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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934         For the fiscal year ended: June 30, 2010

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from
____________ to _____________

Commission file number: 000-52843

PHOENIX ENERGY RESOURCES CORPORATION(Exact name of registrant as specified in its charter)

|Nevada                          | 20-5408832         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)

1001 Bayhill Drive, 2nd Floor  Suite 200 San Bruno,
California 94066(Address of principal executive offices)

(650) 616-4123Registrants telephone number,
including area code

Securities registered pursuant to Section 12(b) of the Exchange
Act: None

Securities registered pursuant to Section 12(g) of the Exchange
Act: Common Stock, $0.001 par value

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

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

Indicate by checkmark 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. [X] Yes [   ] No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
[   ]  Yes         [   ] No

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

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

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


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

As of December 31, 2009 (the last business day of the
registrants most recently completed second fiscal quarter), the aggregate
market value of the shares of the registrants common stock held by
non-affiliates (based upon the closing sale price of such shares as reported by
quotemedia.com) was approximately $9.4 million. Shares of the registrants
common stock held by each executive officer and director and each by each person
who owns 10% or more of the outstanding common stock have been excluded from the
calculation in that such persons may be deemed to be affiliates of the
registrant. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

There were a total of 3,523,380 shares of the registrants
common stock outstanding as of September 27, 2010.

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PHOENIX ENERGY RESOURCE CORPORATION

TABLE OF CONTENTS

|                                                                                                                                 | Page
|-------------------------------------------------------------------------------------------------------------------------------- | ----
|PART I                                                                                                                           |     
|ITEM 1. BUSINESS                                                                                                                 | 4   
|ITEM 1A. RISK
      FACTORS                                                                                                      | 7   
|ITEM 1B. UNRESOLVED STAFF
      COMMENTS                                                                                         | 15  
|ITEM 2.
      PROPERTIES                                                                                                         | 15  
|ITEM 3. LEGAL PROCEEDINGS                                                                                                        | 15  
|ITEM 4.
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                | 15  
|                                                                                                                                 |     
|PART II                                                                                                                          |     
|ITEM 5. MARKET FOR
      REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES | 16  
|ITEM 6.
      SELECTED FINANCIAL DATA                                                                                            | 17  
|ITEM 7. MANAGEMENTS
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION                               | 17  
|ITEM 7A.
      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                        | 21  
|ITEM 8. FINANCIAL STATEMENTS
      AND SUPPLEMENTARY DATA                                                                        | 21  
|ITEM 9.
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE                         | 22  
|ITEM 9A(T). CONTROLS AND PROCEDURES                                                                                              | 22  
|ITEM 9B.
      OTHER INFORMATION                                                                                                 | 22  
|                                                                                                                                 |     
|PART III                                                                                                                         |     
|ITEM 10. DIRECTORS, EXECUTIVE
      OFFICERS AND CORPORATE GOVERNANCE                                                            | 23  
|ITEM 11.
      EXECUTIVE COMPENSATION                                                                                            | 24  
|ITEM 12. SECURITY OWNERSHIP
      OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS              | 25  
|ITEM 13.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                         | 26  
|ITEM 14. PRINCIPAL ACCOUNTANT
      FEES AND SERVICES                                                                            | 26  
|                                                                                                                                 |     
|PART IV                                                                                                                          |     
|ITEM 15.
      EXHIBITS, FINANCIAL STATEMENT SCHEDULES                                                                           | 26  

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FORWARD-LOOKING STATEMENTS

This report contains
forward-looking statements. These forward-looking statements are subject to a
number of risks and uncertainties, many of which are beyond our control. All
statements, other than statements of historical fact, contained in this report,
including statements regarding future events, our future financial performance,
business strategy and plans and objectives of management for future operations,
are forward-looking statements. We have attempted to identify forward-looking
statements by terminology including anticipates, believes, can,
continue, could, estimates, expects, intends, may, plans,
potential, predicts, should or will or the negative of these terms or
other comparable terminology. Although we do not make forward-looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee
their accuracy. These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including the risks outlined
under Risk Factors or elsewhere in this report, which may cause our or our
industrys actual results, levels of activity, 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. Moreover,
we operate in a very competitive and rapidly changing environment. New risks
emerge from time to time and it is not possible for us to predict all risk
factors, nor can we address the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause our actual
results to differ materially from those contained in any forward-looking
statements. The factors impacting these risks and uncertainties include, but are
not limited to:

- estimated quantities and quality of oil and natural gas reserves;
- fluctuations in the price of oil and natural gas;
- inability to efficiently manage our operations;
- the inability of management to effectively implement our strategies and
  business plans;
- potential default under our secured obligations or material debt
  agreements;
- approval of certain parts of our operations by state regulators;
- inability to hire or retain sufficient qualified operating field
  personnel;
- inability to attract and obtain additional development capital;
- increases in interest rates or our cost of borrowing;
- deterioration in general or regional (especially Southern Kentucky)
  economic conditions;
- adverse state or federal legislation or regulation that increases the
  costs of compliance, or adverse findings by a regulator with respect to
  existing operations;
- the occurrence of natural disasters, unforeseen weather conditions, or
  other events or circumstances that could impact our operations or could impact
  the operations of companies or contractors we depend upon in our operations;
- inability to acquire mineral leases at a favorable economic value that
  will allow us to expand our development efforts;
- inability to achieve future sales levels or other operating results;
- adverse state or federal legislation or regulation that increases the
  costs of compliance, or adverse findings by a regulator with respect to
  existing operations; and
- changes in U.S. GAAP or in the legal, regulatory and legislative
  environments in the markets in which we operate.

You should not place undue
reliance on any forward-looking statement, each of which applies only as of the
date of this report. Except as required by law, we undertake no obligation to
update or revise publicly any of the forward-looking statements after the date
of this report to conform our statements to actual results or changed
expectations.

AVAILABLE INFORMATION

We file annual, quarterly and
other reports and other information with the SEC. You can read these SEC filings
and reports over the Internet at the SECs website at www.sec.gov. You can also
obtain copies of the documents at prescribed rates by writing to the Public
Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on
official business days between the hours of 10:00 am and 3:00 pm. Please call
the SEC at (800) SEC-0330 for further information on the operations of the
public reference facilities. We will provide a copy of our annual report to
security holders, including audited financial statements, at no charge upon
receipt to of a written request to us at Phoenix Energy Resource Corporation,
1001 Bayhill Drive, 2nd Floor  Suite 200, San Bruno, California 94066.

INDUSTRY AND MARKET DATA

The market data and certain other
statistical information used throughout this report are based on independent
industry publications, government publications, reports by market research firms
or other published independent sources. In addition, some data are based on our
good faith estimates.

1

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USE OF TERMS

Except as otherwise indicated by
the context, all references in this report to we, us, our, the Company
and Phoenix Energy refer to Phoenix Energy Resource Corporation, unless the
context requires otherwise. We report our financial information on the basis of
a June 30, fiscal year end. We have provided definitions for the oil and natural
gas industry terms used in this report in the Glossary below.

|Term                     | Definition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Barrel (bbl)             | The standard unit of measurement of liquids in the
      petroleum industry, it contains 42 U.S. standard gallons. Abbreviated to
      bbl.                                                                                                                                                                                                                                                                                                                                                                         
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Basin                    | A depression in the crust of the Earth, caused by plate
      tectonic activity and subsidence, in which sediments accumulate.
      Sedimentary basins vary from bowl-shaped to elongated troughs. Basins can
      be bounded by faults. Rift basins are commonly symmetrical; basins along
      continental margins tend to be asymmetrical. If rich hydrocarbon source
      rocks occur in combination with appropriate depth and duration of burial,
      then a petroleum system can develop within the basin.
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|BOPD                     | Abbreviation for barrels of oil per day, a common unit of
      measurement for volume of crude oil. The volume of a barrel is equivalent
      to 42 U.S. standard gallons.                                                                                                                                                                                                                                                                                                                                           
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Carried Working Interest | The owner of this type of working interest in the
      drilling of a well incurs no capital contribution requirement for drilling
      or completion costs associated with a well and, if specified in the
      particular contract, may not incur capital contribution requirements
      beyond the completion of the well.                                                                                                                                                                                       
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Completion / Completing  | A well made ready to produce oil or natural gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Costless Collar          | When viewed against an appropriate index, the parties
      agree to a maximum price (call option) and a minimum price (put option),
      through a financially-settled collar. If the average monthly prices are
      within the collar range there will be no monthly settlement. However, if
      average monthly prices fluctuate outside the collar, the parties settle
      the difference in cash.                                                                                                          
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Development              | The phase in which a proven oil or natural gas field is
      brought into production by drilling development wells.                                                                                                                                                                                                                                                                                                                                                                                                   
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Development Drilling     | Wells drilled during the Development phase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Division order           | A directive signed by the royalty owners verifying to the
      purchaser or operator of a well the decimal interest of production owned
      by the royalty owner. The Division Order generally includes the decimal
      interest, a legal description of the property, the operators name, and
      several legal agreements associated with the process. Completion of this
      step generally precedes placing the royalty owner on pay status to begin
      receiving revenue payments.                   
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Drilling                 | Act of boring a hole through which oil and/or natural gas
      may be produced.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Dry Wells                | A well found to be incapable of producing hydrocarbons in
      sufficient quantities such that proceeds from the sale of such production
      exceed production expenses and taxes.                                                                                                                                                                                                                                                                                                                                  
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Exploration              | The phase of operations which covers the search for oil
      or natural gas generally in unproven or semi-proven territory.                                                                                                                                                                                                                                                                                                                                                                                           
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Exploratory Drilling     | Drilling of a relatively high percentage of properties
      which are unproven.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Farm out                 | An arrangement whereby the owner of a lease assigns all
      or some portion of the lease or licenses to another company for
      undertaking exploration or development activity.                                                                                                                                                                                                                                                                                                                                   
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Field                    | An area consisting of a single reservoir or multiple
      reservoirs all grouped on, or related to, the same individual geological
      structural feature or stratigraphic condition. The field name refers to
      the surface area, although it may refer to both the surface and the
      underground productive formations.                                                                                                                                                                                   
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Fixed price swap         | A derivative instrument that exchanges or swaps the
      floating or daily price of a specified volume of natural gas, oil or
      NGL, over a specified period, for a fixed price for the specified volume
      over the same period (typically three months or longer).                                                                                                                                                                                                                                       
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Gathering line / system  | Pipelines and other facilities that transport oil or
      natural gas from wells and bring it by separate and individual lines to a
      central delivery point for delivery into a transmission line or mainline.                                                                                                                                                                                                                                                                                                   

2

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|Gross acre                  | The number of acres in which the Company owns any working
      interest.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Gross Producing Well        | A well in which a working interest is owned and is
      producing oil or natural gas or other liquids or hydrocarbons. The number
      of gross producing wells is the total number of wells producing oil or
      natural gas or other liquids or hydrocarbons in which a working interest
      is owned.                                                                                                                                                                                                          
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Gross well                  | A well in which a working interest is owned. The number
      of gross wells is the total number of wells in which a working interest is
      owned.                                                                                                                                                                                                                                                                                                                                                                   
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Held-By-Production (HBP)    | Refers to an oil and natural gas property under lease, in
      which the lease continues to be in force, because of production from the
      property.                                                                                                                                                                                                                                                                                                                                                                
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Horizontal drilling         | A drilling technique used in certain formations where a
      well is drilled vertically to a certain depth and then turned and drilled
      horizontally. Horizontal drilling allows the wellbore to follow the
      desired formation.                                                                                                                                                                                                                                                                              
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|In-fill wells               | In-fill wells refers to wells drilled between established
      producing wells; a drilling program to reduce the spacing between wells in
      order to increase production and recovery of in-place hydrocarbons.                                                                                                                                                                                                                                                                                                    
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Oil and Natural Gas Lease   | A legal instrument executed by a mineral owner granting
      the right to another to explore, drill, and produce subsurface oil and
      natural gas. An oil and natural gas lease embodies the legal rights,
      privileges and duties pertaining to the lessor and lessee.                                                                                                                                                                                                                                        
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Lifting Costs               | The expenses of producing oil from a well. Lifting costs
      are the operating costs of the wells including the gathering and
      separating equipment. Lifting costs do not include the costs of drilling
      and completing the wells or transporting the oil.                                                                                                                                                                                                                                                  
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mcf                         | Thousand cubic feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mmcf                        | Million cubic feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Net acres                   | Determined by multiplying gross acres by the working
      interest that the Company owns in such acres.                                                                                                                                                                                                                                                                                                                                                                                                                
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Net Producing Wells         | The number of producing wells multiplied by the working
      interest in such wells.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Net Revenue Interest        | A share of production revenues after all royalties,
      overriding royalties and other nonoperating interests have been taken out
      of production for a well(s).                                                                                                                                                                                                                                                                                                                                                  
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Operator                    | A person, acting for itself, or as an agent for others,
      designated to conduct the operations on its or the joint interest owners
      behalf.                                                                                                                                                                                                                                                                                                                                                                   
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Overriding Royalty          | Ownership in a percentage of production or production
      revenues, free of the cost of production, created by the lessee, company
      and/or working interest owner and paid by the lessee, company and/or
      working interest owner out of revenue from the well.                                                                                                                                                                                                                                              
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Pooled Unit                 | A term frequently used interchangeably with Unitization
      but more properly used to denominate the bringing together of small tracts
      sufficient for the granting of a well permit under applicable spacing
      rules.                                                                                                                                                                                                                                                                                     
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Proved Developed Reserves   | Proved reserves that can be expected to be recovered from
      existing wells with existing equipment and operating methods. This
      definition of proved developed reserves has been abbreviated from the
      applicable definitions contained in Rule 4-10(a)(2-4) of Regulation S-X.                                                                                                                                                                                                                           
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Proved Developed Non-       | Proved developed reserves expected to be recovered from
      zones behind casings in existing wells.                                                                                                                                                                                                                                                                                                                                                                                                                   
|Producing                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Proved Undeveloped Reserves | Proved undeveloped reserves are the portion of proved
      reserves which can be expected to be recovered from new wells on undrilled
      proved acreage, or from existing wells where a relatively major
      expenditure is required for completion. This definition of proved
      undeveloped reserves has been abbreviated from the applicable definitions
      contained in Rule 4-10(a)(2-4) of Regulation S-X.                                                                                            
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|PV10                        | PV10 means the estimated future gross revenue to be
      generated from the production of proved reserves, net of estimated
      production and future development and abandonment costs, using prices and
      costs in effect at the determination date, before income taxes, and
      without giving effect to non- property related expenses, discounted to a
      present value using an annual discount rate of 10% in accordance with the
      guidelines of the SEC. PV10 is a non-GAAP financial measure.
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Re-completion               | Completion of an existing well for production from one
      formation or reservoir to another formation or reservoir that exists behind casing of the
      same well.                                                                                                                                                                                                                                                                                                                                                 

3

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|Reservoir                | The underground rock formation where oil and
      natural gas has accumulated. It consists of a porous rock to hold the oil
      or natural gas, and a cap rock that prevents its escape.                                                                                                                                                                                           
|------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Reservoir Pressure       | The pressure at the face of the producing
      formation when the well is shut-in. It equals the shut-in pressure at the
      wellhead plus the weight of the column of oil and natural gas in the well.                                                                                                                                                                            
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Roll-Up Strategy         | A roll-up strategy is a common business term
      used to describe a business plan whereby a company accumulates multiple
      small operators in a particular business sector with a goal to generate
      synergies, stimulate growth and optimize the value of the individual
      pieces.                                                                                   
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Secondary Recovery       | The stage of hydrocarbon production during
      which an external fluid such as water or natural gas is injected into the
      reservoir through injection wells located in rock that has fluid
      communication with production wells. The purpose of secondary recovery is
      to maintain reservoir pressure and to displace hydrocarbons toward the
      wellbore.        
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|                         | The most common secondary recovery techniques
      are natural gas injection and waterflooding. Normally, natural gas is
      injected into the natural gas cap and water is injected into the
      production zone to sweep oil from the reservoir. A pressure-maintenance
      program can begin during the primary recovery stage, but it is a form of
      enhanced recovery.
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Shut-in well             | A well which is capable of producing but is not
      presently producing. Reasons for a well being shut- in may be lack of
      equipment, market or other.                                                                                                                                                                                                                         
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Stock Tank Barrel or STB | A stock tank barrel of oil is the equivalent of
      42 U.S. Gallons at 60 degrees Fahrenheit.                                                                                                                                                                                                                                                                                       
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Undeveloped acreage      | Lease acreage on which wells have not been
      drilled or completed to a point that would permit the production of
      commercial quantities of oil and natural gas regardless of whether such
      acreage contains proved reserves.                                                                                                                                            
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Unitize, Unitization     | When owners of oil and/or natural gas reservoir
      pool their individual interests in return for an interest in the overall
      unit.                                                                                                                                                                                                                                            
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Waterflood               | The injection of water into an oil reservoir to
      push additional oil out of the reservoir rock and into the wellbores of
      producing wells. Typically a secondary recovery process.                                                                                                                                                                                        
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Water Injection Wells    | A well in which fluids are injected rather than
      produced, the primary objective typically being to maintain or increase
      reservoir pressure, often pursuant to a waterflood.                                                                                                                                                                                               
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Water Supply Wells       | A well in which fluids are being produced for
      use in a Water Injection Well.                                                                                                                                                                                                                                                                                                    
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Wellbore                 | A borehole; the hole drilled by the bit. A
      wellbore may have casing in it or it may be open (uncased); or part of it
      may be cased, and part of it may be open. Also called a borehole or hole.                                                                                                                                                                            
|                         |                                                                                                                                                                                                                                                                                                                                                                                       
|Working Interest         | An interest in an oil and natural gas lease
      entitling the owner to receive a specified percentage of the proceeds of
      the sale of oil and natural gas production or a percentage of the
      production, but requiring the owner of the working interest to bear the
      cost to explore for, develop and produce such oil and natural gas.                             

