UNITED STATES SECURITIES


AND


EXCHANGE COMMISSION


Washington, D.C.  20549





FORM 20-F/A


(Amendment No. 2)





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


OR


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


For the fiscal year ended ________December 31, 2010________





OR


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


For the transition period from ____________ to __________





OR





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





Date of event requiring this shell company report: ______





Commission File Number: 333-137571





POWER OIL & GAS INC.


(Exact name of Registrant as specified in its charter)





Alberta, Canada


(Jurisdiction of incorporation or organization)





104 – 1240 Kensington Road N.W., Calgary, Alberta, Canada T2N 3P7


(Address of principal executive offices)





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





None





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





Common Stock, Fully Paid and Non-Assessable Common Shares Without Par Value


(Title of Class)





Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None





Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:  42,818,875 common shares as of December 31, 2010.  No preferred shares issued and outstanding.


1





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





If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes [  ] No [X]


Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.





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





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.





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





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





U.S. GAAP [  ]                             International Financial Reporting Standards as issued                           Other [ X]


by the International Accounting Standards Board [  ]





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


Item 17 [ X] Item 18 [  ]





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





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date 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 [X]








2





EXPLANATORY NOTE





The Company filed its Annual Report on Form 20-F for the fiscal year ended December 31, 2010 with the Securities and Exchange Commission on June 30, 2011 (the "Form 20-F").





This Amendment No. 2 to the Form 20-F is being filed by the Company solely for the purpose of the inclusion of  the audit report of independent registered public accounting firm of Smythe Ratcliffe LLP Chartered Accountants dated June 29, 2010, as filed within Item 17 of the Form 20-F as amended.  The audit reports and financial statements of the Company are hereby replaced in their entirety.  In addition, this Form 20-F/A includes currently dated Exhibit 12.1 certification pursuant to Section 301(a) of the Sarbanes-Oxley Act of 2002 and Exhibit 13.1 certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





Other than as described above, this Amendment No. 2 speaks as of the filing date of the Form 20-F and does not purport to, amend, update or restate any other information or disclosure included in the Form 20-F, as amended.





PART III





ITEM 17.  FINANCIAL STATEMENTS





The Company's audited financial statements for years ended December 31, 2010, 2009 and 2008 are included in this Amendment No. 2 to the Annual Report and found immediately following the text of this Amendment No. 2 to the Annual Report.  The audit reports of BDO Canada LLP and Smythe Ratcliffe LLP Chartered Accountants, the predecessor auditor, are included herein immediately preceding the audited financial statements.








ITEM 18.  FINANCIAL STATEMENTS





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





3




POWER OIL & GAS INC.
 (An Exploration Stage Company)
 
 Financial Statements
 December 31, 2010 and 2009
 (Expressed in Canadian Dollars)
 
 
 
 
 
 
 
 
 Index
PageReport of Independent Registered Public Accounting Firm
5Financial StatementsBalance Sheets
8Statements of Operations and Comprehensive Loss
9Statements of Shareholders’ Equity
10Statements of Cash Flows
11Notes to Financial Statements
12 – 26
 
 
  4
  
 
 
 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 TO THE SHAREHOLDERS AND DIRECTORS OF POWER OIL & GAS INC.
 (An Exploration Stage Company)
 
 We have audited the balance sheet of Power Oil & Gas Inc. (an exploration stage company) as at December 31, 2009 and the statements of operations, shareholders’ deficiency and cash flows for the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
 We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
 
 In our opinion, these financial statements present fairly, in all material respects, the financial position of  Power Oil & Gas Inc. (an exploration stage company) as at December 31, 2009 and the result of its operations and its cash flows for the years ended December 31, 2009 and 2008 in conformity with Canadian generally accepted accounting principles.
 
 
 “Smythe Ratcliffe LLP” (signed)
 
 
 Chartered Accountants
 
 Vancouver, Canada
 June 29, 2010
 
  5
  
 BDO CanadaLLP                                                       600 Cathedral Place
 925 West Georgia Street
 Vancouver, BC, Canada V6C 3L2
 Telephone:  (604) 688-5421
 Telefax:  (604) 688-5132
 E-mail:  vancouver@bdo.ca
 www.bdo.ca
 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the Directors and Stockholders,
 Power Oil & Gas Inc.
 (An Exploration Stage Company)
 
 We have audited the accompanying balance sheet of Power Oil & Gas Inc. (the “Company”) (An Exploration Stage Company) as at December 31, 2010, and the statements of operations and comprehensive loss, cash flows and shareholders’ equity for the year ended December 31, 2010, and a summary of significant accounting policies and other explanatory information.
 
 Management's Responsibility for the Financial Statements
 
 Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
 
 Auditor's Responsibility
 
 Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the presentation of the financial statements.
 
 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
 
 Opinion
 
 In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2010 and the results of its operations and its cash flows for each of the year ended December 31, 2010 in accordance with accounting principles generally accepted in the United States.
 
