UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q


(Mark
One)


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





For
the quarterly period ended October 31,
2008





or





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





For
the transition period from ____________ to ________________





Commission
file number: 000-51519





True
      North Energy Corporation(Exact
      name of registrant as specified in its
charter)




Nevada
                
                98-043482(State
      or other jurisdiction of incorporation or organization)
                
                (IRS
      Employer Identification
No.)




2
      Allen Center, 1200 Smith Street, 16th
      Floor
                  Houston,
      Texas 77002(Address
      of principal executive offices)(713)
      353-3948(Registrant’s
      telephone number, including area
code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes x  No  ̈





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





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





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





As of December 12, 2008, there were
74,183,466 shares of the issuer’s common stock, par value $0.0001,
outstanding.





TRUE
NORTH ENERGY CORPORATION





FORM
10-Q


FOR
THE QUARTERLY PERIOD ENDED OCTOBER 31, 2008


TABLE
OF CONTENTS








PAGEPART
      I - FINANCIAL INFORMATIONItem
      1.
                Financial
      Statements (Unaudited)
                3Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                12Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                18Item
      4T.
                Controls
      and Procedures
                18PART
      II - OTHER INFORMATIONItem
      1.
                Legal
      Proceedings
                20Item
      1A.
                Risk
      Factors
                20Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                20Item
      3.
                Defaults
      Upon Senior Securities
                20Item
      4.
                Submission
      of Matter to a Vote of Security Holders
                20Item
      5.
                Other
      Information
                21Item
      6.
                Exhibits
                22SIGNATURES
                23




2


PART
I – FINANCIAL INFORMATION




ITEM
1.  FINANCIAL STATEMENTS





PAGEConsolidated
      Balance Sheets as of October 31, 2008 and April 30, 2008
      (Unaudited)
                            
                            4Consolidated
      Statements of Operations for the three and six month periods ended October
      31, 2008 and 2007 (Unaudited)
                            
                            5Consolidated
      Statements of Cash Flows for the six month periods ended October 31, 2008
      and 2007 (Unaudited)
                            
                            6Notes
      to Consolidated Financial Statements (Unaudited)
                            
                            7





3


TRUE
NORTH ENERGY CORPORATION




Consolidated
Balance Sheets




(Unaudited)




October 31,
                      2008
                    
                    
                    April 30,
                      2008AssetsCurrent
      assets:Cash
      and cash equivalents
                    
                    $
                    163,907
                    
                    
                    $
                    228,094Accounts
      receivable
                    
                    
                    68,973
                    
                    
                    
                    274,669Prepaid
      expenses and other current assets
                    
                    
                    109,512
                    
                    
                    
                    231,888Total
      current assets
                    
                    
                    342,392
                    
                    
                    
                    734,651Oil
      and gas properties, using successful efforts accounting method, including
      unproven properties of $2,152,363 and $2,152,068, respectively (net of
      accumulated amortization of $1,143,658 and $756,879,
      respectively)
                    
                    
                    4,541,263
                    
                    
                    
                    4,927,747Property
      and equipment, net of accumulated depreciation of $5,979 and $4,611,
      respectively
                    
                    
                    5,245
                    
                    
                    
                    6,613Website
      development, net of accumulated amortization of $21,140 and $17,150,
      respectively
                    
                    
                    2,786
                    
                    
                    
                    6,776Deferred
      financing costs, net
                    
                    
                    419,451
                    
                    
                    
                    554,055Total
      assets
                    
                    $
                    5,311,137
                    
                    
                    $
                    6,229,842Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Accounts
      payable
                    
                    $
                    20,361
                    
                    
                    $
                    105,680Accrued
      liabilities
                    
                    
                    1,051,718
                    
                    
                    
                    1,157,511Stock
      compensation payable
                    
                    
                    21,528
                    
                    
                    
                    52,117Current
      portion of notes payable
                    
                    
                    537,029
                    
                    
                    
                    711,121Total
      current liabilities
                    
                    
                    1,630,636
                    
                    
                    
                    2,026,429Notes
      payable, net of debt discount
                    
                    
                    2,807,871
                    
                    
                    
                    2,707,834Asset
      retirement obligation
                    
                    
                    58,403
                    
                    
                    
                    54,622Total
      liabilities
                    
                    
                    4,496,910
                    
                    
                    
                    4,788,885Commitments
      and contingencies
                    
                    
                    -
                    
                    
                    
                    -Stockholders’
      Equity:Preferred
      Stock, par value $0.0001; 20,000,000 shares authorized, no shares issued
      or outstanding
                    
                    
                    -
                    
                    
                    
                    -Common
      Stock, par value $0.0001; 250,000,000 shares authorized; 71,961,242 and
      71,016,758 shares issued and outstanding, respectively
                    
                    
                    7,196
                    
                    
                    
                    7,102Additional
      paid-in capital
                    
                    
                    22,573,442
                    
                    
                    
                    22,439,642Accumulated
      deficit
                    
                    
                    (21,766,411
                    )
                    
                    
                    (21,005,787
                    )Total
      stockholders’ equity
                    
                    
                    814,227
                    
                    
                    
                    1,440,957Total
      liabilities and stockholders’ equity
                    
                    $
                    5,311,137
                    
                    
                    $
                    6,229,842




See
notes to consolidated financial statements.


4


TRUE
NORTH ENERGY CORPORATON




Consolidated
Statements of Operations




(Unaudited)




Three Months Ended
                  October 31,
                
                
                Six Months Ended
                  October 31,2008
                
                
                2007
                
                
                2008
                
                
                2007Revenues
                
                $
                274,987
                
                
                $
                294,453
                
                
                $
                898,212
                
                
                $
                294,453Costs
      and expenses:Lease
      operating expenses
                
                
                93,523
                
                
                
                140,928
                
                
                
                200,699
                
                
                
                215,888Exploration
      costs
                
                
                30,828
                
                
                
                310,656
                
                
                
                53,584
                
                
                
                339,536Accretion
      expense
                
                
                1,891
                
                
                
                884
                
                
                
                3,781
                
                
                
                884General
      and administrative expenses:Compensation
      and benefits
                
                
                62,899
                
                
                
                86,295
                
                
                
                125,086
                
                
                
                9,114,424Legal
      and accounting
                
                
                123,031
                
                
                
                58,407
                
                
                
                263,867
                
                
                
                112,831Advisory
      board fees
                
                
                (8,875
                )
                
                
                47,307
                
                
                
                (6,695
                )
                
                
                36,948Investor
      relations
                
                
                9,539
                
                
                
                24,052
                
                
                
                15,806
                
                
                
                42,104Other
      general and administrative expenses
                
                
                54,661
                
                
                
                86,696
                
                
                
                117,759
                
                
                
                166,957Depreciation,
      depletion and amortization
                
                
                137,804
                
                
                
                180,612
                
                
                