PART I

ITEM 1. BUSINESS.

Overview

Phoenix Energy, formerly known as
Exotacar, Inc., is an energy acquisition, exploration and development company.
In February of 2008, Exotacar, Inc. changed the focus of its business plan from
the development of online exotic car sales and entered into the oil and natural
gas industry. In conjunction with the change, the Company was renamed Phoenix
Energy Resource Corporation.

Our principal strategy has been
to focus on the acquisition of oil and natural gas mineral leases that ideally
have existing production and cash flow.

4

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History and Corporate Structure

Phoenix Energy Resource
Corporation was incorporated in the State of Nevada on June 3, 2005 as Exotacar,
Inc. and focused on the development of online exotic automobile sales. This
business plan was ultimately abandoned following its unsuccessful
implementation. On February 2, 2008 Helvetic Capital Ventures AG, Switzerland
acquired 64% of the total outstanding shares of the Company effectuating a
change in control. Following the acquisition, we transitioned the business plan
focusing on energy resources. Subsequent to the change in control, we changed
our name to Phoenix Energy Resource Corporation. All of our current operations
are conducted through Phoenix Energy Resource Corporation.

Sale of Natural Gas and Oil

We do not intend to refine our
natural gas or oil production. We expect to sell all or most of our production
to a small number of purchasers in a manner consistent with industry practices
at prevailing rates by means of long-term and short-term sales contracts, some
of which may have fixed price components. As of June 30, 2010, we did not have
any production; however, we believe that we will be able to find suitable
purchasers when, and if, production is commenced.

Markets and Marketing

The natural gas and oil industry
has experienced rising and volatile prices in recent years. As a commodity,
global natural gas and oil prices respond to macro-economic factors affecting
supply and demand. In particular, world oil prices have risen in response to
political unrest and supply uncertainty in Iraq, Venezuela, Nigeria and Iran,
and increasing demand for energy in rapidly growing economies, notably India and
China. Due to rising world prices and the consequential impact on supply, North
American prospects have become more attractive. Escalating conflicts in the
Middle East and the ability of OPEC to control supply and pricing are some of
the factors negatively impacting the availability of global supply. In contrast,
increased costs of steel and other products used to construct drilling rigs and
pipeline infrastructure, as well as higher drilling and well-servicing rig
rates, negatively impact domestic supply.

Our market is affected by many
factors beyond our control, such as the availability of other domestic
production, commodity prices, the proximity and capacity of natural gas and oil
pipelines, and general fluctuations of global and domestic supply and demand. We
do not anticipate difficulty in finding additional sales opportunities, as and
when needed.

Natural gas and oil sales prices
are negotiated based on factors such as the spot price for natural gas or posted
price for oil, price regulations, regional price variations, hydrocarbon
quality, distances from wells to pipelines, well pressure, and estimated
reserves. Many of these factors are outside our control. Natural gas and oil
prices have historically experienced high volatility, related in part to
ever-changing perceptions within the industry of future supply and demand.

Competition

The natural gas and oil industry
is intensely competitive and, as an early-stage company, we must compete against
larger companies that may have greater financial and technical resources than we
do and substantially more experience in our industry. These competitive
advantages may better enable our competitors to sustain the impact of higher
exploration and production costs, natural gas and oil price volatility,
productivity variances between properties, overall industry cycles and other
factors related to our industry. Their advantage may also negatively impact our
ability to acquire prospective properties, develop reserves, attract and retain
quality personnel and raise capital.

Research and Development Activities

We have not spent any material amount of time in the last
fiscal year on research and development activities.

Governmental Regulations

Regulation of Oil and Natural
Gas Production.Our oil and natural gas exploration, production and related
operations, when developed, are subject to extensive rules and regulations
promulgated by federal, state, tribal and local authorities and agencies. For
example, some states in which we may operate, including Kentucky, require
permits for drilling operations, drilling bonds and reports concerning
operations and impose other requirements relating to the exploration and
production of oil and natural gas. Such states may also have statutes or
regulations addressing conservation matters, including provisions for the
unitization or pooling of oil and natural gas properties, the establishment of
maximum rates of production from wells, and the regulation of spacing, plugging
and abandonment of such wells. Failure to comply with any such rules and
regulations can result in substantial penalties. Moreover, such states may place
burdens from previous operations on current lease owners, and the burdens could
be significant. The regulatory burden on the oil and natural gas industry will
most likely increase our cost of doing business and may affect our
profitability. Although we believe we are currently in substantial compliance
with all applicable laws and regulations, because such rules and regulations are
frequently amended or reinterpreted, we are unable to predict the future cost or
impact of complying with such laws. Significant expenditures may be required to
comply with governmental laws and regulations and may have a material adverse
effect on our financial condition and results of operations.

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Federal Regulation of Natural
Gas.The Federal Energy Regulatory Commission (FERC) regulates interstate
natural gas transportation rates and service conditions, which may affect the
marketing of natural gas produced by us, as well as the revenues that may be
received by us for sales of such production. Since the mid-1980s, FERC has
issued a series of orders, culminating in Order Nos. 636, 636-A and 636-B
(Order 636), that have significantly altered the marketing and transportation
of natural gas. Order 636 mandated a fundamental restructuring of interstate
pipeline sales and transportation service, including the unbundling by
interstate pipelines of the sale, transportation, storage and other components
of the city-gate sales services such pipelines previously performed. One of
FERCs purposes in issuing the order was to increase competition within all
phases of the natural gas industry. The United States Court of Appeals for the
District of Columbia Circuit largely upheld Order 636 and the Supreme Court has
declined to hear the appeal from that decision. Generally, Order 636 has
eliminated or substantially reduced the interstate pipelines traditional role
as wholesalers of natural gas in favor of providing only storage and
transportation service, and has substantially increased competition and
volatility in natural gas markets.

The price we may receive from the
sale of oil and natural gas liquids will be affected by the cost of transporting
products to markets. Effective January 1, 1995, FERC implemented regulations
establishing an indexing system for transportation rates for oil pipelines,
which, generally, would index such rates to inflation, subject to certain
conditions and limitations. We are not able to predict with certainty the
effect, if any, of these regulations on our intended operations. However, the
regulations may increase transportation costs or reduce well head prices for oil
and natural gas liquids.

Environmental Matters

Our future operations and
properties are subject to extensive and changing federal, state and local laws
and regulations relating to environmental protection, including the generation,
storage, handling, emission, transportation and discharge of materials into the
environment, and relating to safety and health. The recent trend in
environmental legislation and regulation generally is toward stricter standards,
and this trend will likely continue.

These laws and regulations may:

- require the acquisition of a permit or other authorization before
  construction or drilling commences and for certain other activities;
- limit or prohibit construction, drilling and other activities on certain
  lands lying within wilderness and other protected areas; and
- impose substantial liabilities for pollution resulting from its
  operations, or due to previous operations conducted on any leased lands.

The permits required for our
operations may be subject to revocation, modification and renewal by issuing
authorities. Governmental authorities have the power to enforce their
regulations, and violations are subject to fines or injunctions, or both. In the
opinion of management, we are in substantial compliance with current applicable
environmental laws and regulations, and have no material commitments for capital
expenditures to comply with existing environmental requirements. Nevertheless,
changes in existing environmental laws and regulations or in interpretations
thereof could have a significant impact on us, as well as the oil and natural
gas industry in general.

The Comprehensive Environmental,
Response, Compensation, and Liability Act, as amended (CERCLA), and comparable
state statutes impose strict, joint and several liability on owners and
operators of sites and on persons who disposed of or arranged for the disposal
of hazardous substances found at such sites. It is not uncommon for the
neighboring land owners and other third parties to file claims for personal
injury and property damage allegedly caused by the hazardous substances released
into the environment. The Federal Resource Conservation and Recovery Act, as
amended (RCRA), and comparable state statutes govern the disposal of solid
waste and hazardous waste and authorize the imposition of substantial fines
and penalties for noncompliance. Although CERCLA currently excludes petroleum
from its definition of hazardous substance, state laws affecting our
operations may impose clean-up liability relating to petroleum and petroleum
related products. In addition, although RCRA classifies certain oil field wastes
as non-hazardous, such exploration and production wastes could be reclassified
as hazardous wastes thereby making such wastes subject to more stringent
handling and disposal requirements.

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The Federal Water Pollution
Control Act of 1972, as amended (Clean Water Act), and analogous state laws
impose restrictions and controls on the discharge of pollutants into federal and
state waters. These laws also regulate the discharge of storm water in process
areas. Pursuant to these laws and regulations, we are required to obtain and
maintain approvals or permits for the discharge of wastewater and storm water
and develop and implement spill prevention, control and countermeasure plans,
also referred to as SPCC plans, in connection with on-site storage of greater
than threshold quantities of oil. The EPA issued revised SPCC rules in July 2002
whereby SPCC plans are subject to more rigorous review and certification
procedures. We believe that our future operations will be in substantial
compliance with applicable Clean Water Act and analogous state requirements,
including those relating to wastewater and storm water discharges and SPCC
plans.

The Endangered Species Act, as
amended (ESA), seeks to ensure that activities do not jeopardize endangered or
threatened animal, fish and plant species, nor destroy or modify the critical
habitat of such species. Under ESA, exploration and production operations, as
well as actions by federal agencies, may not significantly impair or jeopardize
the species or its habitat. ESA provides for criminal penalties for willful
violations of the Act. Other statutes that provide protection to animal and
plant species and that may apply to our operations include, but are not
necessarily limited to, the Fish and Wildlife Coordination Act, the Fishery
Conservation and Management Act, the Migratory Bird Treaty Act and the National
Historic Preservation Act. Although we believe that our future operations will
be in substantial compliance with such statutes, any change in these statutes or
any reclassification of a species as endangered could subject us to significant
expenses to modify our operations or could force us to discontinue certain
operations altogether.

Personnel

As of June 30, 2010, we had one
full-time employee. As drilling production activities are started, we intend to
hire additional technical, operational and administrative personnel as
appropriate. We are using and will continue to use the services of independent
consultants and contractors to perform various professional services,
particularly in the area of land services, reservoir engineering, geology
drilling, water hauling, pipeline construction, well design, well-site
monitoring and surveillance, permitting and environmental assessment. We believe
that this use of third-party service providers may enhance our ability to
contain capital costs, general and administrative expenses.

Facilities

We currently maintain an office
at 1001 Bayhill Drive, 2nd floor-Suite 200, San Bruno, California 94066 at a
month to month fee of $190.

ITEM 1A. RISK FACTORS.

We operate in a highly competitive environment in which
there are numerous factors which can influence our business, financial position
or results of operations and which can also cause the market value of our common
stock to decline. Many of these factors are beyond our control and therefore,
are difficult to predict. The following section sets forth what we believe to be
the principal risks that could affect us, our business or our industry, and
which could result in a material adverse impact on our financial results or
cause the market price of our common stock to fluctuate or decline.

RISKS ASSOCIATED WITH OUR BUSINESS

We have sustained losses, which raises doubt as to our
ability to successfully develop profitable business operations.

Our prospects must be considered
in light of the risks, expenses and difficulties frequently encountered in
establishing and maintaining a business in the oil and natural gas industries.
There is nothing conclusive at this time on which to base an assumption that our
business operations will prove to be successful or that we will be able to
operate profitably. Our future operating results will depend on many factors,
including:

- the future prices of natural gas and oil;
- our ability to raise adequate working capital;
- success of our development and exploration efforts;
- demand for natural gas and oil;
- the level of our competition;
- our ability to attract and maintain key management, employees and
  operators;
- transportation and processing fees on our facilities;
- fuel conservation measures;
- alternate fuel requirements;
- government regulation and taxation;
- technical advances in fuel economy and energy generation devices; and
- our ability to efficiently explore, develop and produce sufficient
  quantities of marketable natural gas or oil in a highly competitive and
  speculative environment while maintaining quality and controlling costs.

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To achieve profitable operations,
we must, alone or with others, successfully execute on the factors stated above,
along with continually developing ways to enhance our production efforts.
Despite our best efforts, we may not be successful in our development efforts or
obtain required regulatory approvals. There is a possibility that some of our
future wells may never produce natural gas or oil in sustainable or economic
quantities.

Natural gas and oil prices are volatile. This volatility
may occur in the future, causing negative change in cash flows which may result
in our inability to cover our operating or capital expenditures.

Our future revenues,
profitability, future growth and the carrying value of our properties is
anticipated to depend substantially on the prices we may realize for our natural
gas and oil production. Our realized prices may also affect the amount of cash
flow available for operating or capital expenditures and our ability to borrow
and raise additional capital.

Natural gas and oil prices are
subject to wide fluctuations in response to relatively minor changes in or
perceptions regarding supply and demand. Historically, the markets for natural
gas and oil have been volatile, and they are likely to continue to be volatile
in the future. Among the factors that can cause this volatility are:

- worldwide or regional demand for energy, which is affected by economic
  conditions;
- the domestic and foreign supply of natural gas and oil;
- weather conditions;
- natural disasters;
- acts of terrorism;
- domestic and foreign governmental regulations and taxation;
- political and economic conditions in oil and natural gas producing
  countries, including those in the Middle East and South America;
- impact of the U.S. dollar exchange rates on oil and natural gas prices;
- the availability of refining capacity;
- actions of the Organization of Petroleum Exporting Countries, or OPEC, and
  other state controlled oil companies relating to oil price and production
  controls; and
- the price and availability of other fuels.

It is impossible to predict natural gas and oil price movements
with certainty. Lower natural gas and oil prices may not only decrease our
future revenues on a per unit basis but also may reduce the amount of natural
gas and oil that we can produce economically. A substantial or extended decline
in natural gas and oil prices may materially and adversely affect our future
business enough to force us to cease our business operations. In addition, our
reserves, financial condition, results of operations, liquidity and ability to
finance and execute planned capital expenditures will also suffer in such a
price decline. Further, natural gas and oil prices do not necessarily move
together.

Because we face uncertainties in estimating proven
recoverable reserves, you should not place undue reliance on such reserve
information.

There are numerous uncertainties
inherent in estimating quantities of proved reserves and cash flows from such
reserves. Reserve engineering is a subjective process of estimating underground
accumulations of natural gas and oil that can be economically extracted, which
cannot 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
the available data, assumptions regarding future natural gas and oil prices,
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 natural gas and oil 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 assumptions and estimates in our
reserve reports. Any significant variance from these assumptions to actual
figures could greatly affect our estimates of reserves, the economically
recoverable quantities of natural gas and oil attributable to any particular
group of properties, the classification of reserves based on risk of recovery,
and estimates of the future net cash flows. In addition, reserve engineers may
make different estimates of reserves and cash flows based on the same available
data.