 
 6
 
 
 Emphasis of Matter
 
 Without qualifying our opinion, we draw attention to Note 1 in the financial statements, which indicates that the Company has an accumulated deficit during the exploration stage of $3,535,681 as at December 31, 2010.  These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that may cast substantial doubt upon the Company’s ability to continue as a going concern.
 
 Other Matters
 
 The financial statements of the Company for the year ended December 31, 2009, were audited by another auditor who expressed an unmodified opinion on those statements on June 29, 2010.
 
 /s/ BDO Canada LLP





Chartered AccountantsVancouver, CanadaJune 29, 2011
 
  7
  
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Balance Sheets
 December 31
 (Expressed in Canadian Dollars)
 
 2010


2009AssetsCurrentCash

$
4,128


$
3,644Goods and services tax receivable


-



2,119Prepaid expenses


1,010



1,0105,138



6,773Oil and Gas Property Interests(note 4)


116,748



166,463$
121,886


$
173,236Liabilities and Shareholders’ Equity (Deficiency)Current LiabilitiesAccounts payable and accrued liabilities

$
35,004


$
36,54035,004



36,540Shareholders’ EquityCapital StockAuthorized1,000,000,000 common shares without par value1,000,000,000 preferred shares without par valueIssued and outstanding42,818,875 (2009 - 42,140,935) common shares (notes 7 and 8)


411,756



242,271Obligation to issue shares (note 6)


-



119,485Contributed surplus


3,210,807



2,339,480Deficit accumulated during the exploration stage


(3,535,681
)


(2,564,540
)86,882



136,696$
121,886


$
173,236
 
 Nature of Operations and Going Concern (note 1)
 
 Approved on behalf of the Board:
 
 “Keith Diakiw”
 __________________________________
 Keith Diakiw, President
 
 “Pratt Barndollar”
 __________________________________
 Pratt Barndollar, Director
  See notes to financial statements.
 8
  POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Statements of Operations and Comprehensive Loss
 Years Ended December 31
 (Expressed in Canadian Dollars)
 
 2010


2009


2008(Restated –

Note 5)ExpensesStock-based compensation (note 7(d))

$
871,327


$
2,272,427


$
67,053Professional fees


19,600



30,125



36,250Office and sundry


5,835



12,245



5,210Consulting fees (note 10)


4,500



8,800



-Interest


-



2,340



-Directors’ fees (note10)


-



1,500



15,000Listing and filing fees


1,532



185



5,948Transfer agent fees


101



218



1,650Total Expenses


902,895



2,327,840



131,111OtherInterest income


-



-



(151
)Foreign exchange loss


15



80



400Surrendered oil and gas property

interests (note 4)


68,231



-



-Net Loss and Comprehensive Loss for Year

$
(971,141
)

$
(2,327,920
)

$
(131,360
)Basic and Diluted Loss Per Share

$
(0.02
)

$
(0.06
)

$
(0.01
)Weighted Average Number of Common Shares Outstanding


42,640,866



41,989,725



41,709,750
 
  See notes to financial statements.
 9
  POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Statements of Shareholders’ Equity
 Years Ended December 31
 (Expressed in Canadian Dollars)
 
 Number of Common Shares


Capital

Stock


Shares to be Issued


Contributed

Surplus


Deficit Accumulated During the Exploration Stage


Total(Restated –

Note 5)Balance, December 31, 2007


41,709,750



134,475



-



-



(105,260
)


29,215Stock-based compensation


-



-



-



67,053



-



67,053Net loss for year


-



-



-



-



(131,360
)


(131,360
)Balance, December 31, 2008


41,709,750



134,475



-



67,053



(236,620
)


(35,092
)Warrants exercised


431,185



107,796



-



-



-



107,796Shares to be issued  via exercise of warrants (note  6)


-



-



119,485



-



-



119,485Stock-based compensation (note 7(d))


-



-



-



2,272,427



-



2,272,427Net loss for year


-



-



-



-



(2,327,920
)


(2,327,920
)Balance, December 31, 2009


42,140,935



242,271



119,485



2,339,480



(2,564,540
)


136,696Warrants exercised


200,000



50,000



-



-



-



50,000Shares issued on obligation (note 6)


477,940



119,485



(119,485
)


-



-



-Stock-based compensation (note 7(d))


-



-



-



871,327



-



871,327Net loss for year


-



-



-



-



(971,141
)


(971,141
)Balance, December 31, 2010


42,818,875


$
411,756



-


$
3,210,807


$
(3,535,681
)

$
86,882
 
  See notes to financial statements.
 10
  POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Statements of Cash Flows
 Years Ended December 31
 (Expressed in Canadian Dollars)
 
 2010


2009


2008(Restated –

Note 5)Operating ActivitiesNet loss for the year

$
(971,141
)

$
(2,327,920
)

$
(131,360
)Adjustment to reconcile net loss to net cash used in operating activitiesStock-based compensation


871,327



2,272,427



67,053Surrendered oil and gas property interests


68,231



-



-Changes in non-cash working capital:Good and services tax receivables


2,119



(1,390
)


