the
number of our contractors, strategic partners and equipment suppliers. This
growth will place significant strain on our current personnel, systems and
resources. We expect that we will be required to hire qualified consultants and
employees to help us manage our growth effectively. We believe that we will also
be required to improve our management, technical, information and accounting
systems, controls and procedures. We may not be able to maintain the quality of
our operations, control our costs, continue complying with all applicable
regulations and expand our internal management, technical information and
accounting systems to support our desired growth. If we fail to manage our
anticipated growth effectively, our business could be adversely affected.

All of our assets and the majority of our directors and
officers are outside the United States, with the result that it may be difficult
for investors to enforce within the United States any judgments obtained against
us or some of our directors or officers.

All of our assets are located outside the United States. In
addition, the majority of our directors and officers are nationals and/or
residents of countries other than the United States, and all or a substantial
portion of such persons' assets are located outside the United States. As a
result, it may be difficult for investors to enforce within the United States
any judgments obtained against us or our officers or directors, including
judgments predicated upon the civil liability provisions of the securities laws
of the United States or any state thereof. Consequently, you may be effectively
prevented from pursuing remedies under United States federal securities laws
against them.

As a holding company, our ability to make payments
depends on the cash flows of our subsidiary.

The Company is a holding company that conducts substantially
all of its operations through Adira Israel, a subsidiary incorporated outside
North America. We have no direct operations and no significant assets other than
the shares of Adira Israel. Therefore, we are dependent on the cash flows of
Adira Israel to meet our obligations, including payment of principal and
interest on any debt we incur. The ability of Adira Israel to provide us with
payments may be constrained by the following factors:

- the cash flows generated by operations, investment activities and financing
  activities;
- the level of taxation, particularly corporate profits and withholding
  taxes, in Israel; and
- the introduction of exchange controls and repatriation restrictions or the
  availability of hard currency to be repatriated.

If we are unable to receive sufficient cash from Adira Israel,
we may be required to refinance any indebtedness we incur, raise funds in a
public or private equity or debt offering or sell some or all of our assets. We
can provide no assurances that an offering of our debt or equity or a
refinancing of our debt can or will be completed on satisfactory terms or that
it would be sufficient to enable us to make payment with respect to our debt.
The foregoing events could have an adverse impact on our future cash flows,
earnings, results of operations and financial condition.

We have agreed to indemnify our directors against
liabilities incurred by them as directors.

We have agreed to indemnify our directors from and against all
costs, charges and expenses reasonably incurred by them in respect of any civil,
criminal or administrative action or proceeding to which they are made a party
or with which they are threatened by reason of being or having been a director
of the Company, provided that (i) they have acted honestly and in good faith
with a view to the best interests of the Company; and (ii) in the case of a
criminal or administrative action or proceeding that is enforced by a

- 12 -

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monetary penalty, they had reasonable grounds for believing
that their conduct was lawful. This indemnity may reduce the likelihood of
derivative litigation against our directors and may discourage or deter our
shareholders from suing our directors.

The loss of certain key management employees could have a
material adverse effect on our business.

Our ability to continue the development of our assets and
business and to compete with other energy companies depends, in large part, on
our ability to attract and maintain qualified key personnel. Competition for
such personnel is intense, and we cannot assure you that we will be able to
attract and retain them. Our development now and in the future will depend on
the efforts of key management figures. The loss of any of these key people could
have a material adverse effect on our business. We do not currently maintain
key-man life insurance on any of our key employees.

We may be adversely affected by current global financial
conditions.

Current global financial conditions have been characterized by
increased volatility and several financial institutions have either gone into
bankruptcy or have had to be rescued by governmental authorities. Access to
public financing and bank credit has been negatively impacted by both the rapid
decline in value of sub-prime mortgages and the liquidity crisis affecting the
asset-backed commercial paper market. These and other factors may affect our
ability to obtain equity or debt financing in the future on favourable terms.
Additionally, these factors, as well as other related factors, may cause
decreases in our asset values that may be other than temporary, which may result
in impairment losses. If such increased levels of volatility and market turmoil
continue, or if more extensive disruptions of the global financial markets
occur, our operations could be adversely impacted and the market value of our
Common Shares may be adversely affected.

Currency fluctuations could have an adverse effect on our
business.

Our earnings and cash flow may also be affected by fluctuations
in the exchange rate between the U.S. dollar and other currencies, such as the
Israel shekel, the Canadian dollar and the Euro. Our consolidated financial
statements are expressed in Canadian dollars. Our sales of oil and gas, if any,
will be denominated in U.S. dollars, while production costs and corporate
administration costs are, in part, denominated in Israel shekels and Canadian
dollars.

Fluctuations in exchange rates between the U.S. dollar and
other currencies may give rise to foreign exchange currency exposures, both
favourable and unfavourable, which have materially impacted and in the future
may materially impact our future financial results. We do not utilize a hedging
program to limit the adverse effects of foreign exchange rate fluctuations.

Our financial reporting may be subject to weaknesses in
internal controls.

Internal controls over financial reporting are procedures
designed to provide reasonable assurance that transactions are properly
authorized, assets are safeguarded against unauthorized or improper use, and
transactions are properly recorded and reported. A control system, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance
with respect to the reliability of financial reporting and financial statement
preparation. As an early-stage company, our internal controls may be weaker than
those of more established corporations.

The Company cannot be certain that current expected
expenditures and completion/testing programs will be realized.

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The Company believes that the costs used to prepare internal
budgets are reasonable, however, there are assumptions, uncertainties, and risk
that may cause the Companys allocated funds on a per well basis to change as a
result of having to alter certain activities from those originally proposed or
programmed to reduce and mitigate uncertainties and risks. These assumptions,
uncertainties, and risks are inherent in the completion and testing of wells and
can include but are not limited to: pipe failure, casing collapse, unusual or
unexpected formation pressure, environmental hazards, and other operating or
production risk intrinsic in oil and or gas activities. Any of the above may
cause a delay in the Companys completion program and its ability to determine
reserve potential.

Risks Associated with Our Business

We have not discovered any oil and gas reserves, and we
cannot assure you that that we or our venture ever will.

We are in the business of exploring for oil and natural gas,
and the development and exploitation of any significant reserves that are found.
Oil and gas exploration involves a high degree of risk that the exploration will
not yield positive results. These risks are more acute in the early stages of
exploration. We have not discovered any reserves, and we cannot guarantee you
that we ever will. Even if we succeed in discovering oil or gas reserves, these
reserves may not be in commercially viable quantities or locations. Until we
discover such reserves, we will not be able to generate any revenues from their
exploitation and development. If we are unable to generate revenues from the
development and exploitation of oil and gas reserves, we will be forced to
change our business or cease operations.

The Company might incur additional debt in order to fund
its exploration and development activities, which would continue to reduce its
financial flexibility and could have a material adverse effect on the Companys
business, financial condition or results of operation.

It is possible that the Company might incur debt in order to
fund its exploration and development activities, which would continue to reduce
its financial flexibility and could have a material adverse effect on the
Companys business, operations and results of operations and financial
condition. General economic conditions, oil and gas prices and financial ,
business and other factors affect the Companys operations and future
performance. Many of these factors are beyond the Companys control. No
assurances can be made that the Company will be able to generate sufficient cash
flow to pay the interest on its debt or that future working capital, borrowings
or equity financing will be available to pay or refinance such debt. Factors
that will affect its ability to raise cash through an offering of Common Shares
or other types of equity securities, or a refinancing of debt include financial
market conditions, the value of its assets and performance at the time the
Company needs capital. No assurances can be made that the Company will have
sufficient funds to make such payments. If the Company does not have sufficient
funds and is otherwise unable to negotiate renewals of its borrowings or arrange
new financing, it might be required to sell significant assets. Any such sale
could have a material adverse effect on the Companys business, financial
condition and results of operations.

Our assets and operations are subject to government
regulation in Israel.

Our interests and operations in Israel may be affected in
varying degrees by government regulations relating to the oil and gas industry.
Any changes in regulations or shifts in political conditions are beyond the
control of the Company may adversely affect our business. Our operations may be
affected in varying degrees by new government regulations and changes to
existing regulations, including those with respect to restrictions on
exploration and production, price controls, export controls, income taxes,
employment, land use, water use, environmental legislation and safety
regulations.

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Our future success depends upon our ability to find,
develop and acquire additional oil and natural gas reserves that are
economically recoverable.

In the event that we are able to find and develop oil and
natural gas reserves which are economically recoverable, the rate of production
from those reservoirs will decline as reserves are depleted. As a result, we
must locate and develop or acquire new oil and natural gas reserves to replace
those being depleted by production. We must do this even during periods of low
oil and natural gas prices when it is difficult to raise the capital necessary
to finance activities. Without successful exploration or acquisition activities,
our reserves and revenues will decline. We may not be able to find and develop
or acquire additional reserves at an acceptable cost or have necessary financing
for these activities.

Oil and natural gas drilling is a high-risk
activity.

Our future success will depend on the success of our
exploration and drilling programs. In addition to the numerous operating risks
described in more detail below, these activities involve the risk that no
commercially productive oil or natural gas reservoirs will be discovered. In
addition, we are uncertain as to the future cost or timing of drilling,
completing and producing wells. Furthermore, our drilling operations may be
curtailed, delayed or canceled as a result of a variety of factors, including,
but not limited to, the following:

- unexpected drilling conditions;
- pressure or irregularities in formations;
- equipment failures or accidents;
- adverse weather conditions;
- inability to comply with governmental requirements; and
- shortages or delays in the availability of drilling rigs and the delivery
  of equipment.

If we experience any of these problems, our ability to conduct
operations could be adversely affected.

The Company might not be able to determine reserve
potential, identify liabilities associated with the properties or obtain
protection from sellers against them, which could cause the Company to incur
losses.

Although the Company believes it has reviewed and evaluated the
Israel Project in a manner consistent with industry practices, such review and
evaluation might not necessarily reveal all existing or potential problems. This
is also true for any future acquisitions made by the Company. Inspections may
not always be performed on every well, and environmental problems, such as
groundwater contamination, are not necessarily observable even when an
inspection is undertaken. Even when problems are identified, a seller may be
unwilling or unable to provide effective contractual protection against all or
part of those problems, and the Company often assumes environmental and other
risks and liabilities in connection with the acquired properties.

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You should not place undue reliance on reserve
information because reserve information represents estimates, and our seismic
surveying is still in the preliminary stages.

There are numerous uncertainties inherent in estimating
quantities of proved reserves and cash flows from such reserves, including
factors beyond our control and the control of engineers. Reserve engineering is
a subjective process of estimating underground accumulations of oil and natural
gas that can not be measured in an exact manner. The accuracy of an estimate of
quantities of reserves, or of cash flows attributable to these reserves, is a
function of many factors, including, but not limited to, the following:

- available data;
- assumptions regarding future oil and natural gas prices;
- estimates of future production rates;
- expenditures for future development and exploitation activities; and
- engineering and geological interpretation and judgment.

Reserves and future cash flows may also be subject to material
downward or upward revisions based upon production history, development and
exploitation activities and oil and natural gas prices. Actual future
production, revenue, taxes, development expenditures, operating expenses,
quantities of recoverable reserves and value of cash flows from those reserves
may vary significantly from the estimates. In addition, reserve engineers may
make different estimates of reserves and cash flows based on the same available
data.

The nature of oil and gas exploration makes the estimates
of costs uncertain, and our operations may be adversely affected if we
underestimate such costs.

It is difficult to project the costs of implementing an
exploratory drilling program. Complicating factors include the inherent
uncertainties of drilling in unknown formations, the costs associated with
encountering various drilling conditions, such as over-pressured zones and tools
lost in the hole, and changes in drilling plans and locations as a result of
prior exploratory wells or additional seismic data and interpretations thereof.
If we underestimate the costs of such programs, we may be required to seek
additional funding, shift resources from other operations or abandon such
programs.

Factors beyond our control affect our ability to market
oil and gas.

Our ability to market oil and natural gas from our wells
depends upon numerous factors beyond our control. These factors include, but are
not limited to, the following:

- the level of domestic production and imports of oil and gas;
- the volatility of both oil and natural gas pricing;
- the proximity of natural gas production to natural gas facilities,
  pipelines and other means of transportation;
- the availability of pipeline capacity or other means of transportation;
- the demand for oil and natural gas by utilities and other end users;

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- the availability of alternate fuel sources;
- the effect of inclement weather; and
- government regulation of oil and natural gas marketing.

If these factors were to change dramatically, our ability to
market oil and natural gas or obtain favorable prices for our oil and natural
gas could be adversely affected.

Prices and markets for oil are unpredictable and tend to
fluctuate significantly, which could reduce profitability, growth and the value
of our business if we or our venture ever begin exploitation of reserves.

Our future financial condition, results of operations and the
carrying value of our oil and natural gas properties depend primarily upon the
prices we receive for our oil and natural gas production, if any. Oil and
natural gas prices historically have been volatile and likely will continue to
be volatile in the future, especially given current world economic conditions.
Significant changes in long-term price outlooks for crude oil could by the time
that we start exploiting oil and gas reserves, if we ever discover and exploit
such reserves, could have a material adverse effect on revenues as well as the
value of licenses or other assets.

Our future cash flow from operations, if any, will be highly
dependent on the prices that we receive for oil and natural gas. This price
volatility also affects the amount of our cash flow available for capital
expenditures and our ability to borrow money or raise additional capital. The
prices for oil and natural gas are subject to a variety of additional factors
that are beyond our control. These factors include:

- the level of consumer demand for oil and natural gas;
- the domestic and foreign supply of oil and natural gas;
- the ability of the members of the Organization of Petroleum Exporting
  Countries to agree to and maintain oil price and production controls;
- the price of foreign oil and natural gas;
- the price and availability of alternative fuel sources;
- governmental regulations;
- weather conditions;
- market uncertainty;
- political conditions in oil and natural gas producing regions, including
  Israel and the Middle East;
- war, or the threat of war, in oil producing regions; and
- worldwide economic conditions.

These factors and the volatility of the energy markets
generally make it extremely difficult to predict future oil and natural gas
price movements with any certainty. Also, oil and natural gas prices do not
necessarily move in tandem. Declines in oil and natural gas prices would not
only reduce revenue, but

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could reduce the amount of oil and natural gas that we can
produce economically and, as a result, could have a material adverse effect upon
our financial condition, cash flows, results of operations, oil and natural gas
reserves, the carrying values of our oil and natural gas properties and the
amounts we can borrow under any bank credit facilities we may obtain in the
future.

Even if we discover and then develop oil and gas
reserves, we may have difficulty distributing our production.

If our exploration activities result in the discovery of oil
and gas reserves, and if we are able to successfully develop and exploit such
reserves, we will have to make arrangements for storage and distribution of oil
and gas. We would have to rely on local infrastructure and the availability of
transportation for storage and shipment of oil and gas products, but any readily
available infrastructure and storage and transportation facilities may be
insufficient or not available at commercially acceptable terms. The
marketability of our production depends in part upon the availability,
proximity, and capacity of oil and natural gas pipelines, crude oil trucking,
natural gas gathering systems and processing facilities. This could be
particularly problematic to the extent that operations are conducted in remote
areas that are difficult to access, such as areas that are distant from shipping
or pipeline facilities. Furthermore, weather conditions or natural disasters,
actions by companies doing business in one or more of the areas in which we or
our venture will operate, or labor disputes may impair the distribution of oil
and gas. These factors may affect the ability to explore and develop properties
and to store and transport oil and gas and may increase our expenses to a degree
that has a material adverse effect on operations.

Our inability to obtain necessary facilities could hamper
our operations.

Oil and gas exploration activities depend on the availability
of equipment, transportation, power and technical support in the particular
areas where these activities will be conducted, and our access to these
facilities may be limited. Demand for such limited equipment and other
facilities or access restrictions may affect the availability of such equipment
to us and may delay exploration and development activities. The quality and
reliability of necessary facilities may also be unpredictable and we may be
required to make efforts to standardize our facilities, which may entail
unanticipated costs and delays. Shortages or the unavailability of necessary
equipment or other facilities will impair our activities, either by delaying our
activities, increasing our costs or otherwise.

Our success depends on our ability to attract and retain
qualified personnel

Recruiting and retaining qualified personnel is critical to our
success. The number of persons skilled in the acquisition, exploration and
development of oil and gas properties is limited and competition for such
persons is intense. As our business activity grows, it will require additional
key financial, administrative and mining personnel as well as additional
operations staff. Although we believe that we will be successful in attracting,
training and retaining qualified personnel, there can be no assurance of such
success. If we are not successful in attracting and training qualified
personnel, the efficiency of our operations could be affected, which could have
an adverse impact on our future cash flows, earnings, results of operations and
financial condition.

We face strong competition from other energy companies that
may negatively affect our ability to carry on operations.

We operate in the highly competitive areas of oil and natural
gas exploration, development and production. Factors which affect our ability to
successfully compete in the marketplace include, but are not limited to, the
following:

- the availability of funds and information relating to a property;

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- the standards established by us for the minimum projected return on
  investment;
- the availability of alternate fuel sources; and
- the intermediate transportation of gas.

Our competitors include major integrated oil companies,
substantial independent energy companies, affiliates of major interstate and
intrastate pipelines, and national and local natural gas gatherers. Many of
these competitors possess greater financial and other resources than we do.

Operating hazards may adversely affect our ability to
conduct business.

Our future operations, if any, will be subject to risks
inherent in the oil and natural gas industry, including, but not limited to, the
following:

- blowouts;
- cratering;
- explosions;
- uncontrollable flows of oil, natural gas or well fluids;
- fires;
- pollution; and
- other environmental risks.

These risks could result in substantial losses to us from
injury and loss of life, damage to and destruction of property and equipment,
pollution and other environmental damage and suspension of operations.
Governmental regulations may impose liability for pollution damage or result in
the interruption or termination of operations.

Losses and liabilities arising from uninsured or
under-insured hazards could have a material adverse effect on our business.

If we develop and exploit oil and gas reserves, those
operations will be subject to the customary hazards of recovering, transporting
and processing hydrocarbons, such as fires, explosions, gaseous leaks, migration
of harmful substances, blowouts and oil spills. An accident or error arising
from these hazards might result in the loss of equipment or life, as well as
injury, property damage or other liability. We cannot assure you that we will
obtain insurance on reasonable terms or that any insurance we may obtain will be
sufficient to cover any such accident or error. Our operations could be
interrupted by natural disasters or other events beyond our control. Losses and
liabilities arising from uninsured or underinsured events could have a material
adverse effect on our business, financial condition and results of operations.

Compliance with environmental and other government
regulations could be costly and could negatively impact production.

All phases of the oil and gas business present environmental
risks and hazards and are subject to environmental regulation pursuant to a
variety of laws and regulations. Our operations are subject to laws

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and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. The recent trend
toward stricter standards in environmental legislation and regulation is likely
to continue. The enactment of stricter legislation or the adoption of stricter
regulation could have a significant impact on our operating costs, as well as on
the oil and natural gas industry in general.

Our existing property, and any future properties that we
may acquire, may be subject to pre-existing environmental liabilities.

Pre-existing environmental liabilities may exist on the
property in which we currently hold an interest or on properties that may be
subsequently acquired by us which are unknown to the Company and which have been
caused by previous or existing owners or operators of the properties. In such
event, we may be required to remediate these properties and the costs of
remediation could be substantial. Further, in such circumstances, we may not be
able to claim indemnification or contribution from other parties. In the event
we were required to undertake and fund significant remediation work, such event
could have a material adverse effect upon the Company and the value of our
common shares.

Our business will suffer if we cannot obtain or maintain
necessary licenses.

Our operations require licenses, permits and in some cases
renewals of licenses and permits from various governmental authorities. Among
other factors, our ability to obtain, sustain or renew such licenses and permits
on acceptable terms is subject to change in regulations and policies and to the
discretion of the applicable governments. Our inability to obtain, maintain or
acquire extensions for these licenses or permits could hamper our ability to
produce revenues from operations. Other oil and gas companies may seek to
acquire property leases and licenses that we will need to operate our business.
This competition has become increasingly intense as the price of oil on the
commodities markets has risen in recent years. This competition may prevent us
from obtaining licenses we deem necessary for our business, or it may
substantially increase the cost of obtaining these licenses.

Penalties we may incur could impair our
business.

Failure to comply with government regulations could subject us
to civil and criminal penalties, could require us or our venture to forfeit
property rights or licenses, and may affect the value of our assets. We may also
be required to take corrective actions, such as installing additional equipment,
which could require substantial capital expenditures. We could also be required
to indemnify our employees in connection with any expenses or liabilities that
they may incur individually in connection with regulatory action against them.
As a result, our future business prospects could deteriorate due to regulatory
constraints, and our profitability could be impaired by our obligation to
provide such indemnification to our employees.

Strategic relationships upon which we may rely are
subject to change, which may diminish our ability to conduct our operations.

Our ability to successfully acquire additional licenses, to
discover reserves, to participate in drilling opportunities and to identify and
enter into commercial arrangements depends on developing and maintaining close
working relationships with industry participants and government officials and on
our ability to select and evaluate suitable properties and to consummate
transactions in a highly competitive environment. We may not be able to
establish these strategic relationships, or if established, we may not be able
to maintain them. In addition, the dynamics of our relationships with strategic
partners may require us to incur expenses or undertake activities we would not
otherwise be inclined to undertake in order to fulfill our obligations to these
partners or maintain our relationships. If our strategic relationships

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are not established or maintained, our business prospects may
be limited, which could diminish our ability to conduct our operations.