                392,137
                
                
                
                183,290Total
      costs and expenses
                
                
                505,301
                
                
                
                935,837
                
                
                
                1,166,024
                
                
                
                10,212,862Loss
      from operations
                
                
                (230,314
                )
                
                
                (641,384
                )
                
                
                (267,812
                )
                
                
                (9,918,409
                )Other
      income (expense):Interest
      and other income
                
                
                -
                
                
                
                -
                
                
                
                186,050
                
                
                
                764Interest
      expense
                
                
                (343,265
                )
                
                
                (230,183
                )
                
                
                (678,862
                )
                
                
                (247,659
                )Loss
      before income taxes
                
                
                (573,579
                )
                
                
                (871,567
                )
                
                
                (760,624
                )
                
                
                (10,165,304
                )Income
      taxes
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      loss
                
                $
                (573,579
                )
                
                $
                (871,567
                )
                
                $
                (760,624
                )
                
                $
                (10,165,304
                )Basic
      and diluted loss per common share
                
                $
                (0.01
                )
                
                $
                (0.01
                )
                
                $
                (0.01
                )
                
                $
                (0.15
                )Weighted-average
      common shares outstanding
                
                
                71,455,615
                
                
                
                67,536,318
                
                
                
                71,266,882
                
                
                
                66,497,937





See
notes to consolidated financial statements.


5




TRUE
NORTH ENERGY CORPORATON




Consolidated
Statements of Cash Flows




(Unaudited)





Six
      Months Ended
                    October
      31,2008
                  
                  
                  2007Cash
      flows from operating activities:Net
      loss
                  
                  $
                  (760,624
                  )
                  
                  $
                  (10,165,304
                  )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation,
      depletion and amortization
                  
                  
                  392,137
                  
                  
                  
                  183,290Stock-based
      compensation
                  
                  
                  103,305
                  
                  
                  
                  8,957,280Amortization
      of debt discount
                  
                  
                  269,253
                  
                  
                  
                  106,713Amortization
      of deferred financing costs
                  
                  
                  134,604
                  
                  
                  
                  50,893Accretion
      expense
                  
                  
                  3,781
                  
                  
                  
                  884Changes
      in operating assets and liabilities:Accounts
      receivable
                  
                  
                  205,696
                  
                  
                  
                  (324,847
                  )Prepaid
      expenses and other
                  
                  
                  122,376
                  
                  
                  
                  196,673Accounts
      payable
                  
                  
                  (85,319
                  )
                  
                  
                  209,835Accrued
      liabilities
                  
                  
                  (105,793
                  )
                  
                  
                  563,490Net
      cash provided by (used in) operating activities
                  
                  
                  279,416
                  
                  
                  
                  (221,093
                  )Cash
      flows from investing activities:Additions
      to oil and gas properties
                  
                  
                  (295
                  )
                  
                  
                  (2,667,102
                  )Net
      cash used in investing activities
                  
                  
                  (295
                  )
                  
                  
                  (2,667,102
                  )Cash
      flows from financing activities:Proceeds
      from issuance of notes payable
                  
                  
                  -
                  
                  
                  
                  4,250,000Increase
      in deferred financing costs
                  
                  
                  -
                  
                  
                  
                  (557,007
                  )Principal
      payments on notes payable
                  
                  
                  (343,308
                  )
                  
                  
                  (418,069
                  )Net
      cash provided by (used in) financing activities
                  
                  
                  (343,308
                  )
                  
                  
                  3,274,924Net
      increase (decrease) in cash and cash equivalents
                  
                  
                  (64,187
                  )
                  
                  
                  386,729Cash
      and cash equivalents, beginning of period
                  
                  
                  228,094
                  
                  
                  
                  267,845Cash
      and cash equivalents, end of period
                  
                  $
                  163,907
                  
                  
                  $
                  654,574Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                  
                  $
                  293,317
                  
                  
                  $
                  15,506Income
      taxes
                  
                  
                  -
                  
                  
                  
                  -Non-cash
      investing and financing activities:Common
      stock issued for oil and gas leases
                  
                  $
                  -
                  
                  
                  $
                  1,988,626Discount
      on notes for relative fair value
                  
                  
                  -
                  
                  
                  
                  781,624Discount
      on notes for overriding royalty interest granted to
lenders
                  
                  
                  -
                  
                  
                  
                  200,000




See
notes to consolidated financial statements.




6




TRUE
NORTH ENERGY CORPORATION


Notes
to Consolidated Financial Statements





NOTE 1 – NATURE OF
OPERATIONS





The
accompanying unaudited interim consolidated financial statements of True North
Energy Corporation (“True North” or the “Company”) have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange
Commission.  These unaudited interim consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and notes thereto contained in the Company’s Annual Report on Form 10-KSB
previously filed with the Securities and Exchange Commission.





In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein.  The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full
year.  Notes to the consolidated financial statements that would
substantially duplicate the disclosure contained in the Company’s audited
consolidated financial statements for the year ended April 30, 2008 as reported
in Form 10-KSB have been omitted.





Certain
reclassifications have been made to the prior year financial statements to
conform with the current presentation.





NOTE
2 – GOING CONCERN





The
accompanying consolidated financial statements have been prepared on a going
concern basis, which implies that True North will continue to realize its assets
and discharge its liabilities in the normal course of business.  The
continuation of True North as a going concern is dependent upon many factors
including, but not limited to, continued financial support from its
shareholders, receipt of additional financing when and as needed to finance its
ongoing business, and the attainment of profitable operations.





True
North has had minimal revenues and has accumulated losses since its inception on
February 1, 2006.  The Company will require additional financing in
order to execute its business plan.  There can be no assurance that
such financing will be available to the Company as and when needed or, if
available, the reasonableness of the terms of such financing. These factors
raise substantial doubt regarding the Company’s ability to continue as a going
concern. The accompanying consolidated financial statements do not include any
adjustments relative to the recoverability or classification of recorded assets
or liabilities that might be necessary should the Company be unable to continue
as a going concern.





NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Accounting
estimates





The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the periods reported.
Actual results could differ from these estimates.





Significant estimates include volumes
of oil and natural gas reserves used in calculating depletion of proved oil and
gas properties, future net revenues and abandonment obligations, impairment of
proved and unproved properties, future income taxes and related assets and
liabilities, the fair value of various common stock, warrants and option
transactions, and contingencies. Oil and natural gas reserve estimates, which
are the basis for unit-of-production depletion and the calculation of
impairment, have numerous inherent uncertainties. The accuracy of any reserve
estimate is a function of the quality of available data, the engineering and
geological interpretation and judgment. Results of drilling, testing and
production subsequent to the date of the estimate may justify revision of such
estimate. Accordingly, reserve estimates are often different from the quantities
of oil and gas that are ultimately recovered. In addition, reserve estimates are
vulnerable to changes in wellhead prices of crude oil and gas. Such prices have
been volatile in the past and can be expected to be volatile in the
future.