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The present value of future net cash flows of proved reserves is not
necessarily the same as the current market value of estimated reserves.
Estimated discounted future net cash flows from proved reserves is based on
prices and costs. However, actual future net cash flows from our natural gas and
oil properties also will be affected by factors such as:

- Geological conditions;
- Assumptions governing future oil and natural gas prices;
- Amount and timing of actual production;
- Availability of funds;
- Future operating and development costs;
- Actual prices we receive for natural gas and oil;
- Supply and demand for our natural gas and oil;
- Changes in government regulations and taxation; and
- Capital costs of drilling new wells.

The timing of both production and
incurrence of expenses in connection with the development and production of our
properties will affect the timing of actual future net cash flows from proved
reserves, and thus their actual present value. In addition, the 10% discount
factor we use when calculating discounted future net cash flows may not be the
most appropriate discount factor based on interest rates in effect from time to
time and risks associated with our business or the natural gas and oil industry
in general.

The differential between the New York Mercantile
Exchange, or NYMEX, or other benchmark price of oil and natural gas and the
wellhead price we receive could have a material adverse effect on our results of
operations, financial condition and cash flows.

The prices that we receive for
our oil and natural gas production sometimes trade at a discount to the relevant
benchmark prices, such as NYMEX, that are used for calculating hedge positions.
The difference between the benchmark price and the price we receive is called a
differential. We cannot accurately predict oil and natural gas differentials. In
recent years for example, production increases from competing Canadian and Rocky
Mountain producers, in conjunction with limited refining and pipeline capacity
from the Rocky Mountain area, have gradually widened this differential.
Increases in the differential between the benchmark price for oil and natural
gas and the wellhead price we receive could have a material adverse effect on
our results of operations, financial condition and cash flows by decreasing the
proceeds we receive for our oil and natural gas production in comparison to what
we would receive if not for the differential.

The natural gas and oil business involves numerous
uncertainties and operating risks that can prevent us from realizing profits and
can cause substantial losses.

Our development, exploitation and
exploration activities may be unsuccessful for many reasons, including weather,
cost overruns, equipment shortages and mechanical difficulties. Moreover, the
successful drilling of a natural gas and oil well does not ensure a profit on
investment. A variety of factors, both geological and market-related, can cause
a well to become uneconomical or only marginally economical. In addition to
their cost, unsuccessful wells can hurt our efforts to replace reserves.

The natural gas and oil business involves a variety of
operating risks, including:

- unexpected operational events and/or conditions;
- unusual or unexpected geological formations;
- reductions in natural gas and oil prices;
- limitations in the market for oil and natural gas;
- adverse weather conditions;
- facility or equipment malfunctions;
- title problems;
- natural gas and oil quality issues;
- pipe, casing, cement or pipeline failures;
- natural disasters;
- fires, explosions, blowouts, surface cratering, pollution and other risks
  or accidents;
- environmental hazards, such as natural gas leaks, oil spills, pipeline
  ruptures and discharges of toxic gases;
- compliance with environmental and other governmental requirements; and
- uncontrollable flows of oil, natural gas or well fluids.

If we experience any of these
problems, it could affect well bores, gathering systems and processing
facilities, which could adversely affect our ability to conduct operations. We
could also incur substantial losses as a result of:

- injury or loss of life;
- severe damage to and destruction of property, natural resources and
  equipment;
- pollution and other environmental damage;
- clean-up responsibilities;
- regulatory investigation and penalties;
- suspension of our operations; and
- repairs to resume operations.

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Because we use third-party
drilling contractors to drill our wells, we may not realize the full benefit of
worker compensation laws in dealing with their employees. Our insurance does not
protect us against all operational risks. We do not carry business interruption
insurance at levels that would provide enough funds for us to continue operating
without access to other funds. For some risks, we may not obtain insurance if we
believe the cost of available insurance is excessive relative to the risks
presented. In addition, pollution and environmental risks generally are not
fully insurable. If a significant accident or other event occurs and is not
fully covered by insurance, it could impact our operations enough to force us to
cease our operations.

Drilling wells is speculative, often involving
significant costs that may be more than our estimates, and may not result in any
addition to our production or reserves. Any material inaccuracies in drilling
costs, estimates or underlying assumptions will materially affect our
business.

Developing and exploring for
natural gas and oil involves a high degree of operational and financial risk,
which precludes definitive statements as to the time required and costs involved
in reaching certain objectives. The budgeted costs of drilling, completing and
operating wells are often exceeded and can increase significantly when drilling
costs rise due to a tightening in the supply of various types of oilfield
equipment and related services. Drilling may be unsuccessful for many reasons,
including geological conditions, weather, cost overruns, equipment shortages and
mechanical difficulties. Moreover, the successful drilling of a natural gas or
oil well does not ensure a profit on investment. Exploratory wells bear a much
greater risk of loss than development wells. A variety of factors, both
geological and market-related, can cause a well to become uneconomical or only
marginally economic. Our initial drilling and development sites, and any
potential additional sites that may be developed, require significant additional
exploration and development, regulatory approval and commitments of resources
prior to commercial development. If our actual drilling and development costs
are significantly more than our estimated costs, we may not be able to continue
our business operations as proposed and would be forced to modify our plan of
operation.

Development of reserves, when
established, may not occur as scheduled and the actual results may not be as
anticipated. Drilling activity and access to capital may result in downward
adjustments in reserves or higher than anticipated costs. Our estimates will be
based on various assumptions, including assumptions over which we have control
and assumptions required by the SEC relating to natural gas and oil prices,
drilling and operating expenses, capital expenditures, taxes and availability of
funds. We have control over our operations that affect, among other things,
acquisitions and dispositions of properties, availability of funds, use of
applicable technologies, hydrocarbon recovery efficiency, drainage volume and
production decline rates that are part of these estimates and assumptions and
any variance in our operations that affects these items within our control may
have a material effect on reserves. The process of estimating our natural gas
and oil reserves is anticipated to be extremely complex, and will require
significant decisions and assumptions in the evaluation of available geological,
geophysical, engineering and economic data for each reservoir. Our estimates may
not be reliable enough to allow us to be successful in our intended business
operations. Our actual production, revenues, taxes, development expenditures and
operating expenses will likely vary from those anticipated. These variances may
be material.

A significant portion of our potential future reserves
and our business plan depend upon secondary recovery techniques to establish
production. There are significant risks associated with such techniques.

We anticipate that a significant
portion of our future reserves and our business plan will be associated with
secondary recovery projects that are either in the initial stage of
implementation or are scheduled for implementation. We anticipate that secondary
recovery will affect our reserves and our business plan, and the exact project
initiation dates and, by the very nature of waterflood operations, the exact
completion dates of such projects are uncertain. In addition, the reserves and
our business plan associated with these secondary recovery projects, as with any
reserves, are estimates only, as the success of any development project,
including these waterflood projects, cannot be ascertained in advance. If we are
not successful in developing a significant portion of our reserves associated
with secondary recovery methods, then the project may be uneconomic or generate
less cash flow and reserves than we had estimated prior to investing the
capital. Risks associated with secondary recovery techniques include, but are
not limited to, the following:

- higher than projected operating costs;
- lower-than-expected production;
- longer response times;
- higher costs associated with obtaining capital;
- unusual or unexpected geological formations;
- fluctuations in natural gas and oil prices;
- regulatory changes;
- shortages of equipment; and
- lack of technical expertise.

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If any of these risks occur, it
could adversely affect our financial condition or results of operations.

Any acquisitions we complete are subject to considerable
risk.

Even when we make acquisitions
that we believe are good for our business, any acquisition involves potential
risks, including, among other things:

- the validity of our assumptions about reserves, future production,
  revenues and costs, including synergies;
- an inability to integrate successfully the businesses we acquire;
- a decrease in our liquidity by using our available cash or borrowing
  capacity to finance acquisitions;
- a significant increase in our interest expense or financial leverage if we
  incur additional debt to finance acquisitions;
- the assumption of unknown liabilities, losses or costs for which we are
  not indemnified or for which our indemnity is inadequate;
- the diversion of managements attention from other business concerns;
- an inability to hire, train or retain qualified personnel to manage the
  acquired properties or assets;
- the incurrence of other significant charges, such as impairment of
  goodwill or other intangible assets, asset devaluation or restructuring
  charges;
- unforeseen difficulties encountered in operating in new geographic or
  geological areas; and
- customer or key employee losses at the acquired businesses.

Our decision to acquire a property will depend in part on
the evaluation of data obtained from production reports and engineering studies,
geophysical and geological analyses and seismic and other information, the
results of which are often incomplete or inconclusive.

Our reviews of acquired
properties can be inherently incomplete because it is not always feasible to
perform an in-depth review of the individual properties involved in each
acquisition. Even a detailed review of records and properties may not
necessarily reveal existing or potential problems, nor will it permit a buyer to
become sufficiently familiar with the properties to assess fully their
deficiencies and potential. Inspections may not always be performed on every
well, and environmental problems, such as ground water contamination, plugging
or orphaned well liability are not necessarily observable even when an
inspection is undertaken.

We must obtain governmental permits and approvals for
drilling operations, which can result in delays in our operations, be a costly
and time consuming process, and result in restrictions on our
operations.

Regulatory authorities exercise
considerable discretion in the timing and scope of permit issuances in the
region in which we operate. Compliance with the requirements imposed by these
authorities can be costly and time consuming and may result in delays in the
commencement or continuation of our exploration or production operations and/or
fines. Regulatory or legal actions in the future may materially interfere with
our operations or otherwise have a material adverse effect on us. In addition,
we are often required to prepare and present to federal, state or local
authorities data pertaining to the effect or impact that a proposed project may
have on the environment, threatened and endangered species, and cultural and
archaeological artifacts. Accordingly, the permits we need may not be issued, or
if issued, may not be issued in a timely fashion, or may involve requirements
that restrict our ability to conduct our operations or to do so profitably.

Our business depends in part on gathering and
transportation facilities owned by others. Any limitation in the availability of
those facilities could interfere with our ability to market our oil and natural
gas production and could harm our business.

The marketability of our future
oil and natural gas production will depend in a very large part on the
availability, proximity and capacity of pipelines, oil and natural gas gathering
systems and processing facilities. The amount of oil and natural gas that can be
produced and sold is subject to curtailment in certain circumstances, such as
pipeline interruptions due to scheduled and unscheduled maintenance, excessive
pressure, physical damage or lack of available capacity on such systems. The
curtailments arising from these and similar circumstances may last from a few
days to several months. In many cases, we will be provided only with limited, if
any, notice as to when these circumstances will arise and their duration. Any
significant curtailment in gathering system or pipeline capacity could
significantly reduce our ability to market our oil and natural gas production
and harm our business.

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The high cost of drilling rigs, equipment, supplies,
personnel and other services could adversely affect our ability to execute on a
timely basis our development, exploitation and exploration plans within our
budget.

Shortages or an increase in cost of drilling rigs,
equipment, supplies or personnel could delay or interrupt our operations, which
could impact our financial condition and results of operations. Drilling
activity in the geographic areas in which we conduct drilling activities may
increase, which would lead to increases in associated costs, including those
related to drilling rigs, equipment, supplies and personnel and the services and
products of other vendors to the industry. Increased drilling activity in these
areas may also decrease the availability of rigs. We do not have any contracts
for drilling rigs and drilling rigs may not be readily available when we need
them. Drilling and other costs may increase further and necessary equipment and
services may not be available to us at economical prices.

Our exposure to possible leasehold defects and potential
title failure could materially adversely impact our ability to conduct drilling
operations.

We obtain the right and access to
properties for drilling by obtaining oil and natural gas leases either directly
from the hydrocarbon owner, or through a third party that owns the lease. The
leases may be taken or assigned to us without title insurance. There is a risk
of title failure with respect to such leases, and such title failures could
materially adversely impact our business by causing us to be unable to access
properties to conduct drilling operations.

We are subject to complex laws and regulations, including
environmental regulations, which can adversely affect the cost, manner or
feasibility of doing business.

Development, production and sale
of natural gas and oil in the United States are subject to extensive laws and
regulations, including environmental laws and regulations. We may be required to
make large expenditures to comply with environmental and other governmental
regulations. Matters subject to regulation include, but are not limited to:

- location and density of wells;
- the handling of drilling fluids and obtaining discharge permits for
  drilling operations;
- accounting for and payment of royalties on production from state, federal
  and Indian lands;
- bonds for ownership, development and production of natural gas and oil
  properties;
- transportation of natural gas and oil by pipelines;
- operation of wells and reports concerning operations; and
- taxation.

Under these laws and regulations, we could be liable for
personal injuries, property damage, oil spills, discharge of hazardous
materials, remediation and clean-up costs and other environmental damages.
Failure to comply with these laws and regulations also may result in the
suspension or termination of our operations and subject us to administrative,
civil and criminal penalties. Moreover, these laws and regulations could change
in ways that substantially increase our costs. Accordingly, any of these
liabilities, penalties, suspensions, terminations or regulatory changes could
materially adversely affect our financial condition and results of operations
enough to possibly force us to cease our business operations.

Our operations may expose us to significant costs and
liabilities with respect to environmental, operational safety and other
matters.

We may incur significant costs
and liabilities as a result of environmental and safety requirements applicable
to our oil and natural gas exploration and production activities. We may also be
exposed to the risk of costs associated with Kentucky Corporation Commission
requirements to plug orphaned and abandoned wells on our oil and natural gas
leases from wells previously drilled by third parties. In addition, we may
indemnify sellers or lessors of oil and natural gas properties for environmental
liabilities they or their predecessors may have created. These costs and
liabilities could arise under a wide range of federal, state and local
environmental and safety laws and regulations, including regulations and
enforcement policies, which have tended to become increasingly strict over time.
Failure to comply with these laws and regulations may result in the assessment
of administrative, civil and criminal penalties, imposition of cleanup and site
restoration costs, liens and to a lesser extent, issuance of injunctions to
limit or cease operations. In addition, claims for damages to persons or
property may result from environmental and other impacts of our operations.

Strict, joint and several
liability may be imposed under certain environmental laws, which could cause us
to become liable for the conduct of others or for consequences of our own
actions that were in compliance with all applicable laws at the time those
actions were taken. New laws, regulations or enforcement policies could be more
stringent and impose unforeseen liabilities or significantly increase compliance
costs. If we are not able to recover the resulting costs through insurance or
increased revenues, our ability to operate effectively could be adversely
affected.

12

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Our facilities and activities could be subject to
regulation by the Federal Energy Regulatory Commission or the Department of
Transportation, which could take actions that could result in a material adverse
effect on our financial condition.

Although it is anticipated that
our future natural gas gathering systems will be exempt from FERC and DOT
regulation, any revisions to this understanding may affect our rights,
liabilities, and access to midstream or interstate natural gas transportation,
which could have a material adverse effect on our operations and financial
condition. In addition, the cost of compliance with any revisions to FERC or DOT
rules, regulations or requirements could be substantial and could adversely
affect our ability to operate in an economic manner. Additional FERC and DOT
rules and legislation pertaining to matters that could affect our operations are
considered and adopted from time to time. We cannot predict what effect, if any,
such regulatory changes and legislation might have on our operations, but we
could be required to incur additional capital expenditures and increased costs.

Although our future natural gas
sales activities are not currently projected to be subject to rate regulation by
FERC, if FERC finds that in connection with making sales in the future, we (i)
failed to comply with any applicable FERC administered statutes, rules,
regulations or orders, (ii) engaged in certain fraudulent acts, or (iii) engaged
in market manipulation, we could be subject to substantial penalties and fines
of up to $1.0 million per day per violation.

We operate in a highly competitive environment and our
competitors may have greater resources than us.