Political instability or fundamental changes in the
leadership or in the structure of the governments in the jurisdictions in which
the Company operates could have a material negative impact on the
Company.

The Companys interests may be affected by political and
economic upheavals. Although the Company currently operates in jurisdictions
that welcome foreign investment and are generally stable, there is no assurance
that the current economic and political situation in these jurisdictions will
not change drastically in coming years. Local, regional and world events could
cause the jurisdictions in which the Company operates to change the mining laws,
tax laws, foreign investment laws, or to revise their policies in a manner that
renders the Companys current and future projects non-economic. Further, there
is always the possibility of the governments in the jurisdictions in which the
Company operates deciding to nationalize the oil and gas industry, or imposing
such restrictions and penalties on foreign-owned entities that the Companys
current and future projects would become uneconomic, or the Company would be
prevented from selling its assets or operating its business. The occurrence of
any such fundamental change could have a materially adverse effect on the
Companys business, financial condition and results of operations.

AMG Oil Ltd. may enter into hedging agreements but may
not be able to hedge against all such risks.

If the Company is able to discover commercially exploitable
quantities of oil or gas and is able to enter into commercial production, trom
time to time the Company may enter into agreements to receive fixed or a range
of prices on its oil and natural gas production to offset the risk of revenue
losses if commodity prices decline; however, if commodity prices increase beyond
the levels set in such agreements, the Company will not benefit from such
increases. Similarly, from time to time the Company may enter into agreements to
fix the exchange rate of certain currencies to US dollars in order to offset the
risk of revenue losses if the other currencies increase in value compared to the
US dollar; however, if other currencies decline in value compared to the US
dollar, the Company will not benefit from the fluctuating exchange rate. In
addition to the potential of experiencing an opportunity cost, other potential
costs or losses associated with hedging include the risk that the other party to
a hedge transaction does not perform its obligations under a hedge agreement,
the hedge is imperfect or our hedging policies and procedures are not
followed.

AMG Oil Ltd. is incorporated in Canada.

The Company is a company incorporated federally and as such,
its corporate structure, the rights and obligations of shareholders and its
corporate bodies may be different from those of the home countries of
international investors. Furthermore, non-Canadian residents may find it more
difficult and costly to exercise shareholder rights. International investors may
also find it costly and difficult to effect service of process and enforce their
civil liabilities against the Company or some of its directors, controlling
persons and officers.

To the extent that the Company establishes natural gas
and oil reserves, it will be required to replace, maintain or expand its natural
gas and oil reserves in order to prevent its reserves and production from
declining, which could adversely affect cash flows and income.

In general, production from natural gas and oil properties
declines over time as reserves are depleted, with the rate of decline depending
on reservoir characteristics. If the Company establishes reserves, of which
there is no assurance, and is not successful in its subsequent exploration and
development activities or in subsequently acquiring properties containing proved
reserves, its proved reserves will decline as reserves

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are produced. The Companys future natural gas and oil
production is highly dependent upon its ability to economically find, develop or
acquire reserves in commercial quantities.

To the extent cash flow from operations is reduced, either by a
decrease in prevailing production volume prices for natural gas and oil or an
increase in finding and development costs, and external sources of capital
become limited or unavailable, the Companys ability to make the necessary
capital investment to maintain or expand its asset base of natural gas and oil
reserves would be impaired. Even with sufficient available capital, its future
exploration and development activities may not result in additional proved
reserves, and the Company might not be able to drill productive wells at
acceptable costs.

Risks Associated with our Common Shares

We expect to be classed as a passive foreign investment
company for United States tax purposes, which will have adverse tax consequences
for all United States holders of our shares.

Due to our ownership of a currently non-operating business in
Israel as our sole material asset, we expect to be classified for United States
income tax purposes as a passive foreign investment company. This means that any
dividends we pay you will be taxed as ordinary income and not at preferential
qualifying dividend tax rates, and upon any sale of our Common Shares, any
capital gain will be taxed as ordinary income and not at preferential capital
gains rates. This will continue to be true even after we commence active
operations.

The exercise of all or any number of outstanding warrants or
stock options, the issuance of any annual bonus shares, the award of any
additional options, bonus shares or other stock-based awards or any issuance of
shares to raise funds or acquire a business may dilute your Common Shares.

We may in the future grant to some or all of our directors,
officers, insiders, and key employees options to purchase our Common Shares,
bonus shares and other stock based awards as non-cash incentives to those
persons. We may grant these options and other stock based awards at exercise
prices equal to or less than market prices, and we may grant them when the
market for our securities is depressed. The issuance of any equity securities
could, and the issuance of any additional shares will, cause our existing
shareholders to experience dilution of their ownership interests.

Any additional issuance of shares or decision to enter into
joint ventures with other parties to raise financing or acquire other businesses
through the sale of equity securities, may dilute our investors' interests in
the Company, and investors may suffer dilution in their net book value per share
depending on the price at which such securities are sold. Such issuance may
cause a reduction in the proportionate ownership and voting power of all other
shareholders. The dilution may result in a decline in the price of our Common
Shares or a change in the control of the Company.

We do not expect to pay dividends for the foreseeable
future.

We do not intend to declare dividends for the foreseeable
future, as we anticipate that we will reinvest any future earnings in the
development and growth of our business. Therefore, investors will not receive
any funds unless they sell their Common Shares, and shareholders may be unable
to sell their shares on favorable terms or at all. We cannot assure you of a
positive return on investment or that you will not lose the entire amount of
your investment in our Common Shares. Prospective investors seeking or needing
dividend income or liquidity should not purchase our Common Shares.

An investment in AMG Oil will likely be diluted.

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We may issue a substantial number of our common shares without
investor approval to raise additional financing and we may consolidate the
current outstanding common shares. Any such issuance or consolidation of our
securities in the future could reduce an investors ownership percentage and
voting rights in the Company and further dilute the value of your investment.

The value of securities issued by the Company might be
affected by matters not related to the Companys own operating performance for
reasons that include the following:

- general economic conditions in Canada, the US, Israel and globally;
- industry conditions, including fluctuations in the price of oil and
  natural gas;
- governmental regulation of the oil and gas industry, including
  environmental regulation;
- fluctuation in foreign exchange or interest rates;
- liabilities inherent in oil and natural gas operations;
- geological, technical, drilling and processing problems;
- unanticipated operating events which can reduce production or cause
  production to be shut-in or delayed;
- failure to obtain industry partner and other third party consents and
  approvals, when required;
- stock market volatility and market valuations;
- competition for, among other things, capital, acquisition of reserves,
  undeveloped land and skilled personnel;
- the need to obtain required approvals from regulatory authorities;
- worldwide supplies and prices of and demand for natural gas and oil;
- political conditions and developments in Israel, Canada, the US, and
  globally;
- political conditions in natural gas and oil producing regions;
- revenue and operating results failing to meet expectations in any
  particular period;
- investor perception of the oil and gas industry;
- limited trading volume of the Common Shares;
- change in environmental and other governmental regulations;
- announcements relating to the Companys business or the business of its
  competitors;
- the Companys liquidity; and
- the Companys ability to raise additional funds.

In the past, companies that have experienced volatility in
their value have been the subject of securities class action litigation. The
Company might become involved in securities class action litigation in the
future. Such litigation often results in substantial costs and diversion of
managements attention and resources and could have a material adverse effect on
the Companys business, financial condition and results of operation.

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ITEM
4           INFORMATION
ON THE COMPANY

We are an oil and gas exploration company and from the State of
Israel, through our wholly owned subsidiary and own petroleum License
No.356/EITAN in the Hula Valley. We have also recently acquired License No.
378/ "Gabriella" offshore Israel, although this property is presently not
material to our operations. Our business plan is to carry out exploration
activities on Eitan in order to assess whether the property contains any
commercially exploitable quantities of oil and gas. We presently do not produce
any oil or gas and do not earn any revenues.

A.           History
and Development of the Company

Name

Our legal and commercial name is AMG Oil Ltd.

Principal Office

Our principal office is located at Suite 901, 30 St. Clair
Avenue West, Toronto, Ontario, Canada, M4V 3A1. Our telephone number is (416)
250-6500.

Incorporation and Continuation

We are a Canadian corporation governed under the Canada
Business Corporations Act (the CBCA).

We were incorporated on February 20, 1997 under the name Trans
New Zealand Oil Company by filing our Articles of Incorporation with the
Secretary of State of Nevada. We changed our name to AMG Oil Ltd. on July 27,
1998. Our fiscal year end is September 30.

On November 25, 2008, the Companys shareholders approved the
change of our jurisdiction of incorporation from the State of Nevada to the
Canadian federal jurisdiction under the CBCA by way of continuation. The Company
completed the filing of its Articles of Conversion with the Nevada Secretary of
State on November 25, 2008, and the Companys Articles of Continuance were
accepted for filing by Industry Canada effective November 27, 2008. The effect
of these filings was to transfer the jurisdiction of incorporation of the
Company from the State of Nevada to the Canadian federal jurisdiction under the
CBCA. Copies of the Articles of Conversion, Articles of Continuance, Certificate
of Continuance and By-Laws, are incorporated by reference to this Form 20-F as
exhibits.

The Companys common shares remain registered under Section
12(g) of the Exchange Act after completion of the continuation as a result of
the operation of Rule 12g-3 of the Exchange Act. The Companys current trading
symbol on the OTCBB is AMGOF.

Acquisition of Adira Energy

We completed the acquisition of Adira Energy Corp. (Adira
  Energy), a company incorporated in the Province of Ontario, on August
  31, 2009. As a result of the completion of this acquisition, we are now the
  owner of all the issued and outstanding shares of Adira Energy and we have ceased
  to be a shell company, as defined in Rule 12b-2 of the Exchange
  Act. The acquisition was completed to a securities exchange agreement dated
  August 4, 2009 among the Company, Adira Energy and Dennis Bennie, Ilan Diamond
  and Alan Friedman, as principal shareholders, and concurrent securities exchange
  agreements among the Company, and each of the minority shareholders of Adira
  Energy.

- 24 -

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Immediately prior the acquisition, Adira completed a private
  placement (Private Placement) of 7,600,000 units (Units)
  at a price of U.S. $0.25 per Unit. Sandfire Securities Inc. acted as lead agent
  to Adira in connection with the Private Placement. Each Unit was comprised of
  one common share of Adira and one-half of one share purchase warrant. The common
  shares and share purchase warrants issued by Adira were exchanged concurrently
  with the closing of the Acquisition. Each resulting share purchase warrant entitles
  the holder to purchase one additional common share of the Company at the exercise
  price of U.S.$0.50 per share for a two year period following closing, expiring
  on August 31, 2011. In connection with the Private Placement, 455,770 compensation
  warrants were issued to agents which will entitle the holders thereof to purchase
  an equal amount of common shares of the Company at the exercise price of U.S.
  $0.25 per common share for a two year period following closing expiring on August
  31, 2011.

As consideration for the outstanding common of Adira Energy,
the Company has issued an aggregate of 39,040,001 common shares and now has an
aggregate of 62,240,001 issued and outstanding common shares. Additionally,
3,334,000 options and 3,845,000 warrants of Adira were exchanged for options
(the Options) and warrants of the Company on an equivalent basis.

Concurrent with the completion of the Acquisition, Michael
Hart, Michael Murphy and John Campbell, resigned from the board of the Company
and Dennis Bennie (Chair), Glen Perry, Alan Friedman and Ilan Diamond (CEO) were
appointed as the new directors of the Company. It is contemplated that at the
next shareholders meeting, subject to and upon receipt of shareholder approval,
the Company will change its name to Adira Energy Corp., will ratify our 2009
Adira Option Plan and ratify the previously granted Options.

Together with pre-existing cash on hand and after deducting
commissions payable in connection with the Private Placement, AMG has a cash
balance as of August 31, 2009 of approximately U.S.$2.6 million. The Company
intends to use cash proceeds to immediately complete the purchase of a drill rig
and to commence drilling operations on its Eitan License in Northern Israel.

Adira Energy is a natural resource gas exploration and
development company which has been granted a Petroleum License covering
approximately 31,000 acres (125,700 dunam) in the Hula Valley located in
Northern Israel. Adira Energy aims to explore and, if warranted, develop the
natural gas and coal bed methane (CBM) gas field, generate gas-powered
electricity, and acquire additional exploration/development licenses in the
region.

Prior Operations of AMG

We were previously engaged in the acquisition and, formerly,
exploration of resource properties.

We had been inactive for approximately the last four years and
were considered a shell company within the meaning assigned to that term in
Rule 12b-2 of the Exchange Act prior to the acquisition of Adira Energy because
we had no operations and our assets consisted solely of cash. In previous years,
we had conducted oil and gas exploration activities in New Zealand but withdrew
from the permit and assigned our interest to other participants in the permit
during the 2003 fiscal year.

We do not receive any revenue from our discontinued oil and gas
operations in New Zealand and had no significant assets, tangible or intangible
except for cash on hand. We have no history of earnings and there is no
assurance that our business will be profitable. As at September 30, 2008, AMG
had an accumulated deficit of $3,169,899. We expect to continue incurring
operating losses and accumulating deficits in future periods.

- 25 -

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Reporting Issuer Status under Canadian Securities Laws

On February 1, 2006, the British Columbia Securities Commission
granted our application to be designated as a reporting issuer under the
Securities Act (British Columbia). Accordingly, we and our insiders became
subject to the continuous disclosure requirements under the securities laws of
the Province of British Columbia, Canada.

Capital Expenditures and Divestitures

During the last three fiscal years ended September 30, 2009,
AMG did not undertake any capital expenditures.

During the period ended April 30, 2009, Adira put a deposit of
$29,000 down on the purchase of drilling equipment.

Our planned capital expenditures for the next twelve months are
summarized below under Plan of Operations. These anticipated expenditures
relate to our drilling exploration program in connection with our Hula Valley
property in Israel and the related purchase of drilling equipment.

Other than described above, we do not expect any significant
purchases of plant and equipment or the hiring of employees within the next
twelve months, unless acquired in connection with the acquisition of a business
opportunity which may be identified.

Takeover Offers

We are not aware of any indication of any public takeover
offers by third parties in respect of our common shares during our last and
current financial years.

B.          
Business Overview

Petroleum License

Through our wholly owned subsidiary, Adira Energy Israel Ltd.,
we received a petroleum license No.356/EITAN from the State of Israel in the
Hula Valley for a period of three years from December 15, 2008 to December 14,
2011. The area of this permit is approximately 125.7 square kilometres. The
permit area is subject to 12.5% royalty payable to the government. During this
period, Adira Israel is committed to a work program as follows:

| | 1. | Re-process all the seismic lines and submit a conclusive
      report within six months from date of grant.                            
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                        
| | 2. | Prepare a report of gas potential within 12 months from
      date of grant.                                                           
| |    |                                                                                                                                        
| | 3. | Re-enter at least three wells to the shallow and deep
      layers and examination thereof within 24 months from the date of
    grant.
| |    |                                                                                                                                        
| | 4. | Drill and test a new well to the depth of at least 900
      metres within 30 months from the date of grant.                           

The Hula Valley area has experienced some minor shallow gas
exploration but with no commercial discovery of any gas field. There is no
seismic data available for this review. In terms of conventional gas, there is
no well-defined prospect in the area at this time.

- 26 -

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Through our wholly owned subsidiary, Adira Energy Israel Ltd.,
we received a petroleum License No. 378/ "Gabriella" offshore Israel app.  390
square kilometres). This property is presently not material to our operations.
We are presently evaluating whether to conduct preliminary exploration on this
property.

Recommended Exploration Program

The target of our exploration activities will be the Esther
field which is located within the area covered by our petroleum license. The
Esther field has identified shallow gas and coal-bed methane (CBM) from the
prior drilling of a total of 14 wells. We have determined based on the
recommendations of a technical report that we have received to pursue a re-entry
program to work-over and test the shallow gas in two to three shallow gas wells.
If the testing of the shallow gas is successful, we plan to then design a
development program based on the local market demands for the gas. For the
coal-bed methane, it is recommended to test the selected shallow coal seams from
445 to 489 metres in the Esther #2 well with a stimulation program (hydraulic
fracture treatment using foam or water). If the testing of the coal bed methane
(CBM) is successful, a development program can be designed in conjunction with
the seismic data acquisition program in order to determine the areal extent of
the coal-bed deposits in the area. We plan to undertake the plan of operations
provided below in order to carry out these recommendations.

Plan of Operations

Over the next 12 months, our objective is to undertake a plan
of operations that will include the commencement of drilling operations on the
Eitan license in the Hula valley of Northern Israel, as described in further
detail in the table below. We will complete the purchase of a drill rig which
will be moved to location and refurbished. Following refurbishment a drilling
program encompassing re-entry into 3 existing wells and the drilling of 2 new
wells (1 cored deep well down to 1090m) will commence. We estimate that the
program will start in November 2009 and run 21⁄2 to 3 months. Processing of
technical data, de-watering and monitoring of well progress is likely to take
around 6 months. Once results start coming forth a plan of action will be set up
and designed for a follow-on program, if further exploration is warranted.

In addition to the drilling program, and budget permitting, we
intend to acquire an additional 7-11km of additional 2D seismic information.
This seismic will be acquired on the western side of the license and will allow
us to assess possible closure to various geologic structures.

We are also presently evaluating whether to commence initial
exploration work on the Gabriella license. We anticipate that this initial work,
if undertaken, would mostly related to re-processing and interpretation of data
on the license area. In the event that limited exploration work justifies
additional spend, we will seek to engage funding joint venture partners.

Our plan of operations for the next twelve months is summarized
as follows:

Activity
    Project Timeframe
    Budget ($)Re-location of
      drill rig
    3
      weeks
    30,000Refurbishment of
      drill rig
    3-6
      weeks
    60,000
      (Estimated)Drilling program (3 re-entrys & 2 new wells)
    10-13 weeks
    850,000 (based on AFEs)


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Coring and then desorption testing and lab work
    6 weeks (coring included above)
    Included in drilling budgetMonitoring  including de- watering & assessment of
      results
    6 months
    Partly included above + 75,000Seismic (7-11km)
    2
      weeks
    100,000Application for
      future license/s
    Concurrent to above timeframe
    25,000Initial work on
      new license/s
    Concurrent to above timeframe
    100,000Planning
    Mostly
      concurrent
    10,000
      (Consultants)


Our plan of operations, including the projected timeframe and
budgeted expenditures, are subject to change. Our board of directors may
determine based on the results of exploration activities or other identified
opportunities `1to change our plan of operations. In addition, the risks
identified above under Risk Factors may result in delays and costs overruns,
each of which could adversely impact on our ability to complete our plan of
operations within the projected timeframes and within the projected budgets.

We plan to continue future exploration based on the results of
our preliminary exploration efforts. Our future exploration plans will be
designed based on the results of our preliminary exploration programs. We plan
to obtain geological reports on our preliminary exploration programs, which we
will review in the process of determining whether to conduct advanced
exploration and the nature of any advanced exploration programs. We will conduct
our business activities largely through external consultants that we will retain
in order to carry out our plan of operations. These consultants will include
geologists and engineers with expertise in oil and gas exploration. We will also
engage drilling companies and other oil and gas service provides to enable us to
carry out our plan of operations.

C.           Organizational
  Structure

We operate:

| | • | in Canada through our wholly owned subsidiary Adira
      Energy Corp., an Ontario corporation incorporated on April 8, 2009;
    and
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                      
| | • | in Israel, through Adira Energys wholly owned
      subsidiaries, namely:                                                           
| |   |                                                                                                                                      
| |   | o                                                                                                                                    
| |   |                                                                                                                                      
| |   | o                                                                                                                                    

D.           Property,
  Plant and Equipment

Corporate Offices

Our executives offices are comprised of approximately 400
square feet at Suite 901, 30 St. Clair Avenue West, Toronto, Ontario, Canada,
M4V 3A1. The lease cost is $400 per month.

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The following sets forth information relating to our Eitan
petroleum license, which is presently our only material exploration property:

Eitan Petroleum License

Adira Israel received a petroleum license petroleum license
No.356/EITAN from the State of Israel in the Hula Valley on December 15th2008 (the License). The original term of the License is three
years; however, the term is may be extended for a further four years according
to Israeli Petroleum Law, 5712  1952 (the Petroleum Law).

License Rights

Subject to the provisions of the Petroleum Law, the License
confers upon Adira Israel the right:

- to explore for petroleum in the licensed area;
- the right to do exploration work outside the licensed area bearing on the
  petroleum prospects of the licensed area, to such extent and subject to such
  conditions as the Israeli Petroleum and Mining Commissioner (the
  Commissioner) may prescribe;
- the exclusive right to conduct tests or development drilling in the
  licensed area and to produce petroleum there from; and
- the right to obtain a lease after having made a discovery in the licensed
  area.

Under the Petroleum Law, Adira Israel, as the holder of a
petroleum right, is entitled, subject to any other relevant law, to drill and
search for water in the area of its petroleum right and to use the water
discovered by it either by drilling for water or in any of its other operations
and/ or to use any other water situated in the area of its petroleum right to
the extent required for its operations, provided that it does not thereby
prejudice any persons right in such water or having the benefit thereof.