(193
)Interest on bridge loan settled by obligation to issue shares


-



2,340



-Accounts payable and accrued liabilities


(1,536
)


18,127



8,952Cash Used in Operating Activities


(31,000
)


(36,416
)


(55,548
)Investing ActivitiesProceeds from short-term investments


-



-



20,000Expenditures on oil and gas property interests


(18,516
)


(124,347
)


(32,782
)Cash Used in Investing Activities


(18,516
)


(124,347
)


(12,782
)Financing ActivitiesIssuance of capital stock upon exercise of warrants


50,000



107,796



-Bridge loan payable


-



-



117,145Cash Provided by Financing Activities


50,000



107,796



177,145Inflow (Outflow) of Cash


484



(52,967
)


48,815Cash, Beginning of Year


3,644



56,611



7,796Cash, End of Year

$
4,128


$
3,644


$
56,611Supplementary InformationObligation to issue shares in settlement of bridge loan (note 7)

$
-


$
119,485


$
-
 
 No taxes or interest paid in 2010, 2009 or 2008.
  See notes to financial statements.
 11
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  1.
NATURE OF OPERATIONS AND GOING CONCERN
 
 Power Oil & Gas Inc. (the “Company”) was incorporated under the Canada Business Corporations Acton April 25, 2005.
 
 The Company is primarily engaged in the acquisition and exploration of oil and gas property interests in North America.
 
 At December 31, 2010, the Company had a working capital deficiency of $29,866 (2009 - $29,767) and an accumulated deficit of $3,535,681 (2009 - $2,564,540).  The Company will require additional financing or outside participation to undertake further acquisitions and exploration and subsequent development of future oil and gas property interests and to meet its administrative overhead costs in 2011.
 
 The Company’s financial statements have been prepared on a going-concern basis. The application of the going-concern basis is dependent upon the Company’s ability to achieve and maintain future profitable operations and receive continued financial support from its creditors and shareholders or raise additional equity financing. The current financial equity market conditions and the challenging funding environment make it difficult to raise funds by placement of common shares. There is no assurance that the Company will be successful with any financing ventures. Management is actively engaged in the review and due diligence on new projects, is seeking to raise the necessary capital to meet its funding
requirements and has undertaken available cost cutting measures. There can be no assurance that management’s plan will be successful. Therefore a significant uncertainty exists in relation to the Company’s ability to continue as a going-concern.
 
 If the going-concern assumption were not appropriate for these financial statements then adjustments would be necessary in the carrying values of assets and liabilities, the reported expenses and the balance sheet classifications used. Such adjustments would be material.
 
 The business of oil and gas exploration involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable operations. The Company has no revenue, and has significant cash requirements to meet its administrative overhead and maintain its oil and gas interests. The recoverability of amounts shown for oil and gas property interests is dependent on several factors. These include the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of these properties, and future profitable production or proceeds from disposition of oil and gas interests.
 
 2.
SIGNIFICANT ACCOUNTING POLICIES
 
 The financial statements of the Company have been prepared in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”). The functional and reporting currency of the Company is the Canadian dollar.  Canadian GAAP differs in certain respects from accounting principles generally accepted in the United States (see note 11). The significant accounting policies are summarized as follows.
 
  12
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 2.           SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (a)
Use of estimates
 
 The preparation of financial statements in conformity with Canadian GAAP 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 for the reporting period.  Significant areas requiring the use of estimates include the carrying value of oil and gas property interests, estimates of accrued liabilities, variables used in the calculation of stock-based compensation and the determination of the valuation allowance for future income tax assets.  Management believes the estimates are reasonable; however,
actual results could differ from these estimates and could impact future results of operations and cash flows.
 
 (b)
Financial instruments
 
 The Company classifies its financial instruments into one of these five categories: held-for-trading, held-to-maturity, loans and receivables, available-for-sale financial assets or other financial liabilities. All financial instruments are initially measured at fair value. Subsequent measurement and changes in fair value will depend on their initial classification as follows: held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net income; available-for-sale financial instruments are measured at fair value with changes in fair value recorded in other comprehensive income until the investment is no longer recognized or impaired, at which time the amounts would
be recorded in net income. All other financial instruments which are classified as loans and receivables, held-to-maturity investments and other financial liabilities measured at amortized cost.
 
 Transaction costs that are directly attributable to the acquisition or issuance of financial instruments that are classified as other than held-for-trading, which are expensed as incurred, are included in the initial carrying value of such instruments.
 
 In order to measure changes in fair value, the fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels and adjustments to fair value must be based on one of the following measures:
 
 ·
Level one – Quoted market prices in active markets for identical assets or liabilities;
 ·
Level two – Inputs other than level one inputs that are either directly or indirectly observable, and;
 ·
Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
 
 (c)
Oil and gas property interests
 
 The Company follows the full cost method of accounting for petroleum and natural gas interests whereby all costs of exploration for and development of petroleum and natural gas reserves are capitalized.  These costs include leasehold acquisition costs, geological and geophysical expenses, drilling costs of successful as well as unsuccessful wells and overhead charges related directly to exploration and development activities.
  13
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (c)
Oil and gas property interests – (continued)
 
 If the interests are sold, the proceeds of the interests will be applied against capitalized costs unless such a sale significantly impacts the rate of depletion.
 
