---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K/A(Amendment No. 2)

(Mark One)

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

For the fiscal year ended October 31, 2011

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

For the transition period from [   ] to [   ]

Commission file number 000-52138

LEXARIA CORP.(Exact name
of registrant as specified in its charter)

|Nevada                                                               | 20-2000871                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|                                                                     |                                     
|                                                                     |                                     
|#950-1130 WEST PENDER STREET, VANCOUVER, BRITISH                     |                                     
|COLUMBIA, CANADA                                                     | V6E 4A4                             
|(Address of principal executive offices)                             | (Zip Code)                          

Registrant's telephone number, including area code:
604-602-1675

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

|Title of Each Class | Name of Each Exchange On Which Registered
|------------------- | -----------------------------------------
|N/A                 | N/A                                      

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 (Title of class)

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

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

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 last 90 days.
Yes X No [   ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-K (§229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).

YesX No [   ]

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

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 definition of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

|Large accelerated filer [   ] | Accelerated filer [   ]    
|----------------------------- | ---------------------------
|Non-accelerated filer [   ]   | Smaller reporting company X

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

The aggregate market value of Common Stock held by
non-affiliates of the Registrant on April 30, 2011 was $2,928,107 based on the
average of the high and low bid and asked price of the Registrants shares of
common stock on the OTC Bulletin Board or $0.40 on April 30, 2011. For purposes
of this computation, all executive officers and directors have been deemed to be
affiliates. Such determination should not be deemed to be an admission that such
executive officers and directors are, in fact, affiliates of the Registrant.

Indicate the number of shares outstanding of each of the
registrants classes of common stock as of the latest practicable date.
16,431,452 common shares as of January 26, 2012

DOCUMENTS INCORPORATED BY REFERENCE

None.

---

Explanatory Note

This Amendment No.1 on Form 10-K/A (Amendment No. 1) to the
Companys Annual Report on Form 10−K for the year ended October 31, 2011,
originally filed with the Securities and Exchange Commission on January 26, 2012
(Form 10−K), is to add the consent letter of MNP LLP Chartered Accountants in
reference to Registration Statement No. 333-175385 on Form S-8 ; the exhibit
index has been updated accordingly.
No other changes have been made to the Form 10−K. This Form 10−K/A does not
reflect events that may have occurred subsequent to the original filing date,
and does not modify or update in any way disclosures made in the Form 10−K.

---



TABLE OF CONTENTS

|Item
      1.  | Business                                                                                                                 | 4 
|-------------- | ------------------------------------------------------------------------------------------------------------------------ | --
|Item
      1A. | Risk
      Factors                                                                                                       | 8 
|Item
      1B. | Unresolved
      Staff Comments                                                                                          | 13
|Item
      2.  | Properties                                                                                                               | 13
|Item
      3.  | Legal
      Proceedings                                                                                                  | 23
|Item
      4.  | Removed
      and Reserved                                                                                               | 23
|Item
      5.  | Market
      for Registrants Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities | 23
|Item
      6.  | Selected
      Financial Data                                                                                            | 25
|Item
      7.  | Managements
      Discussion and Analysis of Financial Condition and Results of Operations                              | 26
|Item
      7A. | Quantitative
      and Qualitative Disclosures About Market Risk                                                         | 31
|Item
      8.  | Financial
      Statements and Supplementary Data                                                                        | 31
|Item
      9.  | Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure                         | 60
|Item
      9A. | Controls
      and Procedures                                                                                            | 60
|Item
    9B.   | Other
    Information                                                                                                    | 61
|Item
      10. | Directors,
      Executive Officers and Corporate Governance                                                             | 61
|Item
      11. | Executive
      Compensation                                                                                             | 65
|Item
      12. | Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters               | 68
|Item
      13. | Certain
      Relationships and Related Transactions, and Director Independence                                          | 69
|Item
      14. | Principal
      Accounting Fees and Services                                                                             | 69
|Item
      15. | Exhibits,
      Financial Statement Schedules                                                                            | 71

---

PART I

Item 1. Business

This annual report contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.

In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States dollars and all references to common
shares refer to the shares in our common stock. References to CAD$ refers to
Canadian dollars.

As used in this current report and unless otherwise indicated,
the terms "we", "us", "our" and "our company" mean Lexaria Corp.

General Overview

We were incorporated in the State of Nevada on December 9,
2004. We are an exploration and development oil and gas company currently
engaged in the exploration for and development of petroleum and natural gas in
North America. We maintain our registered agent's office and our U.S. business
office at Nevada Agency and Transfer Company, 50 West Liberty, Suite 880, Reno,
Nevada 89501. Our telephone number is (755) 322-0626.

The address of our principal executive office is Suite 950,
1130 West Pender Street, Vancouver, British Columbia V6E 4A4. Our telephone
number is (604) 602-1675. We have an additional office located in Kelowna.
British Columbia.

Our common stock is quoted on the OTC Bulletin Board under the
symbol "LXRP" and on the Canadian National Stock Exchange under the symbol LXX

We are an oil and gas company engaged in the exploration for
oil and natural gas in Canada and the United States. Our company is currently
generating revenues from our business operations in Mississippi. Our companys
business plan is to focus on development of the Belmont Lake oil field, in which
we have working interests, in order to maximize cash flow and use excess cash
flow to pay debt and conduct additional development well drilling. Eventually,
if cash flows are strong enough, our company will once again be able to explore
for additional oil and gas by way of our existing 60% interest option to drill
38 exploratory wells (see Oil & Gas Properties - Mississippi and Louisiana:
Frio-Wilcox Project). To accomplish this, our company intends to focus on
development drilling first. Eventually our company will seek a balance between
exploration, development and exploitation drilling. To achieve sustainable and
profitable growth, our company intends to control the timing and costs of our
projects wherever possible. Our company is not currently the operator of any of
our properties and will consider becoming the operator only when financial
conditions have improved sufficiently.

---

Overview of Business over the Last Five Years

Since we began operations in 2005, we have been focused
exclusively on the exploration for and development of oil and gas assets located
in North America. We participated in the drilling of a single well in Strachan
Hills Alberta and eventually wrote down the value of that well to $nil. We
participated in the drilling of wells in Oklahoma where we successfully produced
and sold oil and gas prior to selling our interest in the Oklahoma properties.
We have participated in the drilling of oil and gas wells in Mississippi and
remain focused there as our key area of interest with all our current assets
within Amite and Wilkinson Counties, Mississippi.

On June 21, 2007, we acquired an assignment of a 10% gross
working interest in an Area of Mutual Interest (AMI) formerly held by Brinx
Resources Ltd, a non-related company, in up to 50 oil & gas wells to be
drilled, and any future development prospects thereof associated, located in
Mississippi, USA. Interests in seven wells previously drilled under the
conditions of the AMI remain the property of Brinx Resources Ltd. and we are not
a party to Brinxs interest in these wells, while the right to assume the 10%
gross working interest in the remaining 43 wells and any future development
prospects thereof, now belongs to our company. Because we already had a 40%
gross working interest in this AMI, as a result of this transaction, we have a
50% gross working interest in the AMI.

On June 23, 2007, we acquired an assignment of a 10% gross
working interest in 12 previously drilled oil & gas wells and any future
development prospects thereof, formerly held by 0743868 BC Ltd., a non-related
company. Since we had a 20% gross working interest in these same 12 oil and gas
wells and development prospects, as a result of this transaction we obtained a
30% gross working interest in the 12 oil & gas wells and development
prospects. We were obligated to make cash payments of US$520,000 over
approximately a one-year period to complete this transaction ($200,000 paid as
of October 31, 2007). Our company had made total of $350,000 repayment and
accrued $18,016 interest expense since June 23, 2007 with ending balance of
$169,938 as at April 30, 2008.

On May 13, 2008 our company entered into an Assignment of Debt
between 0743868 BC Ltd. (the Assignor) and our president and shareholder of
our company (collectively the Assignees). The Assignor agreed to accept
US$46,000 from our company in satisfaction of the outstanding amount and agreed
to assign the Assignees all of the Assignors right, title and interest in and
to the US$124,000 balance of the outstanding amount. As a result, the Assignor
no longer has any claim against our company.

On May 14, 2008 our company entered into an unsecured Loan
Agreement with each of our president and a shareholder of our company for
$62,000. The purpose of this Loan Agreement was to set out terms of the
arrangement by which our company agreed to make a Loan of US$124,000 at an
interest rate of 16.8% and no set principal payments for one year available to
our company. The purpose of the Loan Agreement was to provide our company with
capital funds for oil and gas exploration and/or general corporate purposes. On
October 27, 2008, the loan from the President in the amount of US$62,000 was
terminated in favour of an updated debt agreement.

On August 29, 2008, our company sold all of our working
interests in our Owl Creek Project, located in Garvin County, Oklahoma, to an
unrelated third party for net proceeds of $206,021. The property sold included
our companys 7.5% working interest in Isbill #2.

On October 27, 2008, our company entered into a Purchase
Agreement with CAB Financial Services Ltd., Chris Bunka, and another shareholder
of our company (Purchasers) for an aggregate amount of nine CAD $900,000. The
Purchasers agreed to purchase an 18% interest bearing Promissory Note of our
company subject to and upon the terms and conditions of the Purchase Agreement.

Our companys obligations to repay the Promissory Note are
secured by certain specified assets of our company pursuant to a Security
Agreement. Also, as long as the Promissory Note is outstanding, the Purchasers
may voluntarily convert the Promissory Note to shares of common stock of our
company at the conversion price of $0.45 per share. Additionally, in
consideration for the Purchasers agreeing to purchase the Promissory Notes, our
company agrees to issue Warrants to the Purchasers.

---

Each Warrant entitles the Purchaser to acquire shares of common
stock of our company, and the number of Series A and B Warrants issuable shall
be determined by the Purchase Amount divided by $0.45, which Warrants shall have
the following terms:

| | 1. | each Series A Warrant entitling the holder to purchase
      one-half of one Warrant Share for a term of one year from issuance and an
      exercise price of US $0.45 per whole Warrant Share (the exercise price is
      subject to adjustment pursuant to the loan agreement);  
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                      
| | 2. | each Series B Warrant entitling the holder to purchase
      one-half of one Warrant Share for a term of two years from issuance and
      exercise price of US $0.90 per whole Warrant Share (the exercise price is
      subject to adjustment pursuant to the loan agreement); and
| |    |                                                                                                                                                                                                                                                                                      
| | 3. | Mandatory conversion of the Warrants at the option of the
      Company upon the Companys Common Stock closing at 200% of the applicable
      exercise price for twenty consecutive Trading Days.                                                                                  
| |    |                                                                                                                                                                                                                                                                                      
| | 4. | Two whole Warrants and the exercise price are required to
      purchase one share of the Company.                                                                                                                                                                                   

On April 3, 2009, our company entered into an Asset Purchase
Agreementwith Delta Oil & Gas, Inc. and The Stallion Group to
acquire additional interests in its existing core producing Mississippi oil and
gas properties. Our company paid $40,073.39 to acquire an additional two percent
(2%) working interest in the proven Belmont Lake oil and gas field and an
additional 10% working interest in potential nearby exploration wells,bringing our total gross working interest in the Belmont Lake oil and gas
field to 32% and bringing our total gross working interest to 60% in the 38
wells that remain to be drilled of this original 50-well option with Griffin
& Griffin Exploration in over 140,000 acres surrounding Belmont Lake in all
directions.

On August 28, 2009, our company entered into four separate
assignment agreements with Enertopia Corp., 0743608 BC Ltd., David DeMartini,
and Murrayfield Ltd., three of which are people or companies with related
management. Our company received from these four parties proceeds of $371,608.57
to fund additional interests in this well. As a result, our company has a 25.84%
perpetual gross interest in the well (18.0% net revenue interest); as well as a
5.2% net revenue interest in the non-consent interest. The non-consent interest
remains valid until such time as the well produces 500% of all costs and
expenses back to the participants in the form of revenue, at which time the
non-consent interest ends. Enertopia Corp, a company with related management,
acquired from our company a 6.16% perpetual gross interest in the 12-4 well;
David DeMartini, a director of our company, acquired from our company a 5% gross
interest in the non-consent interest in the 12-4 well; and 0743608 BC Ltd. a
company owned by our president, acquired from our company a 11.6% gross interest
in the non-consent interest in the 12-4 well.

Effective June 23, 2009, we amended our Articles of
Incorporation to effect a one (1) for four (4) share consolidation of our
authorized and issued and outstanding common stock. As a result, our companys
authorized capital decreased from 75,000,000 shares of common stock with a par
value of $0.001 to 18,750,000 shares of common stock with a par value of $0.001
and our issued and outstanding shares decreased from 24,369,500 shares of common
stock to 6,092,370 shares of common stock.

Effective at the opening of trading on October 28, 2009, our
shares of common stock began trading on Canadian National Stock Exchange under
the trading symbol LXX.

On November 13, 2009, our company announced that our Operator
in Mississippi, Griffin & Griffin Exploration LLC, has declared force
majeure on the Belmont Lake offset wells.

On December 21, 2009, our board of directors amended and
restated our bylaws. The purpose of the amendment and restatement of the bylaws
was for, among other things, removing certain outdated and redundant provisions
that existed in our prior bylaws with respect to corporate governance,
shareholder and director meeting procedures, and indemnification procedures. The
changes to our prior bylaws include: (i) expanding certain provisions with
respect to shareholders meetings including change of quorum requirements; (ii)
amending certain provisions respecting appointment of directors, corporate
governance and committees, and directors meetings; (iii) expanding certain
provisions with respect to officers and their duties; (iv) changing certain
provisions with respect to share certificates; and (vi) adding certain indemnification provisions.

---

On March 17, 2010, we increased our authorized share capital
from 18,750,000 common shares to 200,000,000 common shares.

On May 31, 2010, we issued 499,893 units at at a price of $0.12
per share for a Settlement Agreement valued at $59,987.24. Each unit consist one
share of common stock and one share purchase warrant exercisable at $0.20 per
share for a period of two years.

On June 16, 2010, we signed a Settlement Agreement with a third
party, who had originally participated in the August 28, 2009 opportunity in the
non-consent interest for Belmont Lake 12-4. We returned $144,063.46 to the third
party and cancelled its participation.

On July 29, 2010, we agreed with our operators at Belmont Lake
not to proceed to drill a horizontal 12-4 well. Rather, two of the three
proposed vertical wells 12-2, 12-4, or 12-5 are proposed to be drilled in August
2010. To take best advantage of this opportunity, our company cancelled all
previous agreements relating to August 28, 2009 with respect to Belmont Lake
horizontal well 12-4 and entered into three separate assignment agreements, of
which all three were with people or companies with related management. Our
company received total proceeds of $324,677.12 to fund additional interests in
these wells. As a result, our company has a 32% perpetual gross interest in the
wells (24.0% net revenue interest); as well as a 8% gross interest (6% net
revenue interest) in the non-consent interest. The non-consent interest remains
valid until such time as the well produces 500% of all costs and expenses back
to the participants in the form of revenue, at which time the non-consent
interest ends. Emerald Atlantic LLC, a company owned by a director of our
company, has acquired from our company a 8.74% gross interest in the non-consent
interest in two of the three vertical wells; and 0743608 BC Ltd. a company owned
by our president, has acquired from our company a 20.79% gross interest in the
non-consent interest in the two of the three vertical wells; an advisor to our
company has acquired from our company 2.46% gross interest in the non-consent
interest in two of the three vertical wells.

On September 13, 2010, we entered into three separate
assignment agreements with 0743608 BC Ltd, a company solely owned by a director
of our company, Emerald Atlantic LLC, a company solely owned by a director of
our company, and our Senior VP Business Development. (the Assignees), whereby
the Assignees have paid a fee of US$408,116 to earn a 24% share of our companys
gross non-perpetual 32% interest in the three oil wells being drilled in
Wilkinson County, Mississippi. This agreement replaces the one signed on August
28, 2009. A balance of $83,439, which is outstanding, will be received by our
company in the month of September. As a result of the three assignment
agreements, we receive at no cost to our company, a carried interest of 8% in
these same rights and benefits. Our company assigns, transfers and sets over to
the Assignees, all proportionate rights, interest and benefits in the Assigned
Non Perpetual Interest held by or granted to the Assignor in and to the
Participation Agreement between our company and Griffin but limited to a gross
500% revenue payout based on the total amount paid under the Initial
Consideration and the Subsequent Consideration after which all rights, interests
and benefits cease.

On October 21, 2010, we settled a portion of the debt in the
amount of $1,625 with CAB Financial Services by converting 65,000 warrants into
32,500 shares of common stock of our company pursuant to a Purchase Agreement
dated October 27, 2008 at a price of $0.05 per share.

On October 21, 2010, we settled a portion of the debt, in th
amount of $2,166.65 with Christopher Bunka, our president by converting 86,667
warrants into 43,333 shares of common stock of our company pursuant to a
Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.

In September and October, 2010, new wells 12-2; 12-4 and 12-5
were drilled at the Belmont Lake oil field.