License Requirements

The License is subject to the following requirements:

- Adira Israel shall commence petroleum exploration within four months from
  the day on which the License is granted and shall continue the same with due
  diligence as long as the License is in force.
- Adira Israel shall commence test drilling on the date prescribed therefore
  in the conditions of the license and not later than two years following the
  grant of the license and shall continue such drilling with due diligence until
  he makes a discovery. The interval between the completion of the drilling of
  one well and the commencement of the drilling of another well shall not exceed
  four months.
- Adira Israel shall submit to the Commissioner reports on the petroleum
  exploration carried out by him. Adira Energy may require that the information
  supplied in the report shall be kept secret to the extent that it relates to
  prospects of discovering petroleum. Furthermore, Adira Energy shall at the
  time of drilling, carry out tests and measurements and take samples and retain
  samples and forward them to the Commissioner as the Commissioner may demand,
  having regard to the other tests and measurements carried out by Adira Energy
  and to the damages which may be caused by complying with the demand.

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| | • | Within one month after the expiration of every three
      months period from the grant of the License onwards, Adira Israel is
      required to deliver to the Commissioner a report, in duplicate, on the
      exploration work done by him under the License during the three months,
      setting out:                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | Adira Israel has submitted the first two quarterly
      reports.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | As the holder of a petroleum right, Adira Israel shall,
      not later than fourteen days before commencing the drilling of any test,
      development or water well or further drilling and work at an old drill
      hole, notify the Commissioner in writing of his intention to do so and in
      the case of a new well shall notify the location of the proposed well by
      means of a spot map certified by a qualified surveyor, the well drilling
      plan (including the estimated stratigraphic sections and the water-bearing
      horizons) and the date on which drilling will begin.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | After drilling has commenced, Adira Israel, as the holder
      of the petroleum right shall, within ten days after the end of each month,
      report to the Commissioner in writing the depth of the well at the end of
      the month and the geological horizon to which, according to the holders
      determination then, the well has penetrated.                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | Within fifteen days after the completion of a petroleum
      well, whether as a producing well or a dry hole, and within fifteen days
      after the completion of any further work at an old drill hole, Adira
      Israel, as the holder of the petroleum right, shall submit to the
      Commissioner a completion report showing:                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

The report shall be accompanied by samples taken of strata
penetrated and analyses of such samples and samples of all fluids entering the
well with the depths and geological horizons at which they were found and
analyses of all such fluids.

Rights in Land

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The licensed area is situated in the Hula valley in the upper
Galilee in Israel and is land owned by the State of Israel. According to the
Petroleum Law, where state land is reasonably required by the holder of a
petroleum right for a petroleum purpose, he may make a demand from the Israel
Lands Authority that the land or any right therein be leased to him on the
conditions prescribed by the Petroleum Law and the regulations under the
Petroleum Law.

The licensed area forms part of the lands on which kibbutz Naot
Mordechai is situated (in terms of a long term lease agreement between the
Kibbutz and the Israel Lands Authority). This is the area on which the Company
anticipates focussing its work program for the next 18 months. The result of
this situation is that Adira Israel will have to reach an agreement with Kibbutz
in order to secure the access to the land in question. Negotiations have
commenced in connection with securing this agreement.

Location of Hula Valley in Israel

The Hula Valley basin is located in Northern Israel near the
head of the Jordan River Valley. The valley is bordered on the west by the
Naftali Mountains, to the east by the Golan Heights, to the north by the Metulla
High, and to the south by the Korazim High. The Hula Valley is some 25 km long
and 6 km wide providing an area of 150 km2 (37,065 acres) at an elevation of
approximately 60 meters to 70 meters above sea level. The subject permit area is
125.7 km2 and it covers roughly half of the valley.

Seismic Data

Adira Israel has reprocessed 142.9 km of seismic data. The
seismic surveys were acquired over the potential hydrocarbon traps in the
central and southern part of the Hula Valley Basin. The areas include the
central valley in the Neot Mordechai (NMB) area where the Esther wells were
drilled and the southern Agamon Natural Preserve (ANB) area where the Notera,
Gonen, and Suzie wells were drilled.

Exploration History

The presence of gas was first reported in 1950 while exploring
the valley for peat to be used for fuel. Early exploration focused on the
lignite stringers. Twenty shallow boreholes were drilled ranging in depths from
72 metres (236 feet) to 175 metres (574 feet). The early exploration also
defined three zones or levels: Shallow (surface to 200 metres (656 feet)),
Medium (200 metres to 600 metres (656 to 1,968 feet)), and Deep (600 metres to
2,800 metres (1,968 feet to 9,186 feet)). These different levels were explored
in four projects as follows:

|1. | Notera Project between 1980 and 1982 - Notera-1 well, was
      drilled in 1980, and reached a depth of 505 metres (1,658 feet). Dry gas
      was discovered between 476 - 482 metres (1,562  1,581 feet) and the well
      was completed for production. The well was connected to Kibbutz Gonen in
      October, 1981 and 7 MMcf of gas were sold. Total production including
      testing and flaring was estimated to be 14.7 MMcf. The well died on
      September 7, 1982 probably due to the influx of water from what appeared
      to be a strong water drive confirmed by a constant bottom hole pressure of
      674 psig throughout the life of the well. The Notera-2 well, also drilled
      in 1980, penetrated to a depth of 749 meters (2,457 feet). It discovered
      gas and the well tested in the interval 120 - 175 meters (394 574 feet).
      After a long period of testing, it was considered non- commercial due to
      the large quantities of formation water produced. In 1981, Notera-3 well
      was drilled to a total depth of 2,786 metres (9,140 feet) but no gas was
      found. In 1982, Notera-6 well was drilled to a total depth of 560 metres
      (1,837 feet) but also found no commercial gas.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2. | Gonen Project in 1983  10 shallow wells were drilled
      based on the well data of Notera 6 because of the multi-stringers of sand
      between 450 and 550 metres (1,476 and 1,820 feet). None of these wells
      tested any commercial production rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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|3. | Susie Project from 1985  1986  Three shallow wells of
      less than 150 metres were drilled in this area. Additional two wells were
      drilled but no success in finding commercial gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4. | ABJAC Operations between 1990 and 2002. Two structural
      traps were identified resulting in the drilling of the prospect in the
      Lily 1 well with a total depth of 1,260 metres (4,133 feet) but no
      commercial gas discovery. The Esther 1 and 2 wells were drilled to a total
      depth of 1,293 metres (4,244 feet) and 525 meters (1,722 feet)
      respectively. Both Esther 1 and 2 wells encountered numerous coal seams.
      Cores were taken to determine reservoir evaluation. Subsequent to the two
      Esther wells, nine more wells were drilled but no commercial gas discovery
      but encountered coal seams at various depths.

Exploration Summary

Most of the wells drilled in this area encountered gas. These
wells varied in depth from 146 metres (479 feet) in Esther-4 well to the deepest
at 2,786 metres (9,140 feet) in Notera-3 well. During the Notera project, all
drilled wells were electrically logged with also conducted composite logs. A
total of 42 gas exploration wells have been drilled in the Hula Valley. In
addition, 20 unlisted lignite test boreholes were drilled to an average depth of
150 metres (~500 feet) and Naphtha drilled three structural boreholes. There
were no absolute open flow tests or any extended tests to indicate or support a
commercial discovery. However, coal seams have been identified in some of the
wells to provide some data for potential coal-bed methane potentials.

Esther Field Gas Prospect

Adira Israel has received a technical report which has
identified the Esther field as a gas prospect. A total of 14 wells (1, 2, 3, 3A,
4, 4A, 5, 6, 7, 8, 8A, 11, 12 and 13) were drilled in the field with no
commercial gas discovery in all depths. The gas potentials in the Esther field
can be divided into three segments according to depths. The shallow depth is
around 200 metres (650 feet) between the surface and the top of the Yarda
Basalt. The middle depth is the coal beds between 400 and 1,000 metres (1,300
and 3,280 feet). The deep depth is the limestone and fracture basalts from 1,000
to 4,000 metres (3,280 and 13,000 feet). The most prospective is the gas from
the coal beds between the 400 and 1,000 metres and will be discussed in the
section later. Coal-bed methane (CBM) is seldom commercial below 1,000
metres.

To determine whether there is any potential of the shallow gas
and as part of the committed work program, the technical report recommended the
re-entry of the two to three shallow wells in the Esther field to test for
commercial gas. The re-entry would require cleaning up the formation,
stimulation if required and flow test the well for an extended period of time.
We plan to undertake this exploration work as part of our plan of operations, as
described above under Plan of Operations.

Equipment

The Company intends to complete the purchase of a drill rig in
order to commence drilling operations on its Eitan License in Northern Israel as
soon as possible.

ITEM
4A           UNRESOLVED STAFF
COMMENTS

Not applicable.

- 32 -

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ITEM 5       
     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of the Companys plan of
operations and historical financial and operating results should be read in
conjunction with:

- the audited consolidated financial statements of the Company for the years
  ended September 30, 2008, 2007, and 2006, together with the notes related
  thereto, as filed with the Companys Form 20-F for the year ended September
  30, 2008,
- the interim financial statements of the Company for the three and nine
  month periods ended June 30, 2009 and 2008, as furnished with the Companys
  Form 6-K filed with the SEC on September 3, 2009,
- the audited financial statements of Adira Energy for the period ended April
  30, 2009, and
- Item 4 - Information on the Company.

A.           Operating
  Results

Summary

We completed the acquisition of Adira Energy on August 31,
2009. Our plan of operations is to carry out the exploration business of Adira
Energy and to complete the plan of operations described above in Item 4.B under
Plan of Operations.

Results of Operations

Adira Energy

Period ended April 30, 2009

Adira Energy has not earned any revenues from operations to
date.

Operating expenses during the period from the incorporation of
Adira Energy on April 8, 2009 to April 30, 2009 included the following:

- Accounting and legal expenses in connection with our organization of
  CDN$27,586,
- Consulting fees of CDN $82,000, including CDN$32,000 paid to a director
      under a consulting contract,
- CDN$598,800 in share based compensation expense attributable to the
  purchase of 12,000,000 common shares of Adira Energy at a price of CDN$0.0001
  per share by certain directors, and
- Technical consulting fees in connection with the Companys exploration
  property totalling CDN$82,706.

AMG Oil

AMG has not earned any revenues from operations to date.

Nine Months ended June 30, 2009 to Nine Months ended June
30, 2008

- 33 -

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AMG incurred a net loss for the second quarter of the 2009
fiscal year of $39,174 (0.00 per share) compared to a loss of $46,389 (0.00 per
share) from the third quarter of last year. For the nine month period ended June
30, 2009, AMG recorded a net loss of $130,999 (0.00 per share) compared to a net
loss of $172,921 for the same period last year.

AMGs net loss for the third quarter of the 2009 fiscal year of
$39,174 (nine months: $130,999) consisted solely of General and Administrative
(G&A) as detailed below. G&A decreased when compared to the same
period last year as a result of AMGs efforts to change AMG Oils jurisdiction
of incorporation from the State of Nevada to the Canadian federal jurisdiction
under the Canada Business Corporations Act by way of continuation during
the 2008 fiscal year. G&A costs were partially offset by interest income of
$404 (nine months: $9,640) compared to $7,574 (nine months: $33,164) from the
same period last year. Interest income decreased when compared to the same
period last year as a result of the Companys lower cash balances as well as a
decrease in interest rates on the Companys investments.

2008 Compared to 2007 and 2006

Total losses incurred by AMG since incorporation to the period
ending September 30, 2008 were $3,169,899.

AMG had a net use of cash of $213,768 from operating activities
  for the year ending September 30, 2008 compared to a net use of cash of $30,150
  for the comparable year ending September 30, 2007 (2006: $25,201), which is
  an increase resulting primarily from general and administrative (G&A)
  expenses. AMGs increased G&A expenses were primarily the results of
  increased consulting and professional fee expenses. These costs were partially
  offset by interest income being received by us as detailed below.

AMG incurred a net loss for the 2008 fiscal year of $282,659
($0.01 per share) compared to a loss of $25,330 ($0.00 per share) for the year
ended September 30, 2007 (2006: $36,173, $0.00 per share), a difference
resulting primarily from $285,180 in G&A expenses relating to AMGs
operations, compared to $90,640 for the year ended September 30, 2007 (2006:
$68,046). AMG also recorded interest income of $40,061 in the 2008 fiscal year
compared to $65,310 for the year ended September 30, 2007 (2006: $31,873).

B.           Liquidity
  and Capital Resources

Liquidity

As at June 30, 2009, AMGhad
$946,128in cash and cash equivalents and
$931,474 in working capital. This compares to $1,104,364 in cash and cash
equivalents and $1,062,473 in working capital as at September 30, 2008.

We acquired approximately $1.7 million in cash upon completion
of the acquisition of Adira Energy, providing us with total cash of
approximately $2.6 million as at September 1, 2009. The cash acquired was
primarily attributable to the Private Placement completed by Adira Energy, as
described in Item 4.A of this Form 20-F.

We presently believe that we have sufficient capital resources
to fund our plan of operations for the next twelve months, as described in Item
4.B of this Form 20-F. However, we will require additional funds to continue
advanced exploration of our existing exploration property or to acquire and
undertake exploration of new properties that we may acquire.

Cash on hand is currently our only source of liquidity. We do
not have any lending arrangements in place with banking or financial
institutions and we do not anticipate that we will be able to secure these
funding arrangements in the near future.

- 34 -

---

The Company has historically maintained its liquidity and has
funded its operations primarily from the sale of its common shares. The Company
relies on its ability to raise additional capital through the issuance of common
shares, which may have a dilutive effect on the Companys shareholders, to fund
its operations. If the Company chooses to raise additional funding, the Company
cannot give assurance that it will be able to secure outside sources of capital
in an amount that is sufficient for it to undertake its plan of operations. In
the event that future equity financing cannot be raised or negotiations for
joint venture funding are not successful, our activities may be curtailed and
this may adversely affect our ability to carry out exploration of our existing
property and to acquire any new exploration properties. There can be no
assurance that additional financing, if required, will be available to the
Company on acceptable terms or at all.

Cash Flows

Adira Energy

Adira completed the following share issuances during the period
ended April 30, 2009:

- 12,000,000 common shares were issued at a price of CDN$0.0001 per share,
  and
- 10,500,000 common shares were issued at a price of CDN$0.05 per share.

Subsequent to April 30, 2009, Adira Energy completed the
issuance of 7,600,000 units at a price of $0.25 per unit pursuant to the Private
Placement described in Item 4.1 of this Form 20-F.

Adira Energy used CDN$29,000 in investing activities during the
period ended April 30, 2009 in connection with a deposit on drilling equipment.

Adira Energy used cash in operating activities of CDN$73,033
during the period ended April 30, 2009.

AMG Oil

The Company did not conduct any financing activities for the
years ended September 30, 2008 and September 30, 2007. During the 2006 fiscal
year, financing activities provided cash of approximately $1,500,000 from the
issuance of common shares.

AMG did not conduct any investing activities for the 2008, 2007
or 2006 fiscal years.

The net impact of all cash activities during the twelve months
ended September 30, 2008 resulted in a net decrease in cash of $213,768, a net
decrease in cash of $30,150 for the year ended September 30, 2007 and a net
increase in cash of $1,333,756 for the year ended September 30, 2006.

Material Commitments for Capital Expenditures

As at the date of this Form 20-F, we plan to spend
approximately $300,000 over the next twelve months on capital expenditures
relating to the exploration of our Eitan petroleum license. We plan to fund this
capital expenditure using our existing cash resources.

Inflation

Inflation has not had a material impact on our operations.

- 35 -

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Foreign Currency Fluctuations

Fluctuations in foreign currency have not had a material impact
on our operations.

Government Regulation

There is no governmental regulation that the Company is aware
of or that would affect us, other.

**Critical Accounting Policies of Adira Energy**

***Foreign Currency Translation***

The financial statements of Adira Energy are presented in Canadian
  dollars. Foreign denominated monetary assets and liabilities are translated
  to their Canadian dollar equivalent using foreign exchange rates at the balance
  sheet dates. Non-monetary items are translated at historical exchange rates.
  Revenues and expenses are translated using average rates of exchange during
  the year. Exchange gains or losses arising from currency translation are included
  in the determination of net income.

***Share-based Compensation***

Compensation expense has been recorded for the issue of common
  shares where an intrinsic value in excess of cash consideration paid was determined
  at the date of issuance.

***Oil and Gas Property***

Adira Energy follows the full cost method of accounting for oil and gas properties
  whereby all costs relating to the acquisition, exploration, and development
  of oil and gas properties and equipment are capitalized and accumulated in cost
  centres by country. Such costs include lease acquisition costs, geological and
  geophysical expenditures, lease rentals, seismic and costs of drilling productive
  and non-productive wells, together with overhead expenses related to acquisition,
  exploration, development activities. The costs in cost centres from which there
  has been no commercial production are not subject to depletion until commercial
  production commences. Depletion is calculated using costs of acquisition, exploration,
  development, estimated future development as well as dismantlement and abandonment
  costs, net of salvage values using the unit-of production method. An assessment
  is performed at every reporting date to determine whether the aggregate net
  costs in each pre-development stage cost centre are recoverable. Costs which
  are unlikely to be recovered are written-off. Oil and gas properties for which
  there has been commercial production, are subject to a ceiling test in each
  reporting period to determine that the costs are recoverable and do not exceed
  the fair value of the properties. The costs are assessed to be recoverable if
  the sum of the undiscounted cash flows expected from the production of proved
  reserves and the lower of cost and market of unproved properties exceed the
  carrying values of the oil and gas properties. If the carrying value of the
  oil and gas properties is not assessed to be recoverable, an impairment loss
  is recognized to the extent that the carrying value exceeds an estimated fair
  value. The fair value estimate is normally based on the sum of the discounted
  cash flows expected from production of proved and probable reserves at a discount
  rate of 10% and the lower of cost and market of unproved properties. The cash
  flows are estimated using forecast product prices and costs with the forecast
  product pricing being a constant price utilizing the actual oil price posted
  at April 30, 2009 and discounted using a risk-free interest rate of 10%.

Sales of oil and gas properties, whether or not being amortized currently,
  shall be accounted for as adjustments of capitalized costs, with no gain or
  loss recognized unless such adjustments would significantly alter the relationship
  between capitalized costs and proved reserves of oil and gas attributable to
  a cost centre. Abandonments of oil and gas properties shall be accounted for
  as adjustments of capital cost with the costs of abandoned properties being
  charged to the cost centre and amortized.

C.           Research
and Development, Patents and Licences

Not applicable.

- 36 -

---

D.          
  Trend Information

The Company is not aware of any trends that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors. For information on risks associated to the Company refer to Item 3.D
 Risk Factors.

E.           Off-Balance
  Sheet Arrangements

The Company does not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to investors.

F.           Tabular
Disclosure of Contractual Obligations

AMG Oil

The following table sets forth AMGs contractual obligations as
at September 30, 2008:

Payments due by periodLess than 1
      
      
      More than 5Contractual Obligations
      Total
      year
      1-3 years
      3-5 years
      yearsLong-Term Debt Obligations
      -
      -
      -
      -
      -Capital (Finance) Lease
      -
      -
      -
      -
      -ObligationsOperating Lease Obligations
      -
      -
      -
      -
      -Purchase obligations
      -
      -
      -
      -
      -Other Long-TermObligations (1)
      $5,500
      $5,500
      -
      -
      -Other Long-Term LiabilitiesReflected on the CompanysBalance Sheet under theGAAP of the primaryfinancial statements
      -
      -
      -
      -
      -Total (2)
      $5,500
      $5,500
      -
      -
      -


| | (1) | The Other Long Term Obligations that the Company has are
      in respect of the consulting agreement entered into with PCL to provide
      advisory services to the Company and the rental agreement with DLJ at
      September 30, 2008. The Company may choose to terminate the consulting
      agreement and/or the rental agreement where practical.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                             
| | (2) | The Companys total commitments include those that are
      required to be incurred to maintain its consultant to provide advisory
      services and office for administrative purposes.                                                                                                                                                                  

Adira Energy

The following table sets forth Adira Energys contractual
obligations as at April 30, 2009:

Payments due by periodLess than 1
      
      
      More than 5Contractual Obligations
      Total
      year
      1-3 years
      3-5 years
      yearsLong-Term Debt Obligations
      -
      -
      -
      -
      -Capital (Finance) Lease
      -
      -
      -
      -
      -Obligations


- 37 -

---

Payments due by periodLess than 1
      
      
      More than 5Contractual Obligations
      Total
      year
      1-3 years
      3-5 years
      yearsOperating Lease Obligations
      -
      -
      -
      -
      -Purchase obligations
      $320,000
      $320,000
      -
      -
      -Other Long-Term
      -
      -
      -
      -
      -Obligations (1)Other Long-Term LiabilitiesReflected on the CompanysBalance Sheet under theGAAP of the primaryfinancial statements
      -
      -
      -
      -
      -Total (2)
      $320,000
      $320,000
      -
      -
      -


G.          
Safe Harbor

The safe harbor provided in s. 27A of the Securities Act and s.
21E of the Exchange Act shall apply to forward-looking information provided
pursuant to Item 5.E and F where applicable.

ITEM
6            
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.           Directors
and Senior Management

The size of our board of directors is currently set at 4. All
of our directors are elected annually by the shareholders and hold office until
our next annual general meeting or until their successors are duly elected and
qualified, unless their office is earlier vacated in accordance with the CBCA
and our articles of incorporation. All of our directors are residents of Canada.