The natural gas and oil industry
is intensely competitive and we compete with other companies, many of which are
larger and have greater financial, technological, human and other resources.
Many of these companies not only explore for and produce crude oil and natural
gas but also carry on refining operations and market petroleum and other
products on a regional, national or worldwide basis. Such companies may be able
to pay more for productive natural gas and oil properties and exploratory
prospects or define, evaluate, bid for and purchase a greater number of
properties and prospects than our financial or human resources permit. In
addition, such companies may have a greater ability to continue exploration
activities during periods of low oil and natural gas market prices. Our ability
to acquire additional properties and to discover reserves in the future will be
dependent upon our ability to evaluate and select suitable properties and to
consummate transactions in a highly competitive environment. If we are unable to
compete, our operating results and financial position may be adversely affected.

We will need additional capital to finance our planned
growth, which we may not be able to raise or may only be available on terms
unfavorable to us or our stockholders, which may result in our inability to fund
our working capital requirements and harm our operational results.

We have and expect to continue to
have substantial capital expenditure and working capital needs. We will need to
rely on cash flow from operations and borrowings under our credit facility or
raise additional cash to fund our operations, pay outstanding long-term debt,
fund our anticipated reserve replacement needs and implement our growth
strategy, or respond to competitive pressures and/or perceived opportunities,
such as investment, acquisition, exploration, workover and development
activities.

If low natural gas and oil
prices, operating difficulties or other factors, many of which are beyond our
control, cause our revenues or cash flows from operations to decrease, we may be
limited in our ability to spend the capital necessary to complete our
development, production exploitation and exploration programs. If our resources
or cash flows do not satisfy our operational needs, we will require additional
financing, in addition to anticipated cash generated from our operations, to
fund our planned growth. Additional financing might not be available on terms
favorable to us, or at all. If adequate funds were not available or were not
available on acceptable terms, our ability to fund our operations, take
advantage of unanticipated opportunities, develop or enhance our business or
otherwise respond to competitive pressures would be significantly limited. In
such a capital restricted situation, we may curtail our acquisition, drilling,
development, and exploration activities or be forced to sell some of our assets
on an untimely or unfavorable basis.

If we raise additional funds
through the issuance of equity or convertible debt securities, the percentage
ownership of our stockholders would be reduced, and these newly issued
securities might have rights, preferences or privileges senior to those of
existing stockholders.

Our success depends on our key management and
professional personnel, including Rene Soullier, the loss of whom would harm our
ability to execute our business plan.

Our success depends heavily upon
the continued contributions of Rene Soullier, whose knowledge, leadership and
technical expertise would be difficult to replace, and on our ability to retain
and attract experienced engineers, geoscientists and other technical and
professional staff. We have entered into an employment agreement with Mr.
Soullier. However, we do not maintain key person insurance on Mr. Soullier. If
we were to lose his services, our ability to execute our business plan would be
harmed and we may be forced to significantly alter our operations until such
time as we could hire a suitable replacement for Mr. Soullier.

13

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RISKS ASSOCIATED WITH OUR COMMON STOCK

Our common stock is traded on an illiquid market, making
it difficult for investors to sell their shares.

On April 18, 2008, our common
stock commenced trading on the Over-the-Counter Bulletin Board under the symbol
EXOT (changed to PNXE on July 18, 2008) but trading has been
minimal. Therefore, the market for our common stock is limited. The trading
price of our common stock could be subject to wide fluctuations. Investors may
not be able to purchase additional shares or sell their shares within the time
frame or at a price they desire.

The price of our common stock may be volatile and you may
not be able to resell your shares at a favorable price.

Regardless of whether an active
trading market for our common stock develops, the market price of our common
stock may be volatile and you may not be able to resell your shares at or above
the price you paid for such shares. The following factors could affect our stock
price:

- our operating and financial performance and prospects;
- quarterly variations in the rate of growth of our financial indicators,
  such as net income per share, net income and revenues;
- changes in revenue or earnings estimates or publication of research
  reports by analysts about us or the exploration and production industry;
- potentially limited liquidity;
- actual or anticipated variations in our reserve estimates and quarterly
  operating results;
- changes in natural gas and oil prices;
- sales of our common stock by significant stockholders and future issuances
  of our common stock;
- increases in our cost of capital;
- changes in applicable laws or regulations, court rulings and enforcement
  and legal actions;
- commencement of or involvement in litigation;
- changes in market valuations of similar companies;
- additions or departures of key management personnel;
- general market conditions, including fluctuations in and the occurrence of
  events or trends affecting the price of natural gas and oil; and
- domestic and international economic, legal and regulatory factors
  unrelated to our performance.

Our articles of incorporation, bylaws and Nevada Law
contain provisions that could discourage an acquisition or change of control of
us.

Our articles of incorporation
authorize our board of directors to issue preferred stock and common stock
without stockholder approval. If our board of directors elects to issue
preferred stock, it could be more difficult for a third party to acquire control
of us. In addition, provisions of the articles of incorporation and bylaws could
also make it more difficult for a third party to acquire control of us. In
addition, Nevadas Combination with Interested Stockholders Statute and its
Control Share Acquisition Statute may have the effect in the future of
delaying or making it more difficult to effect a change in control of us.

These statutory anti-takeover
measures may have certain negative consequences, including an effect on the
ability of our stockholders or other individuals to (i) change the composition
of the incumbent board of directors; (ii) benefit from certain transactions
which are opposed by the incumbent board of directors; and (iii) make a tender
offer or attempt to gain control of us, even if such attempt were beneficial to
us and our stockholders. Since such measures may also discourage the
accumulations of large blocks of our common stock by purchasers whose objective
is to seek control of us or have such common stock repurchased by us or other
persons at a premium, these measures could also depress the market price of our
common stock. Accordingly, our stockholders may be deprived of certain
opportunities to realize the control premium associated with take-over
attempts.

We have no plans to pay dividends on our common stock.
You may not receive funds without selling your stock.

We do not anticipate paying any
cash dividends on our common stock in the foreseeable future. We currently
intend to retain future earnings, if any, to finance the expansion of our
business. Our future dividend policy is within the discretion of our board of
directors and will depend upon various factors, including our business,
financial condition, results of operations, capital requirements, investment
opportunities and restrictions imposed by our debentures and credit facility.

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We may issue shares of preferred stock with greater
rights than our common stock.

Although we have no current
plans, arrangements, understandings or agreements to issue any preferred stock,
our articles of incorporation authorizes our board of directors to issue one or
more series of preferred stock and set the terms of the preferred stock without
seeking any further approval from our stockholders. Any preferred stock that is
issued may rank ahead of our common stock, with respect to dividends,
liquidation rights and voting rights, among other things.

Because our common stock is deemed a low-priced Penny
stock, an investment in our common stock should be considered high risk and
subject to marketability restrictions.

Since our common stock is a penny
stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be
more difficult for investors to liquidate their investment even if and when a
market develops for the common stock. Until the trading price of the common
stock rises above $5.00 per share, if ever, trading in the common stock is
subject to the penny stock rules of the Securities Exchange Act specified in
rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting
transactions in any penny stock, to:

- Deliver to the customer, and obtain a written receipt for, a disclosure
  document;
- Disclose certain price information about the stock;
- Disclose the amount of compensation received by the broker-dealer or any
  associated person of the broker-dealer;
- Send monthly statements to customers with market and price information
  about the penny stock; and
- In some circumstances, approve the purchasers account under certain
  standards and deliver written statements to the customer with information
  specified in the rules.

Consequently, the penny stock
rules may restrict the ability or willingness of broker-dealers to sell the
common stock and may affect the ability of holders to sell their common stock in
the secondary market and the price at which such holders can sell any such
securities. These additional procedures could also limit our ability to raise
additional capital in the future.

If we fail to remain current on our reporting
requirements, we could be removed from the OTC Bulletin Board, which would limit
the ability of broker-dealers to sell our securities and the ability of
stockholders to sell their securities in the secondary market.

Companies trading on the OTC
Bulletin Board, such as us, must be reporting issuers under Section 12 of the
Securities Exchange Act of 1934, as amended, and must be current in their
reports under Section 13, in order to maintain price quotation privileges on the
OTC Bulletin Board. More specifically, FINRA has enacted Rule 6530, which
determines eligibility of issuers quoted on the OTC Bulletin Board by requiring
an issuer to be current in its filings with the Commission. Pursuant to Rule
6530(e), if we file our reports late with the Commission three times in a
two-year period or our securities are removed from the OTC Bulletin Board for
failure to timely file twice in a two-year period then we will be ineligible for
quotation on the OTC Bulletin Board. As a result, the market liquidity for our
securities could be severely adversely affected by limiting the ability of
broker-dealers to sell our securities and the ability of stockholders to sell
their securities in the secondary market.

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

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

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2. PROPERTY.

None.

ITEM 3. LEGAL PROCEEDINGS.

We may become involved in various
routine legal proceedings incidental to our business. However, to our knowledge
as of the date of this report, there are no material pending legal proceedings
to which we are a party or to which any of our property is subject.

ITEM 4. (REMOVED AND RESERVED)

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PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our Common Stock is quoted on the
OTCQB, the over-the-counter electronic bulletin board for reporting companies
maintained by the Pink OTC Markets, under the symbol PNXE. Prior to that it
was quoted under the symbol EXOT. The CUSIP number for our common stock is
71903B 203.

Our common stock has traded
infrequently on the OTC.BB, which limits our ability to locate accurate high and
low bid prices for each quarter within the last two fiscal years. Therefore, the
following table lists the quotations for the high and low bid prices as reported
by a Quarterly Trade and Quote Summary Report of the OTC Bulletin Board and
Yahoo! Finance for fiscal years 2007, 2008, and 2009. The quotations reflect
inter-dealer prices without retail mark-up, markdown, or commissions and may not
represent actual transactions.

|Fiscal 2008 and 2009                                                | Low   | High 
|------------------------------------------------------------------- | ----- | -----
|Quarter ended September 30, 2010 (through
      September 27, 2010) | $0.11 | $0.14
|Quarter ended June 30, 2010                                         | $0.03 | $0.28
|Quarter ended March 31, 2010                                        | $0.10 | $0.21
|Quarter ended December 31, 2009                                     | $0.04 | $0.25
|Quarter ended September 30, 2009                                    | $0.12 | $0.25
|Quarter ended June 30, 2009                                         | $0.20 | $1.01
|Quarter ended March 31, 2009                                        | $0.70 | $1.01
|Quarter ended December 31, 2008                                     | $0.35 | $1.01
|Quarter ended September 30, 2008                                    | $0.05 | $0.61
|Quarter ended June 30, 2008                                         | $0.40 | $0.40
|Quarter ended March 31, 2008                                        | $0.12 | $0.40

The last reported sale price of our common stock on the OTCQB
was $0.11 per share on September 27, 2010.

Holders of Common Stock

As of September 27, 2010, there were 48 holders of record of
our common stock.

Dividends

We have never paid or declared
any cash dividends on our common stock. We currently intend to retain any future
earnings to finance the growth and development of our business and we do not
expect to pay any cash dividends on our common stock in the foreseeable future.
In addition, we are contractually prohibited by the terms of our outstanding
debt from paying cash dividends on our common stock. Payment of future
dividends, if any, will be at the discretion of our board of directors and will
depend on our financial condition, results of operations, capital requirements,
restrictions contained in current or future financing instruments, including the
consent of debt holders, if applicable at such time, and other factors our board
of directors deems relevant.

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Securities Authorized for Issuance under Equity Compensation
Plans

None.

Recent Sales of Unregistered Securities

In November 2008, the Registrant
issued 6,667 common shares to the John. W. Robbins Revocable Trust of 2008, John
W. Robbins, Trustee for professional services in connection with helping the
Registrant find and obtain oil and gas leases. The Shares are valued at $.35 per
share (based on November 2008 stock price) yielding an aggregate expense of
$70,000. The Registrant relied on exemptions provided by Section 4(2) of the
Securities Act of 1933, as amended. The Registrant made this offering based on
the following facts: (1) the issuance was an isolated private transaction which
did not involve a public offering; (2) there was only one Offeree, (3) the
Offeree has agreed to the imposition of a restrictive legend on the face of the
stock certificate representing its shares, to the effect that it will not resell
the stock unless its shares are registered or an exemption from registration is
available; (4) the Offeree was a sophisticated investor very familiar with our
company and stock-based transactions; (5) there were no subsequent or
contemporaneous public offerings of the stock; (6) the stock was not broken down
into smaller denominations; and (7) the negotiations for the sale of the stock
took place directly between the Offeree and the Registrants management.

Issuer Purchases of Equity Securities

We did not repurchase any of our
equity securities during the fiscal years ended June 30, 2010 or 2009.

ITEM 6. SELECTED FINANCIAL DATA.

Not applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of
our financial condition and results of operations should be read in conjunction
with our financial statements and the related notes to our financial statements
included elsewhere in this report. In addition to historical financial
information, the following discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results
and timing of selected events may differ materially from those anticipated in
these forward-looking statements as a result of many factors, including those
discussed under ITEM 1A. Risk Factors are elsewhere in this report.

Overview of the Companys Business

Phoenix Energy, formerly known as
Exotacar, Inc., is an energy acquisition, exploration and development company.
In February of 2008, Exotacar, Inc. changed the focus of its business plan from
the development of online exotic car sales and entered into the oil and natural
gas industry. In conjunction with the change, the Company was renamed Phoenix
Energy Resource Corporation.

Our principal strategy has been
to focus on the acquisition of oil and natural gas mineral leases that ideally
have existing production and cash flow.

Recent Developments

On September 27, 2010, the
Company consummated a securities purchase agreement (the Purchase Agreement),
dated September 23, 2010, between the Company, Helvetic Capital Ventures AG
(Helvetic) and the accredited investor signatory thereto (the Investor),
pursuant to which, the Company sold an aggregate of 1,333,336 shares (the
Shares) of the Companys common stock par value, $.001 (the Common Stock) to
the Investor for an aggregate purchase price of $100,103. Simultaneously with
the closing of the Purchase Agreement, the Company repurchased 1,333,336 shares
of common stock held by Helvetic, for an aggregate purchase price of $100,103,
net any outstanding liabilities of the Company as of the closing date, as
contemplated by a repurchase agreement, dated September 23, 2010, by and between
the Company and Helvetic (the Repurchase Agreement).

As a result of the closing of the
Purchase Agreement and the Repurchase Agreement, the Investor under the Purchase
Agreement now holds 63.79% of the Companys outstanding capital stock resulting
in a change in control of the Company.

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Results of Operations for the Fiscal Years Ended June 30,
2010 and 2009.

We currently have no production
or revenues from properties. Our operations to date have been limited to
technical evaluation of properties and the design of development plans to
exploit the oil and gas resources on those properties as well as seeking
financing opportunities to acquire additional oil and gas properties.

Our expenses to date have
consisted principally of general and administrative costs associated with
evaluating other potential acquisitions and raising capital. Total operating
expenses for the fiscal year ended June 30, 2009 were $262,531 compared to
$89,395 for the fiscal year ended June 30, 2010. We had a net loss of $281,230
or ($0.13) per share for the year ended June 30, 2009 compared to a net loss of
$107,473 or ($0.05) per share for the year ended June 30, 2010.

Operation Plan

Our plan has been to acquire oil and natural gas assets,
primarily in the mid-continent region of the United States. However, over time
we may expand our area of operations as opportunities to do so become available.
Once these assets are acquired we plan to continue to focus our efforts on
increasing production of oil and natural gas, cash flows and enhancing our net
asset value.

We expect to achieve these results by:

- Investing additional capital in development drilling and in secondary and
  tertiary recovery of oil as well as natural gas;
- Using the latest technologies available to the oil and natural gas
  industry in our operations;
- Finding additional oil and natural gas reserves on the properties we
  acquire.

We have several other projects
that are in various stages of discussions and we are continually evaluating oil
and gas opportunities in Kentucky. Once a financial partner is selected we plan
to bring multiple acquisitions to our current financial partner for evaluation
and financing. It is our vision to grow the business in a disciplined and well
thought-through manner.

In addition to raising additional
capital we plan to take on Joint Venture (JV) or Working Interest (WI) partners
that will contribute to the capital costs of drilling and completion and then
share in revenues derived from production. This economic strategy may allow us
to utilize our own financial assets toward the growth of our leased acreage
holdings, pursue the acquisition of strategic oil and gas producing properties
or companies and generally expand our existing operations.