Our Current Business

We are an oil and gas company engaged in the exploration for
oil and natural gas in Canada and the United States. We are currently generating
revenues from our business operations in Mississippi.

---

We have acquired working interests in various oil and gas
properties in Mississippi USA. All of our current oil and gas assets are located
in Wilkinson and Amite counties, Mississippi, where we have between 42% gross
working interest and 60% gross working interests in producing oil and/or gas
wells and in exploration wells yet to be drilled. Our Belmont Lake oil field
discovered in December 2006 is located within the Palmetto Point area of
Wilkinson county, Mississippi.

Our companys business plan is to focus on development of the
Belmont Lake oil field, in which we have working interests, in order to maximize
cash flow and use excess cash flow to pay debt and conduct additional
development well drilling. Eventually, if cash flows are strong enough, we
expect to explore for additional oil and gas by way of our existing 60% interest
option to drill 38 exploratory wells (see Oil & Gas Properties -
Mississippi and Louisiana: Frio-Wilcox Project). To accomplish this, our
company intends to focus on development drilling first. Eventually our company
will seek a balance between exploration, development and exploitation drilling.
To achieve sustainable and profitable growth, our company intends to control the
timing and costs of our projects wherever possible. We are not currently the
operator of any of our properties and will consider becoming the operator only
when our financial conditions have improved sufficiently.

During the past fiscal year we experienced the following
significant corporate developments:

| | 1. | On November 16, 2010, we settled the debt incurred as a
      result of a consulting agreement, in the amount of $9,376, to Mr. Tom
      Ihrke by issuing 40,761 restricted shares of common stock of our company
      at a price of $0.23 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 2. | On November 30, 2010, we closed the first tranche of a
      private placement offering of convertible debentures in the aggregate
      amount of $450,000. The convertible debentures mature on November 30,
      2012, subject to forced conversion as set out in the convertible debenture
      certificate. The convertible debentures pay an interest rate of 12% per
      annum (on a simple basis) and are convertible at $0.35 per unit. Each unit
      is comprised of one share of our common stock and one share purchase
      warrant. Each warrant entitles the holder thereof to purchase one share of
      common stock at a price of $0.40 per share from the earlier of the
      maturity date of the convertible debenture or one year from conversion of
      the convertible debenture. We also entered into a general security
      agreement with the subscribers, whereby the obligations to repay the
      convertible debenture are secured by certain of our assets. 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 3. | On December 16, 2010, we closed the second tranche of a
      private placement offering of convertible debentures in the aggregate
      amount of $170,000. The convertible debentures mature on November 30,
      2012, subject to forced conversion as set out in the convertible debenture
      certificate. The convertible debentures pay an interest rate of 12% per
      annum (on a simple basis) and are convertible at $0.35 per unit. Each unit
      is comprised of one share of our common stock and one share purchase
      warrant. Each warrant entitles the holder thereof to purchase one share of
      common stock at a price of $0.40 per share from the earlier of the
      maturity date of the convertible debenture or one year from conversion of
      the convertible debenture. We also entered into a general security
      agreement with the subscribers, whereby the obligations to repay the
      convertible debenture are secured by certain of our assets.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 4. | On December 16, 2010, we entered into an assignment
      agreement with Emerald Atlantic LLC, a company solely owned by a director
      of our company (the Assignee), whereby the Assignee has paid a fee of
      $30,076 to earn 18% of a 4.423% share of our companys net revenue
      interest after field operating expenses for a well to be drilled in
      Wilkinson County.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 5. | On January 4, 2011, 132,600 warrants were exercised and
      we issued 66,300 shares of common stock of our company at an exercise
      price of CAD$0.22 per share for total proceeds of CAD$14,586. Of the
      132,600 warrants exercised, 100,000 warrants were exercised by a director
      of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 6. | On March 6, 2011, we accepted and received gross proceeds
      of $21,250 for the exercise of 106,250 stock options by a director of our
      company at an exercise price of $0.20 per stock option into 106,250 shares
      of our common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 7. | On June 8, 2011, 1,500,000 warrants were exercised and we
      issued 1,500,000 shares of our common stock at an exercise price of $0.20 per share for total
      proceeds of $300,000. The warrants were exercised by a director of our
      company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---

| | 8.  | On June 28, 2011, 500,000 warrants were exercised and we
      issued 500,000 shares of our common stock at an exercise price of $0.20
      per share for total proceeds of $100,000. The warrants were exercised by a
      director of our company.                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 9.  | On October 27, 2008, we made a secured loan agreement in
      the amount of CAD$300,000 with CAB Financial. On July 10, 2009, $40,000 of
      the debt was converted to equity. On October 21, 2010, we settled a
      portion of the debt in the amount of CAD $1,625 with CAB Financial by
      converting 65,000 warrants into 32,500 shares of our common stock pursuant
      to a Purchase Agreement dated October 27, 2008 at a price of CAD$0.05 per
      share. On June 28, 2011, we paid down CAD$100,000 of the debt.                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 10. | On July 11, 2011, we granted 700,000 stock options to
      directors and officers of our company at an exercise price of $0.35 per
      share, which options vest immediately and expire on July 11,
  2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 11. | On July 13, 2011, 173,043 warrants were exercised and we
      issued 173,043 shares of our common stock at a price of $0.20 per share
      for total proceeds of $34,608.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 12. | On July 13, 2011, we completed an equity financing and
      issued 200,000 units at $0.35 per unit, for gross proceeds of $70,000.
      Each unit consists of one share of common stock and one share purchase
      warrant which entitles a holder to purchase an additional share of common
      stock at an exercise price of $0.50 per share for a period of two years.
      All shares and warrants issued were restricted under applicable securities
      rules.                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 13. | On July 15, 2011, we accepted and received gross proceeds
      of $23,750 for the exercise of 118,750 stock options at an exercise price
      of $0.20 per stock option and issued 118,750 shares of common stock of our
      company. All of the stock options were exercised by directors and/or
      officers of our company.                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 14. | We entered into a Asset Purchase Agreement dated August
      12, 2011, with Brinx Resources Ltd. to acquire 100% of its 10% gross
      working interest in the oil and gas interests located in Mississippi, USA.
      By acquiring the additional 10% working interest in Belmont Lake oil and
      gas field, we now have a 42% working interest in Belmont Lake and retains
      our existing 60% working interest in the exploration wells on
      approximately 130,000 acres surrounding Belmont Lake in all directions. We
      agreed to pay a total of $400,000 and issue 800,000 shares of our common
      stock at a deemed price of at $0.30 per share.

Our company plans to continue our current business of acquiring
interests in potentially high-impact oil and gas property interests that offer a
high probability of being able to drill without significant time delays. We will
endeavor to try to choose North American properties where, if drilling is
successful, the wells could be quickly connected to infrastructure and thus,
with success, brought into production and able to generate cash flow as quickly
as possible.

Our business plan does not anticipate that we will hire a large
number of employees or that we will require extensive office space. Our company
has, to date, and plans to continue to acquire most of the industry and
geological expertise we require through third party contractual relationships
with consulting experts and with operating companies which will act as operators
of our companys various interests. Although this exposes our company to certain
risks on behalf of those operators, it also allows our company to participate in
the often unique experience and knowledge that local persons have related to
certain properties. This strategy allows our company to participate in a wider
variety of oil and gas opportunities than if all of our geological expertise
were in-house and confined to a single geographical area. From a business
operations perspective, this strategy also enables our company to minimize our
ongoing fixed in-house costs for geological or geophysical analytical expenses
while still allowing it to contract for that expertise when and as needed. This
business strategy has been successful during a time of declining oil and gas
prices, when many companies with high internal overheads and cost structures due
to large numbers of highly expensive in-house professionals cannot be sustained
due to declining revenues. Our

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company will hire third-party consulting geophysicists and
geologists on an as-needed basis to evaluate oil and gas properties that may be
of interest, and to reinforce and double-check the technical work and abilities
of its third-party operators. This provides our company with the required
expertise we need, when its needed, whilst avoiding high fixed long-term costs.

Our company relies on the business experience of our existing
management, on the technical abilities of consulting experts, and on the
technical and operational abilities of its operating partner companies to
evaluate business opportunities.

Competition

We are in the business of acquisition and exploration of oil
and gas properties. The petroleum industry is competitive in all its phases. We
compete with numerous other participants in the search for and the acquisition
of oil and natural gas properties, and in the marketing of oil and natural gas.
Our competitors include oil and natural gas companies that have substantially
greater financial resources, staff and facilities than ours. Our ability to
obtain or increase reserves in the future will depend not only on our ability to
explore and develop our present properties, but also on our ability to select
and acquire suitable producing properties or prospects for exploratory drilling.
Competitive factors in the distribution and marketing of oil and natural gas
include price and methods and reliability of delivery.

Compliance with Government Regulation

The exploration and development of oil and gas properties is
subject to various United States federal, state and local and foreign
governmental regulations. We may from time to time, be required to obtain
licenses and permits from various governmental authorities in regards to the
exploration of our property interests.

Employees

We primarily use the services of sub-contractors and
consultants for manual labour exploration work and drilling on our properties.
Our Director, Mr. David DeMartini is our technical advisor.

On May 12, 2009, we entered into a six month consulting
agreement with BKB Management Ltd., a British Columbia company for a
consideration of CAD$4,500 per month plus applicable taxes. Effective January 1,
2011, the consideration was increased to CAD$5,500 plus applicable taxes. BKB
Management is a consulting company controlled by our chief financial officer.

On November 27, 2008, we entered into a consulting agreement
with CAB Financial Services Ltd., a British Columbia company. The consulting
services provided by CAB Financial are on a continuing basis for a consideration
of CAD$8,000 per month plus applicable taxes. CAB Financial is a consulting
company controlled by our president.

On August 5, 2010 we entered into a three-month Management
agreement with Tom Irkhe, whereby Mr. Irkhe will act as the Senior
Vice-President, Business Development for our company for consideration of $3,125
per month and has signed a revised agreement to continue the Management
relationship on a continuing month to month basis.

Research and Development

We have incurred $Nil in research and development expenditures
over the last two fiscal years.

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Item 1A. Risk Factors

Our business operations are subject to a number of risks and
uncertainties, including, but not limited to those set forth below:

We have a limited operating history and as a result there is
no assurance we can operate on a profitable basis.

We have a limited operating history. Our company's operations
will be subject to all the uncertainties arising from the absence of a
significant operating history. Potential investors should be aware of the
difficulties normally encountered by resource exploration companies and the high
rate of failure of such enterprises. The likelihood of success must be
considered in light of the problems, expenses, difficulties, complications and
delays encountered in connection with the exploration of the properties that we
plan to undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. The expenditures to be made by us in
the exploration of our properties may not result in the discovery of reserves.
Problems such as unusual or unexpected formations of rock or land and other
conditions are involved in resource exploration and often result in unsuccessful
exploration efforts. If the results of our exploration do not reveal viable
commercial reserves, we may decide to abandon our claims and acquire new claims
for new exploration or cease operations. The acquisition of additional claims
will be dependent upon us possessing capital resources at the time in order to
purchase such claims. If no funding is available, we may be forced to abandon
our operations. There can be no assurance that we will be able to operate on a
profitable basis.

If we do not obtain additional financing, our business will
fail and our investors could lose their investment.

We had cash in the amount of $31,201 and working capital
deficiency of $814,355 as of our year ended October 31, 2011. Any direct
acquisition of a claim under lease or option is subject to our ability to obtain
the financing necessary for us to fund and carry out exploration programs on
potential properties. The requirements are substantial. Obtaining additional
financing would be subject to a number of factors, including market prices for
resources, investor acceptance of our properties and investor sentiment. These
factors may negatively affect the timing, amount, terms or conditions of any
additional financing available to us. The most likely source of future funds
presently available to us is through the sale of equity capital and loans. Any
sale of share capital will result in dilution to existing shareholders.

Because there is no assurance that we will generate material
revenues, we face a high risk of business failure.

For the fiscal year 2011, we have earned revenues of
$1,133,766. We currently have only modest oil or gas reserves that are deemed
proved, probable or possible pursuant to American standards of disclosure for
oil and gas activities. All of our existing wells are in Mississippi, USA.

There can be no assurance that our current or future drilling
activities will be successful, and we cannot be sure that our overall drilling
success rate or our production operations within a particular area will ever
come to fruition, and if they do, will not decline over time. We may not recover
all or any portion of our capital investment in the wells or the underlying
leaseholds. Unsuccessful drilling activities would have a material adverse
effect upon our results of operations and financial condition. The cost of
drilling, completing and operating wells is often uncertain, and a number of
factors can delay or prevent drilling operations, including: (i) unexpected
drilling conditions; (ii) pressure or irregularities in geological formation;
(iii) equipment failures or accidents; (iv) adverse weather conditions; and (v)
shortages or delays in the availability of drilling rigs and the delivery of
equipment.

In addition, our exploration and development plans may be
curtailed, delayed or cancelled as a result of lack of adequate capital and
other factors, such as weather, compliance with governmental regulations,
current and forecasted prices for oil and changes in the estimates of costs to
complete the projects. We will continue to gather information about our
exploration projects, and it is possible that additional information may cause
our company to alter our schedule or determine that a project should not be
pursued at all. You should understand that our plans regarding our projects are
subject to change.

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We recognize that if we are unable to generate significant
revenues from our activities, we will not be able to earn profits or continue
operations. We cannot guarantee that we will be successful in raising capital to
fund these operating losses or generate revenues in the future. We can provide
investors with no assurance that we will generate any operating revenues or ever
achieve profitable operations. If we are unsuccessful in addressing these risks,
our business will most likely fail and our investors could lose their
investment.

The oil and natural gas industry is highly competitive and
there is no assurance that we will be successful in acquiring leases.

The oil and natural gas industry is intensely competitive.
Although we do not compete with other oil and gas companies for the sale of any
oil and gas that we may produce, as there is sufficient demand in the world
market for these products, we compete with numerous individuals and companies,
including many major oil and natural gas companies which have substantially
greater technical, financial and operational resources and staff. Accordingly,
there is a high degree of competition for desirable oil and natural gas leases,
suitable properties for drilling operations and necessary drilling equipment, as
well as for access to funds. We cannot predict if the necessary funds can be
raised or that any projected work will be completed.

There can be no assurance that we will discover oil or
natural gas in any commercial quantity on our properties.

Exploration for economic reserves of oil and natural gas is
subject to a number of risks. There is competition for the acquisition of
available oil and natural gas properties. Few properties that are explored are
ultimately developed into producing oil and/or natural gas wells. If we cannot
discover oil or natural gas in any commercial quantity thereon, our business
will fail.

Even if we acquire an oil and natural gas exploration
property and establish that it contains oil or natural gas in commercially
exploitable quantities, the potential profitability of oil and natural gas
ventures depends upon factors beyond the control of our company.

The potential profitability of oil and natural gas properties
is dependent upon many factors beyond our control. For instance, world prices
and markets for oil and natural gas are unpredictable, highly volatile,
potentially subject to governmental fixing, pegging, controls or any combination
of these and other factors, and respond to changes in domestic, international,
political, social and economic environments. Additionally, due to worldwide
economic uncertainty, the availability and cost of funds for production and
other expenses have become increasingly difficult, if not impossible, to
project. In addition, adverse weather conditions can hinder drilling operations.
These changes and events may materially affect our future financial performance.
These factors cannot be accurately predicted and the combination of these
factors may result in our company not receiving an adequate return on invested
capital.

In addition, a productive well may become uneconomic in the
event water or other deleterious substances are encountered which impair or
prevent the production of oil and/or natural gas from the well. Production from
any well may be unmarketable if it is impregnated with water or other
deleterious substances. Also, the marketability of oil and natural gas which may
be acquired or discovered will be affected by numerous related factors,
including the proximity and capacity of oil and natural gas pipelines and
processing equipment, market fluctuations of prices, taxes, royalties, land
tenure, allowable production and environmental protection, all of which could
result in greater expenses than revenue generated by the well.

The marketability of natural resources will be affected by
numerous factors beyond our control which may result in us not receiving an
adequate return on invested capital to be profitable or viable.

The marketability of natural resources which may be acquired or
discovered by us will be affected by numerous factors beyond our control. These
factors include market fluctuations in oil and natural gas pricing and demand,
the proximity and capacity of natural resource markets and processing equipment,
governmental regulations, land tenure, land use, regulation concerning the
importing and exporting of oil and natural gas and environmental protection
regulations. The exact effect of these factors cannot be accurately predicted,
but the combination of these factors may result in us not receiving an adequate
return on invested capital to be profitable or viable.

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Oil and natural gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.

Oil and natural gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment.
Oil and natural gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government
bodies are required for drilling operations to be conducted; no assurance can be given that standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities.
Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental
damages. To date, we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in the future and this may affect our ability to expand or maintain our operations.

Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuation of our operations.

In general, our exploration and production activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and
may prevent or delay the commencement or continuation of a given operation. Specifically, we may be subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition,
legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of
compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.

Exploratory drilling involves many risks and we may become liable for pollution or other liabilities which may have an adverse effect on our financial position.

Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour natural gas leakage, fire, inability to obtain suitable or adequate
machinery, equipment or labor, and other risks are involved. We may become subject to liability for pollution or hazards against which it cannot adequately insure or which it may elect not to insure. Incurring any such liability may have a material
adverse effect on our financial position and operations.

Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.

The business of oil and natural gas exploration and development is subject to substantial regulation under various countries laws relating to the exploration for, and the development, upgrading, marketing, pricing, taxation, and transportation of
oil and natural gas and related products and other matters. Amendments to current laws and regulations governing operations and activities of oil and natural gas exploration and development operations could have a material adverse impact on our
business. In addition, there can be no assurance that income tax laws, royalty regulations and government incentive programs related to the properties subject to our farm-out agreements and the oil and natural gas industry generally will not be
changed in a manner which may adversely affect our progress and cause delays, inability to explore and develop or abandonment of these interests.

Permits, leases, licenses, and approvals are required from a variety of regulatory authorities at various stages of exploration and development. There can be no assurance that the various government permits, leases, licenses and approvals sought
will be granted in respect of our activities or, if granted, will not be cancelled or will be renewed upon expiry. There is no assurance that such permits, leases, licenses, and approvals will not contain terms and provisions which may adversely
affect our exploration and development activities.

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If we are unable to hire and retain key personnel, we may not be able to implement our business plan.

Our success is largely dependent on our ability to hire highly qualified personnel. This is particularly true in highly technical businesses such as resource exploration. These individuals are in high demand and we may not be able to attract the
personnel we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Failure to hire key personnel when needed, or on acceptable terms, would have a
significant negative effect on our business.

We are not the "operator" of any of our oil and gas exploration interests, and so we are exposed to the risks of our third-party operators.

We rely on the expertise of our contracted third-party oil and gas exploration and development operators and third-party consultants for their judgment, experience and advice. We can give no assurance that these third party operators or consultants
will always act in our best interests, and we are exposed as a third party to their operations and actions and advice in those properties and activities in which we are contractually bound.

Our management has limited experience and training in the oil and gas industry and could make uninformed decisions that negatively impact our oil and gas operations.

Because our management has limited experience and training in the oil and gas industry, we may not have sufficient expertise to make informed best practices decisions regarding oil and gas operations. We do not have a petroleum engineer on staff to
provide internal oversight. It is possible that, due to our limited knowledge, we might elect to complete a well and incur financial burdens that a more experienced petroleum team might elect not to complete. Our ability to internally evaluate oil
and gas operations and opportunities could be less thorough than that of a more highly trained management team.

Our independent certified public accounting firm, in the notes to the audited financial statements for the year ended October 31, 2011 states that there is a substantial doubt that we will be able to continue as a going concern.

As at October 31, 2011, we have experienced significant losses since inception. Failure to arrange adequate financing on acceptable terms and to achieve profitability would have an adverse effect on our financial position, results of operations,
cash flows and prospects. Accordingly, there is substantial doubt that we will be able to continue as a going concern.

Risks Associated with Our Common Stock

Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Our common stock is quoted on the OTC Bulletin Board service of the Financial Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many
factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock
exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any
of the shares.

Penny stock rules will limit the ability of our stockholders to sell their stock.

The Securities and Exchange Commission has adopted regulations which generally define penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited

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investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these
penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder's ability to buy and sell our stock.

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

Other Risks

Because majority of our officers and directors are located in non-U.S. jurisdictions, you may have no effective recourse against them for misconduct and you may not be able to enforce judgment and civil liabilities against our officers,
directors, experts and agents.

With the exception of one officer, all of our directors and officers are nationals and/or residents of countries other than the United States and all or a substantial portion of their assets are located outside of the United States. As a result, it
may be difficult for investors to enforce within the United States any judgments obtained against our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state
thereof.

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that
might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.

Item 1B. Unresolved Staff Comments

As a smaller reporting company, we are not required to provide the information required by this Item.

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Item 2. Properties

Executive Offices

The address of our principal executive office is Suite 950, 1130 West Pender Street, Vancouver, British Columbia, V6E 4A4, for which we share 250 square feet of office space, which includes one executive office for a monthly rental of CAD$1,337.
Our telephone number is (604) 602-1675. We have an additional office located in Kelowna, British Columbia, for which we share 1,500 square feet of office space, which includes two executive offices for a monthly rental ofCAD500. Our current
locations provide adequate office space for our purposes at this stage of our development.

Resource Properties

As at October 31, 2011, our company currently owns a 42% gross working interest in 13 wells and with the exception of a 50% working interest in wells PP F-12-4 and PP F-12-5; a 45% gross working interest in 7 wells; and a 60% gross working interest
in 43 wells (of which 38 remain to be drilled); all located in Mississippi under various agreements with Griffin and Griffin Exploration, L.L.C. The most significant of these wells are the producing oil wells PP F-12-1, PP F-12-3, PP F-12-4, and PP
F-12-5 located within the Belmont Lake oil field which is itself located in the Palmetto Point region. The Belmont Lake oil field is onshore, as are all of our companys wells, but located in a flood plain of the Mississippi River which forces
seasonal constraints on certain field activities. Our company has an interest in one producing gas well, the PP F-29, but because the gas from this well is consumed by field operations it is deemed to be of no commercial value. Except for this and
the four oil wells noted immediately above, our company has no other producing wells. Additional details of these interests are noted below and not all of these wells were successful.

Mississippi: Palmetto Point Project

On December 21, 2005, our company agreed to purchase a 20% gross working and revenue interest in a 10 well drilling program in Palmetto Point, Mississippi owned by Griffin & Griffin Exploration  for cash payments of $700,000, comprised of
$220,000 paid upon entering the Agreement and the remaining balance of $480,000 paid on January 17, 2006. Our company applied the full cost method to account for our oil and gas properties and as of July 31, 2009, seven wells were found to
be proved wells, and three wells were found impaired. One of the wells was impaired due to uneconomic life, and the other two wells were abandoned due to no apparent gas or oil shows present.  The costs of impaired properties were added to the
capitalized cost in determination of the depletion expense. Palmetto Point is approximately 150 miles southwest of Jackson, Mississippi and approximately 50 miles north/northwest of Baton Rouge, Louisiana. It is 30 miles west of Woodville,
Mississippi off of State Highway 33 and is entirely within Wilkinson County.

There were no further costs to our company in earning our interest in the 10 well drilling program, including well development costs or pipeline connections. Griffin has agreed that the leases held by it covering any mineral estate underlying the
applicable well site acreage shall not provide for more than twenty-five (25%) percent royalty and overriding royalty interest. Our companys net interest in any oil and gas produced is calculated by subtracting the applicable royalties from
its 20% gross interest. Consequently, its original net working interest in the drilling program was a minimum fifteen (15%) percent net working interest. Griffin conducted the Drilling Program in its capacity as Operator and receives a 15% carried
interest.

One of these original 10 wells was the PP F-12-1 well, which was the discovery well of a field now known as the Belmont Lake field. All of these original 10 wells were targeting the Frio geological formation of the Cenozoic era and Oligocene series,
which is characterized in this region as a generally shallow, sandstone-rich layer. In this area of Mississippi, the Frio geologic formation is generally found between 2,000 and 4,500 foot depth from surface.

On September 22, 2006, our company elected to participate in an additional two-well program in Palmetto Point, Mississippi owned by Griffin by paying an additional $140,000 (paid). Our company earned the same 20% gross interest in the two (2)
additional wells (12 wells total and all drilled) and subsequently increased our gross interest to

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32% in these 12 wells, or a net revenue interest of 20.802815% . As of July 31, 2009, the two wells were found to be proved wells.

On June 23, 2007, our company acquired an assignment of a 10% gross working interest in the Palmetto Point wells described above from a third party for $520,000 which was payable by a secured loan. The $520,000 loan was valued at a Net
Present Value of $501,922, which is the capitalized amount. Our company calculated the net present value of the secured loan payable by applying 8% interest rate, which was based on a T-bill rate of 4.28% plus a risk premium.

On October 4, 2007, our company elected to participate in the drilling of the PP F-12-3 well in Palmetto Point, Mississippi which was conducted by Griffin. This well was the second well drilled in the Belmont Lake oil field. Our company had a 30%
gross working interest and paid $266,348. On July 31, 2008, our company accrued and paid an additional cost of $127,707 for the workovers of wells PP F-12 and PP F-12-3. PP F-12 has had intermittent production from October 2007, and PP
F-12-3 has had intermittent production from November 2007.

On April 3, 2009, our company entered into an Asset Purchase Agreementwith Delta Oil & Gas, Inc., and The Stallion Group to acquire additional interests in its existing core producing Mississippi oil and gas properties. Our company paid
$40,073.39 to acquire an additional two percent (2%) working interest in the proven Belmont Lake oil and gas field and an additional 10% working interest in potential nearby exploration wells. Total working interest for Belmont Lake as of July
31, 2009 is 32%; and total working interest in the exploration wells on approximately 140,000 acres surrounding Belmont Lake in all directions as of July 31, 2010, is 60%.

Our company had a short-lived opportunity to acquire additional fractional interests in the upcoming Belmont Lake 12-4 well which was expected to be a horizontal well. An unrelated third party did not participate in its right to participate in the
12-4 well, and therefore a share of its interest (a non consent interest) was made available to the other participating parties including Our company. On August 28, 2009 and effective on September 1, 2009, to take best advantage of this
opportunity, our company entered into four separate assignment agreements, three of which were with people or companies with related management. Our company received from these four parties proceeds of $371,608.57 to fund additional interests in
this well. As a result, our company has a 25.84% perpetual gross interest in the well (18.0% net revenue interest); as well as a 5.2% net revenue interest in the non-consent interest. The non-consent interest remains valid until such time as the
well produces 500% of all costs and expenses back to the participants in the form of revenue, at which time the non-consent interest ends. Enertopia, a company with related management, had acquired from Our company a 6.16% perpetual gross interest
in the 12-4 well; David DeMartini, a director of Our company, had acquired from Our company a 5% gross interest in the non-consent interest in the 12-4 well; and 0743608 BC Ltd. a company owned by the President of our company, had acquired from Our
companyour company a 11.60% gross interest in the non-consent interest in the 12-4 well.

On May 31, 2010, our company signed a Settlement Agreement with Enertopia Corp., whereby our company issued 499,893 units at $0.12 per unit. Each unit consists of one restricted share of our common stock and one share purchase warrant
exercisable at $0.20 per share for a period of two years in exchange for the working interest initially assigned on August 28, 2009.

On June 16, 2010, our company signed a Settlement Agreement with a third party, who had originally participated in the August 28, 2009, opportunity in the non-consent interest for Belmont Lake 12-4.  Our company returned $144,063.46 to the third
party and cancelled its participation.

On July 29, 2010, our company had agreed with its Operators at Belmont Lake not to proceed to drill a horizontal 12-4 well. Rather, two of the three proposed vertical wells 12-2, 12-4, or 12-5 were proposed to be drilled in August 2010. To take best
advantage of this opportunity, our company cancelled all previous agreements relating to August 28, 2009 with respect to Belmont Lake horizontal well 12-4 and entered into three separate assignment agreements, of which all three were with people or
companies with related management. Our company received total proceeds of $324,677.12 to fund additional interests in these wells. As a result, our company has a 32% perpetual gross interest in the wells (24.0% net revenue interest); as well as
a 8% gross interest (6% net revenue interest) in the non-consent interest. The non-consent interest remains valid until such time as the well produces 500% of all costs and expenses back to the participants in the form of revenue, at which time the
non-consent interest ends. Emerald Atlantic LLC, a company owned by a director of our company, has acquired from our company a 8.74% gross interest in the non-

---

consent interest in two of the three vertical wells; and
0743608 BC Ltd. a company owned by our president, has acquired from our company
a 20.79% gross interest in the non-consent interest in two of the three vertical
wells; an advisor to our company has acquired from our company 2.46% gross
interest in the non-consent interest in two of the three vertical wells.

On September 13, 2010, we entered into three separate
assignment agreements with 0743608 BC Limited, a company solely owned by a a
director of our company ; Emerald Atlantic LLC, a company solely owned by a
director of our company, and our Senior VP Business Development. (the
Assignees), whereby the Assignees have paid a fee of $408,116.48 to earn a 24%
share of our companys gross non-perpetual 32% interest in the three oil wells
being drilled in Wilkinson County, Mississippi. This agreement replaces an
agreement signed on August 28, 2009. As a result of the three assignment
agreements, our company receives at no cost, a carried interest of 8% in these
same rights and benefits. Our company assigns, transfers and sets over to the
Assignees, all proportionate rights, interest and benefits in the Assigned Non
Perpetual Interest held by or granted to the Assignor in and to the
Participation Agreement between our company and Griffin but limited to a gross
500% revenue payout based on the total amount paid under the Initial
Consideration and the Subsequent Consideration after which all rights, interests
and benefits cease.

Total working interest for Belmont Lake as of October 31, 2011
is 42%, with the exception of a 50% interest in wells PP F-12-4 and PP F-12-5;
and total working interest in the exploration wells on approximately 140,000
acres surrounding Belmont Lake in all directions as of October 31, 2010, is 60%.

As of October 31, 2011, there were additional well interest
changes or workovers pending of wells PP F-12, PP F12-3, PP F12-4, PP F12-5 and
PP F-29 in the amount of $340,549.

As of January 11, 2012, the status of the Palmetto Point,
Mississippi wells is as follows:

Well Name
    Spud/Start
    Complete
    Results
    Depth
    StatusPP F-40
    May 11/06
    May 16/06
    Frio Gas; 12 ft.
    3850
    Shut-inPP F-118
    May 18/06
    May 22/06
    Frio Gas; 14 ft.
    3808
    Shut-inPP F-121
    May 24/06
    May 29/06
    Dry
    3850
    Plug & abandonPP F-7
    May 31/06
    June 4/06
    Dry
    3800
    Plug & abandonPP F-39
    June 10/06
    June 16/06
    Frio Gas/Oil; 12 ft.
    3900
    Shut-inPP F-42
    June 18/06
    June 21/06
    Frio Gas/Oil; 10 ft.
    3170
    Shut-inPP F-36-2
    June 23/06
    July 2/06
    Frio Gas; 8 ft.
    3450
    Shut-inPP F-4
    Oct 31/06
    Nov. 5/06
    Frio Gas; 8 ft.
    4200
    Plug & abandonPP F- 29
    Nov 11/06
    Nov. 14/06
    Frio Gas; 37 ft.
    4100
    ProducingPP F-12-1
    Dec 18/06
    Dec. 24/06
    Frio Gas; 3 ft. Frio Oil,
      26 ft.
    4016
    ProducingPP F-6B
    
    July 27/06
    Frio Gas
    
    Shut-inPP F-52A
    
    July 27/06
    Frio Gas
    
    Shut-inPP F-12-3
    Oct/07
    Oct/07
    Frio Oil
    3150
    ProducingPP F-12-4
    Aug/10
    Oct/10
    Frio Oil
    3150
    ProducingPP F-12-5
    Sep 12/10
    Nov 23/10
    Frio Oil
    3150
    Producing


Mississippi and Louisiana: Frio-Wilcox Project

After participating in the Palmetto Point project, we entered
into a separate agreement that expanded both our percentage interest in future
wells, and also expanded the geographical area on which those wells could be
drilled.

On August 3, 2006, we entered into a Phase II agreement with
Griffin, to acquire a working interest in multiple zones of potential oil and
gas production in Mississippi and Louisiana. This agreement contemplates up to a
50 well drill program, which are exclusive to the participants, for Wilcox and
Frio wells, at our companys option, within the defined area of mutual interest
(AMI). From these 50 prospects, Griffin and the participants will select all
drill

---

locations with the expectation that the wells will be drilled to depths sufficient to test prospectively for producible hydrocarbons from the top of the Frio Formation to the bottom of the Wilcox Formation.

These 50 wells are in addition to all wells drilled under the original 10-well agreement and also in addition to any development wells to be drilled at the Belmont Lake oil field discovery. The AMI originally included over 200,000 gross acres
located non-contiguously between Southwest Mississippi and North East Louisiana which include the approximately 32,000 acres of the Palmetto Point area but also include other areas.

Our company had contracted to assume a 40% gross interest in this AMI, meaning we were obligated to pay 40% of costs related to licensing, permitting, drilling, completion and all other related costs. Upon payment of 40% of the costs, we earned a
net 32% of all production from all producible zones to the base of the Frio formation (Frio Targets); and, 30% of all production to the base of the Wilcox formation (Wilcox Targets). All working interests are to be registered in the name of our
company. This 50-well AMI was intended to be drilled in several stages.

Our companys pro rate share of the first stage had a total cost $1.6 million. As of October 31 2007, we had placed $1,600,000 in trust to completely fund this initial commitment. During the drill program, an unrelated third party
participant elected not to continue their participation in the program, and we assumed our pro-rata portion of their 10% gross working interest as our own, at no additional cost, bringing our total gross working interest in the seven (7) wells and
their leases (Initial AMI Drilling Program), to 45%.