The following table sets forth information relating to our
directors and senior management as at the date of this Form 20-F:

|Name (1)          | Residence                  | Position                                                     
|----------------- | -------------------------- | -------------------------------------------------------------
|Dennis Bennie (2) | Toronto, ON, Canada        | Director
      (Chairman)                                    
|                  |                            |                                                              
|Daniel Bloch      | Toronto, ON, Canada        | Secretary                                                    
|                  |                            |                                                              
|Brook Cole        | Bowmanville, ON, Canada    | Interim Chief
      Financial Officer                        
|                  |                            |                                                              
|Ilan Diamond      | Morningside, South Africa  | Chief Executive
      Officer and Director                   
|                  |                            |                                                              
|Alan Friedman     | Toronto, ON, Canada        | Executive
      Vice-President,, and Director                
|                  |                            |                                                              
|Denny Johnson     | Denham Springs, LA, USA    | Senior
      Vice-President, Exploration and Development     
|                  |                            |                                                              
|Colin Kinley      | Overland Park, Kansas, USA | Senior
      Vice-President, Operations                      
|                  |                            |                                                              
|Glen Perry        | Dallas, Texas, USA         | Chairman
      Technical Advisory Board, Director and Officer

- 38 -

---

|(1) | Neither age nor date of birth of directors or senior
      managers is required to be reported in the Companys home country (Canada)
      nor otherwise publicly disclosed.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                              
|(2) | Member of Audit Committee.                                                                                                                                                   

The following is biographical information on each of the
persons listed above:

Mr. Alan Friedmanman, Executive Vice-President, and
Director. Mr. Friedman became a director of the Company on August 31,
2009 prior to assuming his current post at AMG Oil Ltd. Mr. Friedman is a South
African attorney and a Director of the Canada-South Africa Chamber of Business.
He is the founder, President and CEO of Rivonia Capital Inc., a firm that
identifies opportunities in emerging markets, and enhances value through
combining quality assets, management and financial and marketing support for
early stage companies in the resource sector. He was formerly the Executive
Vice-President for a Canadian finance firm, through which he facilitated
significant capital raising for a number of public companies.

Mr. Ilan Diamond, Chief Executive Officer and Director.Mr. Diamond became CEO and a director of the Company on August 31, 2009.
Prior to becoming CEO and Director at AMG Oil Ltd., Mr. Diamond was a director
at Stratus Capital LLP. Stratus Capital focused on trading of physical
commodities (primarily copper and cobalt), mainly from Africa to the East. Mr.
Diamond is also the former Chief Operating Officer of a large investment group
with interests in resources, financial services, technology, media and
consulting, and private equity specialist Buffet Investments.

Mr. Dennis Bennie, Director (Chairman). Mr.
Bennie became a director of the Company on August 31, 2009. Mr. Bennie is a
pioneer, entrepreneur and innovator in the Canadian technology industry. Over
the past 20 years, Mr. Bennies entrepreneurial management has powered Mission
Electronics, Ingram Canada and Delrina. Mr. Bennie entered the world of
technology in 1979, when he co-founded Mission Electronics. He drove the
expansion of this leading British audio equipment manufacturer to become a
dominant force in the high-end stereo market. In 1997, he founded the XDL
Venture Capital Fund, focusing on information technology opportunities. Mr.
Bennie currently manages an experienced team investing in private equity
opportunities as the XDL Capital Group. From 1988 to 1996, Mr. Bennie was CEO of
Delrina Corporation, an independent software developer and publisher, which he
founded, which forged the new software categories of electronic forms and PC fax
communications.

Mr. Glen Perry, Chairman Technical Advisory Board,
Director and Officer. Mr. Perry became a director of the Company on
August 31, 2009. Mr. Perry has a Masters in Petroleum Engineering from the
University of Texas. He is currently the Director, COO and President of Zion Oil
and Gas Inc., an oil and gas company incorporated in Israel and listed on the
NASDAQ, and formerly; consultant to Delek Drilling Ltd. (Manager), National
Petroleum Limited (Officer and Director), Prairie Producing Company, Exxon
Company USA (now ExxonMobil Corporation) and Energy Reserves Group (now
BHP).

Mr. Brook Cole, Chief Financial Officer. Mr. Cole
became a director of the Company on August 31, 2009. Mr. Cole is and has been a
controller of XDL Capital Corp. since 2007. Prior to that, Mr. Cole was the
president of The Gateshead Group Inc. consulting firm for eight years.

Mr. Denny Johnson, Senior Vice-President, Exploration and
Development, and Officer.Mr. Johnson became a director of the Company
on August 31, 2009. Mr. Johnson has been the President of Highlands Consulting
group since 2008. Prior to that, he was a drilling engineer for Range Resources,
a natural gas producer, and a petroleum field engineer for Schlumberger, an
oilfield service provider, for 3 and 4 years respectively.

Mr. Colin Kinley, Senior VP, Operations and
Officer. Mr. Kinley became a director of the Company on August 31, 2009.
Mr. Kinley is responsible for the leadership and overall management of
Kinley

- 39 -

---

Exploration. Prior to Kinley Exploration, Mr. Kinley worked for
Saber Energy as President and provided the project management skills necessary
to prove up an unconventional gas field in the central Kalahari Desert in sub
Saharan Africa. Prior to his employment with Saber, Mr. Kinley spent 26 years as
an executive for Layne Christensen Company and its predecessor companies. He was
responsible for the management of specialized engineered drilling and
development projects, executive oversight of multiple service companies and
exploration and production operations, both domestically and internationally.

Mr. Daniel Bloch, Secretary.Mr. Bloch became a
director of the Company on August 31, 2009. Mr. Bloch is a partner at Aird &
Berlis LLP in Toronto, and member of the firm's Corporate Finance Group and the
Natural Resources Team. Mr. Blochs practice focuses on all areas of corporate
finance, mergers and acquisitions and securities law. Mr. Bloch regularly
represents and provides general corporate and securities law advice to publicly
and privately held corporations in a wide variety of industries. He has
developed a particular expertise in advising issuers and underwriters in
connection with public and private financings.

No director or any member of senior management has any family
relationships with any other director or manager. There is no arrangement with
any major shareholder, customer, supplier or other party pursuant to which any
person was selected as a director or member of senior management.

B.           Compensation

AMG

The following table sets forth the aggregate compensation paid
by AMG for services rendered during the last full fiscal year ended September
30, 2008:

Compensation
      Common Shares Under OptionNamed and Principal Position
      Year Ended
      Salary ($)
      Other Annual Compensation
        
        ($)
      Number of Options
      Exercise Price
      Expiry DateMichael Hart, 
        President, Chief 
        Executive Officer, 
        Secretary, Treasurer 
        and Director
      2008
      -
      -
      -
      -
      -John Campbell, 
        Director
      2008
      -
      -
      -
      -
      -Dan Brown, 
        Director (1)
      2008
      -
      $9,421
      -
      -
      -Garth Johnson, 
        Chief Financial 
        Officer
      2008
      -
      -
      -
      -
      -


|(1) | Mr. Brown was paid indirectly by us through DLJ for time
      spent directly on AMG Oil. DLJ invoices us on a cost recovery
  basis.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

Adira Energy

- 40 -

---

The following table sets forth the aggregate compensation paid
by Adira Energy for services rendered during the period ended April 30, 2009:

Compensation
      Common Shares Under
        OptionNamed and Principal Position
      Year Ended
      Salary ($)
      Other Annual Compensation
        **($ )**
      Number of Options
      Exercise Price
      Expiry DateDennis Bennie 
        Director 
        (Chairman)
      2009
      Nil
      Nil
      -
      -
      -Daniel Bloch 
        Secretary
      2009
      Nil
      Nil
      -
      -
      -Brook Cole 
        Interim Chief 
        Financial Officer
      2009
      Nil
      Nil
      -
      -
      -Ilan Diamond 
        Chief Executive 
        Officer and 
        Director
      2009
      $40,000
      Nil
      -
      -
      -Alan Friedmanman 
        Executive Vice- 
        President and 
        Director
      2009
      32,000(1)
      Nil
      -
      -
      -Denny Johnson 
        Senior Vice- 
        President, 
        Exploration and 
        Development
      2009
      Nil
      Nil
      -
      -
      -Colin Kinley 
        Senior VP, 
        Operations
      2009
      Nil
      Nil
      -
      -
      -Glen Perry 
        Chairman 
        Technical Advisory 
        Board, Director and 
        Officer
      2009
      Nil
      Nil
      -
      -
      -


(1)Paid to Rivonia Capital Inc.

Compensation of Directors

AMG has no arrangements, standard or otherwise, pursuant to
which Directors are compensated by AMG for their services in their capacity as
Directors, or for committee participation, involvement in special assignments or
for services as consultant or expert during the most recently completed
financial year or

- 41 -

---

subsequently, up to and including the date of this Form 20-F,
except the Rivonia Agreement described as Section 7.A Related Party
Transactions.

Stock Options

AMG has a stock option plan for the granting of incentive stock
options to the officers, employees, consultants and directors. See Item 6E
Share Ownership  Equity Compensation Plans for more information.

No stock options were granted by AMG during the fiscal year
ended September 30, 2008. No stock options were exercised by any of the
directors or executive officers of AMG during the fiscal year ended September
30, 2008. AMG granted options to purchase 3,334,000 common shares on August 31,
2009 at an exercise price of $0.25 per share, subject to various vesting
provisions, to the holders of the Adira Energy options and in exchange for the
cancellation of their Adira Energy option agreements.

No stock options were granted by Adira Energy during the period
ended April 30, 2009. No stock options were exercised by any of the directors or
executive officers of Adira Energy during the period ended April 30, 2009. Adira
Energy granted options to purchase 3,334,000 common shares in August 2009 at an
exercise price of $0.25 per share, subject to various vesting provisions.

Long-Term Incentive Plan Awards

AMG did not make any long-term incentive plan awards during the
fiscal year ended September 30, 2008.

Adira did not make any long-term incentive plan awards during
the period ended April 30, 2009.

Pension, Retirement or Similar Benefits

We do not have any amounts set aside or accrued to provide for
pension, retirement or similar benefits.

C.           Board
  Practices

Our Directors have served in their respective capacities since
their election or appointment and will serve until our next annual general
meeting or until a successor is duly elected and qualified, unless their office
is earlier vacated in accordance with the CBCA and our articles of
incorporation. Our officers serve at the discretion of the board.

Term of Office

All directors have a term of office expiring at our next annual
general meeting, unless a directors office is earlier vacated in accordance
with our Articles or the provisions of the CBCA. All officers serve at the
discretion of the Board.

As of September 1, 2009:

|Name          | Position                        | Position Held Since
|------------- | ------------------------------- | -------------------
|Dennis Bennie | Director (Chairman)             | August 2009        
|              |                                 |                    
|Daniel Bloch  | Secretary                       | August 2009        
|              |                                 |                    
|Brook Cole    | Interim Chief Financial Officer | August 2009        

- 42 -

---

|Ilan Diamond  | Chief Executive Officer and
      Director               | August 2009
|------------- | -------------------------------------------------------- | -----------
|              |                                                          |            
|Alan Friedman | Executive Vice-President,
      and Director             | August 2009
|              |                                                          |            
|Denny Johnson | Senior Vice-President,
      Exploration and Development | August 2009
|              |                                                          |            
|Colin Kinley  | Senior VP, Operations                                    | August 2009
|              |                                                          |            
|Glen Perry    | Chairman Technical Advisory
      Board and Director     | August 2009

Benefits on Termination of Employment

We do not have any employment contracts with any of our executive
  officers other than verbal agreements. Written employment agreements are currently
  under negotiation.

We have no compensatory plan, contract or arrangement where an
executive officer is entitled to receive more than $100,000 to compensate such
executive officers in the event of resignation, retirement or other termination,
a change of control of the Company or a change in responsibilities following a
change in control, other than as described in this Form 20-F.

Audit and Compensation Committees

The Company has an audit committee and audit committee charter.
A copy of the Companys audit committee charter was filed as an exhibit to the
Companys Form 10-KSB filed for the Companys 2003 fiscal year. The function of
the audit committee is to monitor the veracity of the financial and regulatory
reports produced by the Company, and the controls that are in place to ensure
the opportunities for fraud or material error in the financial statements of the
Company are minimized. The current audit committee is comprised of Dennis
Bennie. We anticipate appointing additional members to our audit committee as we
increase the size of our board of directors.

The Board has determined that Mr. Bennie meets the SECs
definition of an audit committee financial expert, as defined in Item
401(e)(2) of Regulation S-B. The Board has also determined that Mr. Bennie meets
the definition of an independent director, as defined in Rule 121A of the
American Stock Exchange Company Guide.

The Company does not have a compensation committee. Currently,
any material commitments, inclusive of remuneration, are required to be
pre-approved by the Board.

The Company has a disclosure committee and a disclosure
committee charter. Our disclosure committee is comprised of all of our officers
and directors. The purpose of the committee is to provide assistance to the
Chief Executive Officer and the Chief Financial Officer in fulfilling their
responsibilities regarding the identification and disclosure of material
information about us, and the accuracy, completeness and timeliness of our
financial reports.

- 43 -

---

D.           Employees

As at September 1, 2009 the Company has one employee, and receives
  various consulting and advisory services from consultants.

In addition to the verbal agreement with Rivonia Capital Inc.,
  a company controlled by Alan Friedman,, we have verbal contracts of employment
  with Ilan Diamond, and verbal consulting arrangements Highlands Consulting Group,
  Inc., Kinley Exploration LLC and Brook Cole. The other consulting agreements
  are through the Israeli subsidiary disclosed above.

E.           Share
  Ownership

Shares

The shareholdings of our officers and directors are set forth
below as of the date hereof.

Name and Position
    Number of Common Shares
    Percentage of Outstanding Common
      Shares Owned(1)Dennis Bennie Director (Chairman)
    5,947,068
    9.55%Daniel Bloch Secretary
    Nil
    NilBrook Cole Interim Chief Financial Officer
    Nil
    NilIlan Diamond Chief Executive Officer
      andDirector
    4,569,883
    7.34%


- 44 -

---

Name and Position
    Number of Common Shares
    Percentage of Outstanding Common
      Shares Owned(1)Alan Friedmanman Executive Vice-President and
      Director
      5,838,267 (2)
      9.38%Denny Johnson Senior Vice-President,
      Exploration and Development
    4,000
    0.0%Colin Kinley Senior VP, Operations
    Nil
    NilGlen Perry Chairman Technical Advisory
      Board, Director and Officer
    Nil
    NilTotal:
      16,359,218
      26.27%


(1)      Based on 62,240,001 common
  shares issued and outstanding as of September 1, 2009.(2)      Includes 88,667 held by spouce.

Options

Details of the stock options held by our officers and directors
are set forth below as of the date hereof.

Name and
      Position
    Grant Date
    Expiry Date
    Exercise Price
    TotalDennis Bennie Director (Chairman)
    August 14, 2009
    August 19, 2014
    US$0.25
    396,000(1)Daniel Bloch Secretary
    August 14, 2009
    August 19, 2014
    US$0.25
    75,000(2)Brook Cole Interim Chief Financial
      Officer
    August 14, 2009
    August 19, 2014
    US$0.25
    60,000(3)Ilan Diamond Chief Executive Officer and
      Director
    August 14, 2009
    August 19, 2014
    US$0.25
    781,000(1)(3)


- 45 -

---

Name and Position
    Grant Date
    Expiry Date
    Exercise Price
    TotalAlan Friedmanman Executive Vice-President
      and Director
    August 14, 2009
    August 19, 2014-
    US$0.25
    646,000(1)(3)Denny Johnson Senior Vice-President,
      Exploration and Development
    August 14, 2009
    August 19, 2014
    US$0.25
    150,000(3)Colin Kinley Senior VP, Operations
    August 14, 2009
    August 19, 2014
    US$0.25
    400,000(2)Glen Perry Chairman Technical Advisory
      Board, Director and Officer
    N/A
    N/A
    Nil
    NilTotal:
    
    
    
    2,508,000


|(1) | Options vest over 2 years, with 12.5% vesting at the end
      of each quarter.                                  
|--- | -----------------------------------------------------------------------------------------------------------------
|(2) | Options vest 8.5% at the end of each quarter over two
      years and 8.0% at the end of each quarter thereafter.
|(3) | Options vest over 4 years, with 6.25% vesting at the end
      of each quarter.                                  

Each option may be exercised to purchase one of our common
shares at the exercise price.

Warrants

Details of the share purchase warrants held by our officers and
directors are set forth below as of the date hereof.

Name and Position
    Grant Date
    Expiry Date
    Exercise Price
    TotalDennis Bennie Director
      (Chairman)
    August 31, 2009
    August 31, 2011
    US$0.50
    118,200Daniel Bloch Secretary
    N/A
    N/A
    Nil
    NilBrook Cole Interim Chief
      Financial Officer
    N/A
    N/A
    Nil
    NilIlan Diamond Chief Executive
      Officer and Director
    N/A
    N/A
    Nil
    Nil


- 46 -

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Name and
      Position
    Grant Date
    Expiry Date
    Exercise Price
    TotalAlan Friedmanman Executive Vice-President
      and Director
      August 31, 2009
      August 31, 2011
      US$0.50
      9,000Denny Johnson Senior Vice-President,
      Exploration and Development
    August 31, 2009
    August 31, 2011
    US$0.50
    2,000Colin Kinley Senior VP, Operations
    N/A
    N/A
    Nil
    NilGlen Perry Chairman Technical Advisory
      Board, Director and Officer
    N/A
    N/A
    Nil
    NilTotal:
    
    
    
      129,200


Each warrant may be exercised to purchase one of our common
shares at the exercise price.

Equity Compensation Plans

The following table summarizes our compensation plans under
which equity securities are authorized for issuance as at September 1, 2009.

Plan Category
    Number of securities to be issued upon
      exercise of outstanding options, warrants and
      rights
    Weighted-average exercise price of
      outstanding options, warrants and rights
    Number of securities remaining available for
      future issuance under equity compensation plans
      (excluding securities reflected in the second
      column)Equity compensation plans approved by securityholders
    Nil
    Nil
    N/AEquity compensation plans not approved by
      securityholders
    3,334,000
    $0.25
    2,990,000Total:
    3,334,000
    $0.25
    2,990,000


|(1) | The number of securities remaining available for future
      issuance under AMGs 10% rolling stock option plan as at the end of AMGs
      most recently completed financial year is calculated on the basis of 10%
      of AMGs issued and outstanding shares as at such date (being 10% of
      62,240,001 =6,224,000).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On August 31, 2009, our board of directors adopted a new 10%
rolling stock option plan (the New Stock Option Plan) to replace the
existing plan, subject to approval by the shareholders of the Company.

The purpose of the New Stock Option Plan continues to be to
allow the Company to grant options to directors, officers, employees and
consultants, as additional compensation, and as an opportunity to participate in
the success of the Company. The granting of such options is intended to align
the interests of such persons with that of the shareholders. Options will be
exercisable over periods of up to ten years as determined by the Board of
Directors of the Company and are required to have an exercise price no

- 47 -

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less than the fair market value of the Companys common shares,
as determined in accordance with the New Stock Option Plan. Pursuant to the New
Stock Option Plan, the Board of Directors may from time to time authorize the
issue of options to directors, officers, employees and consultants of the
Company and its subsidiaries or employees of companies providing management or
consulting services to the Company or its subsidiaries.

The maximum number of common shares which may be issued
pursuant to options previously granted and those granted under the New Stock
Option Plan will be a maximum of 10% of the issued and outstanding common shares
at the time of the grant. In addition, the number of shares which may be
reserved for issuance to any one individual may not exceed 5% of the issued
shares on a yearly basis or 2% if the optionee is engaged in investor relations
activities or is a consultant. The New Stock Option Plan contains no vesting
requirements, but permits the Board of Directors to specify a vesting schedule
in its discretion.

As of September 1, 2009, 3,334,000 options had been granted
under the 2009 Stock Option Plan to the former holders of Adira Energy stock
options, in exchange for previously outstanding Adira Energy options. All of the
3,334,000 options that have been granted are exercisable and will expire on
August 19, 2014. A copy of the 2009 Stock Option Plan is included herewith.

ITEM
7             MAJOR
SHAREHOLDER AND RELATED PARTY TRANSACTIONS

A.           Major
Shareholders

Major Shareholders

We are a publicly-held corporation, with our shares held by
residents of the United States, Canada and other countries. To the best of our
knowledge, no person, corporation or other entity beneficially owns, directly or
indirectly, or controls more than 5% of our common shares, except as follows:

Name and Municipality of Residence
      Number of Common Shares Owned(1)
      Percentage(2)Dennis Bennie 
        Toronto, Canada
      5,947,068
      9.55%Ilan Diamond 
        Morningside, South Africa
      4,569,883
      7.34%Alan Friedman 
        Toronto, Canada
      5,838,267(3)
      9.38%Robert Pollock, 
        Toronto, Canada
      8,600,000
      13.82%Rael Diamond, 
        Toronto, Canada
      4,077,849(4)
      6.55%


|(1) | Based on beneficial share ownership data as of the date
        hereof. For these purposes, beneficial ownership means the
        sole or shared power to vote or direct the voting or to dispose or direct
        the disposition of any security. Unless otherwise indicated, each shareholder
        listed has sole voting or dispositive power with respect to such common
        shares.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Based on 62,240,001 of our common shares issued and
        outstanding as of September 1, 2009.                                                                                                                                                                                                                                                                                                    
|(3) | Includes 884,667 held by spouce                                                                                                                                                                                                                                                                                                                                                                     
|(4) | Includes shares held by spouce                                                                                                                                                                                                                                                                                                                                                                      

Each of our common shares entitles the holder thereof to one
vote.