Because of our limited operating
history we have yet to generate any revenues from the sale of oil or natural
gas. Our activities have been limited to raising capital, negotiating WI
agreements, mineral lease acquisition and preliminary analysis of reserves and
production capabilities from our future mineral lease acquisitions.
Consequently, we have incurred the expenses of startup.

Our future financial results will
depend primarily on: (i) the ability to continue to source and screen potential
projects; (ii) the ability to discover commercial quantities of natural gas and
oil; (iii) the market price for oil and natural gas; and (iv) the ability to
fully implement our exploration and development program, which is dependent on
the availability of capital resources. There can be no assurance that we will be
successful in any of these respects, that the prices of oil and gas prevailing
at the time of production will be at a level allowing for profitable production,
or that we will be able to obtain additional funding to increase our currently
limited capital resources.

Liquidity and Capital Resources

Liquidity is a measure of a
companys ability to meet potential cash requirements. We have historically met
our capital requirements through debt financing and the issuance of equity
securities. In the future we anticipate we will be able to provide some of the
necessary liquidity we need by the revenues generated from our net interests in
our oil and natural gas production, and sales of reserves in our existing
properties, however, if we do not generate sufficient sales revenues we will
continue to finance our operations through equity and/or debt financings.

We will actively manage our
exposure to commodity price fluctuations by executing derivative transactions to
hedge the change in prices of our production, thereby mitigating our exposure to
price declines, but these transactions will also limit our earnings potential in
periods of rising commodity prices. There also is a risk that we will be
required to post collateral to secure our hedging activities and this could
limit our available funds for our business activities.

The following table summarizes total current assets, total
current liabilities and working capital at June 30, 2010 as compared to June 30,
2009.

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|                    |   | June 30, |   |   | June 30, |   |   | Increase / |  
|------------------- | - | -------- | - | - | -------- | - | - | ---------- | -
|                    |   | 2010     |   |   | 2009     |   |   | (Decrease) |  
|Current Assets      | $ | 1,086    |   | $ | 2,496    |   | $ | (1,410     | )
|Current Liabilities | $ | 251,079  |   | $ | 30,016   |   | $ | 221,063    |  
|Working Capital     | $ | (249,993 | ) | $ | (27,520  | ) | $ | (222,473   | )

Discussion of Material Balance Sheet Changes from Fiscal
2009 to Fiscal 2010

Our total assets amounted to
$2,496 at June 30, 2009 compared to $1,086 at June 30, 2010. Our current
liabilities increased from $30,016 at June 30, 2009 to $251,078 at June 30, 2010
primarily as a result of our loan agreements with Seymore Investments, Amphion
Holdings, and JPF Securities becoming due within one year.

Our working capital deficit
totaled ($27,520) and ($249,992) June 30, 2009 and June 30, 2010, respectively.
The change in working capital is primarily a result of our loan agreements with
Seymore Investments, Amphion Holdings, and JPF Securities becoming due within
one year. As a result these balances have been reclassified from long term
liabilities to current liabilities.

Satisfaction of our cash obligations for the next 12
months.

A critical component of our
operating plan is the ability to obtain additional capital through additional
equity and/or debt financing and working interest participants. We have not
generated any cash revenues to meet our monthly expenses, and we still have
negative working capital. In the event we cannot obtain additional capital to
pursue our strategic plan, there is no assurance we would be able to obtain such
financing on commercially reasonable terms, if at all.

We intend to implement and
successfully execute our business and marketing strategy, continue to develop
and upgrade technology and products, respond to competitive developments, and
attract, retain and motivate qualified personnel. There can be no assurance that
we will be successful in addressing such risks, and the failure to do so can
have a material adverse effect on our business prospects, financial condition
and results of operations.

Summary of product research and development that we will
perform for the term of our plan.

We do not anticipate performing
any significant product research and development under our plan of operation
until such time as we can raise adequate working capital to sustain our
operations.

Significant changes in the number of employees.

As of June 30. 2010, we had 1
full time employee. As drilling and production activities increase, we intend to
hire additional technical, operational and administrative personnel as
appropriate. We anticipate offering a number of independent contractors in the
field full time employment to help secure a more stable work base. We do not
anticipate a material increase in expenses from this initiative, as most of
these individuals are already included in our current operating and capital
expenses. We are using and will continue to use the services of independent
consultants and contractors to perform various professional services,
particularly in the area of land services, reservoir engineering, drilling,
water hauling, pipeline construction, well design, well-site monitoring and
surveillance, permitting and environmental assessment. We believe that this use
of third-party service providers may enhance our ability to contain general and
administrative expenses.

Off-Balance Sheet Arrangements

We do 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.

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Critical Accounting Policies and Estimates

Our critical accounting estimates
will include our oil and gas properties, asset retirement obligations and the
value of share-based payments.

Oil and Gas Properties:

The accounting for our business
is subject to special accounting rules that are unique to the gas and oil
industry. There are two allowable methods of accounting for oil and gas business
activities: the successful efforts method and the full-cost method. We will
follow the full-cost method of accounting under which all costs associated with
property acquisition, exploration and development activities are capitalized. We
also capitalize internal costs that can be directly identified with our
acquisition, exploration and development activities and do not include any costs
related to production, general corporate overhead or similar activities.

Under the full-cost method,
capitalized costs are amortized on a composite unit-of-production method based
on proved gas and oil reserves. Depreciation, depletion and amortization expense
is also based on the amount of estimated reserves. If we maintain the same level
of production year over year, the depreciation, depletion and amortization
expense may be significantly different if our estimate of remaining reserves
changes significantly. Proceeds from the sale of properties are accounted for as
reductions of capitalized costs unless such sales involve a significant change
in the relationship between costs and the value of proved reserves or the
underlying value of unproved properties, in which case a gain or loss is
recognized. The costs of unproved properties are excluded from amortization
until the properties are evaluated. We review all of our unevaluated properties
quarterly to determine whether or not and to what extent proved reserves have
been assigned to the properties, and otherwise if impairment has occurred.
Unevaluated properties are assessed individually when individual costs are
significant.

We will review the carrying value
of our gas and oil properties under the full-cost accounting rules of the SEC on
a quarterly basis. This quarterly review is referred to as a ceiling test. Under
the ceiling test, capitalized costs, less accumulated amortization and related
deferred income taxes, may not exceed an amount equal to the sum of the present
value of estimated future net revenues (adjusted for cash flow hedges) less
estimated future expenditures to be incurred in developing and producing the
proved reserves, less any related income tax effects. The present value of
estimated future net cash flows is computed by applying 12-month average price
of oil and natural gas to estimated future production of proved oil and gas
reserves as of period-end, less estimated future expenditures to be incurred in
developing and producing the proved reserves and assuming continuation of
existing economic conditions. Two primary factors impacting this test are
reserve levels and current prices, and their associated impact on the present
value of estimated future net revenues. Revisions to estimates of gas and oil
reserves and/or an increase or decrease in prices can have a material impact on
the present value of estimated future net revenues. Any excess of the net book
value, less deferred income taxes, is generally written off as an expense. Under
SEC regulations, the excess above the ceiling is not expensed (or is reduced)
if, subsequent to the end of the period, but prior to the release of the
financial statements, gas and oil prices increase sufficiently such that an
excess above the ceiling would have been eliminated (or reduced) if the
increased prices were used in the calculations.

The process of estimating gas and
oil reserves is very complex, requiring significant decisions in the evaluation
of available geological, geophysical, engineering and economic data. The data
for a given property may also change substantially over time as a result of
numerous factors, including additional development activity, evolving production
history and a continual reassessment of the viability of production under
changing economic conditions. As a result, material revisions to existing
reserve estimates occur from time to time. Although every reasonable effort is
made to ensure that reserve estimates reported represent the most accurate
assessments possible, the subjective decisions and variances in available data
for various properties increase the likelihood of significant changes in these
estimates.

Asset Retirement Obligations:

The asset retirement obligation
relates to the plug and abandonment costs when our future wells are no longer
useful. We determine the value of the liability by obtaining quotes for this
service and estimate the increase we will face in the future. We then discount
the future value based on an intrinsic interest rate that is appropriate for us.
If costs rise more than what we have expected there could be additional charges
in the future however we monitor the costs of the abandoned wells and we will
adjust this liability if necessary.

Recent Accounting Pronouncements

In June 2009, the FASB issued FASB ASC 105-10-65 (Prior
authoritative literature:FASB Statement 168, The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles). Under FASB ASC 105-10-65 (Prior authoritative literature:FASB Statement 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles), the FASB Accounting
Standards Codification  (the Codification) will become the exclusive source
of authoritative U.S. generally accepted accounting principles (U.S. GAAP)
recognized by the FASB to be applied by nongovernmental entities. Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. The Codification will supersede all then-existing non-SEC accounting and reporting standards, with the exception
of certain non-SEC accounting literature which will become nonauthoritative.
FASB ASC 105-10-65 (Prior authoritative literature:FASB Statement 168,
The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles)is effective for the Companys 2009 first
fiscal quarter. The adoption of FASB ASC 105-10-65 (Prior authoritative
literature:FASB Statement 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles)will not have a material impact on the Companys Financial Statements. All
references to U.S. GAAP provided in the notes to the Financial Statements have
been updated to conform to the Codification.

20

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In May 2009, the FASB issued FASB ASC 855-10-25 (Prior
authoritative literature:FASB Statement 165, Subsequent Events).
FASB ASC 855-10-25 (Prior authoritative literature:FASB Statement 165,
Subsequent Events)provides guidance on managements assessment of
subsequent events and incorporates this guidance into accounting literature.
FASB ASC 855-10-25 (Prior authoritative literature:FASB Statement
165,Subsequent Events)is effective prospectively for interim and annual
periods ending after June 15, 2009. The implementation of this standard did not
have a material impact on the Companys financial position and results of
operations. The Company has evaluated subsequent events through October 1, 2010,
the date of issuance of the Companys financial position and results of
operations.

In October 2009, the FASB issued ASU No. 200-13, Revenue
Recognition  Multiple Deliverable Revenue Arrangements (ASU 2009-13). ASU
2009-13 updates the existing multiple-element revenue arrangements guidance
currently included in FASB ASC 605-25. The revised guidance provides for two
significant changes to the existing multiple-element revenue arrangements
guidance. The first change relates to the determination of when the individual
deliverables included in a multiple-element arrangement may be treated as
separate units of accounting. This change will result in the requirement to
separate more deliverables within an arrangement, ultimately leading to less
revenue deferral. The second change modifies the manner in which the transaction
consideration is allocated across the separately identified deliverables.
Together, these changes will result in earlier recognition of revenue and
related costs for multiple-element arrangements than under previous guidance.
This guidance expands the disclosures required for multiple-element revenue
arrangements. Effective for interim and annual reporting periods beginning after
December 15, 2009. The Company is currently evaluating the potential impact, if
any, of this guidance on its financial statements.

In February 2010, the FASB issued ASU 2010-09, "Subsequent
Events (Topic 855) - Amendments to Certain Recognition and Disclosure
Requirements." ASU 2010-09 requires an entity that is a filer with the United
States Securities and Exchange Commission (the SEC) to evaluate subsequent
events through the date that the financial statements are issued and removes the
requirement that an SEC filer disclose the date through which subsequent events
have been evaluated. ASC 2010-09 was effective upon issuance. The adoption of
this standard had no effect on our results of operation or our financial
position.

From time to time, new accounting pronouncements are issued by
FASB that are adopted by the Company as of the specified effective date. If not
discussed, management believes that the impact of recently issued standards,
which are not yet effective, will not have a material impact on the Companys
financial statements upon adoption.

Effects of Inflation and Pricing

The oil and natural gas industry
is very cyclical and the demand for goods and services of oil field companies,
suppliers and others associated with the industry puts extreme pressure on the
economic stability and pricing structure within the industry. Material changes
in prices impact revenue stream, estimates of future reserves, borrowing base
calculations of bank loans and value of properties in purchase and sale
transactions. Material changes in prices can impact the value of oil and natural
gas companies and their ability to raise capital, borrow money and retain
personnel. We anticipate the increased business costs will continue while the
commodity prices for oil and natural gas, and the demand for services related to
production and exploration, both remain high (from a historical context) in the
near term.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The information to be reported
under this item is not required of smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Management Responsibility for Financial Information

We are responsible for the
preparation, integrity and fair presentation of our financial statements and the
other information that appears in this annual report on Form 10-K. The financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States and include estimates based on our best judgment.

21

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We maintain a comprehensive
system of internal controls and procedures designed to provide reasonable
assurance, at an appropriate cost-benefit relationship, that our financial
information is accurate and reliable, our assets are safeguarded and our
transactions are executed in accordance with established procedures.

Mantyla McReynolds, LLC, an
independent registered public accounting firm, is retained to audit our
financial statements. Its accompanying report is based on an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States).

Our financial statements and
notes thereto, and other information required by this Item 8 are included in
this report beginning on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). CONTROLS AND PROCEDURES.

Our Chief Executive and Principal
Accounting Officer, Rene Soullier, evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of the end of the period covered by this annual report
on Form 10-K.

Based on this evaluation, our
Chief Financial Officer concluded that, as of June 30, 2010 our disclosure
controls and procedures are not effective in ensuring that the information we
are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.

Managements Report on Internal Control over Financial
Reporting

Our Management is responsible for
establishing and maintaining adequate internal control over financial reporting
as defined in Rules 13a-15(c) and (d) of the Exchange Act. Our internal controls
are designed to provide reasonable assurance that the reported financial
information is presented fairly, financial disclosures are adequate and that the
judgments inherent in the preparation of financial statements are reasonable and
in accordance with generally accepted accounting principles of the United States
of America (GAAP).

Because of its inherent
limitations, a system of internal control over financial reporting can provide
only reasonable assurance and may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Further, because of changes in conditions, effectiveness of
internal control over financial reporting may vary over time.

A significant deficiency is a
control deficiency, or combination of control deficiencies, that adversely
affects the companys ability to initiate, authorize, record, process, or report
external financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a
misstatement of the companys annual or interim financial statements that is
more than inconsequential will not be prevented or detected. An internal control
material weakness is a significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.

As part of our compliance efforts
relative to Section 404 of the Sarbanes-Oxley Act of 2002, our management
assessed the effectiveness of our internal control over financial reporting as
of June 30, 2010. In making this assessment, management used the criteria set
forth in the Internal Control - Integrated Framework by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO").We
evaluated control deficiencies identified through our test of the design and
operating effectiveness of controls over financial reporting to determine
whether the deficiencies, individually or in combination, are significant
deficiencies or material weaknesses. In performing the assessment, our
management has identified material weaknesses in internal control over financial
reporting existing as of June 30, 2010.

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

ITEM 9B. OTHER INFORMATION.

None.

22

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table sets forth
certain information regarding our current directors and executive officers. Our
executive officers serve one-year terms.

|Name          | Age | Position                                                                                                          | Board Committee(s)
|------------- | --- | ----------------------------------------------------------------------------------------------------------------- | ------------------
|Rene Soullier | 34  | President, Chief
      Executive Officer, Principal Financial and Accounting Officer and
      Chairman, Director | None              

*Rene Soullier* has been
our President, Chief Executive Officer and Chairman since March 1, 2008.

Rene Soullier was born in 1975 in
Canada. After graduation in 1993 from Summerland Secondary School, Summerland
British Columbia, he went on to graduate from Okanagan University College,
British Columbia, with a Bachelor of Science in Natural Sciences. His focal
points, in addition to Biology, were Earth and Environmental Sciences including
Geology, Physical Geography, Stream Analysis and Field Techniques.

In 2003 Mr. Soullier joined the
research team of Summerland Agricultural Research Station where he stayed until
beginning of 2006. Already in the last months of his research project at the end
of 2005 Mr. Soullier was appointed a director of a European based company
providing business and management consultancy world-wide. He has specialized in
management consultancy for ecologically oriented companies and structures.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), requires our executive
officers and directors, and persons who beneficially own more than ten percent
of our common stock, to file initial reports of ownership and reports of changes
in ownership with the SEC. Executive officers, directors and greater than ten
percent beneficial owners are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. Based upon a review of the copies
of such forms furnished to us and written representations from our executive
officers and directors, we believe that as of the date of this report they were
all current in their 16(a) reports.

