----

----

| [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                   |
|--------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |   |
|                                                                                                                     | For the quarterly period 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 __________ |

| 000-17232                                                                                                                                                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Commission File Number                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                |
| FACT CORPORATION                                                                                                                                                                                                                                                    |
| (Exact name of registrant as specified in its charter)                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                |   |
| Colorado                                                                                                                                                                                                                                                            | 84-0888594 |
| (State or other jurisdiction of incorporation or organization)                                                                                                                                                                                                      | (I.R.S. Employer Identification No.) |
|                                                                                                                                                                                                                                                                |   |
| 5614E Burbank Rd SE, Calgary, Alberta, Canada                                                                                                                                                                                                                       | T2H 1Z4 |
| (Address of principal executive offices)                                                                                                                                                                                                                            | (Zip Code) |
|                                                                                                                                                                                                                                                                |
|                                           403-693-8004 |
| (Registrant’s  telephone number, including area code)                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                |
| 1530 9th Avenue SE, Calgary, Alberta T2G 0T7                                                                                                                                                                                                                        |
| (Former name, former address and former fiscal year, if changed since last report)                                                                                                                                                                                  |

|   | Yes [X]  No [  ] |
|--------|--------------------------------------|
|   | Yes [X]  No [  ] |

|   | Yes [  ]  No [  ] |
|--------|-------------------------------------------------|

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

----

|   | Yes [  ] No [X] |
|--------|---------------------------|

|   | Yes [  ]  No [  ] |
|--------|-------------------------------------------------|

| 18,796,328 common shares outstanding as of July 26, 2010.                                                                             |
|---------------------------------------------------------------------------------------------------------------------------------------|
| (Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.) |

----

|     |                                                                                        | Page    |
|----------|---------------------------------------------------------------------------------------------|---------|
|     | PART I – Financial Information                                                        |    |
| Item 1.  | Financial Statements                                                                        | 3  |
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4       |
| Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                                  | 6       |
| Item 4T. | Controls and Procedures                                                                     | 6       |
|     |                                                                                        |    |
|     | PART II – Other Information                                                           |    |
| Item 1.  | Legal Proceedings                                                                           | 7  |
| Item 1A. | Risk Factors                                                                                | 7  |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 7  |
| Item 3.  | Defaults Upon Senior Securities                                                             | 7  |
| Item 4.  | (Removed and Reserved)                                                                      | 7  |
| Item 5.  | Other Information                                                                           | 7  |
| Item 6.  | Exhibits                                                                                    | 8  |
|     | Signatures                                                                                  | 8       |

----

|                                                         | Page       |
|--------------------------------------------------------------|------------|
| Unaudited Consolidated Financial Statements                  | F-1        |
| Consolidated Balance Sheets                                  | F-2        |
| Consolidated Statements of Operations and Comprehensive Loss | F-3        |
| Consolidated Statements of Cash Flows                        | F-4        |
| Notes to Unaudited Consolidated Financial Statements         | F-5 to F-9 |