- 48 -

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Geographic Breakdown of Shareholders

As of September 1, 2009, our shareholder register indicates
that our common shares are held as follows:

Location
    Number of Shares
    Percentage of Total Shares
    Number of Registered
      Shareholders of RecordUnited States
    7,627,400
    12.25%
    37Canada
    45,524,885
    73.14%
    93Other
    9,087,716
    12.25%
    13Total
    62,240,000
    100%
    143


Shares registered in intermediaries were assumed to be held by
residents of the same country in which the clearing house was located.

Transfer Agent

Our securities are recorded in registered form on the books of
our transfer agent, Computershare Trust Company of Canada, located at
3rd Floor, 510 Burrard Street, Vancouver, BC V6C 3B9. However, the
majority of such shares are registered in the name of intermediaries such as
brokerage houses and clearing houses (on behalf of their respective brokerage
clients). We do not have knowledge or access to the identities of the beneficial
owners of such shares registered through intermediaries.

Control

To the best of our knowledge, we are not directly or indirectly
owned or controlled by any other corporation, by any foreign government or by
any other natural or legal person, severally or jointly.

Insider Reports under the British Columbia Securities Act

Under the British Columbia Securities Act, insiders
(generally officers, directors and holders of 10% or more of our shares) were
required to file insider reports of changes in their ownership in the first ten
days of the month following a trade in our securities. Copies of such reports
are available for public inspection at the offices of the British Columbia
Securities Commission, 9th Floor, 701 West Georgia Street, Vancouver,
British Columbia V7Y 1L2 (telephone (604) 899-6500) or at the British Columbia
Securities Commission website (www.bcsc.bc.ca). Since 2002, in British Columbia
all insider reports must be filed electronically ten days following the date of
the trade at www.sedi.ca. The public is able to access these reports at
www.sedi.ca.

B.           Related
  Party Transactions

AMG

No director or senior officer of AMG, and no associate or
affiliate of the foregoing persons, and no insider has or has had any material
interest, direct or indirect, in any transactions, or in any proposed
transaction, which in either such case has materially affected or will
materially affect us or our predecessors since the beginning of our last
completed fiscal year except as follows:

|(a) | During the 2008 fiscal year, the Company incurred $54,568
      (2007: $46,304 and 2006: $12,255) of mainly G&A costs through DLJ, a
      wholly owned subsidiary of Trans-Orient. The amount represents costs
      incurred by DLJ on behalf of the Company for administrative and accounting
      services. At September 30, 2008, the Company owes DLJ $2,604 (2007:
      $2,535). Trans-Orient
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 49 -

---

|    | was the controlling shareholder of the Company from March
      4, 2003 to November 29, 2005 and is related to the Company through a
      director and officers, and DLJ employs a director of the Company. During
      the 2008 fiscal year, a director was paid $12,955 (2007: $9,421 and 2006:
      $5,553) indirectly through DLJ for time spent on the Company.                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(b) | Mr. Hart, Mr. Campbell and Mr. Brown, who are the three
      directors of the Company, participated in the private placement financing
      completed on February 28, 2006, acquiring a total of 120,000 Units at a
      price of $0.25 per Unit. Each Unit consists of one common share and one
      share purchase warrant. For further detail see Item 4.A History and
      Development of the Company under the heading Principal Operations,
      Capital Expenditures & Divestitures.

Adira

No director or senior officer of Adira Energy, and no associate
or affiliate of the foregoing persons, and no insider has or has had any
material interest, direct or indirect, in any transactions, or in any proposed
transaction, which in either such case has materially affected or will
materially affect us or our predecessors since the beginning of our last
completed fiscal year except as follows:

|(a) | During the period ended April 30, 2009, a total of
      $32,000 in consisting fees were paid to a private company controlled by
      Alan Friedman and Adira Energy agreed to pay the private company a fee of
      $8,000 per month for consulting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(b) | Dennis Bennie, Ilan Diamond and Alan Friedman purchased
      an aggregate of 9,736,167 common shares of Adira Energy (3,493,270,
      2,670,589 and 3,572,308 common shares, respectively) at a price of $0.0001
      per share, such amount being the approximate amount of personal expenses
      incurred primarily by the Dennis Bennie, Ilan Diamond, Alan Friedman in
      conducting the business prior to incorporation. An aggregate of 1,250,000
      common shares of Adira Energy (625,000, 625,000 and 0 common shares,
      respectively) were subsequently directly and beneficially purchased at a
      price of $0.05 per share. The shares of Adira Energy were subsequently
      split resulting in these three individuals holding, beneficially and
      directly, 10,986,167 shares (4,118,270, 3,572,308 and 3,295,589
      respectively). Post split, an aggregate of 236,400 common shares of Adira
      Energy (236,400, 0 and 0 common shares, respectively) were subsequently
      purchased at a price of $0.25 per share. These shares were subsequently
      exchanged for an equivalent number of shares of the Company on completion
      of the acquisition of Adira Energy pursuant to the Securities Exchange
      Agreement dated August 4, 2009 among the Company, Adira Energy, Dennis
      Bennie, Ilan Diamond and Alan Friedman.

C.          
Interests of Experts and Counsel

No applicable.

- 50 -

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ITEM
8            
FINANCIAL INFORMATION

A.           Consolidated
Statements and Other Financial Information

Financial Statements

The financial statements required as part of this Form 20-F are
filed under Item 17 of this Form 20-F.

Legal Proceedings

We are not a party to any legal or arbitration proceedings nor,
to our knowledge, are any such proceedings contemplated.

Dividends

We have not paid any dividends on our common shares since
incorporation. Our management anticipates that we will retain all future
earnings and other cash resources for the future operation and development of
our business. We do not intend to declare or pay any cash dividends in the
foreseeable future. Payment of any future dividends will be at our board of
directors discretion after taking into account many factors including our
operating results, financial condition and current and anticipated cash needs.

B.           Significant
  Changes

We have not experienced any significant changes since the date
of the financial statements included with this Form 20-F except as disclosed in
this Form 20-F.

- 51 -

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ITEM 9            
  THE OFFER AND LISTING

Common Shares

Our authorized capital consists of 100,000,000 common shares
without par value, of which 62,240,001 common shares and are issued and
outstanding as of September 1, 2009. All shares are initially issued in
registered form. There are no restrictions on the transferability of our common
shares imposed by our constituting documents.

The common shares entitle their holders to: (i) vote at all
meetings of our shareholders except meetings at which only holders of specified
classes of shares are entitled to vote, having one vote per common share, (ii)
receive dividends at the discretion of our board of directors; and (iii) receive
our remaining property on liquidation, dissolution or winding up.

A.           Offer
and Listing Details

Trading Markets

Our common shares are traded on the OTC Bulletin Board in the
United States under the symbol AMGOF. The following table shows the progression
in the high and low closing trading prices of our common shares on the OTC
Bulletin Board for the periods listed.

|                     | High (CDN$) | Low (CDN$)
|-------------------- | ----------- | ----------
|Annual (fiscal year) |             |           
|2008                 | 0.50        | 0.11      
|2007                 | 0.90        | 0.32      
|2006                 | 1.41        | 0.125     
|2005                 | 0.27        | 0.022     
|2004                 | 0.07        | 0.01      
|Quarterly            |             |           
|Fiscal 2009          |             |           
|Second Quarter       | 0.38        | 0.06      
|First Quarter        | 0.10        | 0.05      
|Fiscal 2008          | 0.33        | 0.11      
|Fourth Quarter       |             |           
|Third Quarter        | 0.50        | 0.21      
|Second Quarter       | 0.39        | 0.21      
|First Quarter        | $0.50       | $0.27     
|Fiscal 2007          |             |           
|Fourth Quarter       | 0.65        | 0.33      
|Third Quarter        | 0.90        | 0.60      
|Second Quarter       | 0.80        | 0.45      
|First Quarter        | $0.75       | $0.32     
|Monthly              |             |           
|August 2009          | 0.30        | 0.21      
|July 2009            | 0.38        | 0.25      
|June 2009            | 0.38        | 0.29      
|May 2009             | 0.37        | 0.29      
|April 2009           | 0.35        | 0.06      
|March 2009           | 0.07        | 0.06      

B.           Plan
of Distribution

Not applicable.

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C.           Markets

Our common shares are traded in the United States on the OTC
Bulletin Board.

D.           Selling
Shareholders

Not applicable.

E.          
Dilution

Not applicable.

F.           Expenses
of the Issue

Not applicable.

- 53 -

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ITEM
10           ADDITIONAL
INFORMATION

A.           Share
Capital

Our authorized capital consists of 100,000,000 common shares
without par value, of which 62,240,001 common shares are issued and outstanding
as of September 1, 2009.

The common shares entitle their holders to: (i) vote at all
meetings of our shareholders except meetings at which only holders of specified
classes of shares are entitled to vote, having one vote per common share, (ii)
receive dividends at the discretion of our board of directors; and (iii) receive
our remaining property on liquidation, dissolution or winding up. All of our
common shares rank equally for the payment of any dividends and distributions in
the event of a windup.

Our audited consolidated financial statements for the year
ended September 30, 2008 provide details of all of our securities issuances and
the issue price per share from incorporation to September 30, 2008. None of our
shares are held by us or on behalf of us. A summary of our outstanding dilutive
securities (convertible or exercisable into common shares) is as follows:

Stock Options

We have adopted our 2009 stock option plan, as more fully
described in this Form 20-F in Item 6.B, upon the completion of the acquisition
of Adira Energy. The following table shows changes to our outstanding options
over the last three fiscal years and to September 1, 2009:

|                                  |                     | Weighted Average
|--------------------------------- | ------------------- | ----------------
|                                  | Options Outstanding | Exercise Price  
|Balance September 30, 2006        | 396,000             | $0.25           
|Options granted                   | Nil                 | N/A             
|Options exercised                 | Nil                 | N/A             
|Options cancelled                 | Nil                 | N/A             
|Balance September 30, 2007        | 396,000             | $0.25           
|Options granted                   | Nil                 | N/A             
|Options exercised                 | Nil                 | N/A             
|Options cancelled                 | Nil                 | N/A             
|Balance September 30, 2008        | 396,000             | $0.25           
|Options granted (August 31, 2009) | 3,334,000           | $0.25           
|Options cancelled                 | 396,0000            | $0.25           
|Options exercised                 | Nil                 | N/A             
|Balance September 1, 2009         | 3,334,000           | $0.25           

- 54 -

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The following table summarizes information about our stock
options outstanding as of September 1, 2009:

Exercise
      Price
    Options Outstanding
    Options Exercisable
    Expiry Date$0.25
    3,334,000
    Nil
    August 19, 2014


Warrants

Our outstanding common share purchase warrants as at September
1, 2009 are as follows:

Number of
      Shares
    Exercise Price
    Expiry Date528,770
    $0.25
    August 31, 20113,800,000
    $0.50
    August 31, 2011


History of Share Capital

A summary of the changes to our share capital over the last three
  fiscal years and to September 1, 2009 are as follows:

Shares #
    Amount $
    Contributed Surplus
      $Balance, September 30, 2006
    23,200,000
    4,194,600
    Balance, September 30, 2007
    23,200,000
    4,194,600
    Balance, September 30, 2008
    23,200,000
    4,232,140
    Issuance in connection with acquisition of
      Adira Energy Corp.
    38,800,001Issuance on August 31, 2009
    240,000Balance, September 1, 2009
    62,240,001


Fully Diluted Share Capital

A summary of our diluted share capital is as follows:

|                             |  | September 30, 2008 |  |  | September 1, 2009 | 
|---------------------------- |  | ------------------ |  |  | ----------------- | 
|Issued                       |  | 23,200,000         |  |  | 62,240,001        | 
|Options outstanding          |  | 396,000            |  |  | 3,340,000         | 
|Warrants outstanding         |  | 6,600,000          |  |  | 4,300,770         | 
|Fully diluted share position |  | 30,196,000         |  |  | 65,580,001        | 

B.           Memorandum
and Articles of Incorporation

We were incorporated on February 20, 1997 as Trans New Zealand
Oil Company under the laws of the State of Nevada, USA. We changed our name to
AMG Oil Ltd. on July 27, 1998. On November 27, 2008, we changed our
jurisdiction of incorporation from Nevada to the Canadian federal jurisdiction
under the Canada Business Corporation Act.Our corporate constituting
documents are comprised of our

- 55 -

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Articles of Association ("Articles") and our By-Laws
(By-Laws). A copy of the Articles and By-laws are incorporated by reference
into this Form 20-F as exhibits (See Item 19).

The following is a summary of certain material provisions of
our Articles and Bylaws and material provisions of the CBCA that apply to us:

*1.*          *Objects and Purposes*

Our Articles do not specify objects or purposes. We are
entitled under the CBCA to carry on all lawful businesses which can be carried
on by a natural person.

*2.*          *Directors*

Director's power to vote on a proposal, arrangement or
contract in which the director is interested.

According to the CBCA, a director or an officer of a
corporation shall disclose to the corporation, in writing or by requesting to
have it entered in the minutes of meetings of directors or of meetings of
committees of directors, the nature and extent of any interest that he or she
has in a material contract or material transaction, whether made or proposed,
with the corporation, if the director or officer

| | (a) | is a party to the contract or transaction;                                                                                     
| | --- | -------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                
| | (b) | is a director or an officer, or an individual acting in a
      similar capacity, of a party to the contract or transaction; or
| |     |                                                                                                                                
| | (c) | has a material interest in a party to the contract or
      transaction.                                                       

The CBCA requires that the above disclosure shall be made, in
the case of a director,

| | (a) | at the meeting at which a proposed contract or
      transaction is first considered;                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                               
| | (b) | if the director was not, at the time of the meeting,
      interested in a proposed contract or transaction, at the first meeting
      after he or she becomes so interested;
| |     |                                                                                                                                                                               
| | (c) | if the director becomes interested after a contract or
      transaction is made, at the first meeting after he or she becomes so
      interested; or                        
| |     |                                                                                                                                                                               
| | (d) | if an individual who is interested in a contract or
      transaction later becomes a director, at the first meeting after he or she
      becomes a director.                

Under the CBCA, if a material contract or transaction is one
that, in the ordinary course of our business, would not require approval by the
directors or shareholders, a director or officer shall disclose, in writing to
us or request to have it entered into the minutes of meetings of directors or of
meetings of committees of directors, the nature and extent of his interest
immediately after he or she becomes aware of the interest.

Under the CBCA, a general notice to the directors declaring
that a director or officer is to be regarded as interested, for any of the
following, is a sufficient declaration of interest:

| | (a) | the director or officer is a director or officer, or
      acting in a similar capacity, of a party to the contract or transaction,
      or has a material interest in a party to the contract or
    transaction;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 56 -

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| | (b) | the director or officer has a material interest in the
      party; or                                         
| | --- | ---------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                
| | (c) | there has been a material change in the nature of the
      directors or the officer s interest in the
party.

The CBCA further provides that a director required to make the
above disclosure shall not vote on any resolution to approve the contract or
transaction unless the contract or transaction:

| | 1. | relates primarily to his or her remuneration as a
      director, officer, employee or agent of the corporation or an
      affiliate;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                       
| | 2. | is for indemnity or insurance, as provided for in the
      CBCA; or                                                                  
| |    |                                                                                                                                       
| | 3. | is with an affiliate.                                                                                                                 

The CBCA provides that if a director or an officer fails to
comply with the provisions of the CBCA related to disclosure of interests, a
court may set aside the contract or transaction on any terms that it thinks fit,
or may require the director or officer to account to the corporation for any
profit or gain realized on it.

Under the CBCA, a contract or transaction, for which disclosure
is required, is not invalid, and the director or officer is not accountable for
any profit realized, if the disclosure requirements of the CBCA are met, the
directors approved the transaction and the contract or transaction was
reasonable and fair to the corporation. Even if these requirements are not met
the contract or transaction is not invalid, and the director or officer is not
accountable for any profit realized, if the director or officer acted in good
faith, the contract or transaction was reasonable and fair to the corporation,
and after sufficient disclosure to the shareholders, the contract or transaction
is approved or confirmed by special resolution at a meeting of the
shareholders.

Directors' power, in the absence of an independent
quorum, to vote compensation to themselves or any members of their
body.

Our By-Laws provide that, subject to any unanimous shareholder
agreements, the directors shall be paid such remuneration for their services as
the board may determine from time to time. The CBCA provides that directors of a
corporation may fix the remuneration of the directors, officers and employees of
the corporation.

Borrowing powers exercisable by the directors.

Under our By-Laws, our board may, from time to time:

| | 1. | borrow money upon our credit;                                                                                                                                                                                                                                                                                                                          
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                        
| | 2. | issue, reissue, sell, pledge or hypothecate bonds,
      debentures, notes or other evidence of indebtedness or guarantee of ours,
      whether secured or unsecured;                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                        
| | 3. | give a guarantee on our behalf to secure performance of
      an obligation of any person; and                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                        
| | 4. | mortgage, hypothecate, pledge or otherwise create a
      security interest in or charge upon all or any of our real or personal
      property, owned or subsequently acquired by way of mortgage, hypothec,
      pledge or otherwise, to secure payment of any such evidence of
      indebtedness or guarantee whether present or future of
  ours.

- 57 -

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Retirement and non-retirement of directors under an age
limit requirement.

There are no such provisions applicable to us under our
Articles or the CBCA.

Number of shares required for a director's
qualification.

Directors need not own any of our shares in order to qualify as
directors.

*3.*          *Rights,
Preferences and Restrictions Attaching to Each Class of Shares*

Dividends

Dividends may be declared by our Board and paid to our
shareholders according to their respective rights and interests in us. The CBCA
provides that no dividend may be declared or paid if we are, or would after the
payment , be unable to pay our liabilities as they become due; or if the
realizable value of our assets would thereby be less than the aggregate of our
liabilities and stated capital of all classes.

Voting Rights

Each of our shares is entitled to one vote on matters to which
common shares ordinarily vote including the annual election of directors, the
appointment of auditors and the approval of corporate changes. Our directors are
elected yearly to hold office until the close of the next annual meeting of
shareholders. Where directors fail to be elected at any such meeting then the
incumbent directors will continue in office until there successors are elected.
We do not permit cumulative voting rights.

Rights to Profits and Liquidation Rights

All of our common shares participate rateably in any of our net
profit or loss and shares participate rateably in any of our available assets in
the event of a winding up or other liquidation.

Redemption

We currently have no redeemable securities authorized or
issued.

Sinking Fund Provisions

We have no sinking fund provisions or similar obligations.

Shares Fully Paid

All of our shares must, by applicable law, be issued as fully
paid for cash, property or services. They are therefore non-assessable and not
subject to further calls for payment.

Pre-emptive Rights

We do not have any pre-emptive rights which provide a right to
any person to participate in any equity or other securities offering.

With respect to the rights, preferences and restrictions
attaching to our common shares, there are generally no significant differences
between Canadian and United States law as the shareholders, or the applicable
corporate statute, will determine the rights, preferences and restrictions
attaching to each class of our shares.

- 58 -

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*4.*          *Changes
to Rights and Restrictions to Shares*

The CBCA provides that we may by a special resolution amend our
articles to:

| | (a) | change any maximum number of shares that we are
      authorized to issue;                                                                                                                                                                                     
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                
| | (b) | create new classes of shares;                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                
| | (c) | reduce or increase our stated capital, if our stated
      capital is set out in our Articles;                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                
| | (d) | change the designation of all or any of our shares, and
      add, change or remove any rights, privileges, restrictions and conditions,
      including rights to accrued dividends, in respect of all or any of our
      shares, whether issued or unissued;
| |     |                                                                                                                                                                                                                                                                
| | (e) | change the shares of any class or series, whether issued
      or unissued, into a different number of shares of the same class or series
      or into the same or a different number of shares of other classes or
      series;                             
| |     |                                                                                                                                                                                                                                                                
| | (f) | divide a class of shares, whether issued or unissued,
      into series and fix the number of shares in each series and the rights,
      privileges, restrictions and conditions thereof;                                                                     
| |     |                                                                                                                                                                                                                                                                
| | (g) | authorize the directors to divide any class of unissued
      shares into series and fix the number of shares in each series and the
      rights, privileges, restrictions and conditions thereof;                                                            
| |     |                                                                                                                                                                                                                                                                
| | (h) | authorize the directors to change the rights, privileges,
      restrictions and conditions attached to unissued shares of any
    series.                                                                                                                     

The CBCA also provides that we may, with respect to any of our
issued shares which remain outstanding and are held by more than one person, by
special resolution, amend our articles to constrain:

| | (a) | the issue or transfer of shares of any class
        or series to persons who are not resident Canadians;                                                                                                                                                                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | the issue or transfer of shares of any class
        or series to enable us or any of our affiliates or associates to qualify
        under any prescribed law of Canada or a province:                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                           
| | (c) | the issue, transfer or ownership of shares
        of any class or series in order to assist us any of our affiliates or
        associates to qualify under any prescribed law of Canada or a province
        to receive licences, permits, grants, payments or other benefits by reason
        of attaining or maintaining a specified level of Canadian ownership or
        control;

| | (d) | the issue, transfer or ownership of shares of any class
      or series in order to assist us to comply with any prescribed law;
    or                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                 
| | (e) | the issue, transfer or ownership of shares of any class
      or series to enable us to be a registered labour-sponsored venture capital
      corporation to meet certain requirements of the Income Tax
  Act.