7


These
significant estimates are based on current assumptions that may be materially
effected by changes to future economic conditions such as the market prices
received for sales of volumes of oil and gas, interest rates, the fair value of
the Company’s common stock and corresponding volatility, and the Company’s
ability to generate future taxable income. Future changes to these assumptions
may affect these significant estimates materially in the near term.





Oil and gas
properties





The
Company accounts for its oil and gas operations using the successful efforts
method of accounting. Under this method, all costs associated with property
acquisitions, successful exploratory wells, all development wells, including dry
hole development wells, and asset retirement obligation assets are capitalized.
Additionally, interest is capitalized while wells are being drilled and the
underlying property is in development. Costs of exploratory wells are
capitalized pending determination of whether each well has resulted in the
discovery of proved reserves. Oil and gas mineral leasehold costs are
capitalized as incurred. Items charged to expense generally include geological
and geophysical costs, costs of unsuccessful exploratory wells, and oil and gas
production costs. Capitalized costs of proved properties including associated
salvage are depleted on a field-by-field (common reservoir) basis using the
units-of-production method based upon proved producing oil and gas reserves.
Dispositions of oil and gas properties are accounted for as adjustments to
capitalized costs with gain or loss recognized upon sale. A gain (loss) is
recognized to the extent the sales price exceeds or is less than original cost
or the carrying value, net of impairment. Oil and gas properties are also
subject to impairment at the end of each reporting period. Unproved property
costs are excluded from depletable costs until the related properties are
developed.





The
Company reviews its long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable in accordance with SFAS No. 144, “Accounting for the Impairment and
Disposal of Long-Lived Assets” (“SFAS No. 144.”).” If the carrying amount
of the asset, including any intangible assets associated with that asset,
exceeds its estimated future undiscounted net cash flows, the Company will
recognize an impairment loss equal to the difference between its carrying amount
and its estimated fair value. The fair value used to calculate the impairment
for a producing oil and gas field that produces from a common reservoir is first
determined by comparing the undiscounted future net cash flows associated with
total proved properties to the carrying value of the underlying evaluated
property. If the cost of the underlying evaluated property is in excess of the
undiscounted future net cash flows, the future net cash flows are used
discounted at 10%, which the company believes approximates fair value, to
determine the amount of impairment.




For
unproved property costs, management reviews these investments for impairment on
a property-by-property basis at each reporting period or if a triggering event
should occur that may suggest that impairment may be required.





Major
Customers





The
Company sold all of its oil and gas production for the three and six months
ended October 31, 2008 to a single purchaser.  However, because there
is a ready market for the sale of oil and gas and alternate purchasers of oil
and gas are readily available at similar prices, the Company believes that the
loss of this purchaser would not have a material adverse effect on its financial
results.





Earnings per
share





Basic
earnings per share is computed using the weighted average number of common
shares outstanding. Diluted earnings per share reflects the potential dilutive
effects of common stock equivalents such as options, warrants and convertible
securities. Due to the Company incurring a net loss during the three and six
months ended October 31, 2008 and 2007, basic and diluted loss per share are the
same as all potentially dilutive common stock equivalents are
anti-dilutive.


8


Recently Issued Accounting
Pronouncements




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and
requirements to recognize the assets acquired and liabilities assumed in an
acquisition transaction and determines what information to disclose to investors
regarding the business combination. SFAS No. 141(R) is effective for business
combinations for which the acquisition date is on or after the beginning of the
first annual period beginning after December 15, 2008. The Company does not
expect a material impact from SFAS No. 141(R) on its consolidated financial
statements.





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling
Interests in Consolidated Financial Statements – amendments of ARB No. 51.”
SFAS No. 160 states that accounting and reporting for minority interests
will be recharacterized as non-controlling interests and classified as a
component of equity.  The statement also establishes reporting
requirements that provide sufficient disclosures that clearly identify and
distinguish between the interests of the parent and the interests of the
non-controlling owners.  SFAS No. 160 applies to all entities that
prepare consolidated financial statements, except not-for-profit organizations,
but will affect only those entities that have an outstanding non-controlling
interest in one or more subsidiaries or that deconsolidate a subsidiary. 
This statement is effective as of the beginning of an entity’s first fiscal year
beginning after December 15, 2008. The Company currently has no subsidiary
subject to this standard and does not expect a material impact from SFAS No. 160
on its consolidated financial statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.” SFAS 161 is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity’s financial position, financial performance, and cash flows. The
provisions of SFAS 161 are effective for the fiscal years and interim periods
beginning after November 15, 2008. The Company is currently evaluating the
impact of adopting SFAS 161 on its consolidated financial statement
disclosures.




On May 9,
2008 the FASB issued FASB Staff Position APB 14-1, “Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement).” APB 14-1 requires the issuer to separately account for the
liability and equity components of convertible debt instruments in a manner that
reflects the issuer’s nonconvertible debt borrowing rate. The guidance will
result in companies recognizing higher interest expense in the statement of
operations due to amortization of the discount that results from separating the
liability and equity components. APB 14-1 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. The Company is currently evaluating
the impact of adopting APB 14-1 on its consolidated financial
statements.





In June
2008, the FASB ratified the consensus reached on Emerging Issues Task Force
("EITF") Issue No. 07-05, Determining Whether an Instrument (or Embedded
Feature) Is Indexed to an Entity's Own Stock ("EITF No. 07-05"). EITF No. 07-05
clarifies the determination of whether an instrument (or an embedded feature) is
indexed to an entity's own stock, which would qualify as a scope exception under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. EITF
No. 07-05 is effective for financial statements issued for fiscal years
beginning after December 15, 2008. Early adoption for an existing instrument is
not permitted. The Company is currently evaluating the impact of adopting EITF
No. 07-05 and does not expect adoption to have a material impact on its
consolidated financial statements.





NOTE
4 – OIL AND GAS PROPERTIES





The
Company is engaged in the acquisition, exploration, development and production
of oil and gas in Alaska, Colorado and Texas.  The Company first
became an oil and gas exploration and development company in February 2006, but
until September 2007 had no developed reserves or production, and had not
realized any revenues from its operations.





Alaska
Properties





True
North’s principal Alaska assets consist of oil and gas leases covering
approximately 34,910 acres in the Cook Inlet and Beaufort Sea (“North Slope”)
areas of Alaska.  The Company currently holds a 100% working interest
in its Alaska leases but may elect to sell a portion of these interests at some
point in the future. The Cook Inlet leases provide for a net revenue interest of
87.5% prior to an overriding 5% royalty. The North Slope leases provide for a
net revenue interest of approximately 83.3% prior to an overriding 5% royalty.
The Cook Inlet leases have expiration dates ranging from November 27, 2010 to
September 30, 2013 and the North Slope leases expire on March 1, 2012, unless
such leases are held by production or drilling activity.