----

----

| ASSETS                                                                                                                                                                       |   | June 30,2010 |        |   | December 31,2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-------------|--------|------------------|--------|
| Current Assets                                                                                                                                                               |   |         |        |   |             |   |
| Cash                                                                                                                                                                         |   | $            | 27,282      |   |             | $      | 45,736 |   |
| Inventory                                                                                                                                                                    |   |         | 100,133     |   |             |   | 3,193 |   |
| Accounts receivable                                                                                                                                                          |   |         | 17,592      |   |             |   | 133,915 |   |
| Prepaid expense                                                                                                                                                              |   |         | 1,165       |   |             |   | 4,081 |   |
| Total Current Assets                                                                                                                                                         |   |         | 146,172     |   |             |   | 186,925 |   |
|                                                                                                                                                                         |   |         |        |   |             |   |   |   |
| Property and Equipment                                                                                                                                                       |   |         |        |   |             |   |   |   |
| Intellectual property                                                                                                                                                        |   |         | 625,394     |   |             |   | 749,912 |   |
| Real property (net of accumulated depreciation of $1,226 and $1,071)                                                                                                         |   |         | 207         |   |             |   | 362 |   |
| Total Property and Equipment                                                                                                                                                 |   |         | 625,601     |   |             |   | 750,274 |   |
| Total Assets                                                                                                                                                                 |   | $            | 771,773     |   |             | $      | 937,199 |   |
|                                                                                                                                                                         |   |         |        |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                     |   |         |        |   |             |   |   |   |
| Current Liabilities                                                                                                                                                          |   |         |        |   |             |   |   |   |
| Accounts payable and accrued liabilities                                                                                                                                     |   | $            | 459,579     |   |             | $      | 363,673 |   |
| Accounts payable and accrued liabilities (related parties)                                                                                                                   |   |         | 644,040     |   |             |   | 603,451 |   |
| Loan payable (related parties)                                                                                                                                               |   |         | 55,762      |   |             |   | 6,412 |   |
| Loan payable                                                                                                                                                                 |   |         | 158,819     |   |             |   | 2,517 |   |
| Current portion of long-term debt and acquisition cost                                                                                                                       |   |         | 194,279     |   |             |   | 168,938 |   |
| Total current liabilities                                                                                                                                                    |   |         | 1,512,479   |   |             |   | 1,144,991 |   |
|                                                                                                                                                                         |   |         |        |   |             |   |   |   |
| Long – Term Liabilities                                                                                                                                                |   |         |        |   |             |   |   |   |
| 6% Series convertible debenture                                                                                                                                              |   |         | 305,185     |   |             |   | 302,685 |   |
| 8% Series convertible notes                                                                                                                                                  |   |         | 1,262,361   |   |             |   | 1,254,100 |   |
| Acquisition cost payable                                                                                                                                                     |   |         | 1,225,279   |   |             |   | 1,337,089 |   |
| Total Long – Term Liabilities                                                                                                                                          |   |         | 2,792,825   |   |             |   | 2,893,874 |   |
|                                                                                                                                                                         |   |         |        |   |             |   |   |   |
| Total Liabilities                                                                                                                                                            |   |         | 4,305,304   |   |             |   | 4,038,865 |   |
|                                                                                                                                                                         |   |         |        |   |             |   |   |   |
| Stockholders' Deficiency                                                                                                                                                     |   |         |        |   |             |   |   |   |
| Class A Common Stock: authorized 100,000,000 shares of no par value; 18,796,328 and 18,706,328 issued and outstanding as at June 30, 2010 and December 31, 2009 respectively |   |         | 23,270,367  |   |             |   | 23,261,326 |   |
| Additional paid in capital                                                                                                                                                   |   |         | 737,849     |   |             |   | 717,563 |   |
| Accumulated other comprehensive income                                                                                                                                       |   |         | 107,439     |   |             |   | 107,852 |   |
| Accumulated deficit                                                                                                                                                          |   |         | (27,649,186 | )      |             |   | (27,188,407 | ) |
| Total Stockholders' Deficiency                                                                                                                                               |   |         | (3,533,531  | )      |             |   | (3,101,666 | ) |
| Total Liabilities and Stockholders' Deficiency                                                                                                                               |   | $            | 771,773     |   |             | $      | 937,199 |   |