On June 21, 2007, we acquired an additional 10% from a third party for all rights, title and benefits excluding the seven wells drilled under the AMI Agreement between August 3, 2006 and June 19, 2007, specifically wells CMR-USA-39-14, Dixon #1,
Faust #1 TEC F-1, CMR/BR F-14, RB F-1 Red Bug #2, BR F-33, and Randall #1 F-4, and any offset wells that could be drilled to any of these specified wells (Subsequent AMI Drilling Program). This brought our interest in the remaining 43 wells to 50%
and we drilled 5 wells under this arrangement.

On April 3, 2009, we acquired an additional 10% working interest in the 38 exploration wells remaining to be drilled, bringing its total gross working interest to 60% in the 38 wells that remain to be drilled of this original 50-well option in over
140,000 acres surrounding Belmont Lake in all directions.

On December 16, 2010, we entered into an assignment agreement with Emerald Atlantic LLC, a company solely owned by a director of our company, whereby Emerald Atlantic has paid a fee of $30,076 to earn 18% of a 4.423% share of our companys
net revenue interest after field operating expenses for a well to be drilled in Wilkinson County.

Initial AMI Drilling Program

Our companys pro rate share of the first stage had a total cost $1.6 million. As of October 31 2007, we had placed $1,600,000 in trust to completely fund this initial commitment. During the drill program, an unrelated third party
participant elected not to continue their participation in the program, and we assumed our pro-rata portion of their 10% gross working interest as our own, at no additional cost, bringing our total gross working interest in these seven (7) drilled
wells and their leases, to 45%.

We successfully drilled and completed seven (7) wells under this drilling program. Certain wells were placed into production.

Details of the drill program are outlined below:

In December 2006, the first well CMR-US 39-14 was found to have sufficient hydrocarbons to become economic. USA 1-37 and BR F-33 had started intermittent production from November 2007. Our company applied the full cost method to account for its oil
and gas properties.

As at January 31, 2007, we abandoned Dixon #1 due to no economic hydrocarbons being present and $162,420 of drilling costs was added to the capitalized costs. The Dixon #1 was the only Wilcox well our company has drilled to

---

date. Every other well we have participated in located in
Mississippi and Louisiana is a Frio well. Slightly deeper than the Frio targets,
but also of the Cenozoic era, the Wilcox geologic formation is of the Eocene
series, generally found at depths of less than 8,000 feet.

On June 2, 2007, we abandoned Randall #1 and $107,672 drilling
costs were added to the capitalized costs in determination of depletion expense.

During August to October 2007, three additional wells, PP F-90,
PP F-100, and PP F-111 were drilled in the area. These Frio wells were abandoned
due to modest gas shows and a total of $306,562 drilling costs was added to the
capitalized costs in determination of depletion expense.

During December 2007, two additional wells, PP F-6A and PP
F-83, were drilled and were plugged and abandoned due to non-economic gas shows.
A total of $247,086 drilling costs were added to the capitalized costs in
determination of depletion expense.

The results of the initial drill program are as follows:

Well Name
    Spud/Start
    Complete
    Results
    Depth
    StatusCMR-USA-39- 14 RB F-3
    Sept. 8/06
    Sept. 12/06
    Frio Gas 14 ft.
    3,200
    Shut-inDixon #1
    Jan. 03/07
    Jan. 20/07
    Wilcox Target; Dry
    8,650
    Plug & abandonFaust #1, TEC F-1
    Feb. 05/07
    Feb. 11/07
    Frio Gas 9 ft
    5,350
    Shut-inCMR/BR F-24
    Feb. 20/07
    Feb. 24/07
    Frio Gas
    3,250
    Shut-in (Well assigned to
      another operator)RB F-1 Red Bug #2
    May 08/07
    May 13/07
    Frio Gas 10 ft
    3,180
    Shut-inBR F-33
    May 20/07
    May 24/07
    Frio Gas 12 ft
    3,837
    Shut-inRandall #1 Closure F-4
    May 27/07
    June 03/07
    Frio Target: Dry
    5,100
    Plug & abandon


Subsequent AMI Drilling Program

Five additional wells were drilled under the 50-well AMI. Each
of these wells encountered non commercial quantities of hydrocarbons and were
plugged and abandoned.

Significant Acquisitions and Dispositions

None to Report.

Production and Prices

The following table sets forth information regarding net
production of oil and natural gas, and certain price and cost information for
fiscal years ended October 31, 2011, 2010 and 2009.

For the fiscal year ended
      October 31, 2011
    For the fiscal year ended
      October 31, 2010
    For the fiscal year ended
      October 31, 2009Production Data:Natural gas (Mcf)
    0
    360
    13,138Oil (Bbls)
    11,506
    4,641
    7,461Average Prices:Natural gas (per Mcf)
    $4.20
    $4.50
    $3.77Oil (per Bbl)
    $108.74
    $81.47
    $50.00


---

Production Costs:Natural gas (per Mcf)
    $Nil
    $15.72
    $9.43Oil (per Bbl)
    $17.21
    $17.43
    $11.00


Productive Wells

The following table summarizes information at October 31, 2011,
relating to the productive wells in which we owned a working interest as of that
date. Productive wells consist of producing wells and wells capable of
production, but specifically exclude wells drilled and cased during the fiscal
year that have yet to be tested for completion (e.g., all of the operated wells
drilled by our company during this year have been cased in preparation for
completion, but no operations have been initiated that would allow these wells
to be productive). Gross wells are the total number of producing wells in which
we have an interest, and net wells are the sum of our fractional working
interests in the gross wells.

Gross
    NetLocation
    Oil
    Gas
    Total
    Oil
    Gas
    TotalMississippi
    4
    5
    9
    0.27
    0.27
    0.54Total
    4
    5
    9
    0.7
    .27
    0.54


Unaudited Oil and Gas Reserve Quantities

The unaudited reserve estimates for Mississippi, as of October
31, 2011, were prepared by Veazey & Associates, an independent petroleum
engineering firm.

The estimated proved reserves prepared by Veazey and Associates
are summarized in the table below, in accordance with definitions and pricing
requirements as prescribed by the Securities and Exchange Commission (the
SEC). Prices paid for oil and natural gas vary widely depending upon the
quality such as the Btu content of the natural gas, gravity of the oil, sulfur
content and location of the production related to the refinery or pipelines.

There are many uncertainties inherent in estimating proved
reserve quantities and in projecting future production rates and the timing of
development expenditures. In addition, reserve estimates of new discoveries that
have little production history are more imprecise than those of properties with
more production history. Accordingly, these estimates are expected to change as
future information becomes available.

Proved oil and gas reserves are the estimated quantities of
crude oil and natural gas which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions.

Proved developed oil and gas reserves are those reserves
expected to be recovered through existing wells with existing equipment and
operating methods.

Unaudited net quantities of proved developed and undeveloped
reserves of crude oil and natural gas (all located within United States) are as
follows:

The standardized measure of discounted future net cash flows
relating to proved natural gas and oil reserves is as follows:

USD$Future cash inflows
    
    16,940,866Future production costs
    
    (4,409,690
    )Future development costs
    
    (1,070,698
    )Future net cash flows - undiscounted
    
    11,460,47810% annual discount for estimated timing of
      cash flows
    
    (3,388,906
    )Standardized measure of discounted future net cash flows
    
    8,071,572


---

Year-end price per Mcf of natural gas used in making
standardized measure determinations as of October 31, 2011 was $4.20. Year-end
price per Bbl of oil used in making these same calculations was $108.74.

Estimated Net quantities of Natural Gas and Oil
Reserves:

The following table sets forth our proved reserves, including
changes, and proved developed reserves at the end of October 31, 2011.

| |                                  |  |           |   |  | Natural |   |  | Crude Oil   |  
| | -------------------------------- |  | --------- | - |  | ------- | - |  | ----------- | -
| |                                  |  | Crude Oil |   |  | Gas     |   |  | Equivalents |  
| |                                  |  | (MBbls)   |   |  | (MMcf)  |   |  | (MBbls)     |  
| | Proved reserves:                 |  |           |   |  |         |   |  |             |  
| | Beginning of the year reserve    |  | 125.64    |   |  | -       |   |  | 125.64      |  
| | Adjustments of reserves in place |  | 41.65     |   |  | 3.22    |   |  | 42.19       |  
| | Productions                      |  | (11.54    | ) |  | (3.22   | ) |  | (12.04      | )
| | End of year reserves             |  | 155.79    |   |  | -       |   |  | 155.79      |  
| |                                  |  |           |   |  |         |   |  |             |  
| | Proved developed reserves:       |  |           |   |  |         |   |  |             |  
| | Beginning of the year reserve    |  | 57.33     |   |  | -       |   |  | 57.33       |  
| | End of year reserves             |  | 68.07     |   |  | -       |   |  | 68.07       |  

Oil and Gas Acreage

The following table sets forth the undeveloped and developed
acreage, by area, held by us as of October 31, 2011. Undeveloped acres are acres
on which wells have not been drilled or completed to a point that would permit
the production of commercial quantities of oil and gas, regardless of whether or
not such acreage contains proved reserves. Developed acres are acres, which are
spaced or assignable to productive wells. Gross acres are the total number of
acres in which we have a working interest. Net acreage is obtained by
multiplying gross acreage by our working interest percentage in the properties.
The table does not include acreage in which we have a contractual right to
acquire or to earn through drilling projects, or any other acreage for which we
have not yet received leasehold assignments.

**Undeveloped
      Acres**
    Developed Acres**Gross**
    Net
    Gross
    NetMississippi
    220
    132
    1,160
    316.72Total
    220
    132
    1,160
  316.72


Drilling Activity

The following table sets forth our drilling activity during the
years ended October 31, 2011, 2010 and 2009.

2011
    2010
    2009Gross
    Net
    Gross
    Net
    Gross
    NetExploratory wells:ProductiveDry
    1
    .04
    
    
    2
    .72Development wells:Productive
    
    
    2
    1.28Dry
    
    
    1
    .64Total wells
    
    
    3
    1.92
    2
    .72


---

Item 3. Legal Proceedings

Other than as set out below, we know of no material, existing
or pending legal proceedings against us, nor are we involved as a plaintiff in
any material proceeding or pending litigation. There are no proceedings in which
any of our directors, officers or affiliates, or any registered or beneficial
shareholder, is an adverse party or has a material interest adverse to our
company.

On October 20, 2011 we were served with an amended complaint
filed on behalf of John M. Deakle in the Circuit Court of Hinds County,
Mississippi. The complaint includes our company as one of the defendants and
alleges breach of contract as well as mismanagement of the drilling activity and
improper billing by Griffin and Griffin, the operator on our companys Belmont
Lake oil and gas properties. Deakle specifically alleges that we pressured
Griffin and Griffin to undertake the drilling of unnecessary wells for their own
benefit. The complaint requests injunctions to enjoin the operator from drilling
additional wells on the Belmont Lake property, declaratory judgments stating,
apart from other things, that Deakles rights under the joint operating
agreement were breached, and punitive damages.

Our company believes that this is a frivolous suit, devoid of
any merit as it relates to our companys activities, and will defend our
position aggressively. Additionally, our company is considering filing a
countersuit against Deakle for damages caused by Deakles refusal to comply with
the terms of the joint operating agreement, the unwarranted interruption of
drilling activity on the property as a result of Deakles action, as well as
costs associated with defending the lawsuit.

SIGNATURES

Item 4. (Reserved and Removed)

PART II

Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities

Our common shares are quoted on the Over-the-Counter Bulletin
Board under the symbol LXRP. Our common shares are also quoted on the Canadian
National Stock Exchange (CNSX) under the symbol LXX. The following quotations,
obtained from Yahoo Finance, reflect the high and low bids for our common shares
as quoted on the Over-the-Counter Bulletin Board based on inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.

The high and low bid prices of our common stock for the periods
indicated below are as follows:

OTC Bulletin
      Board(1)Quarter Ended
    High
    LowOctober 31, 2009
    $0.16
    $0.14January 31, 2010
    $0.16
    $0.10April 30, 2010
    $0.13
    $0.12July 31, 2010
    $0.20
    $0.12October 31, 2010
    $0.29
    $0.12January 31, 2011
    $0.35
    $0.15April 30, 2011
    $0.50
    $0.26July 31, 2011
    $0.40
    $0.20October 31, 2011
    $0.35
    $0.26


---

|(1)Over-the-counter market quotations reflect
      inter-dealer prices without retail mark- up, mark-down or commission, and
      may not represent actual transactions.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                          
|(2)No high or low bid prices for our common stock
      were recorded for the period indicated.                                                                           

As of January 12, 2012, there were 32 holders of record of our
common stock. As of such date, 16,431,452 shares of common stock were issued and
outstanding.

Our common shares are issued in registered form. Olympia Trust
Company, 1003-750 West Pender Street, Vancouver, BC V6C 2T8 (Telephone:
604-484-8612; Facsimile: 604-484-8638) is the transfer agent for our common
shares.

Nevada Agency and Trust Company, 50 West Liberty Street, Suite
880, Reno, Nevada 89501 (Telephone: 775.322.0626; Facsimile: 775.322.5623) is
our registrar.

Dividend Policy

We have not paid any cash dividends on our common stock and
have no present intention of paying any dividends on the shares of our common
stock. Our current policy is to retain earnings, if any, for use in our
operations and in the development of our business. Our future dividend policy
will be determined from time to time by our board of directors.

Recent Sales of Unregistered Securities

We did not sell any equity securities which were not registered
under the Securities Act during the year ended October 31, 2011 that were not
otherwise disclosed on our quarterly reports on Form 10-Q or our current reports
on Form 8-K filed during the year ended October 31, 2011.

Equity Compensation Plan Information

We have no long-term incentive plans other than the stock
option plans described below:

2007 Equity Plan

On April 25, 2007, our
  shareholders approved our 2007 Equity Incentive Stock Option Plan.

|The 2007 Plan permits our company to issue up to 500,000
      shares of our common stock to eligible employees and directors of our
      company upon the exercise of stock options granted under the 2010 Plan. As
      of October 31, 2011, there is 100,000 option outstanding under the 2007
      Plan.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2010 Equity Compensation Plan

On February 26, 2010, our shareholders approved and adopted our
2010 equity incentive plan.

|The 2010 Plan permits our company to issue up to
      1,800,000 shares of our common stock to directors, officers, employees and
      eleigble consultants of our company upon the exercise of stock options
      granted under the 2010 Plan. As of October 31, 2011, there are 1,725,000
      options outstanding under the 2010 Plan.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

Equity Compensation Plan InformationPlan
      category
    Number of
      securities to be issued upon exercise of
      outstanding options, warrants and rights
    Weighted-average exercise
      price of outstanding options, warrants and
      rights
    Number of securities
      remaining available for future issuance under
      equity compensation plans (excluding securities
      reflected in column (a))Equity compensation plans no approved by
      shareholders
    Nil
    Nil
    NilEquity compensation plans approved
      byshareholders:2007 Equity
           compensation     
      plan
    Nil
    Nil
    100,0002010 Equity
           compensation     
      plan
    1,725,000
    $0.26
    75,000Total
    1,725,000
    0.26
    175,000


As at the date of the annual report, 225,000 stock options were
exercised.

Purchases of Equity Securities by the Issuer and Affiliated
Purchasers

We did not purchase any of our shares of common stock or other
securities during our fiscal year ended October 31, 2011.

Item 6. Selected Financial Data

As a smaller reporting company, we are not required to
provide the information required by this Item.

Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations

The following discussion should be read in conjunction with our
audited consolidated financial statements and the related notes that appear
elsewhere in this annual report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward
looking statements. Factors that could cause or contribute to such differences
include, but are not limited to; those discussed below and elsewhere in this
annual report, particularly in the section entitled "Risk Factors" beginning on
page 11 of this annual report.

Our audited financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.

Results of Operations for our Years Ended October 31,
2011 and 2010

Our net loss and comprehensive loss for the year ended October
31, 2011, for the year ended October 31, 2010 and the changes between those
periods for the respective items are summarized as follows:

---

Year Ended October
      31, 2011 $
    Year Ended October
      31, 2010 $
    Change Between Year Ended
      October 31, 2011 and Year Ended October 31,
      2010 $Revenue
    $ 1,133,766
    $ 362,471
    $ 771,295Other (income)expenses
    Nil
    Nil
    NilGeneral and administrative
    1,004,137
    641,318
    362,819Interest expense
    223,673
    167,322
    56,351Write down in carrying value of oil and gas
      properties
    Nil
    1
    (1)Consulting fees
    262,134
    168,512
    93,622Oil and gas operating expenses
    297,656
    152,479
    145,177Professional Fees
    90,448
    50,562
    39,886Net Income (loss)
    (538,226)
    (552,462)
    14,236


Revenue

Our revenue increased by $771,295 during the year ended
October 31, 2011. The increase in our oil and gas revenues for our year ended
October 31, 2011 was largely due to increased production volumes for oil wells
PP F-12-1 and PP F-12-3 along with the addition of two new wells 12-4 and 12-5.
The revenue for the fiscal year 2011 is net of the revenue interests that were
assigned to the related parties of the Company. The assigned revenue interests,
their related cost of revenue and payout of net revenue were included as a part
of the Companys operations for the Companys financial statements of first
three quarters in fiscal year 2011, which have been reclassified in the yearend
financial statements. As the amount of revenue recorded was not significantly
material and there was no net impact on the net profit of the Companys
operations for the financial statements of its first three quarters of 2011, the
revenue and cost of revenue of the first three quarter financial statements of
fiscal year 2011 have not been reclassified.