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The CBCA provides that the holder of shares of a class or
series are entitled to vote separately as a class or series on a proposal to
amend the articles to increase or decrease the number of authorized shares of
such class or a class having equal or superior privileges; reclassify or cancel
all or part of such class; add, change, or remove the rights, privileges,
restrictions of such class; increase the rights or privileges of a superior
class of shares; create a new class of shares equal to or superior to such
class; effect and exchange or create a right of exchange of all or part of the
shares of another class into the shares of such class; or, constrain the issue,
transfer or ownership of such class or remove such a constraint.

A special resolution is a resolution passed by not less than
two thirds of the votes cast by the shareholders who voted in respect of that
resolution or signed by all the shareholders who were entitled to vote on that
resolution.

Generally, there are no significant differences between
Canadian and United States law with respect to changing the rights of
shareholders as most state corporation statutes require shareholder approval
(usually a majority) for any such changes that affect the rights of
shareholders.

*5.*          *Meetings
  of Shareholders*

Our By-Laws provide that we must hold our annual general
meeting not more than 15 months from our last annual general meeting, but not
later than six months after the end of our preceding financial year. Our Board
also has the power to call special meetings. Our By-Laws provide that meetings
shall be held at our registered office, or elsewhere in Canada as our Board may,
from time to time, determine. Meetings may also be held at a location outside
Canada, if specified in the Articles or if all of the shareholders entitled to
vote thereat agree that the meeting is to be held at that place. Shareholder
meetings are governed by our Articles and our By-Laws but many important
shareholder protections are also contained in provincial securities legislation
and the CBCA. Our By-Laws provide that, if we are not a distributing
corporation, we will provide at least 10 days notice of a shareholder meeting.
If we are a distributing corporation the CBCA requires not less than 21 days and
not more than 60 days notice of a shareholder meeting. Our directors may fix in
advance a date, which is no fewer than 21 days prior to the date of the meeting
for the purpose of determining shareholders entitled to receive notice of and to
attend and vote at a general meeting.

The provincial securities legislation and the CBCA superimpose
requirements that generally provide that shareholder meetings require not less
than a 60 day notice period from initial public notice and that we make a
thorough advanced search of intermediary and brokerage registered shareholdings
to facilitate communication with beneficial shareholders so that meeting proxy
and information materials can be sent via the brokerages to unregistered but
beneficial shareholders. The form and content of information circulars, proxies
and like matters are governed by provincial securities legislation and the CBCA.
This legislation specifies the disclosure requirements for the proxy materials
and various corporate actions, background information on the nominees for
election for director, executive compensation paid in the previous year and full
details of any unusual matters or related party transactions. We must hold an
annual shareholders meeting open to all shareholders for personal attendance or
by proxy at each shareholder's determination.

Most state corporation statutes in the United States require a
public company to hold an annual meeting for the election of directors and for
the consideration of other appropriate matters. The state statutes also include
general provisions relating to shareholder voting and meetings. Apart from the
timing of when an annual meeting must be held and the percentage of shareholders
required to call an annual meeting, or an extraordinary meeting, there are
generally no material differences between Canadian and United States law
respecting annual meetings and extraordinary meetings.

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*6.*          *Rights
  to Own Securities*

There are no limitations under our Articles or in the CBCA that
address the right of persons who are not citizens of Canada to hold or vote
common shares.

*7.*          *Restrictions
on Changes in Control, Mergers, Acquisitions or Corporate Restructuring of the
Company*

Neither our Articles nor our By-Laws contain any provision that
would have the effect of delaying, deferring or preventing a change of control.
We have not implemented any shareholders' rights or other "poison pill"
protections against possible take-overs and we do not have any agreements which
are triggered by a take-over or other change of control. There are no provisions
in our Articles triggered by or affected by a change in outstanding shares which
gives rise to a change in control. There are no provisions in our material
agreements giving special rights to any person on a change in control.

The CBCA does not contain any provision that would have the
effect of delaying, deferring or preventing a change of control of a company.

Generally, there are no significant differences between
Canadian and United States law in this regard, as many state corporation
statutes also do not contain such provisions and only empower a company's board
of directors to adopt such provisions.

*8.*          *Ownership Threshold Requiring Public Disclosure*

Neither our Articles nor our By-Laws require disclosure of
share ownership. Share ownership of director nominees must be reported annually
in proxy materials sent to our shareholders. There are no requirements under
Canadian corporate law to report ownership of shares but the provincial
securities legislation requires disclosure of trading by insiders (generally
officers, directors and holders of 10% of voting shares) within 10 days of a
trade. Controlling shareholders (generally those in excess of 20% of outstanding
shares) must provide seven days advance notice of share sales. All insider
trading reports filed by our insiders pursuant to Canadian securities
legislation are available on the Internet at www.sedi.ca.

Most state corporation statutes do not contain provisions
governing the threshold above which shareholder ownership must be disclosed.
United States federal securities laws require a company that is subject to the
reporting requirements of the Securities Exchange Act of 1934 to disclose, in
its annual reports filed with the Securities and Exchange Commission those
shareholders who own more than 5% of a corporation's issued and outstanding
shares.

*9.*          *Differences
in Law between the US and Canada*

Differences in the law between the United States and Canada,
where applicable, have been explained above within each category.

*10.*        *Changes in the Capital of the Company*

There are no conditions imposed by our Articles which are more
stringent than those required by the CBCA.

C.           Material
  Contracts

The material contracts to which we are a party which were
entered into during the last two years are as follows:

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- Securities Exchange Agreement dated August 4, 2009 among the Company, Adira
  Energy, Alan Friedman, Dennis Bennie and Ilan Diamond.
- Securities Exchange Agreement dated effective August 4, 2009 among the
  Company and the minority shareholders of Adira Energy
- Agency Agreement between Adira Energy and Sandfire Securities Inc. dated
  August 31, 2009 pursuant to which Adira Enegy issued 7,600,000 Units in the
  Private Placement as described in Item 4.A of this Form 20-F.
- Subscription Agreement entered into between Adira Energy and the
  subscribers for the 7,600,000 Unit Private Placement described in Item 4.A of
  this Form 20-F

D.           Exchange
  Controls

There is no law or governmental decree or regulation in Canada
that restricts the export or import of capital, or affects the remittance of
dividends, interest or other payments to a non-resident holder of common shares
of the Company, other than withholding tax requirements. See Taxation.

There is no limitation imposed by Canadian law or by the
charter or other constituent documents of the Company on the right of a
non-resident to hold or vote common shares of the Company, other than as
provided in the Investment Canada Act (Canada) (the Investment Act).

The following discussion summarizes the principal features of
the Investment Act for a non-resident who proposes to acquire common shares of
the Company. It is general only, it is not a substitute for independent legal
advice from an investors own advisor, and it does not anticipate statutory or
regulatory amendments.

The Investment Act is a federal statute of broad application
regulating the establishment and acquisition of Canadian businesses by
non-Canadians, including individuals, governments or agencies thereof,
corporations, partnerships, trusts or joint ventures (each an entity).
Investments by non-Canadians to acquire control over existing Canadian
businesses or to establish new ones are either reviewable or notifiable under
the Investment Act. If an investment by a non-Canadian to acquire control over
an existing Canadian business is reviewable under the Investment Act, the
Investment Act prohibits implementation of the investment unless after review
the Director of Investments, who is appointed by the Minster of Industry, is
satisfied that the investment is likely to be of net benefit to Canada.

A non-Canadian would acquire control of the Company for the
purposes of the Investment Act through the acquisition of common shares if the
non-Canadian acquired a majority of the common shares of the Company. Further,
the acquisition of less than a majority but one third or more of the common
shares of the Company would be presumed to be an acquisition of control of the
Company unless it could be established that, on the acquisition, the Company was
not controlled in fact by the acquirer through the ownership of common shares.

For a direct acquisition that would result in an acquisition of
control of the Company, subject to the exception for WTO-investors that are
controlled by persons who are resident in World Trade Organization (WTO)
member nations, a proposed investment would be reviewable where the value of the
acquired assets is CAD $5 million or more, or if an order for review was made by
the federal cabinet on the grounds that the investment related to Canadas
cultural heritage or national identity, regardless of the value of the assets of
the Company.

For a proposed indirect acquisition that would result in an
acquisition of control of the Company through the acquisition of a non-Canadian
parent entity, the investment would be reviewable where (a) the value

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of the Canadian assets acquired in the transaction is CAD $50
million or more, or (b) the value of the Canadian assets is greater than 50% of
the value of all of the assets acquired in the transaction and the value of the
Canadian assets is CAD $5 million or more.

In the case of a direct acquisition by or from a WTO
investor, the threshold is significantly higher, and is adjusted for inflation
each year. The 2008 threshold was CAD$295 million. Other than the exception
noted below, an indirect acquisition involving a WTO investor is not reviewable
under the Investment Act.

The higher WTO threshold for direct investments and the
exemption for indirect investments do not apply where the relevant Canadian
business is carrying on the following businesses that have been deemed to be
sensitive: (i) the production of oil and gas and the ownership of an interest in
a producing oil and gas property in Canada; (ii) the provision of any financial
service; (iii) the provision of any transportation service; or (iv) a
cultural business.

Certain transactions relating to common shares of the Company
are exempt from the Investment Act, including

| | (a) | acquisition of common shares of the Company by a person
      in the ordinary course of that persons business as a trader or dealer in
      securities,                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                      
| | (b) | acquisition of control of the Company in connection with
      the realization of security granted for a loan or other financial
      assistance and not for a purpose related to the provisions on the
      Investment Act, and                                                   
| |     |                                                                                                                                                                                                                                                                                      
| | (c) | acquisition of control of the Company by reason of an
      amalgamation, merger, consolidation or corporate reorganization following
      which the ultimate direct or indirect control in fact of the Company,
      through the ownership of common shares, remained
  unchanged.

E.           Taxation

Material Canadian Federal Income Tax Consequences for United
States Residents

The following summarizes the material Canadian federal income
tax consequences generally applicable to the holding and disposition of our
shares by a holder (in this summary, a U.S. Holder) who, (a) for the purposes
of the Income Tax Act (Canada) (the Tax Act) and at all relevant times, is not
resident in Canada, deals at arms length with us, holds our shares as capital
property and does not use or hold our shares in the course of carrying on, or
otherwise in connection with, a business in Canada, and (b) for the purposes of
the Canada-United States Income Tax Convention, 1980 (the Treaty) and at all
relevant times, is a resident solely of the United States, has never been a
resident of Canada, and has not held or used (and does not hold or use) our
shares in connection with a permanent establishment or fixed base in Canada.
This summary does not apply to traders or dealers in securities, limited
liability companies, tax-exempt entities, insurers, financial institutions
(including those to which the mark-to-market provisions of the Tax Act apply),
or any other holder in special circumstances.

This summary is based on the current provisions of the Tax Act
including all regulations thereunder, the Treaty, all proposed amendments to the
Tax Act, the regulations and the Treaty publicly announced by the Government of
Canada to the date hereof, and our understanding of the current administrative
practice of the Canada Revenue Agency. It has been assumed that all currently
proposed amendments will be enacted as proposed and that there will be no other
relevant change in any governing law or administrative practice, although no
assurances can be given in these respects. The summary does not take into
account Canadian provincial, U.S. federal (which follows further below), state
or other foreign income tax law or practice. The tax consequences to any
particular U.S. Holder will vary according

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to the status of that holder as an individual, trust,
corporation, partnership or other entity, the jurisdictions in which that holder
is subject to taxation, and generally according to that holders particular
circumstances. Accordingly, this summary is not, and is not to be construed as,
Canadian tax advice to any particular U.S. Holder. All U.S. Holders are advised
to consult with their own tax advisors regarding their particular circumstances.
The discussion below is qualified accordingly.

Dividends

Dividends paid or deemed to be paid to a U.S. Holder by us will
be subject to Canadian withholding tax. The Tax Act requires a 25% withholding
unless reduced under a tax treaty. Under the Treaty, provided that a holder can
demonstrate that it is a qualifying U.S. Holder, the rate of withholding tax on
dividends paid to a U.S. Holder is generally limited to 15% of the gross amount
of the dividend (or 5% if the U.S. Holder is a corporation and beneficially owns
at least 10% of our voting shares). We will be required to withhold the
applicable withholding tax from any dividend and remit it to the Canadian
government for the U.S. Holders account.

Disposition

For purposes of the following discussion, we have assumed that
our shares will remain listed on the TSX. A U.S. Holder is not subject to tax
under the Tax Act in respect of a capital gain realized on the disposition of
our shares in the open market unless the shares are taxable Canadian property
to the holder thereof and the U.S. Holder is not entitled to relief under the
Treaty. Our shares will be taxable Canadian property to a U.S. Holder (a) if, at
any time during the 60 months preceding the disposition, the U.S. Holder or
persons with whom the U.S. Holder did not deal at arms length alone or together
owned 25% or more of our issued shares of any class or series, or (b) in other
specific circumstances, including where shares were acquired for other
securities in a tax-deferred transaction. If our shares constitute taxable
Canadian property to the holder, the holder will (unless relieved under the
Treaty) be subject to Canadian income tax on any gain. The taxpayers capital
gain or loss from a disposition of the share is the amount, if any, by which the
proceeds of disposition exceed (or are exceeded by) the aggregate of the
adjusted cost base and reasonable expenses of disposition. One-half of the
capital gain is included in income and one-half of the capital loss is
deductible from capital gains realized in the same year. Unused capital losses
may be carried back three taxation years or forward indefinitely and applied to
reduce capital gains realized in those years.

A U.S. Holder whose shares do constitute taxable Canadian
property should consult with the holders own tax advisors regarding any
possible relief (if any) from Canadian tax under the Treaty based on applicable
circumstances at the relevant time. Such Treaty relief should not be anticipated
under current circumstances.

United States Tax Consequences

United States Federal Income Tax Consequences

The following is a discussion of all material United States
federal income tax consequences, under current law, generally applicable to a
U.S. Holder (as hereinafter defined) of our common shares. This discussion does
not address all potentially relevant federal income tax matters and it does not
address consequences peculiar to persons subject to special provisions of
federal income tax law, such as those described below as excluded from the
definition of a U.S. Holder. In addition, this discussion does not cover any
state, local or foreign tax consequences. (See Taxation - Canadian Federal
Income Tax Consequences above). Accordingly, we urge holders and prospective
holders of our common shares to consult their own tax advisors about the
specific federal, state, local and foreign tax consequences to them of
purchasing, owning and disposing of our common shares, based upon their
individual circumstances.

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The following discussion is based upon the sections of the
Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations,
published Internal Revenue Service (IRS) rulings, published administrative
positions of the IRS and court decisions that are currently applicable, any or
all of which could be materially and adversely changed, possibly on a
retroactive basis, at any time and which are subject to differing
interpretations. This discussion does not consider the potential effects, both
adverse and beneficial, of any proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time.

U.S. Holders

As used herein, a U.S. Holder means a holder of our common
shares who is a citizen or individual resident of the United States, a
corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof, an entity created or
organized in or under the laws of the United States or of any political
subdivision thereof which has elected to be treated as a corporation for United
States federal income tax purposes (under Treasury Regulation Section 301.7701
-3), an estate whose income is taxable in the United States irrespective of
source or a trust subject to the primary supervision of a court within the
United States and control of a United States fiduciary as described in Section
7701(a)(30) of the Code. This summary does not address the tax consequences to,
and U.S. Holder does not include, persons subject to specific provisions of
federal income tax law, such as tax-exempt organizations, qualified retirement
plans, individual retirement accounts and other tax-deferred accounts, financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, broker-dealers, non-resident alien individuals, persons or
entities that have a functional currency other than the U.S. dollar,
shareholders subject to the alternative minimum tax, shareholders who hold
common shares as part of a straddle, hedging or conversion transaction, and
shareholders who acquired their common shares through the exercise of employee
stock options or otherwise as compensation for services. This summary is limited
to U.S. Holders who own our common shares as capital assets and who own
(directly and indirectly, pursuant to applicable rules of constructive
ownership) no more than 5% of the value of our total outstanding stock. This
summary does not address the consequences to a person or entity holding an
interest in a shareholder or the consequences to a person of the ownership,
exercise or disposition of any options, warrants or other rights to acquire
common shares. In addition, this summary does not address special rules
applicable to United States persons (as defined in Section 7701(a)(30) of the
Code) holding common shares through a foreign partnership or to foreign persons
holding common shares through a domestic partnership.

Distribution on Our Common Shares

In general, U.S. Holders receiving dividend distributions
(including constructive dividends) with respect to our common shares are
required to include in gross income for United States federal income tax
purposes the gross amount of such distributions, equal to the U.S. dollar value
of such distributions on the date of receipt (based on the exchange rate on such
date), to the extent that we have current or accumulated earnings and profits,
without reduction for any Canadian income tax withheld from such distributions.
Such Canadian tax withheld may be credited, subject to certain limitations,
against the U.S. Holders federal income tax liability or, alternatively, may be
deducted in computing the U.S. Holders federal taxable income by those who
itemize deductions. (See more detailed discussion at Foreign Tax Credit
below). To the extent that distributions exceed our current or accumulated
earnings and profits, they will be treated first as a return of capital up to
the U.S. Holders adjusted basis in the common shares and thereafter as gain
from the sale or exchange of property. Preferential tax rates for long-term
capital gains are applicable to a U.S. Holder which is an individual, estate or
trust. There are currently no preferential tax rates for long-term capital gains
for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is
not converted by the recipient into U.S. dollars on the date of receipt, a U.S.
Holder will have a tax basis in the foreign currency equal to its U.S.

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dollar value on the date of receipt. Generally any gain or loss
recognized upon a subsequent sale or other disposition of the foreign currency,
including the exchange for U.S. dollars, will be ordinary income or loss.
However, an individual whose realized gain does not exceed $200 will not
recognize that gain, provided that there are no expenses associated with the
transaction that meet the requirements for deductibility as a trade or business
expense (other than travel expenses in connection with a business trip) or as an
expense for the production of income.

Dividends paid on our common shares generally will not be
eligible for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations. A U.S. Holder which is a
corporation and which owns shares representing at least 10% of our voting power
and value may, under certain circumstances, be entitled to a 70% (or 80% if the
U.S. Holder owns shares representing at least 20% of our voting power and value)
deduction of the United States source portion of dividends received from us
(unless we qualify as a passive foreign investment company, as defined below).
We do not anticipate that we will earn any United States income, however, and
therefore we do not anticipate that any U.S. Holder will be eligible for the
dividends received deduction.

Under current Treasury Regulations, dividends paid on our
common shares, if any, generally will not be subject to information reporting
and generally will not be subject to U.S. backup withholding tax. However,
dividends and the proceeds from a sale of our common shares paid in the U.S.
through a U.S. or U.S. related paying agent (including a broker) will be subject
to U.S. information reporting requirements and may also be subject to the 28%
U.S. backup withholding tax, unless the paying agent is furnished with a duly
completed and signed Form W-9. Any amounts withheld under the U.S. backup
withholding tax rules will be allowed as a refund or a credit against the U.S.
Holders U.S. federal income tax liability, provided the required information is
furnished to the IRS.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions)
Canadian income tax with respect to the ownership of our common shares may be
entitled, at the option of the U.S. Holder, to either receive a deduction or a
tax credit for such foreign tax paid or withheld. Generally, it will be more
advantageous to claim a credit because a credit reduces United States federal
income taxes on a dollar-for-dollar basis, while a deduction merely reduces the
taxpayers income subject to tax. This election is made on a year-by-year basis
and generally applies to all foreign taxes paid by (or withheld from) the U.S.
Holder during that year. There are significant and complex limitations which
apply to the credit, among which is the general limitation that the credit
cannot exceed the proportionate share of the U.S. Holders United States income
tax liability that the U.S. Holders foreign source income bears to his or its
worldwide taxable income. In the determination of the application of this
limitation, the various items of income and deduction must be classified into
foreign and domestic sources. Complex rules govern this classification process.
In addition, this limitation is calculated separately with respect to specific
classes of income such as passive income,  high withholding tax interest,
financial services income, shipping income, and certain other
classifications of income. Dividends distributed by us will generally constitute
passive income or, in the case of certain U.S. Holders, financial services
income for these purposes. The availability of the foreign tax credit and the
application of the limitations on the credit are fact specific, and U.S. Holders
of our common shares should consult their own tax advisors regarding their
individual circumstances.

Disposition of Our Common Shares

In general, U.S. Holders will recognize gain or loss upon the
sale of our common shares equal to the difference, if any, between (i) the
amount of cash plus the fair market value of any property received, and (ii) the
shareholders tax basis in our common shares. Preferential tax rates apply to
long-term capital gains of U.S. Holders which are individuals, estates or
trusts. In general, gain or loss on the sale of our

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common shares will be long-term capital gain or loss if the
common shares are a capital asset in the hands of the U.S. Holder and are held
for more than one year. Deductions for net capital losses are subject to
significant limitations. For U.S. Holders that are not corporations, any unused
portion of such net capital loss may be carried over to be used in later tax
years until such net capital loss is thereby exhausted. For U.S. Holders that
are corporations (other than corporations subject to Subchapter S of the Code),
an unused net capital loss may be carried back three years and carried forward
five years from the loss year to be offset against capital gains until such net
capital loss is thereby exhausted.