 The Company defers expenditures related to the acquisition, exploration and development of its exploration properties. If an exploration property is abandoned, continued exploration is not planned in the foreseeable future or when other events and circumstances indicate that the carrying amount may not be recovered, the accumulated costs and expenditures are written down. Deferred expenditures relating to exploration projects represent costs to be charged to operations in the future and do not necessarily reflect the present or future values of the particular projects. Development projects include those projects where development alternatives are in progress and/or studies have been completed suggesting that the
properties are economically viable. The Company reviews the carrying amount of development projects when events or circumstances suggest that the carrying amount may not be recoverable.
 
 The amounts shown for petroleum and natural gas interests represent costs incurred to date less depletion and impairment if any, and do not necessarily reflect present or future values.
 
 (d)
Future income taxes
 
 The Company follows the asset and liability method of accounting for future income taxes.  Under this method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and losses carried forward.  Future tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on future tax assets and liabilities of a change in tax rates is recognized in operations in the period
in which the change is enacted or substantially enacted under certain circumstances.  The amount of future income tax assets is limited to the amount of the benefit that is more likely than not to be realized.
 
 (e)
Stock-based compensation
 
 The Company accounts for stock-based compensation using a fair value based method with respect to all stock-based payments to directors and non-employees.  For directors, the fair value of the option is measured at the date of grant.  For non-employees, the fair value of the options is measured on the earlier of the date at which the counterparty performance is complete, the date the performance commitment is reached or the date at which the equity instruments are granted if they are fully vested and non-forfeitable.  For directors and non-employees, the fair value of the option is charged either to operations or mineral property interests, with the offset credit to contributed
surplus, over the vesting period.  If and when the stock options are exercised, the applicable amounts from contributed surplus are transferred to capital stock.
 
  14
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 2.           SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (f)
Loss per share
 
 Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. The Company uses the treasury stock method for calculating diluted loss per share. Under this method, the dilutive effect on earnings per share is calculated presuming the exercise of outstanding options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.
 
 Diluted loss per share as at December 31, 2010 did not include 200,000 options or 33,540,875 warrants as they were determined to be anti-dilutive.
 
 Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of the weighted average number of common shares outstanding.
 
 (g)
Asset retirement obligations (“ARO”)
 
 The Company recognizes an estimate of the liability associated with an ARO in the financial statements at the time the liability can be reasonably estimated. The estimated fair value of the ARO is recorded as a long-term liability, with a corresponding increase in the carrying amount of the related asset.  The capitalized amount is depleted on a unit-of-production basis based upon proven oil and gas reserves.  The liability amount is increased each reporting period due to the passage of time and the amount of accretion is charged to operations in the period.  The ARO can also increase or decrease due to changes in the estimates of timing of cash flows or changes in the original
estimated undiscounted cost.  Actual costs incurred upon settlement of the ARO are charged against the ARO to the extent of the liability recorded.  At present, the Company has no material ARO’s to record in the financial statements.
 
 (h)
Foreign currency transactions
 
 Amounts held or transacted in foreign currency are translated into Canadian dollars as follows:
 
 (i)
Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;
 
 (ii)
Non-monetary items at the historical exchange rate; and
 
 (iii)
Expenses, at the exchange rate on the date of the transaction.
 
 Gains and losses arising from translation are included in the current year’s loss.
  15
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  2.           SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (i)
Future accounting change
 
 International Financial Reporting Standards (“IFRS”)
 
 In 2008, the Canadian Accounting Standards Board (“AcSB”) confirmed that the transition to IFRS from Canadian GAAP will be effective for fiscal years beginning on or after January 1, 2011 for publicly accountable enterprises.  The effective date will require the restatement for comparative purposes of amounts reported by the Company for the interim periods and for the year ended December 31, 2010 and earlier where applicable.  While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.
 
 3.
FINANCIAL INSTRUMENTS
 
 The Company’s financial instruments consist of cash, accounts payable and accrued liabilities.  The Company has designated its cash as held-for-trading; and accounts payable and accrued liabilities as other liabilities.
 
 (a)
Fair value
 
 The carrying values of cash and accounts payable and accrued liabilities approximate their fair values because of the short-term maturity of these financial instruments.
 
 (b)
Foreign currency risk
 
 The Company is not exposed to significant foreign currency risk.
 
 (c)
Liquidity risk
 
 Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities. At December 31, 2010, the Company had accounts payable, other than accrued liabilities, of $16,485 (2009 - $11,541), which were due within 30 days. The Company does not have sufficient cash at December 31, 2010 to meet short-term business requirements such as overhead costs and oil and gas lease payments. Management is currently planning on equity, third-party and related party financing to manage its liquidity and settlement of liabilities. The Company will
be required to raise additional debt or equity to meet its obligations for 2011. There is no assurance that management’s strategy will be successful.
 