General and Administrative

Our general and administrative expenses increased by $362,819
during the year ended October 31, 2011. The increase in our general and
administrative expenses for our year ended October 31, 2011 was due to increased
stock based compensation, consulting, travel, investor relations and
advertising.

Professional Fees

Our professional fees increased by $39,886 during the year
ended October 31, 2011. There was an increase in accounting, audit and legal
fees for our year ended October 31, 2011 in connection with the preparation and
filing of a Form S-8 and Form S-1.

Interest Expense

Interest expense increased by $56,351 during the year ended
October 31, 2011. The increase in interest expense for our year ended October
31, 2011 is due to the convertible debt financing made to the Company.

---

Oil and Gas Operating Expenses

Oil and gas operating expenses increased to $145,177 during the
year ended October 31, 2011. The increase in oil and gas operating expenses for
our year ended October 31, 2011 was due to the increased production volumes for
oil and gas and the addition of two new wells.

Liquidity and Financial Condition

|Working Capital              |   | At          |   |   | At          |  
|---------------------------- | - | ----------- | - | - | ----------- | -
|                             |   | October 31, |   |   | October 31, |  
|                             |   | 2011        |   |   | 2010        |  
|Current assets               | $ | 264,228     |   | $ | 140,206     |  
|Current liabilities          |   | 1,078,583   |   |   | 1,049,647   |  
|                             |   |             |   |   |             |  
|Working capital (deficiency) | $ | (814,355    | ) | $ | (909,441    | )

|Cash Flows                                           |   | Year Ended  |  
|---------------------------------------------------- | - | ----------- | -
|                                                     |   | October 31, |  
|                                                     |   | 2011        |  
|Cash flows from (used in) operating
      activities | $ | (195,103    | )
|Cash flows (used in) investing activities            |   | (697,690    | )
|Cash flows from (used in) financing
      activities |   | 861,005     |  
|Net increase (decrease) in cash during year          | $ | (31,788     | )

Operating Activities

Net cash used in operating activities was $195,103 for our year
ended October 31, 2011 compared with cash used in operating activities of
$330,336 in the same period in 2010. This difference was largely due to the
increase in depletion.

Investing Activities

Net cash used in investing activities was $697,690 for our year
ended October 31, 2011 compared to net cash used in investing activities of
$285,242 in the same period in 2010 was mainly attributable to the two new wells
at Belmont Lake.

Financing Activities

Net cash provided in financing activities was $861,005 for our
year ended October 31, 2011 compared to net cash provided of $348,400 in the
same period in 2010. This was largely from the proceeds of a convertible debt
financing and conversion of stock options and warrants in 2011.

Contractual Obligations

As a smaller reporting company, we are not required to
provide tabular disclosure obligations.

Going Concern

The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
applicable to a going concern, which contemplates the realization of assets and
the satisfaction of liabilities and commitments in the normal course of
business. Our company has a net loss of $538,226 for the year ended October 31,
2011 [2010  net loss of $552,462] and at October 31, 2011 had a deficit
accumulated during the exploration stage of $4,462,618 [2010  $3,924,392]. Our
company has working capital deficiency of $814,355 as at October 31, 2011 [2010
- $909,441]. Our company requires additional funds to maintain our existing operations and to acquire new business
assets. These conditions raise substantial doubt about our companys ability to
continue as a going concern. Managements plans in this regard are to raise
equity and debt financing as required, but there is no certainty that such
financing will be available or that we will be available at acceptable terms.
The outcome of these matters cannot be predicted at this time.

---

These financial statements do not include any adjustments to
reflect the future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that might result from the outcome
of this uncertainty.

At this time, we cannot provide investors with any assurance
that we will be able to raise sufficient funding from the sale of our common
stock or through a loan from our directors to meet our obligations over the next
twelve months. We do not have any arrangements in place for any future debt or
equity financing.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
stockholders.

Critical Accounting Policies

The discussion and analysis of our financial condition and
results of operations are based upon our financial statements, which have been
prepared in accordance with the accounting principles generally accepted in the
United States of America. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by managements application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements are critical to an
understanding of our financial statements.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05,
Comprehensive Income (Topic 220): Presentation of Comprehensive Income, which is
effective for annual reporting periods beginning after December 15, 2011. ASU
2011-05 will become effective for the Company on January 1, 2012. This guidance
eliminates the option to present the components of other comprehensive income as
part of the statement of changes in stockholders equity. In addition, items of
other comprehensive income that are reclassified to profit or loss are required
to be presented separately on the face of the financial statements. This
guidance is intended to increase the prominence of other comprehensive income in
financial statements by requiring that such amounts be presented either in a
single continuous statement of income and comprehensive income or separately in
consecutive statements of income and comprehensive income. The adoption of ASU
2011-05 is not expected to have a material impact on the Companys financial
position or results of operations.

In May 2011, the FASB issued ASU
2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which is
effective for annual reporting periods beginning after December 15, 2011. This
guidance amends certain accounting and disclosure requirements related to fair
value measurements. Additional disclosure requirements in the update include:
(1) for Level 3 fair value measurements, quantitative information about
unobservable inputs used, a description of the valuation processes used by the
entity, and a qualitative discussion about the sensitivity of the measurements
to changes in the unobservable inputs; (2) for an entitys use of a nonfinancial
asset that is different from the assets highest and best use, the reason for
the difference; (3) for financial instruments not measured at fair value but for
which disclosure of fair value is required, the fair value hierarchy level in
which the fair value measurements were determined; and (4) the disclosure of all
transfers between Level 1 and Level 2 of the fair value hierarchy. The Company
is currently evaluating the impact of the adoption.

---

Item 7A. Quantitative and Qualitative Disclosures About
Market Risk

Not Applicable.

Item 8. Financial Statements and Supplementary Data

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

LEXARIA CORP.

We have audited the balance sheet of Lexaria Corp. (the
Company) as at October 31, 2011 and the related statements of stockholders
equity, operations and comprehensive loss and cash flows for the year then
ended. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit. We did not audit the Companys financial
statements as of and for the year ended October 31, 2010, and the cumulative
data from November 1, 2009 to October 31, 2010 in the statements of
stockholders equity, operations and cash flows, which were audited by other
auditors whose report, dated January 21, 2011 which expressed an unqualified
opinion, has been furnished to us. Our opinion, insofar as it relates to the
amounts included for cumulative data from November 1, 2009 to October 31, 2010,
is based solely on the report of the other auditors.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as at October 31, 2011 and the result of its operations and its cash flow for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.

The accompanying financial statements refer to above have been
prepared assuming the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company had recurring losses and
requires additional funds to maintain its planned operations. These factors
raise substantial doubt about its ability to continue as a going concern.
Managements plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

|Vancouver, Canada January 26, 2012 | 
|---------------------------------- | 

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

LEXARIA CORP.

We have audited the balance sheets of LEXARIA Corp. (the
Company) as at October 31, 2010 and 2009 and the related statements of
stockholders equity, operations and comprehensive loss and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as at October31, 2010 and 2009 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles in the United States of America.

The accompanying financial statements refer to above have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company had recurring
losses and requires additional funds to maintain its planned operations. These
factors raise substantial doubt about its ability to continue as a going
concern. Managements plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

|Vancouver, Canada |                      
|----------------- | ---------------------
|January 21, 2011  | Chartered Accountants



---

LEXARIA CORP.BALANCE SHEETS(Expressed
in U.S. Dollars)

|                                                                                                                                                                                                                                                                          |   | October 31 |   |   | October 31 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                                                                                                                                                                                                                          |   | 2011       |   |   | 2010       |  
|ASSETS                                                                                                                                                                                                                                                                    |   |            |   |   |            |  
|Current                                                                                                                                                                                                                                                                   |   |            |   |   |            |  
|Cash and cash
      equivalents                                                                                                                                                                                                                                           | $ | 31,201     |   | $ | 62,989     |  
|Accounts receivable                                                                                                                                                                                                                                                       |   | 230,880    |   |   | 74,879     |  
|Prepaid expenses
      and deposit                                                                                                                                                                                                                                        |   | 2,147      |   |   | 2,338      |  
|Total Current Assets                                                                                                                                                                                                                                                      |   | 264,228    |   |   | 140,206    |  
|Capital assets, net                                                                                                                                                                                                                                                       |   | -          |   |   | 425        |  
|Deferred charges                                                                                                                                                                                                                                                          |   | 33,092     |   |   | -          |  
|Oil and gas properties (Note 5)                                                                                                                                                                                                                                           |   |            |   |   |            |  
|Proved property                                                                                                                                                                                                                                                           |   | 3,717,866  |   |   | 3,118,376  |  
|Unproved properties                                                                                                                                                                                                                                                       |   | 19,293     |   |   | 19,293     |  
|Prepayments for oil and gas explorations                                                                                                                                                                                                                                  |   | 304,890    |   |   | -          |  
|                                                                                                                                                                                                                                                                          |   | 4,042,049  |   |   | 3,137,669  |  
|TOTAL ASSETS                                                                                                                                                                                                                                                              | $ | 4,339,369  |   | $ | 3,278,300  |  
|                                                                                                                                                                                                                                                                          |   |            |   |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                      |   |            |   |   |            |  
|                                                                                                                                                                                                                                                                          |   |            |   |   |            |  
|LIABILITIES                                                                                                                                                                                                                                                               |   |            |   |   |            |  
|Current                                                                                                                                                                                                                                                                   |   |            |   |   |            |  
|Accounts payable and accrued
      liabilities                                                                                                                                                                                                                            | $ | 322,313    |   | $ | 137,437    |  
|Loan payable (Note
      6a, 7a)                                                                                                                                                                                                                                          |   | 754,501    |   |   | 910,441    |  
|Due to a related party                                                                                                                                                                                                                                                    |   | 1,769      |   |   | 1,769      |  
|Total Current Liabilities                                                                                                                                                                                                                                                 |   | 1,078,583  |   |   | 1,049,647  |  
|Loan Payable  Long Term (Note 6b)                                                                                                                                                                                                                                        |   | 599,438    |   |   | 75,000     |  
|TOTAL LIABILITIES                                                                                                                                                                                                                                                         |   | 1,678,021  |   |   | 1,124,647  |  
|                                                                                                                                                                                                                                                                          |   |            |   |   |            |  
|STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                      |   |            |   |   |            |  
|                                                                                                                                                                                                                                                                          |   |            |   |   |            |  
|Share Capital (Note 4)                                                                                                                                                                                                                                                    |   |            |   |   |            |  
|Authorized:                                                                    200,000,000
      common voting shares with a par value
      of                                                                    $0.001
      per share                                 |   |            |   |   |            |  
|Issued
      and outstanding: 16,431,452common shares
      at                                                                    October31,                                                                    2011
      (12,926,348 common shares at October 31, 2010) |   | 16,431     |   |   | 12,926     |  
|Additional paid-in capital                                                                                                                                                                                                                                                |   | 7,107,535  |   |   | 6,065,119  |  
|Deficit                                                                                                                                                                                                                                                                   |   | (4,462,618 | ) |   | (3,924,392 | )
|Total Stockholders' Equity                                                                                                                                                                                                                                                |   | 2,661,348  |   |   | 2,153,653  |  
|TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY                                                                                                                                                                                                                          | $ | 4,339,369  |   | $ | 3,278,300  |  

The accompanying notes are an integral part of these financial
statements.

---

|LEXARIA CORP.              
|---------------------------
|STATEMENTS OF OPERATIONS   
|(Expressed in U.S. Dollars)

|                                                                               |  | Years Ended |  
|------------------------------------------------------------------------------ |  | ----------- | -
|                                                                               |  | October 31  |  
|                                                                               |  | 2011        |  
|Revenue                                                                        |  | $           |  
|Natural gas and oil revenue                                                    |  | 1,133,766   |  
|                                                                               |  |             |  
|Cost of revenue                                                                |  |             |  
|Natural gas and oil
      operating costs                                      |  | 297,656     |  
|Depletion                                                                      |  | 370,199     |  
|                                                                               |  | 667,855     |  
|                                                                               |  |             |  
|Gross profit (loss)                                                            |  | 465,911     |  
|                                                                               |  |             |  
|Expenses                                                                       |  |             |  
|Accounting and audit                                                           |  | 32,433      |  
|Insurance                                                                      |  | 8,749       |  
|Advertising and promotions                                                     |  | 40,920      |  
|Bank charges and
      exchange loss                                           |  | 55,052      |  
|Stock Based Compensation                                                       |  | 179,789     |  
|Consulting (note 9)                                                            |  | 262,134     |  
|Depreciation                                                                   |  | 425         |  
|Fees and Dues                                                                  |  | 36,454      |  
|Interest expense from loan payable
      (note 6,7)                            |  | 223,673     |  
|Investor relation                                                              |  | 29,153      |  
|Legal and professional                                                         |  | 58,015      |  
|Office and
      miscellaneous                                                 |  | 5,181       |  
|Rent                                                                           |  | 14,620      |  
|Telephone                                                                      |  | 3,047       |  
|Taxes                                                                          |  | 5,977       |  
|Training                                                                       |  | 268         |  
|Travel                                                                         |  | 48,247      |  
|Write down of oil and
      gas property                                       |  | -           |  
|                                                                               |  | 1,004,137   |  
|                                                                               |  |             |  
|Net (loss) for the year                                                        |  | (538,226    | )
|                                                                               |  |             |  
|Basic and diluted (loss) per share                                             |  | (0.04       | )
|Weighted average number of common shares
      outstanding - Basic and diluted |  | 14,176,503  |  

The accompanying notes are an integral part of these financial
statements.

---

|LEXARIA CORP.              
|---------------------------
|STATEMENT OF CASH FLOWS    
|(Expressed in U.S. Dollars)

|                                                                                  |   | Years Ended |  
|--------------------------------------------------------------------------------- | - | ----------- | -
|                                                                                  |   | October 31  |  
|                                                                                  |   | 2011        |  
|                                                                                  |   |             |  
|Cash flows used in operating
      activities                                     |   |             |  
|Net (loss)                                                                        | $ | (538,226    | )
|Adjustments to
      reconcile net loss to net cash used in operating activities: |   |             |  
|Consulting -Debt
      Settlement                                                 |   | 9,376       |  
|Consulting - Stock based compensation                                             |   | 179,789     |  
|Depreciation                                                                      |   | 425         |  
|Depletion                                                                         |   | 370,199     |  
|Write down in
      carrying value of oil and gas properties                      |   | -           |  
|Foreign exchange gain / loss                                                      |   | 52,823      |  
|Accredited
      interest on loan payable                                         |   | 6,334       |  
|                                                                                  |   |             |  
|Change in operating assets and
      liabilities:                                 |   |             |  
|(Increase) in accounts receivable                                                 |   | (156,001    | )
|(Increase)in
      prepaid expenses and deposit                                   |   | (304,699    | )
|Increase in accounts payable                                                      |   | 184,877     |  
|Net cash used in operating activities                                             |   | (195,103    | )
|                                                                                  |   |             |  
|Cash flows used in investing activities                                           |   |             |  
|                                                                                  |   |             |  
|Oil and gas property acquisition and
      exploration costs                      |   | (697,690    | )
|Net cash used in investing
      activities                                       |   | (697,690    | )
|                                                                                  |   |             |  
|Cash flows from financing activities                                              |   |             |  
|                                                                                  |   |             |  
|Proceeds from loan
      payable                                                  |   | 329,903     |  
|Proceeds from private placement                                                   |   | 36,908      |  
|Proceeds from Stock
      Options and warrant                                     |   | 494,194     |  
|Net cash from financing Activities                                                |   | 861,005     |  
|                                                                                  |   |             |  
|(Decrease) in cash and cash equivalents                                           |   | (31,788     | )
|                                                                                  |   |             |  
|Cash and cash equivalents, beginning
      of period                              |   | 62,989      |  
|Cash and cash equivalents, end of
      period                                    | $ | 31,201      |  

The accompanying notes are an integral part of these financial
statements.