9





Colorado
Properties





In June
2007 True North acquired certain non-producing oil and gas interests and
properties in northwest Colorado in an area covering more than 17,000 acres. The
Company holds a 100% working interest in the underlying oil and gas leases,
which expire in 2016.  True North continues to refine its development
plans for the area.





Texas
Properties





In
September 2007 the Company acquired interests in two Texas oil and gas leases
covering approximately 1,150 acres.  These assets include two
producing wells as well as three additional exploration prospects located in
Brazoria County, Texas.  The following unaudited pro forma
consolidated results of operations have been prepared as if the acquisition of
the Texas assets had occurred as of May 1, 2007.  The pro forma
information is presented for information purposes only and is not necessarily
indicative of the results of operations that actually would have been achieved
had the acquisition of the Texas assets been consummated as of that time, nor is
it intended to be a projection of future results.





Three
      Months Ended October 31
                          
                          
                          Six
      Months Ended October 312008
                          
                          
                          2007
                          
                          
                          2008
                          
                          
                          2007Revenues
                          
                          $
                          274,987
                          
                          
                          $
                          530,927
                          
                          
                          $
                          898,212
                          
                          
                          $
                          1,220,569Net
      loss
                          
                          
                          (521,720
                          )
                          
                          
                          (1,043,909
                          )
                          
                          
                          (738,687
                          )
                          
                          
                          (10,457,031
                          )Loss
      per share – basic and diluted
                          
                          $
                          (0.01
                          )
                          
                          $
                          (0.02
                          )
                          
                          $
                          (0.01
                          )
                          
                          $
                          (0.15
                          )





NOTE
5 – STOCK-BASED COMPENSATION





True
North recognized stock-based compensation expenses of $51,125 and $57,307 during
the three months ended October 31, 2008 and 2007 for services provided by
members of the Company’s advisory board and other third parties.  As
of October 31, 2008 the Company issued an aggregate of 250,000 shares of common
stock to its five advisory board members representing payment of the annual fee
due them for the twelve months ended October 5, 2008. Also during October, the
Company issued an aggregate of 25,000 shares of common stock to its five
advisory board members representing payment of the quarterly fee due them for
the three months ended October 31, 2008.  As of September 30, 2008 the
Company issued 462,291 shares of common stock to Prime Natural Resources, Inc.
(“Prime”), representing payment of the stock fee due to Prime for the
three-month period ended September 30, 2008 under the terms of the June 30, 2008
Consulting Agreement therewith.





Stock
compensation payable as of October 31, 2008 includes $1,528 of stock
compensation expenses associated with 17,760 shares earned by members of the
Company’s advisory board through that date that are not issuable by the Company
until October 2009.  Stock compensation payable as of October 31, 2008
also includes $20,000 of stock compensation expenses associated with 262,605
shares earned by  Prime through that date that are not issuable by the
Company until December 2008.





NOTE
6 – SUBSEQUENT EVENTS





As of
November 24, 2008 the Company entered into an Omnibus Amendment (the
“Amendment”) with Valens Offshore SPV I, Ltd. (“Valens Offshore I”), Valens
Offshore SPV II, Corp. (“Valens Offshore II”), Valens U.S. SPV I, LLC (“Valens
US”), PSource Structured Debt Limited (“PSource”) and LV Administrative
Services, Inc. for the purpose of amending certain terms of (i) that certain
Amended and Restated Secured Term Note, dated as of March 31, 2008 issued by the
Companies in favor of Valens Offshore II (as further amended, restated, modified
and/or supplemented from time to time, the “First March 2008 Amended and
Restated Term Note”) and (ii) that certain Amended and Restated Secured Term
Note, dated as of March 31, 2008 issued by the Companies in favor of Valens US
and subsequently assigned in part to Valens Offshore I and PSource (as further
amended, restated, modified and/or supplemented from time to time, the “Second
March 2008 Amended and Restated Term Note”, together with the First March 2008
Amended and Restated Term Note, the “March Term Notes” and each, a “March Term
Note”).





The
Amendment was required as a result of the temporary, Hurricane Ike-related
shutdown of our producing oil and gas wells in Brazoria County, Texas. As a
consequence of this temporary shutdown, the Company was unable to make the
payments due in November and December 2008 on its March Term Notes. Following
the storm, workover costs totaling approximately $75,000 were incurred to
restore the Devon Fee #1 well to operation.  That well, which was
restored to production on November 1, 2008, currently is producing at pre-shut
in rates.


10





In
consideration of the payment of an aggregate of 2,222,224 shares of True North
Energy Corporation common stock, the holders of the March Term Notes allowed us
to defer the cash payments due to them on November 3, 2008 and December 1, 2008
until the earlier of (i) the maturity date for the March Term Notes or (ii) the
date upon which all of the obligations rising under any March Term Note shall be
declared due and payable or are otherwise paid in full. From and after January
1, 2009, regularly scheduled monthly amount payments under each March Term Note
shall be due and payable in accordance with the terms of such applicable March
Term Note. The stock payments are being treated as additional interest expense
under the March Term Notes.


11





ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS





Forward
Looking Statements





Except
for historical information, this report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.  Such forward-looking
statements involve risks and uncertainties, including, among other things,
statements regarding our business strategy, future revenues and anticipated
costs and expenses.  Such forward-looking statements include, among
others, those statements including the words “expects,” “anticipates,”
“intends,” “believes” and similar language.  Our actual results may
differ significantly from those projected in the forward-looking
statements.  Factors that might cause or contribute to such
differences include, but are not limited to, those discussed herein as well as
in the “Description of Business – Risk Factors” section in our Annual Report on
Form 10-KSB for the year ended April 30, 2008.  You should carefully
review the risks described in our Annual Report and in other documents we file
from time to time with the Securities and Exchange Commission.  You
are cautioned not to place undue reliance on the forward-looking statements,
which speak only as of the date of this report. We undertake no obligation to
publicly release any revisions to the forward-looking statements or reflect
events or circumstances after the date of this document.





Although
we believe that the expectations reflected in these forward-looking statements
are based on reasonable assumptions, there are a number of risks and
uncertainties that could cause actual results to differ materially from such
forward-looking statements.  These factors include, among
others:




· The risks
associated with oil and gas exploration;


·
            Our
      ability to raise capital to fund capital
  expenditures;


·
            Our
      ability to find, acquire, market, develop and produce new
      properties;


·
            Oil
      and gas price volatility;


·
            Uncertainties
      in the estimation of proved reserves and in the projection of future rates
      of production and timing of development
  expenditures;


·
            Operating
      hazards attendant to the natural gas and oil
  business;


·
            Downhole
      drilling and completion risks that are generally not recoverable from
      third parties or insurance;


·
            Availability
      and cost of material and equipment;


·
            Delays
      in anticipated start-up dates;


·
            Actions
      or inactions of third-party operators of our
  properties;


·
            Our
      ability to find and retain skilled
personnel;


·
            Regulatory
      developments;


·
            Environmental
      risks; and


·
            General
      economic conditions.