 (d)
Interest rate risk
 
 The Company is not exposed to interest rate risk due to the short-term nature of its monetary assets and liabilities.  Future cash flows from interest income on cash will be affected by interest rate fluctuations.
 
 (e)
Other price risk
 
 Other price risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from interest rate
  16
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 3.           FINANCIAL INSTRUMENTS -(Continued)
 
 (e)           Other price risk (continued)
 
 risk or foreign currency risk. The Company is not exposed to significant other price risk on its financial instruments.
 
 (f) Credit risk
 
 Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to minimal credit risk with respect to its cash as this financial instrument is held at a major Canadian financial institution.
 
 4.
OIL AND GAS PROPERTY INTERESTS
 
 The cumulative costs of the Company’s unproven oil and gas interests are as follows:
 
 2010


2009Balance, beginning of the year

$
166,463


$
42,116Lease and acquisition costs


17,441



96,091Geological and geophysical


1,075



27,628Camp, field supplies and travel


-



628Total costs for the year


18,516



124,347Surrendered oil and gas property interest


(68,231
)


-Balance, end of the year

$
116,748


$
166,463
 
 On June 14, 2006, the Company entered into a petroleum, natural gas and general rights conveyance with Stone Petroleums Ltd., Supernova Resources Ltd., 349385 Alberta Ltd. and Torland Ltd. whereby the Company acquired a 100% interest in a petroleum and natural gas (“P&NG”) lease with the government of Alberta.  The underlying lease acquired by the Company is Alberta P&NG lease 0405070015, and the property to which the lease pertains is located in the Milk River area of Alberta. Upon signing the Agreement, the Company paid the Vendor $7,500, paid closing costs of $938 and agreed to assume the underlying lease payments to the Province of Alberta.  In addition, the Vendor is
entitled to an overriding 5% royalty on all petroleum substances produced from the Property, if any.  The Vendor is entitled to a first and paramount lien upon all of the petroleum substances produced or allocated to the Property to secure the payment of any amounts due and payable to the Vendor relating to the royalty.
 
 On July 12, 2010, the Company surrendered the lease with the Province of Alberta due to lack of potential for unconventional tight gas sands.  The Company no longer holds any interest in the property and all amounts paid for the lease are non-refundable. As a result, the Company wrote off the carrying amount of these leases totalling $23,443.
 
  17
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 4.           OIL AND GAS PROPERTY INTERESTS(Continued)
 
 On July 23, 2008, the Company entered into an assumption agreement with Giant Oil & Gas Inc., a company related by common directors, whereby the Company acquired all of the rights and obligations of ten Alberta Crown Petroleum and Natural Gas Lease Agreements for the total amount of $30,331, which was equal to the carrying value of the ten leases.
 
 On June 30, 2009, the Company entered into a petroleum, natural gas and general rights conveyance (the “Agreement”) with Stone Petroleums Ltd., Supernova Resources Ltd., 349385 Alberta Ltd. and Torland Ltd. (together, the “Vendor”) whereby the Company acquired a 100% interest in a petroleum and natural gas (“PN&G”) lease with the government of Alberta.  The underlying lease acquired by the Company is Alberta P&NG lease 0405060026 (the “Lease”), and the property to which the Lease pertains is located in the Bow Island area of Alberta (the “Property”).  Upon signing the Agreement, the Company paid the Vendor $14,124 and agreed
to assume the underlying lease payments to the province of Alberta.  In addition, the Vendor is entitled to an overriding 2% royalty on all petroleum substances produced from the Property, if any.  The Vendor is entitled to a first and paramount lien upon all of the petroleum substances produced or allocated to the Property to secure the payment of any amounts due and payable to the Vendor relating to the royalty.
 
 On August 20, 2009, the Company acquired 100% interest in 13 petroleum and natural gas (“P&NG”) leases with the government of Alberta.  The underlying leases acquired by the Company are Alberta PN&G lease numbers 0409080267, 0409080268, 0409080271, 0409080272, 0409080274, 0409080280, 0409080283, 0409080284, 0409080286, 0409080287, 0409080288, 0409080310 and 0409080311 (the “Leases”), and the property to which the Leases pertain are located in the Bow Island area of Alberta for the total amount of $38,433.
 
 On September 3, 2009, the Company acquired 100% interest in 2 petroleum and natural gas (“P&NG”) leases with the government of Alberta.  The underlying leases acquired by the Company are Alberta PN&G lease numbers 0409090046 and 0409090047 (the “Leases), and the property to which the Leases pertain are located in the Provost area of Alberta for the total amount of $4,337.
 
 On October 29, 2009, the Company acquired 100% interest in 1 petroleum and natural gas (“P&NG”) lease with the government of Alberta.  The underlying lease acquired by the Company is Alberta PN&G lease number 0409100445 (the “Lease), and the property to which the Lease pertains is located in the Medicine Hat area of Alberta for the total amount of $31,601.
 