---

|LEXARIA CORP.                                             
|----------------------------------------------------------
|STATEMENTS OF STOCKHOLDERS' EQUITY                        
|For Years Ended October 31, 2011 to October 31,
      2010
|(Expressed in U.S. Dollars)                               

|                                                                                          |  | COMMON STOCK |  |   |        |  |   |            |  |   |            |  
|----------------------------------------------------------------------------------------- |  | ------------ |  | - | ------ |  | - | ---------- |  | - | ---------- | -
|                                                                                          |  |              |  |   |        |  |   | ADDITIONAL |  |   |            |  
|                                                                                          |  |              |  |   |        |  |   | PAID-IN    |  |   |            |  
|                                                                                          |  | SHARES       |  |   | AMOUNT |  |   | CAPITAL    |  |   | DEFICIT    |  
|Balance, October 31, 2009                                                                 |  | 10,732,870   |  | $ | 10,733 |  | $ | 5,658,768  |  | $ | (3,371,930 | )
|                                                                                          |  |              |  |   |        |  |   |            |  |   |            |  
|Stock Options @ $0.20 Jan 10                                                              |  |              |  |   |        |  |   | 139,050    |  |   |            |  
|Issuance of common stock per Subscription                                                 |  |              |  |   |        |  |   |            |  |   |            |  
|Agreement at $0.1143 per share                                                            |  | 1,617,752    |  |   | 1,618  |  |   | 181,782    |  |   |            |  
|Issuance of common stock per Settlement Agreement at $0.12
      per share                |  | 499,893      |  |   | 500    |  |   | 59,487     |  |   |            |  
|Stock Options @ $0.20 Aug. 16                                                             |  |              |  |   |        |  |   | 22,316     |  |   |            |  
|Warrant conversion @$0.05                                                                 |  | 75,833       |  |   | 76     |  |   | 3,716      |  |   |            |  
|Comprehensive income (loss):                                                              |  |              |  |   |        |  |   |            |  |   |            |  
|(Loss) for the year                                                                       |  |              |  |   |        |  |   |            |  |   | (552,462   | )
|                                                                                          |  |              |  |   |        |  |   |            |  |   |            |  
|Balance, October 31, 2010                                                                 |  | 12,926,348   |  |   | 12,926 |  |   | 6,065,119  |  |   | (3,924,392 | )
|Warrant conversion @$0.22                                                                 |  | 66,300       |  |   | 66     |  |   | 14,520     |  |   |            |  
|Issuance of common stock per Settlement Agreement at $0.23
      per share                |  | 40,761       |  |   | 41     |  |   | 9,335      |  |   |            |  
|Warrants for Convertible Debt                                                             |  |              |  |   |        |  |   | 20,562     |  |   |            |  
|Issuance of common stock per stock option exercise @ $0.20                                |  | 106,250      |  |   | 106    |  |   | 21,144     |  |   |            |  
|Issuance of common stock per warrant
      exercise @ $0.20                               |  | 2,173,043    |  |   | 2,173  |  |   | 432,435    |  |   |            |  
|Issuance of common stock per stock option exercise @ $0.20                                |  | 118,750      |  |   | 119    |  |   | 23,631     |  |   |            |  
|Issuance of common stock per PP @ $0.35                                                   |  | 200,000      |  |   | 200    |  |   | 69,800     |  |   |            |  
|Stock Options @$0.35                                                                      |  |              |  |   |        |  |   | 179,789    |  |   |            |  
|Issuance of common stock for acquisition of
      oil and gas property at $0.34 per share |  | 800,000      |  |   | 800    |  |   | 271,200    |  |   |            |  
|Comprehensive income (loss):                                                              |  |              |  |   |        |  |   |            |  |   |            |  
|(Loss) for the
      year                                                                 |  |              |  |   |        |  |   |            |  |   | (538,226   | )
|                                                                                          |  |              |  |   |        |  |   |            |  |   |            |  
|Balance, October 31, 2011                                                                 |  | 16,431,452   |  | $ | 16,431 |  | $ | 7,107,535  |  | $ | (4,462,618 | )

The accompanying notes are an integral part of these financial
statements.

---

|LEXARIA CORP.                    
|---------------------------------
|NOTES TO THE FINANCIAL STATEMENTS
|October 31, 2011                 
|(Expressed in U.S. Dollars)      
|(Unaudited)                      

|1. | Organization and Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company was formed on December 9, 2004 under the laws
      of the State of Nevada and commenced operations on December 9, 2004. The
      Company is an independent natural gas and oil company engaged in the
      exploration, development and acquisition of oil and gas properties in the
      United States and Canada. The Companys entry into the oil and gas
      business began on February 3, 2005. The Company has offices in Vancouver
      and Kelowna, BC, Canada.                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | These financial statements have been prepared in
      accordance with United States generally accepted accounting principles
      applicable to a going concern, which contemplates the realization of
      assets and the satisfaction of liabilities and commitments in the normal
      course of business. The Company has incurred an operating loss and
      required additional funds to maintain its operations. Managements plans
      in this regard are to raise equity and/or debt financing as
    required.                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | These conditions raise substantial doubt about the
      Companys ability to continue as a going concern. These financial
      statements do not include any adjustment that might result from this
      uncertainty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | Business Risk and Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company is subject to several categories of risk
      associated with its operating activities. Natural gas and oil exploration
      and production is a speculative business and involves a high degree of
      risk. Among the factors that have a direct bearing on the Companys
      financial information are uncertainties inherent in estimating natural gas
      and oil reserves, future hydrocarbon production and cash flows,
      particularly with respect to wells that have not been fully tested and
      with wells having limited production histories; access and cost of
      services and equipment; and the presence of competitors with greater
      financial resources and capacity.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | These financial statements are stated in U.S. dollars and
      have been prepared in accordance with U.S. generally accepted accounting
      principles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company uses the sales method of accounting for
      natural gas and oil revenues. Under this method, revenues are recognized
      upon the passage of title, net of royalties. Revenues from natural gas
      production are recorded using the sales method. When sales volumes exceed
      the Companys entitled share, an overproduced imbalance occurs. To the
      extent the overproduced imbalance exceeds the Companys share of the
      remaining estimated proved natural gas reserves for a given property, the
      Company records a liability. At October 31, 2011 and 2010, the Company had
      no overproduced imbalances.                                                                 

---

| | c) | Cash and Cash Equivalents
| | -- | -------------------------

Cash equivalents comprise certain
highly liquid instruments with a maturity of three months or less when
purchased. As of October 31, 2011 and 2010, cash and cash equivalents consist of
cash only.

| | d) | Oil and Gas Properties
| | -- | ----------------------

The Company utilizes the full
cost method to account for its investment in oil and gas properties.
Accordingly, all costs associated with acquisition, exploration and development
of oil and gas reserves, including such costs as leasehold acquisition costs,
capitalized interest costs relating to unproved properties, geological
expenditures, tangible and intangible development costs including direct
internal costs are capitalized to the full cost pool. When the Company obtains
proven oil and gas reserves, capitalized costs, including estimated future costs
to develop the reserves and estimated abandonment costs, net of salvage, will be
depleted on the units-of-production method using estimates of proved
reserves.

Investments in unproved properties are
not depleted pending determination of the existence of proved reserves. Unproved
properties are assessed periodically to ascertain whether impairment has
occurred. Unproved properties whose costs are individually significant are
assessed individually by considering the primary lease terms of the properties,
the holding period of the properties, and geographic and geologic data obtained
relating to the properties. Where it is not practicable to assess individually
the amount of impairment of properties for which costs are not individually
significant, such properties are grouped for purposes of assessing impairment.
The amount of impairment assessed is added to the costs to be amortized, or is
reported as a period expense, as appropriate.

Pursuant to full cost accounting
rules, the Company must perform a ceiling test periodically on its proved oil
and gas assets. The ceiling test provides that capitalized costs less related
accumulated depletion and deferred income taxes for each cost center may not
exceed the sum of (1) the present value of future net revenue from estimated
production of proved oil and gas reserves using current prices, excluding the
future cash outflows associated with settling asset retirement obligations that
have been accrued on the balance sheet, at a discount factor of 10%; plus (2)
the cost of properties not being amortized, if any; plus (3) the lower of cost
or estimated fair value of unproved properties included in the costs being
amortized, if any; less (4) income tax effects related to differences in the
book and tax basis of oil and gas properties. Should the net capitalized costs
for a cost center exceed the sum of the components noted above, an impairment
charge would be recognized to the extent of the excess capitalized costs.

Sales of proved and unproved properties
are accounted for as adjustments of capitalized costs with no gain or loss
recognized, unless such adjustments would significantly alter the relationship
between capitalized costs and proved reserves of oil and gas, in which case the
gain or loss is recognized in the statement of operations.

Exploration activities conducted
jointly with others are reflected at the Companys proportionate interest in
such activities.

Cost related to site restoration
programs are accrued over the life of the project.

| | e) | Stock-Based Compensation
| | -- | ------------------------

Accounting Standards Codification
(ASC) 718, Compensation  Stock Compensation, accounts for its stock
options and similar equity instruments issued. Accordingly, compensation costs
attributable to stock options or similar equity instruments granted are measured
at the fair value at the grant date, and expensed over the expected vesting
period. ASC 718 requires excess tax benefits be reported as a financing cash
inflow rather than as a reduction of taxes paid.

---

| | f) | Accounting Estimates
| | -- | --------------------

The preparation of financial statements
in conformity with 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 reporting period. Actual results could differ from those estimates
and assumptions.

| | g) | Capital Assets
| | -- | --------------

The capital asset represents computer
equipment which is carried at cost and is amortized over its estimated useful
life of 3 years straight-line. Computer equipment is written down to its net
realizable value if it is determined that its carrying value exceeds estimated
future benefits to the Company.

| | h) | Loss Per Share
| | -- | --------------

Loss per share is computed using the
weighted average number of shares outstanding during the period. The Company has
adopted ASC 220 Earnings Per Share. Diluted loss per share is
equivalent to basic loss per share because the potential exercise of the
equity-based financial instruments was anti-dilutive.

| | i) | Foreign Currency Translations
| | -- | -----------------------------

The Companys operations are located in
the United States of America and Canada, and it has offices in Canada. The
Company maintains its accounting records in U.S. Dollars, as follows:

At the transaction date, each asset,
liability, revenue and expense that was acquired or incurred in a foreign
currency is translated into U.S. dollars by the using of the exchange rate in
effect at that date. At the period end, monetary assets and liabilities are
translated at the exchange rate in effect at that date. The resulting foreign
exchange gains and losses are included in operations.

| | j) | Financial Instruments
| | -- | ---------------------

ASC 820 Fair Value Measurements and
Disclosures requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. ASC 820
establishes a fair value hierarchy based on the level of independent, objective
evidence surrounding the inputs used to measure fair value. A financial
instruments categorization within the fair value hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. ASC 820
prioritizes the inputs into three levels that may be used to measure fair
value:

Level 1 - Quoted prices in active
markets for identical assets or liabilities;

Level 2 - Inputs other than quoted
prices included within Level 1 that are either directly or indirectly
observable; and

Level 3 - Unobservable inputs that are
supported by little or no market activity, therefore requiring an entity to
develop its own assumptions about the assumptions that market participants would
use in pricing.

The Companys financial instruments
consist primarily of cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities, loan payable and due to a related party. The
carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities, loans payable and due to a related
partyapproximate their fair values due to their short maturities. The carrying
values of the Companys long-term debt approximate their fair values based upon
a comparison of the interest rate and terms of such debt to the rates and terms
of debt currently available to the Company.

The Company is located in Canada, which
results in exposure to market risks from changes in foreign currency rates. The
financial risk is the risk to the Companys operations that arise from
fluctuations in foreign exchange rates and the degree of volatility of these
rates. Currently, the Company does not use derivative instruments to reduce its
exposure to foreign currency risk.

---

| | k) | Income Taxes
| | -- | ------------

The Company has adopted ASC 740,
Income Taxes, which requires the Company to recognize deferred tax
liabilities and assets for the expected future tax consequences of events that
have been recognized in the Companys financial statements or tax returns using
the liability method. Under this method, deferred tax liabilities and assets are
determined based on the temporary differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect in the
year in which the differences are expected to reverse.

| | l) | Long-Lived Assets Impairment
| | -- | ----------------------------

Long-term assets of the Company are
reviewed for impairment when circumstances indicate the carrying value may not
be recoverable in accordance with the guidance established in ASC 360,
Property, Plant and Equipment. For assets that are to be held and used,
an impairment loss is recognized when the estimated undiscounted cash flows
associated with the asset or group of assets is less than their carrying value.
If impairment exists, an adjustment is made to write the asset down to its fair
value. Fair values are determined based on discounted cash flows or internal and
external appraisals, as applicable. Assets to be disposed of are carried at the
lower of carrying value or estimated net realizable value.

| | m) | Asset Retirement Obligations
| | -- | ----------------------------

The Company accounts for asset
retirement obligations in accordance with the provisions of ASC 410, Asset
Retirement and Environmental Obligations. ASC 410 requires the Company to
record the fair value of an asset retirement obligation as a liability in the
period in which it incurs a legal obligation associated with the retirement of
tangible long-lived assets that result from the acquisition, construction,
development and/or normal use of the assets. The management of the Company had
estimated the asset retirement obligation to be immaterial and therefore was not
reflected on the financial statements as of October 31, 2011 and 2010.

| | n) | Comprehensive Income
| | -- | --------------------

The Company has adopted ASC 220,
Comprehensive Income, which establishes standards for reporting and
display of comprehensive income, its components and accumulated balances. The
Company is disclosing this information on its Statement of Stockholders Equity.
Comprehensive income comprises equity changes except those transactions
resulting from investments by owners and distributions to owners.

| | o) | Credit risk and receivable
Concentration
| | -- | ----------------------------------------

The Company places its cash and cash
equivalent with high credit quality financial institution. As of October 31,
2011, the Company had approximately $31,201 in a bank beyond insured limit
(October 31, 2010: $62,989).

The revenues were generated from the
Companys sole customer for fiscal year 2011 and 2010; the corresponding
accounts receivable balances were $194,293 and $63,285 at December 31, 2011 and
2010, respectively.

| | p) | Convertible Debentures
| | -- | ----------------------

The Company accounts for its
convertible debt instruments that may be settled in cash upon conversion
according to ASC 470-20-30-22 which requires the proceeds from the issuance of
such convertible debt instruments to be allocated between debt and equity
components so that debt is discounted to reflect the Companys non-convertible
debt borrowing rate.

Further, the Company applies ASC
470-20-35-13 which requires the debt discount to be amortized over the period
the convertible debt is expected to be outstanding as additional non-cash
interest expense.

---

| | q) | Commitments and Contingencies
| | -- | -----------------------------

In accordance with ASC 450-20,
Accounting for Contingencies, the Company records accruals for such loss
contingencies when it is probable that a liability has been incurred and the
amount of loss can be reasonably estimated. In the event that estimates or
assumptions prove to differ from actual results, adjustments are made in
subsequent periods to reflect more current information. Historically, the
Company has not experienced any material claims.

| | r) | Newly Adopted Accounting Policies
| | -- | ---------------------------------

In February 2010, the FASB issued ASC
No. 2010-09, Amendments to Certain Recognition and Disclosure Requirements,
which eliminates the requirement for SEC filers to disclose the date through
which an entity has evaluated subsequent events. The adoption of ASC No. 2010-09
does not have a material impact on the Companys financial statements.

In April 2010, the FASB issued ASU
2010-13, CompensationStock Compensation (Topic 718): Effect of Denominating
the Exercise Price of a Share-Based Payment Award in the Currency of the Market
in Which the Underlying Equity Security Trades, or ASU 2010-13. This ASU
provides amendments to Topic 718 to clarify that an employee share-based payment
award with an exercise price denominated in currency of a market in which a
substantial portion of the entitys equity securities trades should not be
considered to contain a condition that is not a market, performance, or service
condition. Therefore, an entity would not classify such an award as a liability
if it otherwise qualifies as equity. The adoption does not have significant
impact on its financial statements.

| | s) | New Accounting Pronouncements
| | -- | -----------------------------

In June 2011, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05,
Comprehensive Income (Topic 220): Presentation of Comprehensive Income, which is
effective for annual reporting periods beginning after December 15, 2011. ASU
2011-05 will become effective for the Company on January 1, 2012. This guidance
eliminates the option to present the components of other comprehensive income as
part of the statement of changes in stockholders equity. In addition, items of
other comprehensive income that are reclassified to profit or loss are required
to be presented separately on the face of the financial statements. This
guidance is intended to increase the prominence of other comprehensive income in
financial statements by requiring that such amounts be presented either in a
single continuous statement of income and comprehensive income or separately in
consecutive statements of income and comprehensive income. The adoption of ASU
2011-05 is not expected to have a material impact on the Companys financial
position or results of operations.

In May 2011, the FASB issued ASU
2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which is
effective for annual reporting periods beginning after December 15, 2011. This
guidance amends certain accounting and disclosure requirements related to fair
value measurements. Additional disclosure requirements in the update include:
(1) for Level 3 fair value measurements, quantitative information about
unobservable inputs used, a description of the valuation processes used by the
entity, and a qualitative discussion about the sensitivity of the measurements
to changes in the unobservable inputs; (2) for an entitys use of a nonfinancial
asset that is different from the assets highest and best use, the reason for
the difference; (3) for financial instruments not measured at fair value but for
which disclosure of fair value is required, the fair value hierarchy level in
which the fair value measurements were determined; and (4) the disclosure of all
transfers between Level 1 and Level 2 of the fair value hierarchy. The Company
is currently evaluating the impact of the adoption.

Accounting standards that have been
issued or proposed by the FASB or other standards-setting bodies that do not
require adoption until a future date are not expected to have a material impact
on the Companys financial statements upon adoption.