Other Considerations

Set forth below are certain material exceptions to the
above-described general rules describing the United States federal income tax
consequences resulting from the holding and disposition of common shares:

Foreign Investment Company

If 50% or more of the combined voting power or total value of
our outstanding shares is held, directly or indirectly, by citizens or residents
of the United States, United States domestic partnerships or corporations, or
estates or trusts other than foreign estates or trusts (as defined by the Code
Section 7701(a)(31)), and we are found to be engaged primarily in the business
of investing, reinvesting, or trading in securities, commodities, or any
interest therein, it is possible that we may be treated as a foreign investment
company as defined in Section 1246 of the Code, causing all or part of any gain
realized by a U.S. Holder selling or exchanging common shares to be treated as
ordinary income rather than capital gain. We do not believe that we currently
qualify as a foreign investment company. However, there can be no assurance that
we will not be considered a foreign investment company for the current or any
future taxable year.

Passive Foreign Investment Company

United States income tax law contains rules governing passive
foreign investment companies (PFIC) which can have significant tax effects on
U.S. Holders of foreign corporations. These rules do not apply to non-U.S.
Holders. Section 1297 of the Code defines a PFIC as a corporation that is not
formed in the United States if, for any taxable year, either (i) 70% or more of
its gross income is passive income, which includes interest, dividends and
certain rents and royalties or (ii) the average percentage, by fair market value
(or, if the corporation is not publicly traded and either is a controlled
foreign corporation or makes an election, by adjusted tax basis), of its assets
that produce or are held for the production of passive income is 50% or more.
We appear to have been a PFIC for the fiscal year ended August 31, 2006, and at
least certain prior fiscal years. In addition, we expect to qualify as a PFIC
for the fiscal year ending August 31, 2007 and we may also qualify as a PFIC in
future fiscal years. Each of our U.S. Holders is urged to consult a tax advisor
with respect to how the PFIC rules affect such U.S. Holders tax situation.

Each of our U.S. Holders who holds stock in a foreign
corporation during any year in which such corporation qualifies as a PFIC is
subject to United States federal income taxation under one of three alternative
tax regimes at the election of such U.S. Holder. The following is a discussion
of such alternative tax regimes applied to such U.S. Holders of our stock. In
addition, special rules apply if a foreign corporation qualifies as both a PFIC
and a controlled foreign corporation (as defined below) and a U.S. Holder
owns, actually or constructively, 10% or more of the total combined voting power
of all classes of stock entitled to vote of such foreign corporation (See more
detailed discussion at Controlled Foreign Corporation below).

A U.S. Holder who elects to treat us as a qualified electing
fund (QEF) will be subject, under Section 1293 of the Code, to current federal
income tax for any taxable year to which the election applies in which we
qualify as a PFIC on his pro rata share of our (i) net capital gain (the
excess of net long-term

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capital gain over net short-term capital loss), which will be
taxed as long-term capital gain, and (ii) ordinary earnings (the excess of
earnings and profits over net capital gain), which will be taxed as ordinary
income, in each case, for the shareholders taxable year in which (or with
which) our taxable year ends, regardless of whether such amounts are actually
distributed. A U.S. Holders tax basis in the common shares will be increased by
any such amount that is included in income but not distributed.

The procedure a U.S. Holder must comply with in making an
effective QEF election, and the consequences of such election, will depend on
whether the year of the election is the first year in the U.S. Holders holding
period in which we are a PFIC. If the U.S. Holder makes a QEF election in such
first year, i.e., a timely QEF election, then the U.S. Holder may make the QEF
election by simply filing the appropriate documents at the time the U.S. Holder
files his tax return for such first year. If, however, we qualified as a PFIC in
a prior year during the U.S. Holders holding period, then, in order to avoid
the Section 1291 rules discussed below, in addition to filing documents, the
U.S. Holder must elect to recognize under the rules of Section 1291 of the Code
(discussed herein) (i) any gain that he would otherwise recognize if the U.S.
Holder sold his stock on the qualification date or (ii) if we are a controlled
foreign corporation, the U.S. Holders pro rata share of our post-1986 earnings
and profits as of the qualification date. The qualification date is the first
day of our first tax year in which we qualified as a QEF with respect to such
U.S. Holder. For purposes of this discussion, a U.S. Holder who makes (i) a
timely QEF election or (ii) an untimely QEF election and either of the
above-described gain-recognition elections under Section 1291 is referred to
herein as an Electing U.S. Holder. A U.S. Holder who holds common shares at
any time during a year in which we are a PFIC and who is not an Electing U.S.
Holder (including a U.S. Holder who makes an untimely QEF election and makes
neither of the above-described gain-recognition elections) is referred to herein
as a Non-Electing U.S. Holder. An Electing U.S. Holder (i) generally treats
any gain realized on the disposition of his common shares as capital gain and
(ii) may either avoid interest charges resulting from PFIC status altogether or
make an annual election, subject to certain limitations, to defer payment of
current taxes on his share of our annual realized net capital gain and ordinary
earnings subject, however, to an interest charge. If the U.S. Holder is not a
corporation, any interest charge imposed under the PFIC regime would be treated
as personal interest that is not deductible.

In order for a U.S. Holder to make (or maintain) a valid QEF
election, we must provide certain information regarding our net capital gains
and ordinary earnings and permit our books and records to be examined to verify
such information. We intend to make the necessary information available to U.S.
Holders to permit them to make (and maintain) QEF elections with respect to us.
We urge each U.S. Holder to consult a tax advisor regarding the availability of,
and procedure for making, the QEF election.

A QEF election, once made with respect to us, applies to the
tax year for which it was made and to all subsequent tax years, unless the
election is invalidated or terminated, or the IRS consents to revocation of the
election. If a QEF election is made by a U.S. Holder and we cease to qualify as
a PFIC in a subsequent tax year, the QEF election will remain in effect,
although not applicable, during those tax years in which we do not qualify as a
PFIC. Therefore, if we again qualify as a PFIC in a subsequent tax year, the QEF
election will be effective and the U.S. Holder will be subject to the rules
described above for Electing U.S. Holders in such tax year and any subsequent
tax years in which we qualify as a PFIC. In addition, the QEF election remains
in effect, although not applicable, with respect to an Electing U.S. Holder even
after such U.S. Holder disposes of all of his or its direct and indirect
interest in our shares. Therefore, if such U.S. Holder reacquires an interest in
us, that U.S. Holder will be subject to the rules described above for Electing
U.S. Holders for each tax year in which we qualify as a PFIC.

In the case of a Non-Electing U.S. Holder, special taxation
rules under Section 1291 of the Code will apply to (i) gains realized on the
disposition (or deemed to be realized by reasons of a pledge) of his common
shares and (ii) certain excess distributions, as defined in Section 1291(b),
by us.

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A Non-Electing U.S. Holder generally would be required to pro
rate all gains realized on the disposition of his common shares and all excess
distributions on his common shares over the entire holding period for the common
shares. All gains or excess distributions allocated to prior years of the U.S.
Holder (excluding any portion of the holders period prior to the first day of
the first year (i) which began after December 31, 1986, and (ii) for which we
were a PFIC) would be taxed at the highest tax rate for each such prior year
applicable to ordinary income. The Non-Electing U.S. Holder also would be liable
for interest on the foregoing tax liability for each such prior year calculated
as if such liability had been due with respect to each such prior year. A
Non-Electing U.S. Holder that is not a corporation must treat this interest
charge as personal interest which, as discussed above, is wholly
non-deductible. The balance, if any, of the gain or the excess distribution will
be treated as ordinary income in the year of the disposition or distribution,
and no interest charge will be incurred with respect to such balance. In certain
circumstances, the sum of the tax and the PFIC interest charge may exceed the
amount of the excess distribution received, or the amount of proceeds of
disposition realized, by the U.S. Holder.

If we are a PFIC for any taxable year during which a
Non-Electing U.S. Holder holds our common shares, then we will continue to be
treated as a PFIC with respect to such common shares, even if we are no longer
definitionally a PFIC. A Non-Electing U.S. Holder may terminate this deemed PFIC
status by electing to recognize gain (which will be taxed under the rules
discussed above for Non-Electing U.S. Holders) as if such common shares had been
sold on the last day of the last taxable year for which we were a PFIC.

Effective for tax years of U.S. Holders beginning after
December 31, 1997, U.S. Holders who hold (actually or constructively) marketable
stock of a foreign corporation that qualifies as a PFIC may elect to mark such
stock to the market annually (a mark-to-market election). If such an election
is made, such U.S. Holder will generally not be subject to the special taxation
rules of Section 1291 discussed above. However, if the mark-to-market election
is made by a Non-Electing U.S. Holder after the beginning of the holding period
for the PFIC stock, then the Section 1291 rules will apply to certain
dispositions of, distributions on and other amounts taxable with respect to our
common shares. A U.S. Holder who makes the mark-to-market election will include
in income for each taxable year for which the election is in effect an amount
equal to the excess, if any, of the fair market value of our common shares as of
the close of such tax year over such U.S. Holders adjusted basis in such common
shares. In addition, the U.S. Holder is allowed a deduction for the lesser of
(i) the excess, if any, of such U.S. Holders adjusted tax basis in the common
shares over the fair market value of such shares as of the close of the tax
year, or (ii) the excess, if any, of (A) the mark-to-market gains for our common
shares included by such U.S. Holder for prior tax years, including any amount
which would have been treated as a mark-to-market gain for any prior tax year
but for the Section 1291 rules discussed above with respect to Non-Electing U.S.
Holders, over (B) the mark-to-market losses for shares that were allowed as
deductions for prior tax years. A U.S. Holders adjusted tax basis in our common
shares will be adjusted to reflect the amount included in or deducted from
income as a result of a mark-to-market election. A mark-to-market election
applies to the taxable year in which the election is made and to each subsequent
taxable year, unless our common shares cease to be marketable, as specifically
defined, or the IRS consents to revocation of the election. Because the IRS has
not established procedures for making a mark-to-market election, U.S. Holders
should consult their tax advisor regarding the manner of making such an
election. No view is expressed regarding whether our common shares are
marketable for these purposes or whether the election will be available.

Under Section 1291(f) of the Code, the IRS has issued Proposed
Treasury Regulations that, subject to certain exceptions, would treat as taxable
certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally
not otherwise taxed, such as gifts, exchanges pursuant to corporate
reorganizations, and transfers at death. Generally, in such cases the basis of
our common shares in the hands of the transferee and the basis of any property
received in the exchange for those common shares would be increased by the
amount of gain recognized. Under the Proposed Treasury Regulations, an Electing
U.S. Holder would

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not be taxed on certain transfers of PFIC stock, such as gifts,
exchanges pursuant to corporate reorganizations, and transfers at death. The
transferees basis in this case will depend on the manner of the transfer. In
the case of a transfer by an Electing U.S. Holder upon death, for example, the
transferees basis is generally equal to the fair market value of the Electing
U.S. Holders common shares as of the date of death under Section 1014 of the
Code. The specific tax effect to the U.S. Holder and the transferee may vary
based on the manner in which the common shares are transferred. Each U.S. Holder
of our shares is urged to consult a tax advisor with respect to how the PFIC
rules affect his or its tax situation.

Whether or not a U.S. Holder makes a timely QEF election with
respect to our common shares, certain adverse rules may apply in the event that
we are a PFIC and any foreign corporation in which we directly or indirectly
hold shares is a PFIC (a lower-tier PFIC). Pursuant to certain Proposed
Treasury Regulations, a U.S. Holder would be treated as owning his or its
proportionate amount of any lower-tier PFIC shares, and generally would be
subject to the PFIC rules with respect to such indirectly-held PFIC shares
unless such U.S. Holder makes a timely QEF election with respect thereto. We do
not currently have any subsidiaries. If we obtain any subsidiaries, we intend to
make the necessary information available to U.S. Holders to permit them to make
(and maintain) QEF elections with respect to each subsidiary of ours that is a
PFIC.

Under the Proposed Treasury Regulations, a U.S. Holder who does
not make a timely QEF election with respect to a lower-tier PFIC generally would
be subject to tax (and the PFIC interest charge) on (i) any excess distribution
deemed to have been received with respect to his or its lower-tier PFIC shares
and (ii) any gain deemed to arise from a so-called indirect disposition of
such shares. For this purpose, an indirect disposition of lower-tier PFIC shares
would generally include (i) a disposition by us (or an intermediate entity) of
lower-tier PFIC shares, and (ii) any other transaction resulting in a diminution
of the U.S. Holders proportionate ownership of the lower-tier PFIC, including
an issuance of additional common shares by us (or an intermediate entity).
Accordingly, each prospective U.S. Holder should be aware that he or it could be
subject to tax even if such U.S. Holder receives no distributions from us and
does not dispose of its common shares. We strongly urge each prospective U.S.
Holder to consult a tax advisor with respect to the adverse rules applicable,
under the Proposed Treasury Regulations, to U.S. Holders of lower-tier PFIC
shares.

Certain special, generally adverse, rules will apply with
respect to our common shares while we are a PFIC unless the U.S. Holder makes a
timely QEF election. For example under Section 1298(b)(6) of the Code, a U.S.
Holder who uses PFIC stock as security for a loan (including a margin loan)
will, except as may be provided in regulations, be treated as having made a
taxable disposition of such shares.

Controlled Foreign Corporation

If more than 50% of the total combined voting power of all our
of shares entitled to vote or the total value of our shares is owned, actually
or constructively, by citizens or residents of the United States, United States
domestic partnerships or corporations, or estates or trusts other than foreign
estates or trusts (as defined by the Code Section 7701(a)(31)), each of which
own, actually or constructively, 10% or more of the total combined voting power
of all of our classes of shares entitled to vote (each, a United States
Shareholder), we could be treated as a controlled foreign corporation (CFC)
under Subpart F of the Code. This classification would affect many complex
results, one of which is the inclusion of certain income of a CFC which is
subject to current U.S. tax. The United States generally taxes United States
Shareholders of a CFC currently on their pro rata shares of the Subpart F income
of the CFC. Such United States Shareholders are generally treated as having
received a current distribution out of the CFCs Subpart F income and are also
subject to current U.S. tax on their pro rata shares of increases in the CFCs
earnings invested in U.S. property. The foreign tax credit described above may
reduce the U.S. tax on these amounts. In addition, under Section 1248 of the
Code, gain from the sale or exchange of shares

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by a U.S. Holder of our common shares which is or was a United
States Shareholder at any time during the five-year period ending on the date of
the sale or exchange is treated as ordinary income to the extent of earnings and
profits attributable to the shares sold or exchanged. If a foreign corporation
is both a PFIC and a CFC, the foreign corporation generally will not be treated
as a PFIC with respect to United States Shareholders of the CFC. This rule
generally will be effective for taxable years of United States Shareholders
beginning after 1997 and for taxable years of foreign corporations ending with
or within such taxable years of United States Shareholders. Special rules apply
to United States Shareholders who are subject to the special taxation rules
under Section 1291 discussed above with respect to a PFIC. Because of the
complexity of Subpart F, a more detailed review of these rules is outside of the
scope of this discussion. We do not believe that we currently qualify as a CFC.
However, there can be no assurance that we will not be considered a CFC for the
current or any future taxable year.

F.          
Dividends and Paying Agents

Not applicable.

G.          
Statement by Experts

Included with this Form 20-F are the following consents with
respect the inclusion of, or reference to, their reports in this Form 20-F:

|1. | Consent of Devisser Gray to the inclusion of their
      auditors report dated July 3, 2009 on Adira Energys financial statements
      for the period ended April 30, 2009.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

H.          
  Documents on Display

Exhibits attached to this Form 20-F are also available for
viewing at our offices, Suite 901, 30 St. Clair Avenue West, Toronto, Ontario,
Canada, M4V 3A1; or you may request them by calling our office at (416)
250-6500. Copies of our financial statements and other continuous disclosure
documents required under securities rules are available for viewing on the
internet at www.sedar.com.

I.           Subsidiary
Information

See Item 4.C of this Form 20-F.

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ITEM
11           QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not subject to any material market risks.

a)           Transaction
Risk and Currency Risk Management

Our operations do not employ complex financial instruments or
derivatives, and given that we keep our excess funds in high-grade short-term
instruments, we do not have significant or unusual financial market risks. In
the event we experience substantial growth in the future, our business and
results of operations may be materially affected by changes in interest rates on
new debt financings, the granting of credit options to our customers, and
certain other credit risks associated with our operations.

b)           Interest
  Rate Risk and Equity Price Risk

We are equity financed and do not have any debt which could be
subject to significant interest rate change risks. We have raised equity funding
through the sale of securities denominated in Canadian dollars, and will likely
raise additional equity funding denominated in Canadian dollars in the future.

c)          
  Exchange Rate Sensitivity

A significant portion of our administrative operations are in
  Canada. We typically hold most of our funds in U.S. dollars and Adira Energy
  reports the results of its operations in Canadian dollars. We incur most of
  our exploration expenditures in U.S. dollars.

d)           Commodity
  Price Risk

While the value of our exploration properties can always be
said to relate to the price of the commodity and the outlook for same, we do not
have any operating mines nor economic ore and therefore do not have any hedging
arrangements.

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ITEM
12           DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES

A.           Debt
Securities

Not applicable.

B.           Warrants
and Rights

Not applicable.

C.          
Other Securities

Not applicable.

D.           American
Depository Shares

Not applicable.

PART II

ITEM
13           DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

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

Not applicable.

ITEM
15           CONTROLS AND
PROCEDURES

Not applicable.

ITEM
16A        AUDIT COMMITTEE FINANCIAL
EXPERTS

Not applicable.

ITEM 16B        CODE OF
ETHICS

Not applicable.

ITEM
16C        PRINCIPAL ACCOUNTANT FEES AND
SERVICES

Not applicable.

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ITEM 16D       EXEMPTIONS FROM
THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E       PURCHASE
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

PART III

ITEM
17           FINANCIAL
STATEMENTS

The following attached financial statements are incorporated
herein:

|1. | Financial Statements of Adira Energy Corp.
        for the period ended April 30, 2009, comprised of the following:
|-- | -------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                    
|   | (a)                                                                                                                
|   |                                                                                                                    
|   | (b)                                                                                                                
|   |                                                                                                                    
|   | (c)                                                                                                                
|   |                                                                                                                    
|   | (d)                                                                                                                

Pro Forma Financial Statements will be filed by an amendment to
this From 20-F

ITEM 18          
  FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to
Item 17.

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Adira Energy Corp.

Consolidated Financial Statements

For the period ended from incorporation on 
  April 8, 2009 to April 30, 2009

---

D E V I S S E R   G R A Y  
  L L PCHARTERED ACCOUNTANTS

401 - 905 West Pender Street
  Vancouver, BC Canada
  V6C 1L6

Tel: (604) 687-5447
  Fax: (604) 687-6737

AUDITORS REPORT

To the Shareholders of Adira Energy Corp.

We have audited the consolidated balance sheet of Adira Energy
  Corp. as at April 30, 2009 and the consolidated statements of operations, comprehensive
  loss and deficit, and cash flows for the period then ended from incorporation
  on April 8, 2009 to April 30, 2009. These consolidated financial statements
  are the responsibility of the Companys management. Our responsibility
  is to express an opinion on these consolidated financial statements based on
  our audit.

We conducted our audit in accordance with Canadian generally
  accepted auditing standards (GAAS) in Canada and the standards of
  the Public Company Accounting Oversight Board (United States) (PCAOB).
  Those standards require that we plan and perform an audit to obtain reasonable
  assurance whether the financial statements are free of material misstatement.
  An audit includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the financial statements. An audit also includes assessing
  the accounting principles used and significant estimates made by management,
  as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  April 30, 2009 and the results of its operations and cash flows for the period
  then ended in accordance with Canadian generally accepted accounting principles.