All
references in this Form 10-Q to the “Company,” “True North,” “we,” “us” or “our”
are to True North Energy Corporation.  All references to share amounts
in this Form 10-Q give retroactive effect to a 5:1 forward stock split that was
affected by the Company on April 18, 2006.





General
Overview





We are
engaged in the acquisition, exploration, development and production of oil and
gas properties in Alaska, Colorado and Texas. We first became an oil and gas
exploration and development company in February 2006, but until the September
19, 2007 closing of a Purchase and Sale Agreement with Prime Natural Resources,
Inc. (“Prime”), had no developed reserves or production, and had not realized
any revenues from our operations. We were incorporated in Nevada in April 2004
under the name Ameriprint International Ltd. to engage in the business of
providing printing and packaging solutions to entities of all sizes and to
specialize in providing templated, low cost, quality printing of high volume,
high turnover print materials. We conducted minimal operations in this area and
discontinued these operations in January 2006.


12


Going
Concern





In its
report as of and for the year ended April 30, 2008 dated July 29, 2008, our
auditors, Malone and Bailey, PC, expressed an opinion that there is substantial
doubt about our ability to continue as a going concern.  Our
consolidated financial statements do not include any adjustments that may result
from the outcome of this uncertainty.  We have generated minimal
revenues since our inception. We have an accumulated deficit of $21,766,411 as
of October 31, 2008.  Our continuation as a going concern is dependent
upon future events, including our ability to raise additional capital and to
generate positive cash flows.





Business
Strategy





We plan
to grow our business onshore in the U.S. through a balance of drilling and
acquisition. We will focus our efforts regionally to achieve economies of scale
with predictable risk and bases of production. Our principal goals are to
provide the Company and our shareholders with opportunity, growth and
value.





After
examining the fundamentals of the North American energy market over the last two
years, we have positioned ourselves to pursue the strategies described above
based on the following beliefs about the energy industry:





·
            production
      depletion rates in North America will
  accelerate;




·
            finding,
      development and operating costs will continue to increase;
    and




·
            conventional
      oil and gas production will soon reach a peak from which there will be no
      recovery, regardless of higher prices or improved
    technology.





We
believe that these trends are becoming more and more evident each day.  The
major oil and gas companies have de-emphasized their search for new conventional
oil and gas reserves in North America. As a result of the increased depletion
rates and reduced discovery efforts, North American conventional production
has declined by one-third of previous levels. It is our belief that emerging oil
and gas companies, such as us, can effectively position themselves to take
advantage of this opportunity. To that end, we have adopted the following
objectives:





·
            Lease
      potentially significant productive acreage in under-explored, neglected,
      but still highly productive basins such as the Cook Inlet and Beaufort Sea
      areas in Alaska;




·
            Lease
      as much of the potentially productive natural gas acreage in
      unconventional gas plays that we can
identify;




·
            Focus
      exclusively onshore in North America (and away from geopolitical unrest)
      where we can benefit from the highly trained and experienced workforce,
      large available seismic and well control database, and readily available
      drilling and production
technologies;





·
            Acquire
      all of the existing conventional natural gas and oil production and
      reserves we can afford; and




·
            Engage
      in low to medium risk exploration and development of oil and gas reserves
      with sophisticated, industry-leading
partners.





We
believe that natural gas demand is likely to steadily increase as the U.S.
economy grows and as natural gas is increasingly seen as the most practical way
to reduce greenhouse gas emissions and reduce the risk of climate change. We
believe these factors will lead to continuing natural gas price strength in the
years to come. Better technologies applied to unconventional reservoirs in a
time of structurally higher natural gas prices will result in the discovery and
development of significant new natural gas reserves.


13


As a
result of these trends, we have expanded our focus beyond just Alaska. During
the past two years we have aggressively pursued new unconventional gas resource
plays with potentially substantial upsides. We believe that this course of
action will allow us to be well positioned for future success. Our June 2007
Colorado acquisition is an example of this strategy. Our tactics to execute our
strategies and achieve our goals and objectives include:




·
            Increasing
      development of internally generated prospects and
      opportunities;




·
            Funding
      prospects developed by proven
geoscientists;




·
            Completing
      negotiated acquisitions of proved
properties;




·
            Maintaining
      tight control of general and administrative and geological and geophysical
      costs by keeping employee levels low and outsourcing as much of our
      activities as possible;




·
            Designing
      creative deal structures to access acreage, seismic data, prospects and
      capital;




·
            Arranging
      necessary financing to execute the business plan;
  and




·
            Using
      equity ownership incentives to align the interests of our employees and
      management with that of our
shareholders.





As we
pursue these objectives, our business will be subject to the risks typically
associated with a start-up company in the competitive and volatile oil and gas
resources business.





Results
of Operations


Three
Months Ended October 31, 2008 Compared to the Three Months Ended October 31,
2007





Revenues.Revenues for the
three months ended October 31, 2008 and 2007 were $274,987 and $294,453,
respectively.  Current period revenues were lower than revenues during
both the immediately proceeding three month period as well as the same period of
the prior year due to a combination of lower oil and gas prices and decreased
production volumes during the period just ended.  The decreases in
production resulted from us shutting in our two operating Texas wells during
Hurricane Ike, as well as workover procedures performed on our Devon Fee #1
well. The prior year period only includes revenues from September 19, 2007, the
acquisition date from Prime of two oil and gas leases in Texas.





Lease operating expenses.Lease operating expenses for the three months ended October 31, 2008 and
2007 were $93,523 and $140,928, respectively.  This decrease of
$47,405was principally due to a $55,243 decrease in property and casualty
insurance costs resulting from less drilling activity than originally planned in
the prior year.  This decrease was partially offset by a $7,838
increase in operating expenses related to the September 19, 2007 acquisition
from Prime of two oil and gas leases in Texas not having a full quarter of
operations in the prior year period.  Operating expenses would have
increased more, but volume driven costs were lower than normal due to the lower
production volumes experienced as a result of our wells being shutdown during
Hurricane Ike.





Exploration costs.
Exploration costs for the three months ended October 31, 2008 and 2007 were
$30,828 and $310,656, respectively.  This decrease of $279,828 was due
in large part to a $287,468 decrease in dry hole costs associated with
management’s election to curtail exploration activities.  The
aforementioned decrease was partially offset by a $5,989 increase in delay
rentals.





General and administrative
expenses. General and administrative expenses for the three months ended
October 31, 2008 and 2007 were $241,255 and $302,757,
respectively.  This decrease of $61,502 primarily was due to a $56,182
decrease in advisory board fees resulting from the lower per share price of our
common stock.  Decreases in compensation and benefits expenses,
investor relations costs and printing and postage expenses were offset by an
increase of $64,624 in legal and accounting fees.  These
fees  increased as a result of  an increase in our
accounting and auditing requirements following the acquisition of two producing
oil and gas leases in Texas from Prime during September 2007.