---

|4. | Capital Stock
|-- | -------------

Share Issuances

On December 24, 2009, the Company
completed an equity financing and issued 1,617,752 units at the price of
CAD$0.12 per unit and each unit consists of one share purchase warrant which two
warrants entitle a holder to purchase one common share at CAD$0.20 per share for
a period of one year, so that effective December 24, 2009, the Company had
12,350,622 shares of common stock issued and outstanding. All shares and
warrants issued were restricted under applicable securities rules.

On March 17, 2010, the Company had
increased its authorized share capital from 18,750,000 common shares to
200,000,000 common shares.

On May 31, 2010, the Company issued
499,893 units at a price of $0.12 per unit for a Settlement Agreement valued at
$59,987. Each unit consists of one common share and one share purchase warrants
at $0.12 per share for a period of two years. All shares and warrants issued
were restricted under applicable securities rules.

On October 21, 2010, the Company
settled a portion of the debt, namely $1,625 with CAB Financial Services by
converting 65,000 warrants into 32,500 common shares of the Company as per
Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.

On October 21, 2010, the Company
settled a portion of the debt, namely $2,167 with Christopher Bunka by
converting 86,667 warrants into 43,333 common shares of the Company as per
Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.

On November 16, 2010, the Company
settled the debt incurred as a result of that consulting agreement, being $9,375
to Mr. Tom Ihrke by issuing 40,761 restricted common shares of the Company at a
price of $0.23 per share.

On January 4, 2011, 132,600 warrants
were exercised for 66,300 common shares of the Company at a price of CAD$0.22
for total proceeds of $14,586. 100,000 warrants of the 132,600 warrants were
exercised by a Director of the Company.

On March 6, 2011, the Company accepted
and received gross proceeds of $21,250 for the exercise of 106,250 stock options
by a Director of the Company at an exercise price of $0.20 per stock option into
106,250 common shares of the Company.

On June 8, 2011, 1,500,000 warrants
were exercised for 1,500,000 common shares of the Company at a price of $0.20
for total proceeds of $300,000. The warrants were exercised by a Director of the
Company.

On June 28, 2011, 500,000 warrants were
exercised for 500,000 common shares of the Company at a price of $0.20 for total
proceeds of $100,000. The warrants were exercised by a Director/Officer of the
Company.

On July 13, 2011, 173,043 warrants were
exercised for 173,043 common shares of the Company at a price of $0.20 for total
proceeds of $34,608.

On July 13, 2011, the Company completed
an equity financing and issued 200,000 units at the price of $0.35 per unit and
each unit consists of one share of common stock and one share purchase warrant
which entitles a holder to purchase one common share at $0.50 per share for a
period of two years. All shares and warrants issued were restricted under
applicable securities rules. The Company accepted and received gross proceeds of
$70,000. $3,500 of finders fee was paid to an officer of the Company.

---

On July 15, 2011, the Company accepted
and received gross proceeds of $23,750 for the exercise of 118,750 stock options
at an exercise price of $0.20 per ctock option into 118,750 common shares of the
Company. 100,000 stock options were exercised by a Director/Officer of the
Company.

On August 12, 2011, the Company issued
800,000 common shares of the Company at the price of $0.34 for the acquisition
of acquiring an additional 10% working interest in Belmont Lake.

As at October 31, 2011, Lexaria Corp.
has 16,431,452 shares issued and outstanding and 2,471,322 warrants issued and
outstanding.

The following table summarizes warrant
activity in the fiscal year ended October 31, 2011:

Number of
    
    
    Weighted-averagewarrants
    
    
    exercise priceOustanding and exercisable at October 31,
      2010
    
    5,853,769
    
    $
    0.20Issued
    
    1,971,429Exercised
    
    (2,305,643
    )Expired
    
    (3,048,233
    )Oustanding and exercisable at October 31,
      2011
    
    2,471,322
    
    $
    0.37


A summary of warrants as at October 31,
2011 is as follows:

Number
    Exercise
    ExpiryOutstanding1
    Price
    Date499,893
    $0.20
    May 31, 20121,771,429
    $0.40
    November 30, 2012200,000
    $0.50
    July 13, 2013


1. Each warrant entitles a holder to
purchase one common share.

|5. | Oil and Gas Properties             
|-- | -----------------------------------
|   |                                    
|   | (a)        
      Proved properties

Properties
    
    October 31,
    
    
    Addition
    
    
    Depletion
    
    
    October 31,2010
    
    
    
    
    
    
    
    
    2011U.S.A.  Proved
      property
    $
    3,118,376
    
    $
    969,689
    
    $
    (370,199
    )
    $
    3,717,866


| | (1) | Palmetto Point Project
| | --- | ----------------------

---

On December 21, 2005, the Company
agreed to purchase a 20% working and revenue interest in a 10 well drilling
program in Mississippi owned by Griffin & Griffin Exploration for $700,000.
Concurrent with signing the Company paid $220,000 and January 17, 2006 the
Company paid the remaining $480,000. The Company applied the full cost method to
account for its oil and gas properties, seven wells were found to be proved
wells, and three wells were found impaired. One of the wells was impaired due to
uneconomic life, and the other two wells were abandoned due to no apparent gas
or oil shows present. The costs of impaired properties were added to the
capitalized cost in determination of the depletion expense.

On September 22, 2006, the Company
elected to participate in an additional two-well program in Mississippi owned by
Griffin & Griffin Exploration and paid $140,000. The two wells were found to
be proved wells.

On June 23, 2007, the Company acquired
an assignment of 10% gross working interest from a third party for $520,000
secured loan payable. The Company recognized $501,922 in the oil and gas
property.

On October 4, 2007, the Company
elected to participate in the drilling of PP F-12-3 in Mississippi by Griffin
& Griffin Exploration. The Company had 30% gross working interest and paid
$266,348. On July 31, 2008, the Company accrued and paid an additional cost of
$127,707 for the workovers of wells PP F-12 and PP F-12-3. PP F-12 started
production from October 2007, and PP F-12-3 started production from November
2007.

On April 3, 2009, the Company entered
into an Asset Purchase Agreement to acquire additional interests in its existing
core producing Mississippi oil and gas properties. The Company paid $40,073.39
to acquire additional 2% working interest in the proven Belmont Lake oil and gas
and an additional 10% working interest in potential nearby exploration wells. At
this time the total working interest for Belmont Lake is 32%; and total working
interest in the exploration wells on approximately 140,000 acres surrounding
Belmont Lake in all directions is 60%.

The Company had a short-lived
opportunity to acquire additional fractional interests in the Belmont Lake 12-4
well which was expected to be a horizontal well. An unrelated third party did
not participate in its right to participate in the 12-4 well, and therefore a
share of its interest (a non consent interest) was made available to the other
participating parties including Lexaria. On August 28, 2009 and effective on
September 1, 2009, to take best advantage of this opportunity, the Company
entered into four separate assignment agreements, three of which were with
people or companies with related management. The Company received from these
four parties proceeds of $371,608.57 to fund additional interests in this well.
As a result, the Company has a 25.84% perpetual gross interest in the well
(18.0% net revenue interest); as well as a 5.2% net revenue interest in the
non-consent interest. The non-consent interest remains valid until such time as
the well produces 500% of all costs and expenses back to the participants in the
form of revenue, at which time the non-consent interest ends. Enertopia, a
company with related management, had acquired from Lexaria a 6.16% perpetual
gross interest in the 12-4 well; David DeMartini, a director of Lexaria,
acquired from Lexaria a 5% gross interest in the non-consent interest in the
12-4 well; and 0743608 BC Ltd. a company owned by the President of the Company,
acquired from Lexaria a 11.60% gross interest in the non-consent interest in the
12-4 well.

On May 31, 2010, the Company signed a
Settlement Agreement with Enertopia Corp., whereby the Company issued 499,893
units at $0.12 per unit and each unit consists of one restricted common share
and one share purchase warrant at $0.20 per share for a period of two years in
exchange for the working interest initially assigned on August 28, 2009.

On June 16, 2010, the Company signed a
Settlement Agreement with a third party, who had originally participated in the
August 28, 2009, opportunity in the non-consent interest for Belmont Lake 12-4.
The Company returned back $144,063.46 to the third party and cancelled its
participation.

---

On July 29, 2010, the Company had
agreed with its Operators at Belmont Lake not to proceed to drill a horizontal 12-4 well. Rather, two of
the three proposed vertical wells 12-2, 12-4, or 12-5 were proposed to be
drilled. To take best advantage of this opportunity, the Company cancelled all
previous agreements relating to August 28, 2009 with respect to Belmont Lake
horizontal well 12-4 and entered into three separate assignment agreements, of
which all three were with people or companies with related management. The
Company received total proceeds of $324,677.12 to fund additional interests in
these wells. As a result, the Company had a 32% perpetual gross interest in the
wells (24.0% net revenue interest); as well as a 8% gross interest (6% net
revenue interest) in the non-consent interest. The non-consent interest remains
valid until such time as the well produces 500% of all costs and expenses back
to the participants in the form of revenue, at which time the non-consent
interest ends. Emerald Atlantic LLC, a company owned by a director of Lexaria,
acquired from Lexaria a 8.74% gross interest in the non-consent interest in two
of the three vertical wells; and 0743608 BC Ltd. a company owned by the
President of the Company, acquired from Lexaria a 20.79% gross interest in the
non-consent interest in the two of the three vertical wells; an advisor to the
Company acquired from Lexaria 2.46% gross interest in the non-consent interest
in two of the three vertical wells.

The July 29, 2010 agreements were
replaced on September 13, 2010, when the Company entered into three separate
assignment agreements with 0743608 BC Ltd, solely owned by Director/Officer of
the Company; Emerald Atlantic LLC, solely owned by a Director of the Company,
and the Senior VP Business Development. (the Assignees), whereby the Assignees
have paid a fee of $408,116 to earn a 24% share of the Companys gross
non-perpetual 32% interest in the three oil wells being drilled in Wilkinson
County, Mississippi. As a result of the three assignment agreements, Lexaria
receives at no cost to the company, a carried interest of 8% in these same
rights and benefits. The Company assigns, transfers and sets over to the
Assignees, all proportionate rights, interest and benefits in the Assigned Non
Perpetual Interest held by or granted to the Assignor in and to the
Participation Agreement between the Company and Griffin but limited to a gross
500% revenue payout based on the total amount paid under the Initial
Consideration and the Subsequent Consideration after which all rights, interests
and benefits cease.

Lexaria entered into an Asset Purchase
Agreement dated August 12, 2011, with Brinx Resources Ltd. to acquire 100% of
its 10% gross working interest in the oil and gas interests located in
Mississippi, USA. By acquiring the additional 10% working interest in Belmont
Lake oil and gas field, Lexaria then had 42% working interest in Belmont Lake
and retains its existing 60% working interest in the exploration wells on
approximately 130,000 acres surrounding Belmont Lake in all directions.

Lexaria has agreed to considerations
as follows;

| | 1. | $200,000 on the August 12, 2011 (the "Initial Payment")
      (paid), and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 2. | $200,000 on or before November 12, 2011; or interim
      payments, as agreed, in the amount of $10,000 per month for up to 3 months
      following November 12, 2011 with the remaining balance of $200,000 then
      due and payable (the "Final Payment"), and, should Lexaria not make the
      final payment on February 12, 2011 a penalty of $500 per day (the Penalty
      Payments) beginning one day after February 12, 2011 and accruing until
      the balance of the $200,000 Final Payment is made to the Vendor. Both the
      Vendor and the Purchaser agree that, should any Penalty Payments be due,
      such Penalty Payments are not deductible from the balance of the $200,000
      Final Payment. Subsequent to the year ended October 31, 2011, the Company
      has paid $30,000, the above mentioned interim payments.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 3. | 800,000 shares of restricted common stock issued from
      Lexaria treasury were issued on August 12, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

As of October 31, 2011, additional
expenditures of $340,549 were incurred for workovers and there were additional
well interest changes or workovers pending of wells PP F-12, PP F12-3, and PP
F12-29.

---

| | As of October 31, 2011, the Companys
working interest and production in PPF-12-4 and PPF-12-5 well located at Belmont
Lake, Mississippi, with carrying values of $1M, are used to secure for the
convertible debentures issued on November 30, 2010, December 16, 2010
      and December 1, 2011 (see note 7 (b) and note 12 (a)), with aggregate
  amount of $820,000.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                          
| | (2) Mississippi and Louisiana, Frio-Wilcox
      Project                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                          
| | In December 2006, the first well CMR-US 39-14 was found
      to have sufficient hydrocarbons to become economic. USA 1-37 and BR F-33
      had started intermittent production from November 2007. The Company
      applied the full cost method to account for its oil and gas
    properties.                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                          
| | As at January 31, 2007, the Company abandoned Dixon #1
      due to no economic hydrocarbons being present and $162,420 of drilling
      costs was added to the capitalized costs. The Dixon #1 was the only Wilcox
      well the Company has drilled to date. Every other well it has participated
      in located in Mississippi and Louisiana is a Frio well.      
| |                                                                                                                                                                                                                                                                                                                                                                          
| | On June 2, 2007, the Company abandoned Randall #1 and
      $107,672 drilling costs was added to the capitalized costs in
      determination of depletion expense.                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                          
| | During August to October 2007, three additional wells, PP
      F-90, PP F-100, and PP F-111 were drilled in the area. These Frio wells
      were abandoned due to modest gas shows and a total of $306,562 drilling
      costs was added to the capitalized costs in determination of depletion
      expense.                                                        
| |                                                                                                                                                                                                                                                                                                                                                                          
| | During December 2007, two additional wells, PP F-6A and
      PP F-83, were drilled and were plugged and abandoned due to non-economic
      gas shows.                                                                                                                                                                                                                  

| | (b) | Unproved Properties
| | --- | -------------------

Properties
    
    October 31,2011 and 2010U.S.A.-Unproved properties
    $
    19,293


| | (1) Mississippi and Louisiana, USA                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | The Company entered into an Agreement to acquire a
      working interest in multiple zones of potential oil and gas production in
      Mississippi and Louisiana. This Agreement contemplates up to a 50 well
      drill program for Wilcox and Frio wells, at the Companys option, within
      the defined area of mutual interest (AMI). The AMI includes over 200,000
      gross acres located non-contiguously between Southwest Mississippi and
      North East Louisiana.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | The Company originally agreed to pay 40% of all prospect
      fees, mineral leases, surface leases, and drilling and completion costs to
      earn a net 32% of all production from all producible zones to the base of
      the Frio formation (Frio Targets); and, 30% of all production to the base
      of the Wilcox formation (Wilcox Targets). All working interests are to be
      registered in the name of Lexaria Corp.                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | The Joint Participation Agreement and Joint Lands
      Agreements are between Lexaria Corp. and Griffin & Griffin Exploration
      LLC (G&G) of Jackson, Mississippi.                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | On June 21, 2007, the Company acquired an additional 10%
      from a third party for all rights, title and benefits excluding the seven
      wells drilled under the AMI Agreement between August 3, 2006 and June 19,
      2007, specifically wells CMR-USA-39-14, Dixon #1, Faust #1 TEC F-1, CMR/BR
      F-14, RB F-1 Red Bug #2, BR F-33, and Randall #1 F-4, and any offset wells
      that could be drilled to any of these specified wells.                               

---

On July 26, 2007, the Company acquired 5% from a third
      party for all rights, title and benefits in
the seven wells drilled under the AMI
Agreement between August 3, 2006 and June 19, 2007, specifically wells
CMR-USA-39-14, Dixon #1, Faust #1 TEC F-1, CMR/BR F-14, RB F-1 Red Bug #2, BR
F-33, and Randall #1 F-4, and any offset wells that could be drilled to any of
these specified wells.

On April 3, 2009, the Company entered
into an Asset Purchase Agreement to acquire additional interests in its existing
core producing Mississippi oil and gas properties. The Company paid $40,073 to
acquire an additional 2% working interest in the proven Belmont Lake oil and gas
field, and an additional 10% working interest in potential nearby exploration
wells. Further, the Company is required to pay $100 per month for a period of 4
years from the closing. Total working interest for Belmont Lake as of October
31, 2010 is 32%; and total working interest in the exploration wells on
approximately 140,000 acres surrounding Belmont Lake in all directions as of
October 31, 2010, is 60%.