CHARTERED ACCOUNTANTS

Vancouver, British Columbia
  July 3, 2009

---

ADIRA ENERGY CORP.Consolidated Balance Sheet 
  (Expressed in Canadian Dollars) 
  As at April 30, 2009

|                                                 |  | $        |  
|------------------------------------------------ |  | -------- | -
|A S S E T S                                      |  |          |  
|Current assets                                   |  |          |  
|Cash and cash equivalents                        |  | 424,167  |  
|                                                 |  |          |  
|Equipment deposit (note 4)                       |  | 29,000   |  
|Oil and gas licenses (note 5)                    |  | 1        |  
|                                                 |  | 453,168  |  
|                                                 |  |          |  
|L I A B I L I T I E S                            |  |          |  
|Current liabilities                              |  |          |  
|Accounts payable and accrued liabilities         |  | 103,553  |  
|Due to related party (note 6)                    |  | 32,000   |  
|                                                 |  | 135,553  |  
|                                                 |  |          |  
|S H A R E H O L D E R S'  
      **E Q U I T Y** |  |          |  
|                                                 |  |          |  
|Share capital (note 7(b))                        |  | 526,200  |  
|Contributed surplus (Note 6)                     |  | 598,800  |  
|Deficit                                          |  | (807,385 | )
|                                                 |  | 317,615  |  
|                                                 |  | 453,168  |  
|Nature and continuance of operations (note 1)    |  |          |  
|Subsequent event (Note 13)                       |  |          |  

Approved by the Board of Directors:

|         |  |         
|-------- |  | --------
|Director |  | Director

See notes to the consolidated financial statements

---

ADIRA ENERGY CORP.Consolidated Statement of Operations, Comprehensive Loss and Deficit 
  (Expressed in Canadian Dollars) 
  For the period from incorporation on April 8, 2009 to April 30, 2009

|                                                     |   | $          |  
|---------------------------------------------------- | - | ---------- | -
|                                                     |   |            |  
|Expenses                                             |   |            |  
|                                                     |   |            |  
|Accounting and legal                                 |   | 27,586     |  
|Bank charges                                         |   | 142        |  
|Consulting                                           |   | 82,000     |  
|Office and miscellaneous                             |   | 3,246      |  
|Share-based compensation
      (note 6)              |   | 598,800    |  
|Technical consulting                                 |   | 92,706     |  
|Travel                                               |   | 2,905      |  
|                                                     |   |            |  
|                                                     |   |            |  
|Net loss and comprehensive loss for the period       |   | (807,385   | )
|Deficit, beginning of the period                     |   | -          |  
|Deficit, end of the period                           |   | (807,385   |  
|                                                     |   |            |  
|                                                     |   |            |  
|Basic and diluted loss per share                     | $ | (0.05      | )
|Weighted average number of common shares outstanding |   | 15,818,182 |  

See notes to the consolidated financial statements

---

ADIRA ENERGY CORP.Consolidated Statement of Cash Flows 
  (Expressed in Canadian Dollars) 
  For the period from incorporation on April 8, 2009 to April 30, 2009

|Cash Provided by (Used for):                         |  | $        |  
|---------------------------------------------------- |  | -------- | -
|Operating activities:                                |  |          |  
|Net loss and comprehensive
      loss for the period |  | (807,385 | )
|Add: share-based compensation, a non-cash
      item |  | 598,800  |  
|                                                     |  | 208,585  |  
|Changes in non-cash working capital components:      |  |          |  
|Accounts payable and accrued
      liabilities       |  | 103,552  | )
|Due to related party                                 |  | 32,000   |  
|Net cash provided by operating activities            |  | (73,033  | )
|                                                     |  |          |  
|Investing activity:                                  |  |          |  
|Deposit on drilling equipment                        |  | (29,000  | )
|Net cash used in investing activities                |  | (29,000  | )
|                                                     |  |          |  
|Financing activity:                                  |  |          |  
|Issuance of common shares                            |  | 526,200  |  
|Net cash provided by financing activities            |  | 526,200  |  
|                                                     |  |          |  
|Net cash provided during the period                  |  | 424,167  |  
|Cash and cash equivalents, beginning of period       |  | -        |  
|Cash and cash equivalents, end of period             |  | 424,167  |  

See notes to the consolidated financial statements

---

ADIRA ENERGY CORP.Notes to Consolidated Financial Statements
  Period Ended April 30, 2009 
  (Expressed in Canadian Dollars)

|1. | Nature and Continuance of Operations                                                                                                                                                                                                                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company was incorporated under the Ontario Business
        Corporations Act on April 8, 2009 and its business activity is the exploration
        and development of an oil and gas license in Israel. The Company has not
        yet commenced its activity as the Company has not yet secured sufficient
        funding to commence this business.                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These financial statements have been prepared assuming
        the Company will continue on a going-concern basis. The Company has incurred
        losses since inception. The ability of the Company to continue as a going-concern
        depends upon its ability to develop profitable operations and to continue
        to raise adequate equity financing to develop its properties.                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | There can be no assurance that the Company will be able
        to continue to raise funds in which case the Company may be unable to
        meet its obligations. Should the company be unable to continue as a going-concern,
        the net realizable values of its assets may be materially less than amounts
        recorded on the balance sheets.                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Refer to note 13.                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Basis of Accounting                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements are prepared
        in accordance with Canadian generally accepted accounting principles (GAAP),
        and also are materially consistent with United States GAAP. Summarized
        below are those policies considered particularly significant to the Company.                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements include the
        accounts of the Company and its wholly-owned subsidiary, Adira Energy
        Israel Ltd. of Israel.                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The preparation of financial statements in conformity
        with Canadian GAAP requires management to make estimates and assumptions
        which affect the reported amounts of assets and liabilities at the dates
        of the financial statements, as well as the reported amounts of revenues
        and expenses incurred during the periods. Actual results could differ
        from those estimated.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Loss per share has been calculated using the weighted
        average number of common shares outstanding during the period. Diluted
        loss per share is not present because it is anti-dilutive.                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Financial Instruments and Financial Risk                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Companys financial instruments consist of
        current assets and liabilities, the fair values of which approximate their
        carrying values due to the short-term nature of these items.                                                                                                                                                                                                              

---

ADIRA ENERGY CORP.Notes to Consolidated Financial Statements
  Period Ended April 30, 2009 
  (Expressed in Canadian Dollars)

|2. | Significant Accounting Policies(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The financial statements are presented in Canadian dollars.
        Foreign denominated monetary assets and liabilities are translated to
        their Canadian dollar equivalent using foreign exchange rates at the balance
        sheet dates. Non- monetary items are translated at historical exchange
        rates. Revenues and expenses are translated using average rates of exchange
        during the year. Exchange gains or losses arising from currency translation
        are included in the determination of net income.                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Share-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Compensation expense has been recorded for the issue
        of common shares where an intrinsic value in excess of cash consideration
        paid was determined at the date of issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company accounts for the future tax consequences
        attributable to differences between the financial statement carrying amounts
        of existing assets and liabilities and their respective tax bases. Future
        tax assets and liabilities are measured using tax rates expected to apply
        to taxable income in the years in which those temporary differences are
        expected to be settled. When the future realization of income tax assets
        does not meet the test of being more likely than not to occur, a valuation
        allowance in the amount of the potential future benefit is taken and no
        net assets are recognized. Such an allowance has been applied to all potential
        income tax assets of the Company.                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Environmental Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The operations of the Company have been, and may in
        the future be, affected from time to time in varying degree by changes
        in environmental regulations, including those for site restoration costs.
        Both the likelihood of new regulations and their overall effect upon the
        Company vary greatly from country to country and are not predictable.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Environmental expenditures that relate to ongoing environmental
        and reclamation programs are charged against operations as incurred or
        capitalized and amortized depending on their expected future economic
        benefit. Estimated future removal and site restoration costs are recognized
        when the ultimate liability is reasonably determinable, and are charged
        against operations over the estimated remaining life of the related business
        operations, net of expected recoveries.                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The fair value of a liability for an asset retirement
        obligation is recognized on an undiscounted cash flow basis when a reasonable
        estimate of the fair value of the obligation can be made. The asset retirement
        obligation is recorded as a liability with a corresponding increase to
        the carrying amount of the related long-lived asset. Subsequently, the
        asset retirement cost is allocated to expense using a systematic and rational
        method and is adjusted to reflect period-to-period changes in the liability
        resulting from the passage of time and from revisions to either expected
        payment dates or the amounts comprising the original estimate of the obligation.
        As at April 30, 2009, the Company does not have any asset retirement obligations.

---

ADIRA ENERGY CORP.Notes to Consolidated Financial Statements
  Period Ended April 30, 2009 
  (Expressed in Canadian Dollars)

|2. | Significant Accounting Policies(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Oil and Gas Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company follows the full cost method of accounting
        for oil and gas properties whereby all costs relating to the acquisition,
        exploration, and development of oil and gas properties and equipment are
        capitalized and accumulated in cost centres by country. Such costs include
        lease acquisition costs, geological and geophysical expenditures, lease
        rentals, seismic and costs of drilling productive and non-productive wells,
        together with overhead expenses related to acquisition, exploration, development
        activities. The costs in cost centres from which there has been no commercial
        production are not subject to depletion until commercial production commences.
        Depletion is calculated using costs of acquisition, exploration, development,
        estimated future development as well as dismantlement and abandonment
        costs, net of salvage values using the unit-of production method. An assessment
        is performed at every reporting date to determine whether the aggregate
        net costs in each pre-development stage cost centre are recoverable. Costs
        which are unlikely to be recovered are written-off. Oil and gas properties
        for which there has been commercial production, are subject to a ceiling
        test in each reporting period to determine that the costs are recoverable
        and do not exceed the fair value of the properties. The costs are assessed
        to be recoverable if the sum of the undiscounted cash flows expected from
        the production of proved reserves and the lower of cost and market of
        unproved properties exceed the carrying values of the oil and gas properties.
        If the carrying value of the oil and gas properties is not assessed to
        be recoverable, an impairment loss is recognized to the extent that the
        carrying value exceeds an estimated fair value. The fair value estimate
        is normally based on the sum of the discounted cash flows expected from
        production of proved and probable reserves at a discount rate of 10% and
        the lower of cost and market of unproved properties. The cash flows are
        estimated using forecast product prices and costs with the forecast product
        pricing being a constant price utilizing the actual oil price posted at
        April 30, 2009 and discounted using a risk-free interest rate of 10%.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Sales of oil and gas properties, whether or not being
        amortized currently, shall be accounted for as adjustments of capitalized
        costs, with no gain or loss recognized unless such adjustments would significantly
        alter the relationship between capitalized costs and proved reserves of
        oil and gas attributable to a cost centre. Abandonments of oil and gas
        properties shall be accounted for as adjustments of capital cost with
        the costs of abandoned properties being charged to the cost centre and
        amortized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Long-lived assets are assessed for impairment when events
        and circumstances warrant, when the carrying amounts of the assets exceeds
        its estimated undiscounted net cash flow from use or its fair value, at
        which time the impairment is charged to earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

---

ADIRA ENERGY CORP.Notes to Consolidated Financial Statements
  Period Ended April 30, 2009 
  (Expressed in Canadian Dollars)

|3. | Changes in Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Capital Disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company has adopted new CICA Handbook section 1535
        which requires disclosure of an entitys objectives, policies and
        processes for managing capital, quantitative data about what the entity
        regards as capital and whether the entity has complied with any capital
        requirements and, if it has not complied, the consequences of such non-
        compliance (Note 11).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Financial Instruments - Disclosure and Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company has adopted new CICA Handbook sections 3862
        and 3863 which replace CICA Handbook Section 3861, Financial Instruments
        - Disclosure and Presentation. These standards increase the disclosures
        currently required, which will enable users to evaluate the significance
        of financial instruments for an entitys financial position and performance,
        including disclosures about fair value. In addition, disclosure is required
        of qualitative and quantitative information about exposure to risks arising
        from financial instruments, including specified minimum disclosures about
        credit risk, liquidity risk and market risk (note 10). The quantitative
        disclosures must provide information about the extent to which the entity
        is exposed to risk, based on information provided internally to the entitys
        key management personnel.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Companys financial instruments, at April 30,
        2009, consist of cash, accounts payable and accrued liabilities and due
        to related party. Cash has been classified as available for sale and the
        carrying value approximates its fair value due to its short term nature.
        Accounts payable and accrued liabilities and due to related party are
        classified as other financial liabilities, measured at amortized cost
        using the effective interest rate method, however due to their short term
        nature, their carrying amounts approximate fair value.                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Going Concern  Amendments to Section 1400                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | CICA 1400, General Standards of Financial Statement
        Presentation, was amended to include requirements to assess and disclose
        an entitys ability to continue as a going concern taking into account
        all available information available for at least, but not limited to 12
        months from the balance sheet date. The new requirements became effective
        for the Company on April 4, 2009. Disclosure is addressed in Note 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | FUTURE CHANGES IN ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | International Financial reporting Standards (IFRS)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In February 2008 the Canadian Accounting Standards Board
        announced 2011 as the changeover date for publicly- listed companies to
        use IFRS, replacing Canadas own generally accepted accounting principles.
        The specific implementation is set for interim and annual financial statements
        relating to fiscal years beginning on or after January 1, 2011. The transition
        date of January 1, 2011 will require restatement for comparative purposes
        of amounts reported by the Company for the year ended December 31, 2010.
        While the Company has begun assessing the adoption of IFRS for 2011, the
        financial reporting impact of the transition to IFRS cannot be reasonably
        estimated at this time.                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4. | Equipment Deposit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Equipment deposit consists of a deposit on the purchase
        of drilling equipment located in Israel. The Company is to pay US$320,000
        plus Value Added Tax (VAT) (US$100,000 subsequently paid for
        a total of US$135,500 plus VAT to report date) by August 31, 2009 or the
        date title of all equipment is registered in the Companys name.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

ADIRA ENERGY CORP.Notes to Consolidated Financial Statements
  Period Ended April 30, 2009 
  (Expressed in Canadian Dollars)

|5. | Oil and Gas Licenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Companys subsidiary has a license
        to explore for oil and gas in Israel which comprises an area of approximately
        31,012 acres and is effective for the period from December 15, 2008 to
        December 15, 2011. Costs to acquire this license were paid outside of
        the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|6. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the current period, the Company incurred
        $32,000 in consulting fees to a directors private company and has
        agreed to pay the company $8,000 per month for consulting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | As at April 30, 2009, $32,000 is due to a
        directors private company for consulting services. The amount is
        unsecured, does not bear interest and has no fixed terms of repayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | At the Companys incorporation, 12,000,000
        common shares were issued to certain directors for cash consideration
        of $0.0001 per share (the Seed shares). Subsequently, the
        Company issued non-flow through common shares by private placement for
        consideration of $0.05 per share. Accordingly, the Company has taken a
        non-cash charge of $598,800 ($0.0499 per share) to recognize an expense
        to the Company equal to the difference between the per share consideration
        paid for the seed shares and that paid for the shares subsequently issued
        by private placement at $0.05 per share. The credit portion of the transaction
        has been recorded in contributed surplus.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | All related party transactions were in the
        normal course of operations and are measured at fair value as determined
        by management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|7. | Share Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                         |  | Number     |  |  | Amount  |  
| | ----------------------- |  | ---------- |  |  | ------- | -
| |                         |  |            |  |  | $       |  
| |                         |  |            |  |  |         |  
| | Private placements (1)  |  | 22,500,000 |  |  | 526,200 | )
| |                         |  |            |  |  |         |  
| | Balance, April 30, 2009 |  | 22,500,000 |  |  | 526,200 | )

| | (1) | The Company issued 12,000,000 common shares for $1,200
        on April 8, 2009 (Refer to note 6) and 10,500,000 shares for $525,000
        on April 22, 2009.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Stock Options                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                             
| |     | As at April 30, 2009, the Company has approved an option
        plan to issue up to a maximum of 4,000,000 shares pursuant to such plan,
        the exercise price and vesting period of which, to be at the discretion
        of the Board of Directors.
| |     |                                                                                                                                                                                                                                                             
| |     | At April 30, 2009, the Company has no options outstanding.                                                                                                                                                                                                  

---

ADIRA ENERGY CORP.Notes to Consolidated Financial Statements
  Period Ended April 30, 2009 
  (Expressed in Canadian Dollars)

|8.  | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | No provision for recovery of income taxes was made in
        2009 because of the uncertainty as to the utilization of the losses and
        costs for income tax purposes. At April 30, 2009 the Company has accumulated
        losses for tax purposes of approximately $207,600 which expire in 2029.
        The Company also has undeducted incorporation costs totalling $700 which
        are available for deduction against future Canadian taxable income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|9.  | Proposed Share Purchase Transaction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | On April 21, 2009, the Company signed a letter of intent
        with AMG Oil Ltd (AMG). AMG will offer to purchase the Company
        by way of a share purchase transaction or other form of business combination
        (the Proposed Transaction), which will result in AMG purchasing
        all of the issued and outstanding securities of the Company. The Proposed
        Transaction is subject to, among other terms, the negotiation and execution
        of a formal agreement by June 30, 2009 (subsequently amended to September
        30, 2009). Upon completion of the Proposed Transaction, the board of the
        resulting issuer will be comprised of five appointees of the Company,
        one appointee of AMG as approved by the Company and any other appointee
        as designated by the board of the resulting issuer.                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Proposed Transaction is also subject to either AMG
        or the Company completing a private placement ("Private Placement") for
        minimum proceeds of US$2,000,000 by the issuance of 8,000,000 units at
        a price of US$0.25 per unit, or such lesser number of Adira units as approved
        by Adira. Each unit shall consist of one (1) common share and one half
        of one (1/2) warrant. Each full warrant shall entitle the holder to acquire
        an additional common share at a price of US$0.50 per common share for
        a period of 24 months from the closing of the Private Placement provided
        that the expiry date will be accelerated, if the closing price of common
        shares of the resulting issuer for any period of 20 consecutive trading
        days exceeds US$1.00 per common share (the "Acceleration Event"), to a
        period that is 30 days after the Acceleration Event.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | In part consideration for acquiring the outstanding
        shares of the Company, AMG will issue such number of common shares (the
        Payment Shares) that shall result in the Companys current
        shareholders holding approximately 49.8% of the resulting issuer, post
        Private Placement. An aggregate of approximately 31.2 million Payment
        Shares will be issued to the Companys shareholders on a pro rata
        basis, which will be in accordance with their holdings in the Company.                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Proposed Transaction is subject to receipt of the
        necessary regulatory and shareholder approvals and a due diligence period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Refer to Note 13.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10. | Financial Instrument Risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Companys financial instruments are exposed
        to the following risks:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Credit Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Companys primary exposure to credit risk is
        the risk of illiquidity of cash amounting to $424,167 at April 30, 2009.
        As the Companys policy is to limit cash holdings and short-term
        deposits to instruments issued by major Canadian banks, or investments
        of equivalent or better quality, the credit risk is considered by management
        to be negligible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---

ADIRA ENERGY CORP.Notes to Consolidated Financial Statements
  Period Ended April 30, 2009 
  (Expressed in Canadian Dollars)

|10. | Financial Instrument Risks(continued)                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Liquidity Risk                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Liquidity risk is the risk that the Company will not
        be able to pay financial instrument liabilities as they come due. The
        Companys only liquidity risk from financial instruments is its need
        to meet operating accounts payable and related party requirements. The
        Company has maintained sufficient cash balances to meet these needs at
        April 30, 2009.                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Foreign Exchange Risk                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company has virtually no foreign exchange risk as
        at April 30, 2009 as virtually all of its financial assets and liabilities
        are denominated in Canadian dollars and located in Canada.                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Interest Rate Risk                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company has not been exposed to interest rate risk
        on its cash as at April 30, 2009.                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company maintained all of its cash balance on deposit
        in a chequing account with a major Canadian bank.                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Price Risk                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company is not exposed to price risk.                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|11. | Capital Management                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Companys objectives for the management of
        capital are to safeguard its ability to continue as a going concern including
        the preservation of capital, and to achieve reasonable returns on invested
        cash after satisfying the objective of preserving capital.                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company considers its cash to be its manageable
        capital. The Companys policy is to maintain sufficient cash and
        deposit balances to cover operating and exploration costs over a reasonable
        future period, generally one to one and a half years. The Company accesses
        capital markets through equity issues as necessary and may also acquire
        additional funds where advantageous circumstances arise.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company currently has no externally-imposed capital
        requirements.                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|12. | Segmented Information                                                                                                                                                                                                                                                                                                                                                                                                                               

April 30,2009Assets by geographic segment, at costCanada
      $
      424,167Israel
      
      29,001$
      453,168


---

ADIRA ENERGY CORP.Notes to Consolidated Financial Statements
  Period Ended April 30, 2009 
  (Expressed in Canadian Dollars)

|13. | Subsequent Event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company engaged Sandfire Securities Inc. (Sandfire)
        to act as lead agent in a brokered offering for minimum proceeds of US$2,000,000
        by the issuance of 8,000,000 units at a price of US$0.25 per Unit or such
        lesser number of Adira units as approved by Adira. Each unit shall consist
        of one (1) common share and one half of one (1/2) warrant. Completion
        of the offering is a condition to the closing of the Proposed Transaction.
        At report date the Company had received verbal commitments for the offering
        in full on terms as indicated in note 9. Sandfire and other selling group
        participants are to receive a cash commission equal to 7% of aggregate
        proceeds of the issue of Units and compensation options entitling the
        holder to purchase additional common shares of the resulting issuer equal
        to 7% of the aggregate number of Units sold in the offering at a price
        of US$0.25 per common share for two years after closing. Sandfire will
        also receive a success fee and compensation for certain expenses.

---

ITEM
19           EXHIBITS

The following exhibits are included in this Form 20-F:

|Exhibit |                                                                                                                                     
|------- | ------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                         
|        |                                                                                                                                     
|1.1     | Articles of Conversion
        (1)                                                                                                  
|        |                                                                                                                                     
|1.2     | Articles of Continuance
        (1)                                                                                                 
|        |                                                                                                                                     
|1.3     | By-Laws (1)                                                                                                                         
|        |                                                                                                                                     
|4.1     | Securities
        Exchange Agreement among the Company, Adira Energy, Alan Friedman, Dennis
        Bennie and Ilan Diamond.       
|        |                                                                                                                                     
|4.2     | Form
        of Securities Exchange Agreement among the Company, Adira Energy and the
        Minority Shareholders of Adira Energy.
|        |                                                                                                                                     
|4.3     | 2009
        Stock Option Plan                                                                                                      
|        |                                                                                                                                     
|4.4     | Agency
        Agreement between Adira Energy and Sandfire Securities Inc.                                                          
|        |                                                                                                                                     
|4.5     | Form
        of Subscription Agreement for Adira Energy August 2009 Private Placement                                               
|        |                                                                                                                                     
|15.1    | Consent
        Letter of Devisser Gray, Chartered Accountants                                                                      

(1)    Herein incorporated by reference as
previously included in our Form 8-K filed on December 2, 2008.



- 75 -

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SIGNATURES

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

|AMG OIL LTD. |                        
|------------ | -----------------------
|             |                        
|             |                        
|Per:         | */s/ Ilan Diamond*     
|Name:        | Ilan Diamond           
|Title:       | Chief Executive Officer
|             |                        
|             |                        
|             |                        
|Date:        | September 4, 2008      

---