14


Depreciation, depletion and
amortization. Depreciation, depletion and amortization for the three
months ended October 31, 2008 and 2007 totaled $137,804 and $180,612,
respectively.  The decrease of $42,808 was due largely to a decrease
in depletion expenses resulting from decreased production volumes while our
wells were shutdown during Hurricane Ike. This decrease would have been larger
except that the two oil and gas leases in Texas did not have a full quarter of
operations in the prior year period.





Interest expense. Interest
expense for the three months ended October 31, 2008 and 2007 was $343,265 and
$230,183, respectively.  The increase in interest expense of $113,082
resulted from the borrowings issued to finance the Prime acquisition being
outstanding for all of the three months ended October 31, 2008 versus just a
portion of the prior year period.





Net loss. We incurred a net
loss for the three months ended October 31, 2008 and 2007 of $573,579 and
$871,567, respectively, specifically due to the reasons discussed
above.





Results
of Operations


Six
Months Ended October 31, 2008 Compared to the Six Months Ended October 31,
2007





Revenues.Revenues for the
six months ended October 31, 2008 and 2007 were $898,212 and 294,453,
respectively.  The increase in revenues was due to the September 19,
2007 acquisition from Prime of two oil and gas leases in Texas being included in
the full six month 2008 period, but only included for one and a half months of
the 2007 period.





Lease operating expenses.Lease operating expenses for the six months ended October 31, 2008 and
2007 were $200,699 and $215,888, respectively.  This decrease was due
to an $110,487 decrease in property and casualty insurance costs resulting from
less drilling activity than originally planned in the prior
year.  This decrease was offset by a $95,298 increase in operating
expenses related to the September 19, 2007 acquisition from Prime of two oil and
gas leases in Texas not having a full six months of operations in the prior year
period.  Operating expenses would have increased more, but volume
driven costs were lower than normal due to lower production as a result of our
wells being shutdown during Hurricane Ike.





Exploration costs.
Exploration costs for the six months ended October 31, 2008 and 2007 were
$53,584 and $339,536, respectively.  This decrease of $285,952
principally was due to a $287,468 decrease in dry hole costs as a result of
management’s election to curtail exploration activities.  The
aforementioned decrease was offset by a $15,304 increase in delay
rentals.





General and administrative
expenses. General and administrative expenses for the six months ended
October 31, 2008 and 2007 were $515,823 and $9,473,264,
respectively.  The decrease in general and administrative costs of
$8,957,441 was primarily due to a $8,989,338 decrease in compensation and
benefits from the prior year period.  Approximately $8.9 million of
the decrease related to prior year stock-based compensation expenses recognized
in connection with the purchase of 15.5 million shares of common stock by our
chief executive officer from True North’s principal shareholder.  This
decrease was offset by an increase of $151,036 in legal and accounting fees,
which increased due to our increased accounting and auditing needs following the
acquisition of two Texas producing oil and gas leases from Prime during
September 2007.





Depreciation, depletion and
amortization. Depreciation, depletion and amortization for the six months
ended October 31, 2008 and 2007 totaled $392,137 and $183,290,
respectively.  Substantially all of the increase of $208,847 resulted
from  depletion of our two oil and gas leases acquired from
Prime.





Interest and other
income.Interest and other income for the six months ended
October 31, 2008 and 2007 totaled $186,050 and $764,
respectively.  During July 2008 we received an insurance premium
refund of $186,050 as a result of a premium audit of our control of well
insurance policy.  The premium refund resulted from our drilling fewer
wells than originally anticipated, as well as the fact that all of the wells
drilled were plugged and abandoned.





Interest expense. Interest
expense for the six months ended October 31, 2008 and 2007 was $678,862 and
$247,659, respectively.  The increase in interest expense of $431,203
resulted from the notes payable issued to finance the Prime acquisition being
outstanding for the full six month 2008 period, as compared to just one and a
half months during the corresponding period of the prior
year.  Interest expense associated with notes payable for the six
months ended October 31, 2008 and 2007 was $275,005 and $23,869, respectively,
an increase of $251,136. Amortization of debt discount associated with these
notes payable increased by $195,540 (from  $73,713 in the 2007 period
to 269,253 in the 2008 period).  Amortization of deferred finance
costs during the six months ended October 31, 2008 and 2007
totaled  $134,604 and $50,893, respectively.  This increase
of $83,711 resulted from the new borrowings being outstanding for a greater
period of time during the current year period.




Net loss. We incurred a net
loss for the six months ended October 31, 2008 and 2007 of $760,624 and
$10,165,304, respectively, specifically due to the reasons discussed
above.


15


Liquidity
and Capital Resources





At
October 31, 2008, we had a working capital deficit of $1,288,244 compared to a
working capital deficit of $1,291,778 at April 30, 2008. Current liabilities
decreased to $1,630,636 at October 31, 2008 from $2,026,429 at April 30,
2008.  This decrease resulted from repayment of several obligations
combined with a reduction in the current portion of notes payable as a result of
an amendment to the repayment terms of our notes payable. We reduced our total
debt by $74,055 through debt repayments, net of the amortization of related debt
discounts.  Current assets decreased to $342,392 at October 31, 2008
from $734,651 at April 30, 2008 due largely to a $205,696 decrease in accounts
receivable.  This decrease in accounts receivable resulted from lower
prices and production volumes on oil and gas sales not yet
collected.  Prepaid expenses and other current assets also decreased
$122,376 due to a decrease in prepaid insurance costs. Cash and cash equivalents
decreased to $163,907 at October 31, 2008 from $228,094 at April 30,
2007.





Net cash
provided by operating activities totaled $279,416 for the six months ended
October 31, 2008 compared to net cash used in operating activities of $221,093
for the six months ended October 31, 2007. This increase is due to the prior
year period only having one and a half months of revenue producing operations,
while the current year period includes the results from the two producing oil
and gas leases acquired from Prime in September 2007 for the full six month
period.  The current year period also included the receipt of an
$186,050 insurance policy premium refund.





Net cash
used in investing activities totaled $295 and $2,667,102 for the six months
ended October 31, 2008 and 2007, respectively.  This decrease was due
to management’s election to curtail investing activities while it evaluates
future opportunities and concentrates on raising additional capital
resources.





Net cash
used in financing activities totaled $343,308 for the six months ended October
31, 2008, consisting entirely of principal payments on notes payable. Net cash
provided by financing activities totaled $3,274,924 during the six months ended
October 31, 2007and consisted of $4,250,000 from the issuance of notes payable
offset by principal payments on notes payable of $418,069 and the payment of
deferred finance costs of $557,007.  These notes payable were issued
to finance the Prime acquisition in September 2007.