----

|                                                                 |   | For the three months endedJune 30, |       |   | For the six months endedJune 30, |   |
|----------------------------------------------------------------------|--------|------------------------------------|------------|--------|----------------------------------|--------|
|                                                                 |   | 2010                               |       |   | 2009                             |   |   | 2010 |   |   | 2009 |   |
| Revenues                                                             |   |                               |       |   |                             |   |   |   |   |   |   |   |
| Functional food premix                                               |   | $                                  | 172,461    |   |                             | $      | 189,000 |   |   | $ | 376,961 |   |   | $ | 651,234 |   |
| Rental income (net of operating expenses)                            |   |                               | 20,615     |   |                             |   | 21,066 |   |   |   | 43,064 |   |   |   | 38,108 |   |
|                                                                 |   |                               | 193,076    |   |                             |   | 210,066 |   |   |   | 420,025 |   |   |   | 689,342 |   |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Costs of Goods Sold – Functional food premix                   |   |                               | 132,567    |   |                             |   | 150,998 |   |   |   | 304,940 |   |   |   | 540,218 |   |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                                         |   |                               | 60,509     |   |                             |   | 59,068 |   |   |   | 115,085 |   |   |   | 149,124 |   |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Costs and Expenses                                                   |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Legal                                                                |   |                               | 3,961      |   |                             |   | 19,770 |   |   |   | (2,257 | ) |   |   | 38,505 |   |
| Consulting fees                                                      |   |                               | 43,288     |   |                             |   | 55,311 |   |   |   | 92,155 |   |   |   | 133,122 |   |
| Depreciation and amortization                                        |   |                               | 62,337     |   |                             |   | 62,328 |   |   |   | 124,673 |   |   |   | 124,652 |   |
| Research and development                                             |   |                               | 10,855     |   |                             |   | - |   |   |   | 34,534 |   |   |   | - |   |
| Marketing                                                            |   |                               | 10,235     |   |                             |   | - |   |   |   | 12,034 |   |   |   | - |   |
| Other Administrative expenses                                        |   |                               | 97,872     |   |                             |   | 121,034 |   |   |   | 244,366 |   |   |   | 167,090 |   |
|                                                                 |   |                               | 228,548    |   |                             |   | 258,443 |   |   |   | 505,505 |   |   |   | 463,369 |   |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) from operations                                               |   |                               | (168,039   | )      |                             |   | (199,375 | ) |   |   | (390,420 | ) |   |   | (314,245 | ) |
| Other income and expenses                                            |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Realized gain (loss)  on disposal of marketable securities |   |                               | -          |   |                             |   | - |   |   |   | - |   |   |   | (32 | ) |
| Gain on debt forgiveness                                             |   |                               | -          |   |                             |   | - |   |   |   | 12,276 |   |   |   | - |   |
| Interest expense                                                     |   |                               | (44,354    | )      |                             |   | (29,777 | ) |   |   | (82,635 | ) |   |   | (61,090 | ) |
|                                                                 |   |                               | (44,354    | )      |                             |   | (29,777 | ) |   |   | (70,359 | ) |   |   | (61,122 | ) |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                                           |   |                               | -          |   |                             |   | - |   |   |   | - |   |   |   | - |   |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss)                                                           |   | $                                  | (212,393   | )      |                             | $      | (229,152 | ) |   | $ | (460,779 | ) |   | $ | (375,367 | ) |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss) per Common Share, basic and diluted                       |   | $                                  | (0.01      | )      |                             | $      | (0.01 | ) |   | $ | (0.02 | ) |   | $ | (0.02 | ) |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Number of Common Shares Used in calculation         |   |                               | 18,789,328 |   |                             |   | 17,154,406 |   |   |   | 18,789,328 |   |   |   | 17,154,406 |   |
|                                                                 |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss                                                   |   |                               |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   | $                                  | (212,393   | )      |                             | $      | (229,152 | ) |   | $ | (460,779 | ) |   | $ | (375,367 | ) |
| Foreign currency translation adjustment                              |   |                               | 5,317      |   |                             |   | (14,478 | ) |   |   | (413 | ) |   |   | (10,635 | ) |
| Comprehensive loss                                                   |   | $                                  | (207,076   | )      |                             | $      | (243,630 | ) |   | $ | (461,192 | ) |   | $ | (386,002 | ) |