Board of Directors

Our board of directors currently
consists of one member. Our directors serve one-year terms.

Committees of the Board of Directors

None.

Code of Ethics

We have not adopted a Code of
Business Conduct and Ethics at this time.

Limitation of Liability of Directors

Pursuant to the Nevada Revised
Statutes, our Articles of Incorporation exclude personal liability for our
Directors for monetary damages based upon any violation of their fiduciary
duties as Directors, except as to liability for any breach of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, or any transaction from which a
Director receives an improper personal benefit. This exclusion of liability does
not limit any right which a Director may have to be indemnified and does not
affect any Directors liability under federal or applicable state securities
laws. We have agreed to indemnify our directors against expenses, judgments, and
amounts paid in settlement in connection with any claim against a Director if he
acted in good faith and in a manner he believed to be in our best interests.

23

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Insofar as indemnification by us
for liabilities arising under the Securities Act may be permitted to our
directors, officers or persons controlling the company pursuant to provisions of
our articles of incorporation and bylaws, or otherwise, we have been advised
that in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification by such director, officer or controlling person
of us in the successful defense of any action, suit or proceeding is asserted by
such director, officer or controlling person in connection with the securities
being offered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

Nevada Anti-Takeover Law and Charter and By-law
Provisions

Depending on the number of
residents in the state of Nevada who own our shares, we could be subject to the
provisions of Sections 78.378 et seq. of the Nevada Revised Statutes
which, unless otherwise provided in a companys articles of incorporation or
by-laws, restricts the ability of an acquiring person to obtain a controlling
interest of 20% or more of our voting shares. Our articles of incorporation and
by-laws do not contain any provision which would currently keep the change of
control restrictions of Section 78.378 from applying to us.

We are subject to the provisions
of Sections 78.411 et seq. of the Nevada Revised Statutes. In general,
this statute prohibits a publicly held Nevada corporation from engaging in a
combination with an interested stockholder for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the combination or the transaction by which the person
became an interested stockholder is approved by the corporations board of
directors before the person becomes an interested stockholder. After the
expiration of the three-year period, the corporation may engage in a combination
with an interested stockholder under certain circumstances, including if the
combination is approved by the board of directors and/or stockholders in a
prescribed manner, or if specified requirements are met regarding consideration.
The term combination includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an interested stockholder is a person who, together with
affiliates and associates, owns, or within three years did own, 10% or more of
the corporations voting stock. A Nevada corporation may opt out from the
application of Section 78.411 et seq. through a provision in its articles
of incorporation or by-laws. We have not opted out from the application of
this section.

Apart from Nevada law, however,
our articles of incorporation and by-laws do not contain any provisions which
are sometimes associated with inhibiting a change of control from occurring
(i.e., we do not provide for a staggered board, or for super-majority votes on
major corporate issues). However, we do have 5,000,000 shares of authorized
blank check preferred stock, which could be used to inhibit a change in
control.

ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth
summary compensation information for the fiscal years ended June 30, 2010, 2009
and 2008 for our Chief Executive Officer. We did not have any other executive
officers as of the end of fiscal 2010.

Summary Compensation Table

Name and Principal Position
    
    Fiscal Year
    
    
    Salary ($)
    
    
    Bonus ($)
    
    
    Option Awards ($)
    
    
    All Other Compensation ($)
    
    
    Total ($)Rene Soullier
    
    2010
    
    $
    36,000
    
    
    -0-
    
    
    -0-
    
    $
    -0-
    
    $
    36,000President, CEO, Principal Financial and
    
    2009
    
    $
    36,000
    
    
    -0-
    
    
    -0-
    
    $
    -0-
    
    $
    36,000Accounting Officer
    
    2008
    
    $
    36,000
    (1)
    
    -0-
    
    
    -0-
    
    $
    -0-
    
    $
    36,000


|(1) | Mr. Soullier began receiving compensation as of March 1,
      2008. We agreed to pay Mr. Soullier a monthly salary of $3,000. Mr.
      Soullier agreed to defer his salary until financing was secured. During
      the year ended June 30, 2010, we accrued $36,000 of Mr. Soulliers
      salary.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Outstanding Equity Awards at 2010 Fiscal Year-End

None.

24

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Potential Payments Upon Termination or Change in Control

We have not entered into any
compensatory plans or arrangements with respect to our named executive officer,
which would in any way result in payments to such officer because of his
resignation, retirement, or other termination of employment with us or our
subsidiaries, or any change in control of, or a change in his responsibilities
following a change in control.

Non-Employee Director Compensation

None.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table presents
information, to the best of Phoenix Energys knowledge, about the ownership of
Phoenix Energys common stock on June 30, 2010 relating to those persons known
to beneficially own more than 5% of Phoenix Energys capital stock and by
Phoenix Energys named executive officer, directors and directors and executive
officers as a group. The percentage of beneficial ownership for the following
table is based on 2,090,000 shares of common stock outstanding.

Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and does not necessarily indicate beneficial ownership for any other
purpose. Under these rules, beneficial ownership includes those shares of common
stock over which the stockholder has sole or shared voting or investment power.
It also includes shares of common stock that the stockholder has a right to
acquire within 60 days after June 30, 2010 pursuant to options, warrants,
conversion privileges or other right. The percentage ownership of the
outstanding common stock, however, is based on the assumption, expressly
required by the rules of the Securities and Exchange Commission, that only the
person or entity whose ownership is being reported has converted options or
warrants into shares of Phoenix Energys common stock.

Title of Class
    Name and Address of
      Beneficial Owner
    Office, If Any
    Amount & Nature of
      Beneficial Ownership(1)
    Percent of Class(3)Common Stock
    Rene Soullier
    CEO, CFO and Director
    -0-
    *All Officers and Directors as a group (5 persons named
      above)
    
    
    -0-
    *Common Stock
    Helvetic Capital Ventures AG (3)
      Sihlamtsstrasse 5 Zurich, Switzerland CH8002
    --
    1,333,336 (2)
    63.79%Total Shares Owned by Persons Named above
    
    
    1,333,336
    63.79% _________*
Less than 1%


(1) Beneficial ownership is determined in accordance with the
rules of the SEC and generally includes voting or investment power with respect
to securities.

(2) Shares are held in the name of Helvetic Capital Ventures
AG. Helvetic is based in Switzerland and operates primarily in Europe but
invests heavily in foreign and U.S. based companies. Ilona Klausgaard is the
president of Helvetic. Although she is not a majority owner of the company she
makes all of their investments decisions and has the authority to vote on a
majority of our shares. Under Swiss law, the shares of Helvetic are traded in
bearer form. Helvetic issues dividends to its shareholders once per year but
their bearer shares could trade many times without the companys knowledge
during the year. Until shares are presented for dividends, Helvetic has no way
of knowing who owns their stock. As of the last dividend calculation, Dr. Urs
Felder was the sole shareholder of Helvetic as set forth in our Annual Report on
Form 10-K for the year ending June 30, 2010.

(3) A total of 2,090,044 shares of our common stock outstanding
are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of
September 27, 2010. For each beneficial owner above, any options exercisable
within 60 days have been included in the denominator.

25

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Changes in Control

There are no arrangements known to us, including any pledge by
any person of our securities, the operation of which may at a subsequent date
result in a change in control of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

We were not a party to any transactions or series of similar
transactions that have occurred during this fiscal year in which:

- The amounts involved exceeds the lesser of $120,000 or one percent of the
  average of our total assets at year end for the last two completed fiscal
  years; and
- A director, executive officer, holder of more than 5% of our common stock
  or any member of their immediate family had or will have a direct or indirect
  material interest.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Mantyla McReynolds, LLC served as our principal independent
public accountants for fiscal 2009 and 2010. Aggregate fees billed to us for the
fiscal years ended June 30, 2010 and 2009 by Mantyla McReynolds, LLC were as
follows:

|                                                                       |   | For the Fiscal Years Ended | 
|---------------------------------------------------------------------- | - | -------------------------- | 
|                                                                       |   | June 30,                   | 
|                                                                       |   | 2010                       | 
|                                                                       |   |                            | 
|(1) Audit Fees(1)                                                      | $ | 16,052                     | 
|(2) Audit-Related Fees(2)                                              |   | -0-                        | 
|(3) Tax Fees(3)                                                        |   | -0-                        | 
|(4) All Other Fees                                                     |   | -0-                        | 
|Total fees paid or accrued to our
      independent public accountants | $ | 16,052                     | 

|(1) | Audit Fees include fees billed and expected to be billed
      for services performed to comply with Generally Accepted Auditing
      Standards (GAAS), including the recurring audit of the Companys
      consolidated financial statements for such period included in this Annual
      Report on Form 10-K and for the reviews of the consolidated quarterly
      financial statements included in the Quarterly Reports on Form 10-QSB
      filed with the Securities and Exchange Commission. This category also
      includes fees for audits provided in connection with statutory filings or
      procedures related to audit of income tax provisions and related reserves,
      consents and assistance with and review of documents filed with the
      SEC.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Audit-Related Fees include fees for services associated
      with assurance and reasonably related to the performance of the audit or
      review of the Companys financial statements. This category includes fees
      related to assistance in financial due diligence related to mergers and
      acquisitions, consultations regarding Generally Accepted Accounting
      Principles, reviews and evaluations of the impact of new regulatory
      pronouncements, general assistance with implementation of Sarbanes-Oxley
      Act of 2002 requirements and audit services not required by statute or
      regulation.                                                                                                                                           
|(3) | Tax fees consist of fees related to the preparation and
      review of the Companys federal and state income tax
  returns.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following information required under this item is filed as
part of this report:

(a) Financial Statements

|                                                                       | Page
|---------------------------------------------------------------------- | ----
|Management Responsibility for Financial
      Information              | 21  
|Managements Report on Internal Control Over Financial
      Reporting | 22  
|Index to Financial Statements                                          | F-1 
|Report of Independent Registered Public Accounting Firm                | F-2 
|Balance Sheets                                                         | F-3 
|Statements of Operations                                               | F-4 
|Statements of Stockholders Equity                                     | F-5 
|Statements of Cash Flows                                               | F-6 

26

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(b) Exhibits

|Exhibit No. | Description                                                                                                                                                                                                                                                                                 
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                                                                                             
|3.1         | Amended and Restated Articles of
    Incorporation, as currently in effect (incorporated by reference to Exhibit
    3.1 to Quarterly Report of Form 10-Q/A filed on January 8, 2010)                                                                                                       
|            |                                                                                                                                                                                                                                                                                             
|10.1        | Change of Control Agreement
    (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 11,
    2008)                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                             
|10.2        | Loan Agreement with Seymore
    (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 27,
    2008)                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                             
|10.3        | Assignment of Overriding Royalty
    Interest (incorporated by reference to Exhibit 10.1 to Form 8-K filed on
    October 21, 2008)                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                             
|10.4        | Assignment of Oil & Gas Lease
    (incorporated by reference to Exhibit 10.2 to Form 8-K filed on October 21,
    2008)                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                             
|10.5        | Operating Agreement (incorporated
    by reference to Exhibit 10.5 to Form 8-K filed on October 21, 2008)                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                             
|10.6        | Assignment of Oil and Gas Lease
    (incorporated by reference to Exhibit 10.3 to Form 8-K filed on October 21,
    2008)                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                             
|10.7        | Assignment of Oil & Gas Lease
    (incorporated by reference to Exhibit 10.4 to Form 8-K filed on October 21,
    2008)                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                             
|10.8        | Loan Agreement with Helvetic
    (incorporated by reference to Exhibit 10.1 to Form 8-K filed on March 5,
    2009)                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                             
|10.9        | Employment Agreement with Mr.
    Rene Soullier (incorporated by reference to Exhibit 10.9 to Annual Report of
    Form 10-K/A filed on December 18, 2009)                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                             
|10.10       | Securities Purchase Agreement,
    dated September 23, 2010, by and among the Company, Helvetic Capital
    Ventures AG and the accredited investor signatory thereto (incorporated by
    reference to Exhibit 10.1 to the Companys Form 8-K filed with the SEC on
    September 28, 2010)
|            |                                                                                                                                                                                                                                                                                             
|10.11       | Repurchase Agreement, dated
      September 23, 2010, by and between the Company and Helvetic Capital
      Ventures AG (incorporated by reference to Exhibit 10.2 to the Companys
      Form 8-K filed with the SEC on September 28, 2010)                                                
|            |                                                                                                                                                                                                                                                                                             
|31.1*       | Certification of Principal Executive Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                             
|31.2*       | Certification of Principal Financial and Accounting Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                             
|32.1*       | Certification of Principal Executive Officer and Principal Financial and
    Accounting Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                      

* Filed herewith

(c) Financial Statement Schedules

None.

27

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SIGNATURES

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

|                      | PHOENIX ENERGY RESOURCES CORPORATION                                              
|--------------------- | ----------------------------------------------------------------------------------
|                      |                                                                                   
|                      | By: /s/ Rene
      Soullier                                                       
|                      | Chief Executive Officer and Chief Financial
      Officer                         
|                      | (Principal Executive Officer and Principal
      Accounting and Financial Officer)
|Date: October 6, 2010 |                                                                                   

28

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INDEX TO FINANCIAL STATEMENTS

|                                                                                                                                                               | Page
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                               |     
|Index to Financial Statements                                                                                                                                  | F-1 
|Report of Independent Registered Public Accounting Firm                                                                                                        | F-2 
|Balance Sheets at June 30, 2010 and 2009                                                                                                                       | F-3 
|Statements of Operations for the Fiscal Years Ended June
      30, 2010 and 2009, and for the period from June 3, 2005 (inception)
      through June 30, 2010 | F-4 
|Statement of Stockholders Equity (Deficit)
      for the period from June 3, 2005 through June 30, 2010                                                       | F-5 
|Statement of Cash Flows for the Fiscal Years Ended June 30,
      2010 and 2009, and for the period from June 3, 2005 (inception) through
      June 30, 2010  | F-6 
|Notes to Financial Statements                                                                                                                                  | F-7 

F-1

---

Report of Independent Registered Public Accounting Firm

Stockholders and Directors Phoenix Energy Resource
Corporation

We have audited the accompanying balance sheets of Phoenix
Energy Resource Corporation (an exploration stage company) as of June 30, 2010
and 2009, and the related statements of operations, stockholders
equity/(deficit), and cash flows for the years ended June 30, 2010 and 2009 and
for the period from June 3, 2005 (inception) through June 30, 2010. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatements. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Phoenix
Energy Resource Corporation as of June 30, 2010 and 2009 and the results of its
operations, stockholders deficit and cash flows for the years ended June 30,
2010 and 2009 and for the period from June 3, 2005 through June 30, 2010, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company is an
exploration stage enterprise and as of the date of our report, had not fully
implemented its planned principal operations and as such has not generated
recurring revenues within its current business plan. As discussed in Note 8 to
the financial statements, the Company has accumulated losses and negative cash
flow from operations and a deficit in working capital. These issues raise
substantial doubt about the Companys ability to continue as a going concern.
Managements plans in regards to these matters are also described in Note 8. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/S/ Mantyla McReynolds, LLC