We will
require additional financing to fund development costs associated with our
existing prospects as well as for any additional lease
acquisitions.  No assurance can be given that such additional
financing will be available to us as and when needed or, if available, the terms
on which it will be available.  No future borrowing or funding sources
are available under our existing financing arrangements.





Entering
into our current fiscal year ending April 30, 2009, we had originally planned to
spend approximately $5 million on exploration and development activities such as
seismic data acquisition, additional lease acquisition, technical studies and
participating in joint venture development and exploration
drilling.  Given our current capital constraints, combined with the
challenging macro-economic environment, we now anticipate expending only minimal
amounts on acquisition, exploration and development activities during the
remainder of this fiscal year nor do we anticipate drilling on our Alaska
properties during the next six months.  Our primary efforts in Alaska
will focus on a regulatory approval to permit an exploratory well in the Cook
Inlet and exploring opportunities to sell a portion of our Alaskan working
interests through an outright sale or a joint venture partnership in an effort
to reduce our risk and financial exposure.  We plan to use a similar
approach to develop our Colorado acreage.





We may
require additional financing to meet our working capital requirements, including
the cost of reviewing and negotiating transactions and other ordinary general
and administrative costs such as regulatory compliance, investor relations,
consulting and advisory services, Internet/web hosting, executive compensation,
office and general expenses, professional fees, travel and entertainment, and
rent and related expenses. We estimate that the level of working capital needed
for these general and administrative costs for the next 12 months will
approximate $1 million.  However, this estimate is subject to change,
depending on the number of transactions in which we ultimately become
involved.  In addition, funding will be required for follow-on
development of working interest obligations of any successful exploration
prospects.


16


Oil and
gas exploration requires significant outlays of capital and in many situations
may offer a limited probability of success. We hope to enhance our chances for
success by effectively using available technology, rigorously evaluating
sub-surface data, and, to the extent possible, managing dry hole and financial
risks.





We intend
to rely on synergistic partnering with sophisticated industry partners. The
ideal partner would tend to be a regionally focused independent that has a solid
grasp on the play's history, and a demonstrated understanding of the technology
required to exploit the play. However, there is no assurance that we will be
able to successfully negotiate any such partnering agreement or raise the
necessary financing to invest in such a venture, or that any such venture will
yield us any revenues or profits.





We
continue to target selected acquisitions of proved on-shore properties in the
United States and Canada. We are biased toward acquisitions of long-lived
reserves and intend to target negotiated acquisitions.  By focusing
our efforts on negotiated acquisitions, we seek to avoid competitive bidding
situations that are the norm for the sale of these assets and typically result
in higher sales prices.





We face
competition from firms that are well established, successful, better capitalized
and, in many instances, willing to pay more for properties than what we might
consider prudent.  Our success will depend on the execution of our
business plan to:


·
              identify
      available transactions;
 ·
              quickly
      evaluate which transactions are most promising;
  and
 ·
              negotiate
      creative transaction
structures.





Presently
our staff consists of our two executive officers, John Folnovic and Massimiliano
Pozzoni.  We do not expect significant changes in our number of
employees during the next twelve months.   We intend to outsource
certain technical and administrative functions on an as-needed basis in order to
conduct our operating activities. Our management team will select and hire these
contractors and manage and evaluate their work performance.





Off-Balance
Sheet Arrangements





We have
never entered into any off-balance sheet financing arrangements and have not
formed any special purpose entities.  We have not guaranteed any debt
or commitments of other entities or entered into any options on non-financial
assets.





Effects
of Inflation and Changes in Price





Our
revenues, future rate of growth, results of operations, financial condition and
ability to borrow funds or obtain additional capital, as well as the carrying
value of our properties, are substantially dependent upon prevailing prices of
oil and natural gas. If the price of oil and natural gas increases (decreases),
there could be a corresponding increase (decrease) in the operating cost that we
are required to bear for operations, as well as an increase (decrease) in
revenues. Inflation has had a minimal effect on the operating activities of the
Company.





Recently
Issued Accounting Pronouncements




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and
requirements to recognize the assets acquired and liabilities assumed in an
acquisition transaction and determines what information to disclose to investors
regarding the business combination. SFAS No. 141(R) is effective for business
combinations for which the acquisition date is on or after the beginning of the
first annual period beginning after December 15, 2008.  We do not
expect a material impact from SFAS No. 141(R) on our consolidated financial
statements.





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling
Interests in Consolidated Financial Statements – amendments of ARB No. 51.”
SFAS No. 160 states that accounting and reporting for minority interests
will be recharacterized as non-controlling interests and classified as a
component of equity.  The statement also establishes reporting
requirements that provide sufficient disclosures that clearly identify and
distinguish between the interests of the parent and the interests of the
non-controlling owners.  SFAS No. 160 applies to all entities that
prepare consolidated financial statements, except not-for-profit organizations,
but will affect only those entities that have an outstanding non-controlling
interest in one or more subsidiaries or that deconsolidate a subsidiary. 
This statement is effective as of the beginning of an entity’s first fiscal year
beginning after December 15, 2008. We currently have no subsidiary subject
to this standard and do not expect a material impact from SFAS No. 160 on our
consolidated financial statements.


17


In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.” SFAS 161 is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity’s financial position, financial performance, and cash flows. The
provisions of SFAS 161 are effective for the fiscal years and interim periods
beginning after November 15, 2008. We are currently evaluating the impact of
adopting SFAS 161 on our consolidated financial statement
disclosures.




On May 9,
2008 the FASB issued FASB Staff Position APB 14-1, “Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement).” APB 14-1 requires the issuer to separately account for the
liability and equity components of convertible debt instruments in a manner that
reflects the issuer’s nonconvertible debt borrowing rate. The guidance will
result in companies recognizing higher interest expense in the statement of
operations due to amortization of the discount that results from separating the
liability and equity components. APB 14-1 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. We are currently evaluating the
impact of adopting APB 14-1 on our consolidated financial
statements.





In June
2008, the FASB ratified the consensus reached on Emerging Issues Task Force
("EITF") Issue No. 07-05, Determining Whether an Instrument (or Embedded
Feature) Is Indexed to an Entity's Own Stock ("EITF No. 07-05"). EITF No. 07-05
clarifies the determination of whether an instrument (or an embedded feature) is
indexed to an entity's own stock, which would qualify as a scope exception under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. EITF
No. 07-05 is effective for financial statements issued for fiscal years
beginning after December 15, 2008. Early adoption for an existing instrument is
not permitted. We are currently evaluating the impact of adopting EITF No. 07-05
and do not expect adoption to have a material impact on our consolidated
financial statements.





ITEM
      3.
            QUANITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.