 In a series of transactions from March 06, 2010 to October 13, 2010, the Company surrendered its rights and obligations to six Alberta Crown and Natural Gas Leases for the combined annual lease payment amount of $12,544. Including the July 12, 2010 decision, the total accumulated oil and property interests surrendered and written off amounted to $44,788.
 
 Total annual lease payments for 2010 paid to the Province of Alberta amounted to $18,337 (2009 - $7,586). As at December 31, 2010, the Company has 22 leases requiring total annual lease payments of $17,441 through to 2012.
 
  18
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  5.
RESTATEMENT
 
 In 2008, the Company recorded a derivative in respect to the foreign exchange element of certain warrants.  It has now been determined that there is no such derivative.  The financial statements for the year ended December 31, 2008 have been restated as follows:
 
 As Previously Reported


Adjustment


As RestatedStatement of OperationsStock-based compensation

$
60,573


$
6,480


$
67,053Loss on foreign exchange derivative

$
20,760


$
(20,760
)

$
-Net loss and comprehensive loss

$
145,640


$
(14,280
)

$
131,360Foreign exchange derivative liability

$
(14,280
)

$
14,280


$
-Shareholders’ Equity (Deficiency)Deficit accumulated during the exploration stage

$
(250,900
)

$
14,280


$
(236,620
)
 
 6.
BRIDGE LOAN PAYABLE
 
 On November 6, 2008, the Company entered into a $117,145 bridge loan agreement with two unrelated parties.  For the year ended December 31, 2009, the loan bears interest at the Bank of Canada Prime Rate of 2% (2008 - 3.50%) plus 1% per annum.  Loan principal and accrued interest in the amount of $57,672 was due on October 14, 2009 and $59,473 was due on November 6, 2009. The loan is unsecured and may be converted to common shares of the Company in 2009 at the discretion of the Borrower or Lender at a conversion rate based on the quoted market value of the Company’s common shares, which will be determined by the Borrower and the Lender on the date of conversion.
 
 During the year ended December, 31, 2009, the Company entered into agreements whereby the lenders exercised previously held Class A warrants for the purchase of 477,940 restricted shares of common stock at $0.25 per share and then set-off the proceeds of the exercise against the outstanding loan balance of $119,485 (including accrued interest).  The shares from the exercise of the warrants are presented as an obligation to issue shares.  The shares were issued in April 2010.
 
  19
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 7.
CAPITAL STOCK
 
 (a)
Common shares
 
 During the year ended December 31, 2010, the Company issued 200,000 common shares upon exercise of share purchase warrants at $0.25 per common share for gross proceeds of $50,000.
 
 (b)
Stock options
 
 The Company has established a stock option plan whereby the Board of Directors may, from time to time, grant options to directors, officers, employees and consultants of the Company.  Under the Plan, the aggregate number of shares that may be issued under the plan shall not exceed 5,000,000 shares.  Additional options may be granted at the discretion of the Board of Directors.  The expiry date for each option shall be set by the Board of Directors at the time of issue of the options and shall not be more than ten years after the grant date.  The exercise price of each option shall be determined by the Board of Directors and in default of any specific determination, shall be
equal to 100% of the fair market value per share on the date of grant.
 
 In 2009, 200,000 stock options were granted to a Director and Officer of the Company, which vest over a two-year period.  In addition, 400,000 stock options previously issued to a Director and Officer were cancelled.
 
 During the year ended December 31, 2010, the Company recognized stock-based compensation of $871,327 (2009 – expense of $172,075; 2008 – expense of $67,053) related to these options.
 
 An estimated forfeiture rate of zero has been assumed and the fair value of each option granted was estimated as at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions and resulting fair value:
 
 
  20
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 7.           CAPITAL STOCK(Continued)
 
 (b)           Stock options (continued)
 
 2010
2009Risk-free interest rate
3.10%
3.37%Dividend yield
0%
0%Expected volatility
130%
168%Expected option life (years)
8
9Forfeiture rate
0%
0%Weighted average fair value
$0.40
$0.49
 
 Expected volatilities are based on industry comparables using available data and other factors due to the fact that the Company’s stock has only limited trading history.  When applicable, the Company will use historical data to estimate option exercise, forfeiture, and employee termination within the valuation model.  For non-employees, the expected term of the options approximate the full term of the options.
 
 The following table sets forth a summary of stock option activity:
 
 Number of Options
Weighted Average Exercise PriceBalance, December 31, 2008
600,000
$ 1.04Options granted
200,000
$ 0.50Options cancelled
(400,000)
$1.30Balance, December 31, 2009
400,000
$ 0.51Options cancelled
(200,000)
$ 0.50Balance, December 31, 2010
200,000
$ 0.51
 
 The following table summarizes information concerning outstanding and exercisable common stock options under the 2007 Plan at December 31, 2010:
 
 Exercise

Price
Options

Outstanding
Expiry date
Number of Options Currently Exercisable
Weighted Average

Life$ 0.51
200,000
June 30, 2018
200,000
7.50 years200,000

200,000
7.50 years
 
 At December 31, 2010, the intrinsic value of the Company’s outstanding stock options was $Nil (2009 - $627,991).
 