----

|                                                      |   | For the six months endedJune 30, |     |
|-----------------------------------------------------------|--------|----------------------------------|----------|
|                                                      |   | 2010                             |     |   | 2009 |   |
| Cash From Operating Activities:                           |   |                             |     |   |   |   |
| Net (loss)                                                |   | $                                | (460,779 | ) |   | $ | (375,367 | ) |
| Reconciling adjustments                                   |   |                             |     |   |   |   |   |   |
| Depreciation, depletion and amortization                  |   |                             | 124,673  |   |   |   | 124,652 |   |
| Accrued interest                                          |   |                             | 66,695   |   |   |   | 61,090 |   |
| Amortization of convertible bonds discount                |   |                             | 10,760   |   |   |   | - |   |
| Stock based compensation                                  |   |                             | 6,827    |   |   |   | 31,344 |   |
| Realized loss on securities                               |   |                             | -        |   |   |   | 32 |   |
| Changes in operating assets and liabilities               |   |                             |     |   |   |   |   |   |
| Accounts receivable                                       |   |                             | 109,182  |   |   |   | 64,218 |   |
| Inventory                                                 |   |                             | (96,940  | ) |   |   | 91,288 |   |
| Prepaid Expense                                           |   |                             | 2,924    |   |   |   | 1,293 |   |
| Payroll liabilities                                       |   |                             | (728     | ) |   |   | 3,393 |   |
| Accounts payable and accrued expenses                     |   |                             | 81,416   |   |   |   | (19,839 | ) |
| Net Cash Flows Used In Operating Activities               |   |                             | (155,970 | ) |   |   | (17,896 | ) |
|                                                      |   |                             |     |   |   |   |   |   |
| Cash From Financing Activities:                           |   |                             |     |   |   |   |   |   |
| Loan proceeds – related party                       |   |                             | 48,147   |   |   |   | - |   |
| Loan proceeds                                             |   |                             | 153,848  |   |   |   | - |   |
| Loan repayment                                            |   |                             | -        |   |   |   | (95,842 | ) |
| Proceeds from sale of common stock                        |   |                             | 22,500   |   |   |   |   |   |
| Reduction to acquisition cost payable                     |   |                             | (86,469  | ) |   |   | (56,700 | ) |
| Net Cash Flows Provided By (Used In) Financing Activities |   |                             | 138,026  |   |   |   | (152,542 | ) |
|                                                      |   |                             |     |   |   |   |   |   |
| Foreign currency translation adjustment                   |   |                             | (510     | ) |   |   | (40 | ) |
|                                                      |   |                             |     |   |   |   |   |   |
| Net change in cash and cash equivalents                   |   |                             | (18,454  | ) |   |   | (170,478 | ) |
| Cash at beginning of period                               |   |                             | 45,736   |   |   |   | 230,341 |   |
| Cash at end of period                                     |   | $                                | 27,282   |   |   | $ | 59,863 |   |
|                                                      |   |                             |     |   |   |   |   |   |
| Supplemental disclosure of cash flow information:         |   |                             |     |   |   |   |   |   |
| Interest paid                                             |   |                             | -        |   |   |   | - |   |
| Income taxes paid (refund)                                |   |                             | -        |   |   |   | - |   |
|                                                      |   |                             |     |   |   |   |   |   |
| Supplemental non-cash financing activity:                 |   |                             |     |   |   |   |   |   |
| Total:                                                    |   | $                                | -        |   |   | $ | - |   |

----

----

|                                          |   | June 30, 2010 |      |   | December 31, 2009 |   |
|-----------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| 8% unsecured convertible notes, at face value |   | $             | 1,304,172 |   |              | $      | 1,304,172 |   |
| Less: unamortized discount                    |   |          | (41,811   | )      |              |   | (50,072 | ) |
| Carrying value                                |   | $             | 1,262,361 |   |              | $      | 1,254,100 |   |

|                          |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|-------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                          |   | 2010                        |   |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
| Amortization of debt discount |   | $                           | 4,153  |   |                      | $      | - |   |   | $ | 8,260 |   |   | $ | - |   |
| Interest at contractual rate  |   |                        | 26,987 |   |                      |   | - |   |   |   | 53,678 |   |   |   | - |   |
|                          |   | $                           | 31,140 |   |                      | $      | - |   |   | $ | 61,938 |   |   | $ | - |   |

----

|                                            |   | June 30, 2010 |    |   | December 31, 2009 |   |
|-------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
| 6% secured convertible debenture, at face value |   | $             | 317,517 |   |              | $      | 317,517 |   |
| Less: unamortized discount                      |   |          | (12,332 | )      |              |   | (14,832 | ) |
| Carrying value                                  |   | $             | 305,185 |   |              | $      | 302,685 |   |

|                          |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|-------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                          |   | 2010                        |   |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
| Amortization of debt discount |   | $                           | 1,257  |   |                      | $      | - |   |   | $ | 2,500 |   |   | $ | - |   |
| Interest at contractual rate  |   |                        | 4,750  |   |                      |   | - |   |   |   | 9,447 |   |   |   | - |   |
|                          |   | $                           | 6,007  |   |                      | $      | - |   |   | $ | 11,947 |   |   | $ | - |   |