ITEM 4T.
            CONTROLS
      AND PROCEDURES





Evaluation
of Our Disclosure Controls and Internal Controls





Under the
supervision and with the participation of our senior management, including our
chief executive officer and chief financial officer, we conducted an evaluation
of the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the
period covered by this quarterly report (the “Evaluation Date”). Based on this
evaluation, our chief executive officer and chief financial officer concluded as
of the Evaluation Date that our disclosure controls and procedures were
effective such that the information relating to us, including our consolidated
subsidiaries, required to be disclosed in our Securities and Exchange Commission
(“SEC”) reports (i) is recorded, processed, summarized and reported within the
time periods specified in SEC rules and forms, and (ii) is accumulated and
communicated to our management, including our chief executive officer and chief
financial officer, as appropriate to allow timely decisions regarding required
disclosure.





Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external purposes of
accounting principles generally accepted in the United
States.  Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Therefore, even
those systems determined to be effective can provide only reasonable assurance
of achieving their control objectives. In evaluating the effectiveness of our
internal control over financial reporting, our management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) in Internal Control – Integrated Framework.





Officers’
Certifications





Appearing
as exhibits to this quarterly report are “Certifications” of our Chief Executive
Officer and Chief Financial Officer. The Certifications are required pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302
Certifications”). This section of the Quarterly Report contains information
concerning the Controls Evaluation referred to in the Section 302 Certification.
This information should be read in conjunction with the Section 302
Certifications for a more complete understanding of the topics
presented.


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Changes
in Internal Control Over Financial Reporting





There
have been no changes in our internal control over financial reporting that
occurred during the quarter ended October 31, 2008 that have materially affected
or are reasonably likely to materially affect our internal control over
financial reporting.


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PART
II – OTHER INFORMATION





ITEM
1.  LEGAL PROCEEDINGS





In the
ordinary course of our business, we may from time to time become subject to
routine litigation or administrative proceedings which are incidental to our
business. We are not a party to nor are we aware of any existing, pending or
threatened lawsuits or other legal actions involving us.





ITEM
1A.  RISK FACTORS





Not
applicable.





ITEM
2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





As of
October 31, 2008 we issued an aggregate of 25,000 shares of our common stock to
our five advisory board members representing payment of the quarterly fee due
them for the quarter ended October 31, 2008. The shares were issued in reliance
on Section 4(2) of the Securities Act of 1933, as amended, since the foregoing
issuance did not involve a public offering, the recipient had access to
information that would be included in a registration statement, the recipient
took the shares for investment and not resale, and we took appropriate measures
to restrict resale.





As of
October 31, 2008 we issued an aggregate of 250,000 shares of our common stock to
our five advisory board members representing payment of the annual fee due them
for the twelve months ended October 5, 2008. The shares were issued in reliance
on Section 4(2) of the Securities Act of 1933, as amended, since the foregoing
issuance did not involve a public offering, the recipient had access to
information that would be included in a registration statement, the recipient
took the shares for investment and not resale, and we took appropriate measures
to restrict resale.





As of
September 30, 2008 we issued 462,291 shares of our common stock to Prime
representing payment of the stock fee due to Prime for the three-month period
ended September 30, 2008 under the terms of the June 30, 2008 Consulting
Agreement with Prime. The shares were issued in reliance on Section 4(2) of the
Securities Act of 1933, as amended, since the foregoing issuance did not involve
a public offering, the recipient had access to information that would be
included in a registration statement, the recipient took the shares for
investment and not resale, and we took appropriate measures to restrict
resale.





As of
November 24, 2008, we issued an aggregate of 2,222,224 shares of our common
stock to four parties pursuant to the Omnibus Amendment of the same date
discussed below in Item 5.  The shares were issued in reliance on
Section 4(2) of the Securities Act of 1933, as amended, since the foregoing
issuance did not involve a public offering, the recipient had access to
information that would be included in a registration statement, the recipient
took the shares for investment and not resale, and we took appropriate measures
to restrict resale.





ITEM
3.  DEFAULTS UPON SENIOR SECURITIES





None.





ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.


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ITEM
5.  OTHER INFORMATION





Effective
October 5, 2008, we renewed the engagement of our advisory board for an
additional one-year period.





As of
November 24, 2008 we and our wholly owned subsidiary, ICF Energy Corporation
(collectively the “Companies”), entered into an Omnibus Amendment (the
“Amendment”) with Valens Offshore SPV I, Ltd. (“Valens Offshore I”), Valens
Offshore SPV II, Corp. (“Valens Offshore II”), Valens U.S. SPV I, LLC (“Valens
US”), PSource Structured Debt Limited (“PSource”) and LV Administrative
Services, Inc. for the purpose of amending certain terms of (i) that certain
Amended and Restated Secured Term Note, dated as of March 31, 2008 issued by the
Companies in favor of Valens Offshore II (as further amended, restated, modified
and/or supplemented from time to time, the “First March 2008 Amended and
Restated Term Note”) and (ii) that certain Amended and Restated Secured Term
Note, dated as of March 31, 2008 issued by the Companies in favor of Valens US
and subsequently assigned in part to Valens Offshore I and PSource (as further
amended, restated, modified and/or supplemented from time to time, the “Second
March 2008 Amended and Restated Term Note”, together with the First March 2008
Amended and Restated Term Note, the “March Term Notes” and each, a “March Term
Note”).





The
Amendment was required due to the temporary shutdown of our producing oil and
gas wells in Brazoria County, Texas as the result of Hurricane Ike. Due to the
temporary shutdown, we were unable to make the payments due on the March Term
Notes for November and December 2008. The well has been worked-over and was
placed on production November 1, 2008 at the pre-shut in production rate and
higher flowing pressure.





In
consideration of the payment of an aggregate of 2,222,224 shares of True North
Energy Corporation common stock, the holders of the March Term Notes allowed us
to defer the cash payments due to them on November 3, 2008 and December 1, 2008
until the earlier of (i) the maturity date for the March Term Notes or (ii) the
date upon which all of the obligations rising under any March Term Note shall be
declared due and payable or is otherwise paid in full. From and after January 1,
2009, regularly scheduled monthly amount payments under each March Term Note
shall be due and payable in accordance with the terms of such applicable March
Term Note. The stock payments are being treated as additional interest under the
March Term Notes.




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ITEM
      6.
            EXHIBITS




Exhibit No.
                
                Description31.1
                
                Rule
      13(a)-14(a)/15(d)-14(a) Certification of Principal Executive
      Officer31.2
                
                Rule
      13(a)-14(a)/15(d)-14(a) Certification of Principal Financial
      Officer32.1
                
                Rule
      1350 Certification of Chief Executive Officer32.2
                
                Rule
      1350 Certification of Chief Financial
Officer


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SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





TRUE
      NORTH ENERGY CORPORATIONDated:  December
      12, 2008
                By:
                /s/John
      FolnovicJohn
      FolnovicPresident,
      Chief Executive
Officer


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