  21
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 7.         CAPITAL STOCK (Continued)
 
 (c)
Share purchase warrants
 
 As at December 31, 2010, the Company has share purchase warrants outstanding entitling the holders to acquire common shares as follows:
 
 Class
Exercise

Price
Expiry

Date
Outstanding at

December 31, 2009
Issued
Exercised
Expired
Outstanding at

December 31, 2010
Weighted Average Remaining Contractual

Life (Years)A
$ 0.25
May 26, 2012
10,640,875
-
(200,000)
-
10,440,875
1.25B
$ 0.50
May 26, 2013
11,550,000
-
-
-
11,550,000
2.52C
$ 1.00
May 26, 2014
11,550,000
-
-
-
11,550,000
3.52$ 0.59

33,740,875
-
(200,000)
-
33,540,875
2.43
 
 Class A warrants are fully vested and exercisable as at December 31, 2010 whereas Class B and Class C warrants vest and become fully exercisable on November 26, 2011 and May 26, 2012 respectively.
 
 During 2008, the vesting dates of the share purchase warrants were extended. Originally, all of the warrants were to have become exercisable on May 26, 2008.  On March 25, 2008, by way of letter agreements with each individual warrant holder, the Company and each respective warrant holder have agreed to extend the vesting of the Company’s Class A, Class B and Class C warrants. As a result of the agreements between the Company and the respective warrant holders, the warrant vesting date has been extended to May 26, 2009 with respect to the Class A warrants, to November 26, 2009 with respect to the Class B warrants, and to May 26, 2010 with respect to the Class C warrants.  All other
terms of the warrant agreements remain unchanged and accordingly there is no change in the fair value to be recognized.
 
 On November 19, 2009, by way of letter agreements with each individual warrant holder, the Company and each respective warrant holder have agreed to further extend the vesting of the Company’s Class B and Class C warrants.  As a result of the letter agreements between the Company and the respective warrant holders, the warrant vesting date has been extended from November 26, 2009 to November 26, 2011 with respect to the Class B warrants and from May 26, 2010 to May 26, 2012 with respect to Class C warrants.  In addition, the warrant expiry date has been extended from May 26, 2010 to May 26, 2012 with respect to the Class A warrants, from May 26, 2011 to May 26, 2013 with respect to the
Class B warrants, and from May 26, 2012 to May 26, 2014 with respect to the Class C warrants.
 
 All other terms of the warrant agreements remained unchanged.The aggregate fair value of the modification to the warrants determined using the Black-Scholes pricing model was $4,313,782 that will be amortized over the revised vesting term(s). The fair value of the original warrants and the fair value of the modified warrants were estimated as at the date of modification using the Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 2.03%, dividend yield of 0.00%,
 
  22
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 7.         CAPITAL STOCK (Continued)
 
 (c)           Share purchase warrants (continued)
 
 volatility of 118.25%, expected life of 3.43 years and fair-value of $0.89. During the year ended December 31, 2010, the Company recognized stock-based compensation of $898,997 (2009 - $2,100,352; 2008 - $Nil) related to the modification of these warrants. At December 31, 2010 there is $1,314,433 (2009 - $2,213,430; 2008 - $Nil) in unrecognized stock-based compensation, which will be recognized in future periods as the warrants vest.
 
 The Company has the right, at its sole discretion, to accelerate the maturity date and to lower the exercise price of all of the warrants.
 
 (d) Stock-based compensation
 
 For the year ended December 31, 2010, the Company has recognized $871,327 (2009 - $2,272,427; 2008 - $67,053) in stock-based compensation attributed as follows:
 
 2010
2009
2008Management services (note 7(b))
$        (27,670)
$      172,075
$      67,053Modification cost (note 7(c))
898,997
2,100,352
-$     871,327
$   2,272,427
$      67,053
 
 8.         SHARE REPURCHASE OPTION
 
 The Company holds an irrevocable right to repurchase all or a portion of the 30,000,000 shares owned by two of its Directors for a price of $0.01 per share.  The right can be exercised by the Company at any time and at its sole discretion.  The Company is not obligated to repurchase the shares at any time or for any reason (such as termination of employment, a change of control of the Company or failure to reach performance goals).  The repurchase right held by the Company will continue with respect to and for so long as any of the 30,000,000 shares issued to these directors are held by them (or any of their affiliates or family members), and will survive any such director’s
resignation as an officer or director of the Company.  The Company may exercise its right of repurchase on some or all of the shares held, directly or indirectly, by these directors by delivering a notice of such exercise to such director(s) not less than seven calendar days prior to the closing of such repurchase.  The directors agree that they shall not, directly or indirectly, sell, exchange, pledge, hypothecate, transfer, gift, grant an irrevocable proxy with respect to, devise, assign or in any other way dispose of, encumber or grant a security interest in any of the shares or any interest therein. The directors also agree and acknowledge that said restriction is in addition to all applicable securities laws and regulations.
 