Mantyla McReynolds, LLC Salt Lake City, Utah

October 5, 2010

F-2

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Balance Sheets                     

|                                                                                                                                                                                                   |   | June 30, |   |   | June 30, |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | - | - | -------- | -
|                                                                                                                                                                                                   |   | 2010     |   |   | 2009     |  
|Assets                                                                                                                                                                                             |   |          |   |   |          |  
|Current assets:                                                                                                                                                                                    |   |          |   |   |          |  
|Cash                                                                                                                                                                                               | $ | 1,086    |   | $ | 2,496    |  
|Prepaid expenses                                                                                                                                                                                   |   | -        |   |   | -        |  
|Total current
      assets                                                                                                                                                                         |   | 1,086    |   |   | 2,496    |  
|                                                                                                                                                                                                   |   |          |   |   |          |  
|                                                                                                                                                                                                   |   |          |   |   |          |  
|Total assets                                                                                                                                                                                       | $ | 1,086    |   | $ | 2,496    |  
|                                                                                                                                                                                                   |   |          |   |   |          |  
|Liabilities and Stockholders Equity (Deficit)                                                                                                                                                     |   |          |   |   |          |  
|Current liabilities:                                                                                                                                                                               |   |          |   |   |          |  
|Accounts payable                                                                                                                                                                                   | $ | -        |   | $ | 1,318    |  
|Accrued liabilities                                                                                                                                                                                |   | 288      |   |   | 5,000    |  
|Accrued interest                                                                                                                                                                                   |   | 35,167   |   |   | 20,167   |  
|Accrued interest  related
      party                                                                                                                                                             |   | 3,624    |   |   | 531      |  
|Accrued compensation  related party                                                                                                                                                               |   | 39,000   |   |   | 3,000    |  
|Current Note payable                                                                                                                                                                               |   | 150,000  |   |   | -        |  
|Current Note payable  related party                                                                                                                                                               |   | 23,000   |   |   | -        |  
|Total current
      liabilities                                                                                                                                                                    |   | 251,079  |   |   | 30,016   |  
|                                                                                                                                                                                                   |   |          |   |   |          |  
|Long term liabilities:                                                                                                                                                                             |   |          |   |   |          |  
|Note payable                                                                                                                                                                                       |   | -        |   |   | 150,000  |  
|Note payable  related party                                                                                                                                                                       |   | 85,000   |   |   | 50,000   |  
|Total long-term liabilities                                                                                                                                                                        |   | 85,000   |   |   | 200,000  |  
|                                                                                                                                                                                                   |   |          |   |   |          |  
|Total Liabilities                                                                                                                                                                                  | $ | 336,079  |   | $ | 230,016  |  
|                                                                                                                                                                                                   |   |          |   |   |          |  
|Stockholders Equity (Deficit):                                                                                                                                                                    |   |          |   |   |          |  
|Preferred stock, $0.001
      par value, 10,000,000       shares
      authorized, no shares issued and outstanding                                                                                |   | -        |   |   | -        |  
|Common stock, $0.001 par value,
      100,000,000 shares
      authorized;       shares issued and
      outstanding  2,090,000 at June 30,
      2010       and 2,090,000 at June
      30, 2009 |   | 2,090    |   |   | 2,090    |  
|Additional paid in capital                                                                                                                                                                         |   | 157,910  |   |   | 157,910  |  
|(Deficit) accumulated during exploration stage                                                                                                                                                     |   | (494,993 | ) |   | (387,520 | )
|Total
      stockholders equity (deficit)                                                                                                                                                         |   | (334,993 | ) |   | (227,520 | )
|                                                                                                                                                                                                   |   |          |   |   |          |  
|Total liabilities and stockholders
      equity (deficit)                                                                                                                                         | $ | 1,086    |   | $ | 2,496    |  

The accompanying notes are an integral part of these
financial statements

F-3

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Statements of Operations           

|                                                                               |   | For the year ended |   |   | June 30, 2005  |  
|------------------------------------------------------------------------------ | - | ------------------ | - | - | -------------- | -
|                                                                               |   | June 30,           |   |   | (Inception) to |  
|                                                                               |   | 2010               |   |   | 2009           |  
|                                                                               |   |                    |   |   |                |  
|Revenue                                                                        | $ | -                  |   | $ | -              |  
|                                                                               |   |                    |   |   |                |  
|                                                                               |   |                    |   |   |                |  
|Expenses:                                                                      |   |                    |   |   |                |  
|Consulting                                                                     |   | -                  |   |   | 83,060         |  
|Executive compensation                                                         |   | 36,000             |   |   | 36,000         |  
|General and administrative                                                     |   | 7,643              |   |   | 14,847         |  
|Professional fees                                                              |   | 45,752             |   |   | 62,909         |  
|Impairment Expense                                                             |   | -                  |   |   | 65,069         |  
|Other expense                                                                  |   | -                  |   |   | 646            |  
|Total
      operating expenses                                                 |   | 89,395             |   |   | 262,531        |  
|                                                                               |   |                    |   |   |                |  
|Net operating (loss)                                                           |   | (89,395            | ) |   | (262,531       | )
|                                                                               |   |                    |   |   |                |  
|Other income (expense):                                                        |   |                    |   |   |                |  
|Debt forgiveness                                                               |   | -                  |   |   | -              |  
|Interest expense                                                               |   | (18,094            | ) |   | (19,284        | )
|Interest income                                                                |   | 16                 |   |   | 585            |  
|Total other
      income (expense)                                             |   | (18,078            | ) |   | (18,700        | )
|                                                                               |   |                    |   |   |                |  
|Net (loss)                                                                     | $ | (107,473           | ) | $ | (281,231       | )
|                                                                               |   |                    |   |   |                |  
|                                                                               |   |                    |   |   |                |  
|Weighted average number of common shares outstanding 
      basic and diluted |   | 2,090,000          |   |   | 2,090,000      |  
|                                                                               |   |                    |   |   |                |  
|Net (loss) per share  basic and diluted                                       | $ | (0.05              | ) | $ | (0.13          | )

The accompanying notes are an integral part of these
financial statements

F-4

---

|Phoenix Energy Resource Corporation         
|--------------------------------------------
|(formerly Exotacar, Inc.)                   
|(an Exploration Stage Company)              
|Statements of Stockholders Equity (Deficit)

Additional
    
    
    
    
    
    Accumulated
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Subscription
    
    
    Development
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Payable
    
    
    Stage (deficit)
    
    
    EquityJune 3, 2005  Founders shares
    
    -
    
    
    -
    
    
    1,166,667
    
    $
    35,000
    
    
    -
    
    
    -
    
    $
    (28,000
    )
    $
    7,000Net (loss), June 3, 2005 to June 30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,000
    )
    
    (7,000
    )Balance, June 30, 2005
    
    -
    
    
    -
    
    
    1,166,667
    
    
    35,000
    
    
    -
    
    
    -
    
    
    (35,000
    )
    
    -Shares issued for professional services
    
    -
    
    
    -
    
    
    83,333
    
    
    2,500
    
    
    2,500
    
    
    -
    
    
    -
    
    
    5,000Net (loss), June 30, 2006
    
    -
    
    
    -
    
    
    
    
    
    -
    
    
    -
    
    
    -
    
    
    (5,000
    )
    
    (5,000
    )Balance, June 30, 2006
    
    -
    
    
    -
    
    
    1,250,000
    
    
    37,500
    
    
    2,500
    
    
    -
    
    
    (40,000
    )
    
    -Shares issued for cash
    
    -
    
    
    -
    
    
    83,333
    
    
    2,500
    
    
    2,500
    
    
    -
    
    
    -
    
    
    5,000Subscription payable
    
    -
    
    
    -
    
    
    
    
    
    -
    
    
    -
    
    
    27,500
    
    
    -
    
    
    27,500Net (loss), June 30, 2007
    
    -
    
    
    -
    
    
    
    
    
    -
    
    
    -
    
    
    -
    
    
    (6,814
    )
    
    (6,814
    )Balance, June 30, 2007
    
    -
    
    
    -
    
    
    1,333,333
    
    
    40,000
    
    
    5,000
    
    
    27,500
    
    
    (46,814
    )
    
    25,686Shares issued per subscription agreement
    
    -
    
    
    -
    
    
    750,000
    
    
    22,500
    
    
    22,500
    
    
    (27,500
    )
    
    -
    
    
    17,500Net (loss), June 30, 2008
    
    -
    
    
    -
    
    
    
    
    
    -
    
    
    -
    
    
    -
    
    
    (59,475
    )
    
    (59,475
    )Balance, June 30, 2008
    
    -
    
    
    -
    
    
    2,083,333
    
    
    62,500
    
    
    27,500
    
    
    -
    
    
    (106,289
    )
    
    (16,289
    )Shares issued for professional services
    
    -
    
    
    -
    
    
    6,667
    
    
    7
    
    
    69,993
    
    
    -
    
    
    -
    
    
    70,000Net (loss), June 30, 2009
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (281,231
    )
    
    (281,231
    )Balance, June 30, 2009
    
    
    
    
    
    
    
    2,090,000
    
    
    62,507
    
    
    97,493
    
    
    -
    
    
    (387,520
    )
    
    (227,520
    )Reverse stock split (30:1)
    
    
    
    
    
    
    
    
    
    $
    (60,417
    )
    $
    60,417
    
    
    -
    
    
    -
    
    
    -Net (loss), June 30, 2010
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (107,473
    )
    
    (107,473
    )Balance, June 30, 2010
    
    
    
    
    
    
    
    2,090,000
    
    
    2,090
    
    
    157,910
    
    
    -
    
    
    (494,993
    )
    
    (334,993
    )


F-5

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Statements of Cash Flows           

|                                                                                    |   | For the years ended |   |   | June 3, 2005   |  
|----------------------------------------------------------------------------------- | - | ------------------- | - | - | -------------- | -
|                                                                                    |   | June 30,            |   |   | (inception) to |  
|                                                                                    |   | 2010                |   |   | 2009           |  
|Cash flows from operating activities                                                |   |                     |   |   |                |  
|Net (loss)                                                                          | $ | (107,473            | ) | $ | (281,231       | )
|                                                                                    |   |                     |   |   |                |  
|Adjustments to reconcile net (loss) to net cash used by
      operating activities: |   |                     |   |   |                |  
|Shares issued for services                                                          |   | -                   |   |   | 70,000         |  
|Prepaid expenses                                                                    |   | -                   |   |   | 7,592          |  
|Accounts payable                                                                    |   | (1,318              | ) |   | 1,318          |  
|Accrued liabilities                                                                 |   | (4,712              | ) |   | 3,957          |  
|Accrued interest                                                                    |   | 18,093              |   |   | 19,284         |  
|Accrued salaries  related party                                                    |   | 36,000              |   |   | (9,000         | )
|Lease impairment                                                                    |   | -                   |   |   | 65,069         |  
|Net cash used by operating activities                                               |   | (59,410             | ) |   | (123,011       | )
|                                                                                    |   |                     |   |   |                |  
|Cash flows from investing activities                                                |   |                     |   |   |                |  
|Unevaluated oil and gas
      properties-purchases                                  |   | -                   |   |   | ( 65,069       | )
|Net cash used by investing
      activities                                         |   | -                   |   |   | (65,069        | )
|                                                                                    |   |                     |   |   |                |  
|Cash flows from financing activities                                                |   |                     |   |   |                |  
|Proceeds from notes payable                                                         |   | 58,000              |   |   | 50,000         |  
|Issuance of common stock                                                            |   | -                   |   |   | -              |  
|Net cash
      provided by financing activities                                     |   | 58,000              |   |   | 50,000         |  
|                                                                                    |   |                     |   |   |                |  
|Net increase in cash                                                                |   | (1,411              | ) |   | (138,080       | )
|Cash, beginning                                                                     |   | 2,496               |   |   | 140,576        |  
|Cash, ending                                                                        | $ | 1,086               |   | $ | 2,496          |  
|                                                                                    |   |                     |   |   |                |  
|Supplemental disclosures:                                                           |   |                     |   |   |                |  
|Interest paid                                                                       | $ | -                   |   | $ | -              |  
|Income taxes paid                                                                   | $ | -                   |   | $ | -              |  
|                                                                                    |   |                     |   |   |                |  
|Non cash transactions:                                                              |   |                     |   |   |                |  
|Shares issued for services                                                          | $ | -                   |   | $ | 70,000         |  
|Shares issued for stock subscription
      payable                                  | $ | -                   |   | $ | -              |  

The accompanying notes are an integral part of these
financial statements

F-6

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Notes to Financial Statements      

NOTE 1: ORGANIZATION AND NATURE OF BUSINESS

Phoenix Energy, formerly known as Exotacar, Inc., is an energy
acquisition, exploration and development company. In February of 2008, Exotacar,
Inc. changed the focus of its business plan from the development of online
exotic car sales and entered into the oil and natural gas industry. In
conjunction with the change, the company was renamed Phoenix Energy Resource
Corporation.

Our principal strategy is to focus on the acquisition of oil
and natural gas mineral leases that ideally have existing production and cash
flow. Once acquired, we will implement an accelerated development program
utilizing capital resources, a regional operating focus, an experienced
management and technical team, and enhanced recovery technologies to attempt to
increase production and increase returns for our stockholders. Our oil and
natural gas acquisition and development activities are currently focused in
Southern Kentucky.

Our land acquisition and field operations, along with various
other services, are primarily outsourced through the use of consultants and
drilling partners. The Company will continue to retain independent contractors
to assist in operating and managing the prospects as well as to carry out the
principal and necessary functions incidental to the oil and gas business. With
the acquisition of oil and natural gas properties, the Company intends to
continue to use both in-house employees and outside consultants to develop and
exploit its leasehold interests.

As an independent oil and gas producer, the Companys future
revenue, profitability and rate of growth are substantially dependent on
prevailing prices of natural gas and oil. Historically, the energy markets have
been very volatile and it is likely that oil and gas prices will continue to be
subject to wide fluctuations in the future. A substantial or extended decline in
natural gas and oil prices could have a material adverse effect on the Companys
financial position, results of operations, cash flows and access to capital, and
on the quantities of natural gas and oil reserves that can be economically
produced.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of America
(GAAP).

Cash and Cash Equivalents

The Company considers highly liquid investments with
insignificant interest rate risk and original maturities to the Company of three
months or less to be cash equivalents. Cash equivalents consist primarily of
interest-bearing bank accounts and money market funds. Our cash positions
represent assets held in checking accounts. These assets are generally available
to us on a daily or weekly basis and are highly liquid in nature. Due to the
balances being less than $250,000, we have FDIC coverage on the entire amount of
bank deposits.

Other Property and Equipment

Property and equipment that are not oil and gas properties are
recorded at cost and depreciated using the straight-line method over their
estimated useful lives. Expenditures for replacements, renewals, and betterments
are capitalized. Maintenance and repairs are charged to operations as incurred.
Long-lived assets, other than oil and gas properties, are evaluated for
impairment to determine if current circumstances and market conditions indicate
the carrying amount may not be recoverable. We have not recognized any
impairment losses on non oil and gas long-lived assets. There was no
depreciation expense recognized for the year ended June 30, 2010 since we had no
property and equipment.

F-7

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Notes to Financial Statements      

Asset Retirement Obligations

The Company records the fair value of a liability for an asset
retirement obligation in the period in which the asset is acquired and a
corresponding increase in the carrying amount of the related long-lived asset.
The liability is accreted to its present value each period, and the capitalized
cost is depreciated over the useful life of the related asset. If the liability
is settled for an amount other than the recorded amount, a gain or loss is
recognized. As of June 30, 2010 we had no asset retirement obligation.

Revenue Recognition and Gas Balancing

We recognize oil and gas revenues from our interests in
producing wells when production is delivered to, and title has transferred to,
the purchaser and to the extent the selling price is reasonably determinable. We
use the sales method of accounting for gas balancing of gas production and would
recognize a liability if the existing proven reserves were not adequate to cover
the current imbalance situation. As of June 30, 2010 and 2009, we had no gas
production and no recognized oil and gas revenues.

Income Taxes

The Company utilizes the asset and liability approach to
measuring deferred tax assets and liabilities based on temporary differences
existing at each balance sheet date using currently enacted tax rates in
accordance with FASB ASC 740-10-30 (Prior authoritative literature:FASB
Statement 109, Accounting for Income Taxes).Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

Stock Issuance

The Company records the stock-based compensation awards issued
to non-employees and other external entities for goods and services at either
the fair market value of the goods received or services rendered on the
instruments issued in exchange for such services, whichever is more readily
determinable, using the measurement date guidelines enumerated in FASB ASC
505-50-30 (Prior authoritative literature,EITF 96-18,Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling, Goods, or Services).

Net Income (Loss) Per Common Share

Net Income (Loss) per common share is based on the Net Income
(Loss) divided by weighted average number of common shares outstanding.

Diluted earnings per share are computed using weighted average
number of common shares plus dilutive common share equivalents outstanding
during the period using the treasury stock method. As the Company has a loss for
the periods ended June 30, 2010 and 2009 the potentially dilutive shares are
anti-dilutive and are thus not added into the earnings per share calculation.