|                              |   | June 30, 2010 |    |   | December 31, 2009 |   |
|-----------------------------------|--------|---------------|---------|--------|-------------------|--------|
| Accounts payable – trade    |   | $             | 356,205 |   |              | $      | 305,634 |   |
| Accounts payable – interest |   |          | 101,837 |   |              |   | 38,874 |   |
| Accrued expense                   |   |          | -       |   |              |   | 16,900 |   |
| Payroll liabilities               |   |          | 1,537   |   |              |   | 2,265 |   |
|                              |   | $             | 459,579 |   |              | $      | 363,673 |   |

----

|                               |   | Class AWarrant |   |   | Class BWarrant |   |
|------------------------------------|--------|----------------|--------|--------|----------------|--------|
| Warrants to purchase common stock: |   |           |   |   |           |   |
|   Strike price           |   | $              | 0.30   |   |           | $      | 0.35 |   |
|   Volatility             |   |           | 177    | %      |           |   | 177 | % |
|   Term (years)           |   |           | 1.00   |   |           |   | 2.00 |   |
|   Risk-free rate         |   |           | 0.40   | %      |           |   | 1.03 | % |
|   Dividends              |   |           | -      |   |           |   | - |   |

| (i)   | Transactions with International Securities Group Inc. |
|-----------------|-------------------------------------------------------|

| (ii)   | Transactions with Directors and Officers |
|------------------|------------------------------------------|

----

| (ii)   | Transactions with Directors and Officers (continued) |
|------------------|------------------------------------------------------|

| (iii)   | Transactions with others |
|-------------------|--------------------------|

----

----

|                                    |   | Six months ended June 30, |    |   |   |   |
|-----------------------------------------|--------|---------------------------|---------|--------|--------|--------|
|                                    |   | 2010                      |    |   | 2009   |   |   | Change |   |
| Net revenue from Functional food premix |   | $                         | 376,961 |   |   | $      | 651,234 |   |   |   | (42.12 | %) |
| Gross Profit on Functional food premix  |   | $                         | 72,021  |   |   | $      | 111,016 |   |   |   | (35.13 | %) |
| Gross Profit Rate                       |   |                      | 19.11   | %      |   |   | 17.05 | % |   |   | 12.08 | % |

----

----

----

| Number   | Description                                                                                                                  | Reference                                                                                                                                                                    |
|----------|------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1(i)   | Articles of Incorporation, as amended                                                                                        | Incorporated by reference to the Exhibits previously filed with Capital Reserve Corporation’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 1990 |
| 3.1(ii)  | Articles of Amendment to Articles of Incorporation, filed with the State of Colorado Secretary of State on November 26, 2001 | Incorporated by reference to the Exhibits previously filed with FACT Corporation’s Annual Report for Form 10-KSB for the fiscal year ended December 31, 2002           |
| 3.1(iii) | Articles of Amendment to Articles of Incorporation, filed with the State of Colorado Secretary of State on February 8, 2002  | Incorporated by reference to the Exhibits previously filed with FACT Corporation’s Annual Report for Form 10-KSB for the fiscal year ended December 31, 2002           |
| 3.2      | Amended Bylaws                                                                                                               | Incorporated by reference to the Exhibits previously filed with Capital Reserve Corporation’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994 |
| 10.1     | 2008 Stock Option and Stock Award Plan                                                                                       | Incorporated by reference to the Exhibits previously filed with FACT Corporation’s Definitive 14C on August 22, 2008                                                   |
| 31.1     | Section 302 Certification - Principal Executive Officer and Principal Financial Officer                                      | Filed herewith                                                                                                                                                               |
| 32.1     | Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002        | Filed herewith                                                                                                                                                               |

|   |            | FACT CORPORATION |
|--------|-----------------|------------------|
|   |            |             |   |
| Date:  | August 10, 2010 | By:              | /s/ Jacqueline Danforth |
|   |            | Name:            | Jacqueline R. Danforth |
|   |            | Title:           | President (Principal Executive, Financial and Accounting Officer) |

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