 
 
  23
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 9.         INCOME TAXES
 
 The reconciliation of income tax provision computed at Canadian statutory rates of 28% (2009 - 30%; 2008 - 31%) to the reported income tax provision is as follows:
 
 2010


2009


2008(Note 5)Income tax benefit

$
272,000


$
698,376


$
40,722Stock-based compensation


(244,000
)


(681,728
)


(20,786
)28,000



16,648



19,936Change in future income taxes resulting from enacted tax rate reduction


(3,000
)


(4,470
)


(8,479
)Change in valuation allowance


(25,000
)


(12,178
)


(11,457
)Income tax provision

$
-


$
-


$
-
 
 The significant components of future income tax assets are as follows:
 
 2010


2009Non-capital losses

$
257,074


$
225,491Oil and gas interests


68,231



(431
)325,305



225,060Income tax rate


25
%


25
%Income tax asset


81,300



56,265Valuation allowance


(81,300
)


(56,265
)$
-


$
-
 
 The valuation allowance reflects the Company’s estimate that the tax assets more likely than not will not be realized.
 
 The Company has accumulated non-capital losses for income tax purposes of $257,074.  The losses expire in the following years:
 
 2015

$
8,9502026


35,1232027


61,6182028


64,3072029


55,4932030


31,583$
257,074
 
  24
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 10.         RELATED PARTY TRANSACTIONS
 
 During the year ended December 31, 2010, directors’ fees in aggregate of $Nil (2009 - $1,500; 2008 - $15,000) were paid to the Directors of the Company and management fees of $4,500 (2009 - $8,800; 2008 - $Nil) were paid to a former Officer and Director of the Company.  These transactions are measured at the exchange amount, which is the amount agreed to by the related parties.  There was $Nil (2009 - $1,260) of management fees in accounts payable at December 31, 2010.
 
 11.         DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GAAP
 
 (a)  Recent US accounting pronouncements
 
 
 (i)
In February 2010, FASB issued ASU 2010-09, “Subsequent Event (Topic 855) Amendments to Certain Recognition and Disclosure Requirements”. ASU 2010-09 removes the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of GAAP. All of the amendments in ASU 2010-09 are effective upon issuance of the final ASU, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010.  The adoption of ASU
2010-09 has been reflected in the Company’s financial statements.
 
 (ii)
In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (ASC 820): Improving Disclosures about Fair Value Measurements” which amends the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies
certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements.  The adoption of ASU 2010-06 has been reflected in the Company’s financial statements.
 
 (b)  Impact between Canadian GAAP and US GAAP
 
 The Company currently has no reconciling items to its financial statements prepared in accordance with Canadian GAAP to comply with US GAAP.
 
 
  25
 POWER OIL & GAS INC.
 (An Exploration Stage Company)
 Notes to Financial Statements
 Years Ended December 31, 2010, 2009 and 2008
 (Expressed in Canadian Dollars)
  
 12.         CAPITAL MANAGEMENT
 
 The Company considers its capital to be its shareholders’ equity.  The Company’s objectives when managing its capital are to safeguard the Company’s ability to continue as a going-concern in order to pursue the development of its oil and gas property interests and to maintain a flexible capital structure, which optimizes the costs of capital at an acceptable risk.
 
 The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets.  To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets, or adjust the amount of cash and term deposits.
 
 In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.
 
 In order to maximize ongoing development efforts, the Company does not pay out dividends.  The Company’s investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments, selected with regard to the expected timing of expenditures from continuing operations. There were no changes in the Company’s approach to capital management during the year ended December 31, 2010. The Company is not subject to externally imposed capital requirements.
 
 13.         SUBSEQUENT EVENTS
 
 (a)
On February 06, 2011, the Company surrendered its rights and obligations to one Alberta Crown and Natural Gas lease for the annual lease payment amount of $448.
 
 (b)
On April 13, 2011, the Company surrendered its rights and obligations to three Alberta Crown and Natural Gas leases for the annual lease payment amount of $1,998.
 
 (c)
On May 9, 2011, the Company entered into a $35,000 Convertible Note Agreement with Risor Energy Exploration Inc. a related party by common directors.  The loan bears interest at the Bank of Canada Prime Rate plus 1%.  The Company may repay the entire loan including the outstanding interest at anytime by advising the lender of such intent to repay 15 days prior to the anticipated date of repayment. The loan may be converted to common shares of the Company at the discretion of the Company or the lender with terms yet to be determined.
 
  26







Signature Page





Pursuant to the requirements of Section 12g of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing this Amendment No. 2 to the Form 20-F and has duly caused this Amendment No. 2 to the Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.





Registrant:





Power Oil & Gas Inc., SEC File No. 333-137571








By: /s/ Keith Diakiw


Name: Keith Diakiw


Title: Chief Executive Officer








Dated: October 25, 2011