Full Cost Method

The Company follows the full cost method of accounting for oil
and gas operations whereby all costs related to the exploration and development
of oil and gas properties are initially capitalized into a single cost center
(full cost pool). Such costs include land acquisition costs, geological and
geophysical expenses, carrying charges on non-producing properties, costs of
drilling directly related to acquisition, and exploration activities. Internal
costs that are capitalized are directly attributable to acquisition, exploration
and development activities and do not include costs related to the production, general corporate overhead or
similar activities. Costs associated with production and general corporate
activities are expensed in the period incurred.

F-8

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Notes to Financial Statements      

Proceeds from property sales will generally be credited to the
full cost pool, with no gain or loss recognized, unless such a sale would
significantly alter the relationship between capitalized costs and the proved
reserves attributable to these costs. A significant alteration would typically
involve a sale of 25% or more of the proved reserves related to a single full
cost pool.

Use of Estimates

The preparation of financial statements under generally
accepted accounting principles (GAAP) in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The most significant estimates relate to future
development costs, estimates relating to certain oil and natural gas expenses,
and deferred income taxes. Actual results may differ from those estimates.

Impairment

FASB ASC 360-10-35-21 (Prior authoritative literature,FASB Statement 144, Accounting for the Impairment and Disposal of
Long-Lived Assets)requires that long-lived assets to be held and used be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Oil and gas
properties accounted for using the full cost method of accounting (which we use)
are excluded from this requirement but continue to be subject to the full cost
methods impairment rules.

New Accounting Pronouncements

In June 2009, the FASB issued FASB ASC 105-10-65 (Prior
authoritative literature:FASB Statement 168, The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles). Under FASB ASC 105-10-65 (Prior authoritative literature:FASB Statement 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles), the FASB Accounting
Standards Codification  (the Codification) will become the exclusive source
of authoritative U.S. generally accepted accounting principles (U.S. GAAP)
recognized by the FASB to be applied by nongovernmental entities. Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. The Codification will supersede all then-existing non-SEC
accounting and reporting standards, with the exception of certain non-SEC
accounting literature which will become nonauthoritative. FASB ASC 105-10-65
(Prior authoritative literature:FASB Statement 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles)is effective for the Companys 2009 first fiscal
quarter. The adoption of FASB ASC 105-10-65 (Prior authoritative literature:FASB Statement 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles)will not have a
material impact on the Companys Financial Statements. All references to U.S.
GAAP provided in the notes to the Financial Statements have been updated to
conform to the Codification.

In May 2009, the FASB issued FASB ASC 855-10-25 (Prior
authoritative literature:FASB Statement 165, Subsequent Events).
FASB ASC 855-10-25 (Prior authoritative literature:FASB Statement 165,
Subsequent Events)provides guidance on managements assessment of
subsequent events and incorporates this guidance into accounting literature.
FASB ASC 855-10-25 (Prior authoritative literature:FASB Statement
165,Subsequent Events)is effective prospectively for interim and annual
periods ending after June 15, 2009. The implementation of this standard did not
have a material impact on the Companys financial position and results of
operations.

F-9

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|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Notes to Financial Statements      

In October 2009, the FASB issued ASU No. 200-13, Revenue
Recognition  Multiple Deliverable Revenue Arrangements (ASU 2009-13). ASU
2009-13 updates the existing multiple-element revenue arrangements guidance
currently included in FASB ASC 605-25. The revised guidance provides for two
significant changes to the existing multiple-element revenue arrangements
guidance. The first change relates to the determination of when the individual
deliverables included in a multiple-element arrangement may be treated as
separate units of accounting. This change will result in the requirement to
separate more deliverables within an arrangement, ultimately leading to less
revenue deferral. The second change modifies the manner in which the transaction
consideration is allocated across the separately identified deliverables.
Together, these changes will result in earlier recognition of revenue and
related costs for multiple-element arrangements than under previous guidance.
This guidance expands the disclosures required for multiple-element revenue
arrangements. Effective for interim and annual reporting periods beginning after
December 15, 2009. The Company is currently evaluating the potential impact, if
any, of this guidance on its financial statements.

In February 2010, the FASB issued ASU 2010-09, "Subsequent
Events (Topic 855) - Amendments to Certain Recognition and Disclosure
Requirements." ASU 2010-09 requires an entity that is a filer with the United
States Securities and Exchange Commission (the SEC) to evaluate subsequent
events through the date that the financial statements are issued and removes the
requirement that an SEC filer disclose the date through which subsequent events
have been evaluated. ASC 2010-09 was effective upon issuance. The adoption of
this standard had no effect on our results of operation or our financial
position.

From time to time, new accounting pronouncements are issued by
FASB that are adopted by the Company as of the specified effective date. If not
discussed, management believes that the impact of recently issued standards,
which are not yet effective, will not have a material impact on the Companys
financial statements upon adoption.

NOTE 3: OIL AND GAS PROPERTIES

Acquisitions

In September of 2008, we acquired mineral leases representing a
total of 483 gross acres located in Allen County Kentucky. As of June 30, 2010
leases representing the total of 483 acres had expired because of exploration
and production inactivity. As of June 30, 2010 the Company had made no
additional acquisitions and all prior acquisitions had expired.

The Company established a valuation allowance for this asset
due to the fact that the Company was unlikely to develop these leases prior to
expiration of the lease contact on September 30, 2009. As of June 30, 2010,
there was no valuation allowance because the assets had been removed from the
Company records and expensed.

|                                               |   | June 30, | 
|---------------------------------------------- | - | -------- | 
|                                               |   | 2010     | 
|Oil and Gas Properties, Full Cost Method       |   |          | 
|Unevaluated Costs, Not Subject to Amortization | $ | -        | 
|Less: Valuation Allowance                      | $ | -        | 
|                                               | $ | -        | 

NOTE 4: RELATED PARTY TRANSACTIONS

On February 1, 2008, we entered into an employment agreement
with Mr. Soullier, our sole executive officer and director. The initial term of
the agreement was one year commencing on March 1, 2008 with annual compensation
of $36,000. The agreement renews annually and may be terminated by either party
with 6 month written notice. As of June 30, 2010, 2009 and 2008, we have accrued $39,000,
$3,000 and $12,000 in executive compensation, respectively.

F-10

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Notes to Financial Statements      

NOTE 5: INCOME TAXES

The Company utilizes the asset and liability approach to
measuring deferred tax assets and liabilities based on temporary differences
existing at each balance sheet date using currently enacted tax rates in
accordance with FASB rules. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.

In June 2006, FASB issued FASB ASC 740-10-05-6 (Prior
authoritative literature:FASB Statement 48, Accounting for Uncertainty
in Income Taxes). We adopted FASB ASC 740-10-05-6 on January 1, 2007. Under
FASB ASC 740-10-05-6, tax benefits are recognized only for tax positions that
are more likely than not to be sustained upon examination by tax authorities.
The amount recognized is measured as the largest amount of benefit that is
greater than 50 percent likely to be realized upon ultimate settlement.
Unrecognized tax benefits are tax benefits claimed in our tax returns that do
not meet these recognition and measurement standards.

Upon the adoption of FASB ASC 740-10-05-6, we had no
liabilities for unrecognized tax benefits and, as such, the adoption had no
impact on our financial statements, and we have recorded no additional interest
or penalties. The adoption of FASB ASC 740-10-05-6 did not impact our effective
tax rates.

Our policy is to recognize potential interest and penalties
accrued related to unrecognized tax benefits within income tax expense. For the
years ended June 30, 2010 and 2009, we did not recognize any interest or
penalties in our Statement of Operations, nor did we have any interest or
penalties accrued in our Balance Sheet at June 30, 2010 and 2009 relating to
unrecognized benefits.

The provision for income taxes consists of the following:

|                                         |   | 2010    |   |   | 2009    |  
|---------------------------------------- | - | ------- | - | - | ------- | -
|Current tax                              |   |         |   |   |         |  
|Deferred tax benefit                     |   | (36,541 | ) |   | (95,619 | )
|Benefits of operating loss carryforwards |   | 36,541  |   |   | 95,619  |  
|Provision for Income Tax                 | $ | -       |   | $ | -       |  

Below is a summary of deferred tax asset calculations on net
operating loss carry forward amounts as of June 30, 2010. Currently there is no
reasonable assurance that the Company will be able to take advantage of a
deferred tax asset. Thus, an offsetting allowance has been established for the
deferred asset.

|Description                          |  | NOL
      Balance |   |   | Tax     |   |  | Rate | 
|------------------------------------ |  | ----------------- | - | - | ------- | - |  | ---- | 
|Net Operating Loss                   |  | 107,473           |   |   | 36,541  |   |  | 34%  | 
|Accrued compensation  related party |  | (36,000           | ) |   | (12,240 | ) |  | 34%  | 
|Valuation Allowance                  |  |                   |   |   | (24,301 | ) |  |      | 
|Deferred Tax Asset  6/30/2010       |  |                   |   | $ | -       |   |  |      | 

The Company has the following operating loss carry forwards
available at June 30, 2010:

|Operating Losses Expires | Amount 
|------------------------ | -------
|2027                     | 47,474 
|2028                     | 278,231
|2029                     | 71,473 

F-11

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Notes to Financial Statements      

Reconciliation between income taxes at the statutory tax rate
(34%) and the actual income tax provision for continuing operations follows:

|                                |  | 2010    |   |  | 2009    |  
|------------------------------- |  | ------- | - |  | ------- | -
|Expected Tax Provision          |  | (24,301 | ) |  | (95,619 | )
|Effect of:                      |  |         |   |  |         |  
|Graduated
      rates           |  |         |   |  |         |  
|Increase in Valuation allowance |  | 24,301  |   |  | 95,619  |  
|Actual Tax Provision            |  | -       |   |  | -       |  

NOTE 6: STOCKHOLDERS EQUITY

The Company is authorized to issue 10,000,000 shares of $0.001
par value preferred stock and 100,000,000 shares of $0.001 par value common
stock. On April 22, 2010, our Board of Directors effectuated a 30:1 reverse
split of the Companys common stock. The Company has retroactively stated all
share amounts. On October 22, 2008, the Company issued 6,667 shares of its
common stock as a bonus for services rendered in connection with the acquisition
of our mineral leases.

NOTE 7: NOTES PAYABLE

At June 30, 2010 we had a note payable to Seymore Investments
totaling $150,000. The note bears interest at a rate of 10% per annum, is
unsecured and matures on May 20, 2011. Further, we have the option to repay the
note in shares of our common stock at a 15% discount to the five day average
trading price as quoted on the Over-the-Counter Bulletin Board at the time of
conversion. At June 30, 2010 we had accrued interest related to this note in the
amount of $35,167.

At June 30, 2010 we had a note payable to Helvetic Capital
Ventures, a related party, totaling $35,000. The note bears interest at a rate
of 4% per annum, is unsecured and matures on February 26, 2012. Further, we have
the option to repay the note in shares of our common stock at a 15% discount to
the five day average trading price as quoted on the Over-the Counter Bulletin
Board at the time of conversion. On June 1, 2009 we had established a second
note payable with Helvetic Capital Ventures totaling $50,000. The note bears
interest at a rate of 4% per annum, is unsecured and matures on May 31, 2012.
Further, we have the option to repay the note in shares of our common stock at a
15% discount to the five day average trading price as quote on the Over-the
Counter Bulletin Board at the time of conversion. At June 30, 2010 we have
accrued interest related to these notes in the amount of $3,503.

On April 30, 2010, we signed a Promissory Note with a related
party, Amphion Investments Corp. (Amphion), stating that Phoenix promised to
pay to the order of Amphion the sum of $8,000, with an interest rate of 8%,
payable on April 30, 2011. At June 30, 2010 we have accrued interest related to
this note in the amount of $121.

At June 30, 2010, Helvetic Capital Ventures, AG (Helvetic) had
a note payable to JPF Securities totaling $15,000. The note bears interest at a
rate of 10% per annum and is payable (principal and accrued interest) on January
28, 2011. This note is guaranteed by the Company in case of default on the part
of Helvetic.

NOTE 8: GOING CONCERN

The accompanying financial statements have been prepared using
the generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. For the Company to continue as a going concern we
must seek additional sources of capital, and must attain future profitable
operations. We are currently initiating our business plan and also in the
process of raising additional capital. The accompanying financial statements do
not include any adjustments that might be necessary should we be unable to
continue as a going concern. There are pertinent conditions and events giving
rise to the assessment of substantial doubt about the entitys
ability to continue as a going concern for a period not to exceed one year from
the balance sheet date.

F-12

---

|Phoenix Energy Resource Corporation
|-----------------------------------
|(formerly Exotacar, Inc.)          
|(an Exploration Stage Company)     
|Notes to Financial Statements      

NOTE 9: SUBSEQUENT EVENTS

On September 19, 2010 the board of directors issued 100,000
shares as a partial conversion of the Seymour Investments promissory note.

On September 27, 2010, the Company consummated a securities
purchase agreement, pursuant to which, the Company sold an aggregate of
1,333,336 shares of the Companys common stock to an investor for an aggregate
purchase price of $100,103. Simultaneously with the closing of the purchase
agreement, the Company repurchased 1,333,336 shares of common stock held by
Helvetic Capital Ventures AG, for an aggregate purchase price of $100,103, net
any outstanding liabilities of the Company as of the closing date, as
contemplated by a repurchase agreement, dated September 23, 2010, by and between
the Company and Helvetic.

As a result of the closing of the Purchase Agreement and the
Repurchase Agreement, the new investor under the Purchase Agreement now holds
63.79% of the Companys outstanding capital stock resulting in a change in
control of the Company.

F-13

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EXHIBIT INDEX

|Exhibit No. | Description                                                                                                                                                                                                                                                                                 
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                                                                                             
|3.1         | Amended and Restated Articles of
    Incorporation, as currently in effect (incorporated by reference to Exhibit
    3.1 to Quarterly Report of Form 10-Q/A filed on January 8, 2010)                                                                                                       
|            |                                                                                                                                                                                                                                                                                             
|10.1        | Change of Control Agreement
    (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 11,
    2008)                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                             
|10.2        | Loan Agreement with Seymore
    (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 27,
    2008)                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                             
|10.3        | Assignment of Overriding Royalty
    Interest (incorporated by reference to Exhibit 10.1 to Form 8-K filed on
    October 21, 2008)                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                             
|10.4        | Assignment of Oil & Gas Lease
    (incorporated by reference to Exhibit 10.2 to Form 8-K filed on October 21,
    2008)                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                             
|10.5        | Operating Agreement (incorporated
    by reference to Exhibit 10.5 to Form 8-K filed on October 21, 2008)                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                             
|10.6        | Assignment of Oil and Gas Lease
    (incorporated by reference to Exhibit 10.3 to Form 8-K filed on October 21,
    2008)                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                             
|10.7        | Assignment of Oil & Gas Lease
    (incorporated by reference to Exhibit 10.4 to Form 8-K filed on October 21,
    2008)                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                             
|10.8        | Loan Agreement with Helvetic
    (incorporated by reference to Exhibit 10.1 to Form 8-K filed on March 5,
    2009)                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                             
|10.9        | Employment Agreement with Mr.
    Rene Soullier (incorporated by reference to Exhibit 10.9 to Annual Report of
    Form 10-K/A filed on December 18, 2009)                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                             
|10.10       | Securities Purchase Agreement,
    dated September 23, 2010, by and among the Company, Helvetic Capital
    Ventures AG and the accredited investor signatory thereto (incorporated by
    reference to Exhibit 10.1 to the Companys Form 8-K filed with the SEC on
    September 28, 2010)
|            |                                                                                                                                                                                                                                                                                             
|10.11       | Repurchase Agreement, dated
      September 23, 2010, by and between the Company and Helvetic Capital
      Ventures AG (incorporated by reference to Exhibit 10.2 to the Companys
      Form 8-K filed with the SEC on September 28, 2010)                                                
|            |                                                                                                                                                                                                                                                                                             
|31.1*       | Certification of Principal Executive Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                             
|31.2*       | Certification of Principal Financial and Accounting Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                             
|32.1*       | Certification of Principal Executive Officer and Principal Financial and
    Accounting Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                      

_________* Filed herewith

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