On December 16, 2010, the Company
entered into an assignment agreement with Emerald Atlantic LLC, solely owned by
a Director of the Company (the Assignee), whereby the Assignee has paid a fee
of $30,076 to earn 18% of a 4.423% share of the Companys net revenue interest
after field operating expenses for a well to be drilled in Wilkinson County.

|6. | Loan Payable
|-- | ------------
|   |             
|   | a)          
|   |             
|   |             
|   |             
|   |             
|   |             
|   | b)          
|   |             
|   |             

---

The aggregate principal value of the
above convertible debentures was $620,000 and was allocated to the individual
components on a relative fair value basis. In addition, because the effective
conversion price of the convertible debentures was below the current trading
price of the Companys common shares at the date of issuance, the Company
recorded a beneficial conversion feature of approximately $20,000. The value of
the warrants and beneficial conversion feature has been recorded as additional
paid in capital.

|7. | (a)        Secured loan
      payable
|-- | -------------------------------------

On October 27, 2008 the Company entered
into a Purchase Agreement in the amount of CAD$900,000 of Notes being purchased
by the President (CAD$400,000), the Presidents wholly-owned company
(CAD$300,000) and a shareholder (CAD$200,000) of the Company (Purchasers). The
Purchasers agreed to purchase an 18% interest bearing Promissory Note of the
Company subject to and upon the terms and conditions of the Purchase Agreement.
The Companys obligations to repay the Promissory Note will be secured by
certain specified assets of the Company pursuant to a Security Agreement. As
long as the Promissory Note is outstanding, the Purchasers may voluntarily
convert the Promissory Note to Common Shares at the conversion price of $0.45
per share of Common Stock. The Promissory Note matures on October 27, 2010 or by
mutual agreement by all parties on October 27, 2009.

In connection with the Purchase
Agreement, the Company issued a total of 390,000 (1,560,000 pre-consolidation)
warrants which two warrants entitle a holder to purchase a common share of the
Company of which 195,000 (780,000 pre-consolidation) warrants are eligible at
$0.05 (adjusted price) and 195,000 (780,000 pre-consolidation) warrants are
eligible at $0.05 (adjusted price) per share and expire October 27, 2009 and
October 27, 2010, respectively.

The Company did not incur beneficiary
conversion charges as the conversion price is greater than the fair value of the
Companys equity.

As at the date of the issuance of the
above noted Promissory Note, the Company allocated CAD$21,321 and CAD$683,559 to
warrants (additional paid-in capital) and Promissory Note based on their
relative fair value.

On July 10, 2009 the Purchasers
converted $45,000 of the Promissory Note into equity at $0.05.

On October 27, 2009, 191,000 warrants
were exercised for 95,500 common shares.

On October 21, 2010, the Company
settled a portion of the debt, namely $1,625 with the Presidents wholly-owned
companyby converting 65,000 warrants into 32,500 common shares of the Company as
per Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.

On October 21, 2010, the Company
settled a portion of the debt, namely $2,166.65 with the President by converting
86,667 warrants into 43,333 common shares of the Company as per Purchase
Agreement dated October 27, 2008 at a price of $0.05 per share.

On October 21, 2010, the Company
entered into an amendment with loan holders to extend the loan to be on a
month-to-month basis with the same terms and conditions as pursuant to the
amendment.

During the year ended October 31, 2011,
the Company has paid down the debt by CAD$185,000 and the carrying amount of the
secured loan is $679,504 as of year end.

| | (b) | Unsecured Loan Payable
| | --- | ----------------------

On September 13, 2010, we entered into
a demand loan agreement and promissory note with CAB Financial Services Ltd.
(the Lender or CAB), a company controlled by the President of our company.
The principal amount of the note is
$90,000. The loan agreement and promissory note provides that the debt be
payable on demand. The note has an interest rate of 12% per annum.

---

On January 31, 2011, the Company had
paid back the loan for the full amount of $90,000 to CAB and accrued interest of
$3,884.

On April 1, 2010, the Company entered
into a purchase agreement with a company controlled by the President (the
Purchaser), for a non-secured promissory note in the amount of US$75,000 (the
Promissory Note). The Purchaser agreed to purchase a non-secured 18% interest
bearing Promissory Note of our company subject to and upon the terms and
conditions of the Purchase Agreement. The Promissory Note is due and payable on
April 1, 2012. The Promissory Note may be prepaid in whole or in part at any
time prior to April 1, 2012 by payment of 108% of the outstanding principal
amount including accrued and unpaid interest.

As long as the Promissory Note is
outstanding, the Purchaser may voluntarily convert the Promissory Note including
accrued and unpaid interest to common shares of our company at the conversion
price of $0.30 per common share.

The Company did not incur beneficiary
conversion charges as the conversion price is great than the fair value of the
Companys equity. As of October 31, 2011, the carrying amount of the unsecured
loan is $75,000.

|8. | Related Party Transactions
|-- | --------------------------
|   |                           
|   | (a)                       
|   |                           
|   |                           
|   |                           
|   | (b)                       
|   |                           
|   | (c)                       
|   |                           
|   | (d)                       
|   |                           
|   | (e)                       

---

| | (f) | On September 13, 2010, the Company entered a demand loan
      agreement in the amount of US$90,000 with CAB (See Note 8b). The Company
      accrued interest of $3,884 and paid interest of $3,150. On January 31,
      2011, the Company paid back the loan in full.                                                                                                                                         
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (g) | Included in accounts payable, $94,696 (October 31, 2010:
      $90,027) was payable to companies controlled by the president, key
      management personnel and directors of the Company.                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (h) | For the year ended October 31, 2011, the Company has
      paid/accrued $153,563 (2010: $Nil) to 0743608 BC Ltd., $64,553 (2010:$Nil)
      to Emerald Atlantic LLC, and $18,196 to Tom Ihrke (2010: $Nil) for their
      respective Non-consent Interests in Belmont Lake. 0743608 BC Ltd. is owned
      by the president of the Company and Emerald Atlantic LLC is owned by a
      Director of the Company.

|9. | Stock Options                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                     
|   | On January 20, 2010, the Company approved a new 2010
      Equity Compensation plan and granted 975,000 stock options to directors
      and consultants of the Company with an exercise prices of $0.20, vested
      immediately and expiring on January 20, 2015.
|   |                                                                                                                                                                                                                                                                     
|   | On August 16, 2010, the Company granted 150,000 stock
      options to a consultant of the Company with an exercise price of $0.20,
      vested 75,000 immediately and 75,000 on August 16, 2011 and expiring on
      August 16, 2015.                            
|   |                                                                                                                                                                                                                                                                     
|   | On July 11, 2011, the Company granted 700,000 stock
      options to directors and officers of the Company with an exercise price of
      $0.35 per share, vested immediately and expiring on July 11,
  2016.                                                     
|   |                                                                                                                                                                                                                                                                     
|   | For the year ended October 31, 2011, the Company recorded
      a total of $179,789 (2010: $161,366) for stock based compensation
      expenses.                                                                                                                   
|   |                                                                                                                                                                                                                                                                     
|   | The fair value of each option granted has been estimated
      as of the date of the grant using the Black-Scholes option pricing model
      with the following assumptions:                                                                                       

Year
      ended October 31, 2011
    Year
      ended October 31, 2010Expected volatility
    131.14%
    145.85%Risk-free interest rate
    2.75%
    2.46%Expected life
    5 years
    5 yearsDividend yield
    0.0%
    0.00%


A summary of weighted average fair
value of stock options granted during the year ended October 31, 2011 is as
follows:

Weighted
    
    
    WeightedAverage
    
    
    AverageExercise
    
    
    FairPeriod ended
      October 31, 2011
    
    Price
    
    
    ValueExercise price is greater than market price at grant date:
    $
    0.35
    
    $
    0.26Weighted
    
    
    WeightedAverage
    
    
    AverageExercise
    
    
    FairYear ended October
      31, 2010
    
    Price
    
    
    ValueExercise price is greater than market price at grant date:
    $
    0.20
    
    $
    0.14


A summary of the stock options for the
year ended October 31, 2011 is presented below:

---

Options OutstandingWeighted AverageNumber of Shares
    
    
    Exercise PriceBalance, October 31, 2010
    
    1,525,000
    
    $
    0.20Granted
    
    700,000
    
    
    0.35Exercised
    
    (225,000
    )
    
    0.20Expired
    
    (300,000
    )
    
    0.20Balance, October 31, 2011
    
    1,700,000
    
    $
    0.26


The Company has the following options
outstanding and exercisable:

October 31, 2011
    
    
    
    
    Options outstanding
    
    
    Options exercisableWeighted
    
    
    Weighted
    
    
    
    
    
    Weightedaverage
    
    
    Average
    
    
    
    
    
    AverageRange of
    
    Number
    
    
    remaining
    
    
    Exercise
    
    
    Number
    
    
    ExerciseExercise prices
    
    of
      shares
    
    
    contractual life
    
    
    Price
    
    
    of
      shares
    
    
    Price$0.20
    
    150,000
    
    
    3.80 years
    
    $
    0.20
    
    
    150,000
    
    $
    0.20$0.20
    
    850,000
    
    
    3.23 years
    
    $
    0.20
    
    
    850,000
    
    $
    0.20$0.35
    
    700,000
    
    
    4.70 years
    
    $
    0.35
    
    
    700,000
    
    $
    0.35Total
    
    1,700,000
    
    
    3.87
      years
    
    $
    0.26
    
    
    1,700,000
    
    $
    0.26


October 31, 2010
    
    
    
    
    Options outstanding
    
    
    Options exercisableWeighted
    
    
    Weighted
    
    
    
    
    
    Weightedaverage
    
    
    Average
    
    
    
    
    
    AverageRange of
    
    Number
    
    
    remaining
    
    
    Exercise
    
    
    Number
    
    
    ExerciseExercise prices
    
    of
      shares
    
    
    contractual life
    
    
    Price
    
    
    of
      shares
    
    
    Price$0.20
    
    150,000
    
    
    4.79 years
    
    $
    0.20
    
    
    75,000
    
    $
    0.20$0.20
    
    975,000
    
    
    4.22 years
    
    $
    0.20
    
    
    975,000
    
    $
    0.20$0.20
    
    75,000
    
    
    0.72 years
    
    $
    0.20
    
    
    75,000
    
    $
    0.20$0.20
    
    325,000
    
    
    0.64
      years
    
    $
    0.20
    
    
    325,000
    
    $
    0.20Total
    
    1,525,000
    
    
    3.34 years
    
    $
    0.20
    
    
    1,450,000
    
    $
    0.20


|10. | Commitments,Significant Contracts and
      Contingencies
|--- | ---------------------------------------------------------

On November 27, 2008, the Company
entered into a Consulting Agreement with CAB Financial Services Ltd. for
consulting services of CAB on a continuing basis for a consideration of US$8,000
per month plus GST.

On May 12, 2009 the Company entered
into a consulting agreement with BKB Management Ltd. to act as the Chief
Financial Officer and a Director for an initial period of six months for
consideration of CAD $4,500 per month plus GST. This agreement replaces the
September 1, 2008, Controller Agreement with CAB Financial Services Ltd.
Subsequent to October 31, 2010, effective January 1, 2011, the consideration was
increased to CAD$5,500 per month plus GST/HST.

On August 5, 2010 we entered into a
three-month Management agreement with Tom Ihrke, whereby Mr. Ihrke will act as
the Senior Vice-President, Business Development for the Company for
consideration of $3,125 per month. On December 2, 2010, the Company entered into
a month to month management agreement with Tom Ihrke, where by Mr. Ihrke will
continue to act as the Senior Vice-President Business Development for the
Company. On October 3, 2011 Mr. Ihrke and the Company amended the agreement
whereby his title changed to Manager, Business Development. The Company will pay
a monthly consulting fee of $3,125.

---

As of October 31, 2011, there is one
pending lawsuit against the Company. While the ultimate outcome of this matter
is not presently determinable, it is the opinion of our management that the
resolution of this outstanding claim will not have a material adverse effect on
our financial position or results of operations. As of October 31, 2011, the
Company has not recorded any loss in terms of this lawsuit.

See also Note 5, 6, and 7.

|11. | Income Tax                                                               
|--- | -------------------------------------------------------------------------
|    |                                                                          
|    | The Company's provision for income taxes comprise of the
      following:

| |                        |   | 2011 |  |   | 2010 | 
| | ---------------------- | - | ---- |  | - | ---- | 
| | Current Tax Provision  | $ | Nil  |  | $ | Nil  | 
| | Deferred Tax Provision | $ | Nil  |  | $ | Nil  | 
| | Tax Expense            | $ | Nil  |  | $ | Nil  | 

Rate Reconciliation

Income taxes vary from the amount that
would be computed by applying the statutory federal income tax rate of 35%.

| |                             |   | 2011     |   |   | 2010     |  
| | --------------------------- | - | -------- | - | - | -------- | -
| | U.S. Federal Statutory Rate | $ | (125,453 | ) | $ | (132,973 | )
| | Tax Benefit Not Recognized  | $ | 125,453  |   | $ | 132,973  |  
| | Tax Expenses                | $ | Nil      |   | $ | Nil      |  

The tax effects of temporary
differences that give rise to the Company's deferred tax asset (liability) are
as follows:

| |                                  |   | 2011       |   |   | 2010       |  
| | -------------------------------- | - | ---------- | - | - | ---------- | -
| | Deferred Tax Assets:             |   |            |   |   |            |  
| | Net Operating Loss Carry forward | $ | 1,408,175  |   | $ | 1,191,357  |  
| | Valuation Allowance              | $ | (1,408,175 | ) | $ | (1,191,357 | )
| | Net Deferred Tax Assets          | $ | Nil        |   | $ | Nil        |  

Changes
in the valuation allowance relate primarily to net operating losses, resources
expenditures and others which are not currently recognized. The Company has
reviewed its net deferred tax assets and has not recognized potential tax
benefits arising there from because at this time management believes it is more
likely than not that the benefits will not be realized in future year.

For tax purpose, as of October 31,
2011, the Company has operating loss carry forwards of approximately $4,023,000
which expire in 2025 through 2031 as follow:

Year
    
    Amount2025
    $
    76,0002026
    
    508,0002027
    
    1,056,0002028
    
    720,0002029
    
    753,0002030
    
    552,0002031
    
    358,000Total
    $
    4,023,000


---



|12. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On December 1, we closed a private placement offering of
      convertible debentures in the aggregate amount of $200,000. The
      convertible debentures mature on December 1, 2012, subject to forced
      conversion as set out in the convertible debenture certificate. The
      convertible debentures pay an interest rate of 12% per annum (on a simple
      basis) and are convertible at $0.35 per unit. Each unit is comprised of
      one share of our common stock and one share purchase warrant. Each warrant
      entitles the holder thereof to purchase one share at a price of $0.40 per
      share from the earlier of the maturity date of the convertible debenture
      or one year from conversion of the convertible debenture. We also entered
      into a general security agreement with the subscribers, whereby the
      obligations to repay the convertible debenture are secured by oil and gas
      properties with carrying value of $1M for the $620,000 private placement
      offering on November 30, 2010 and December 16, 2010 (see note 7(b)). The
      convertible debenture was entered into by two directors of the
    Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Also see Note 5 (a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|13. | Segmented Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Companys business is considered as operating in one
      segment (Oil and gas in the United States) based upon the Companys
      organizational structure, the way in which the operation is managed and
      evaluated, the availability of separate financial results and materiality
      considerations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|14. | Supplemental Information On Natural Gas and Oil
      Exploration, Development and Production Activities
  (Unaudited):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Standardized measure of discounted future net cash
      flows relating to proved oil and gas reserve quantities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The following summarizes the policies we used in the
      preparation of the accompanying natural gas and oil reserve disclosures,
      standardized measures of discounted future net cash flows from proved
      natural gas and oil reserves and the reconciliations of standardized
      measures from year to year. The information disclosed, as prescribed by
      the Statement of Financial Accounting Standards No. 69 (ASC 932), is an
      attempt to present the information in a manner comparable with industry
      peers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The information is based on estimates of proved reserves
      attributable to our interest in natural gas and oil properties as of
      October 31, 2011. These estimates were prepared by independent petroleum
      consultants. Proved reserves are estimated quantities of natural gas and
      crude oil which geological and engineering data demonstrate with
      reasonable certainty to be recoverable in future years from known
      reservoirs under existing economic and operating conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The standardized measure of discounted future net cash
      flows from production of proved reserves was developed as
  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | 3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

| | 4. | Future net cash flows are discounted to present value by
      applying a discount rate of 10%.
| | -- | -----------------------------------------------------------------------------------------------

The standardized measure of discounted
future net cash flows does not purport, nor should it be interpreted, to present
the fair value of our natural gas and oil reserves. An estimate of fair value
would also take into account, among other things, the recovery of reserves not
presently classified as proved, anticipated future changes in prices and costs,
and a discount factor more representative of the time value of money and the
risks inherent in reserve estimates.

The standardized measure of discounted
future net cash flows relating to proved natural gas and oil reserves is as
follows:

| |                                                              |  | USD$       |  
| | ------------------------------------------------------------ |  | ---------- | -
| | Future cash inflows                                          |  | 16,940,866 |  
| | Future production costs                                      |  | (4,409,690 | )
| | Future development costs                                     |  | (1,070,698 | )
| | Future net cash flows - undiscounted                         |  | 11,460,478 |  
| | 10% annual discount for estimated timing of
      cash flows |  | (3,388,906 | )
| | Standardized measure of discounted future net cash flows     |  | 8,071,572  |  

Year-end price per Mcf of natural gas
used in making standardized measure determinations as of October 31, 2011 was
$4.20. Year-end price per Bbl of oil used in making these same calculations was
$108.74.

Estimated Net quantities of Natural
Gas and Oil Reserves:

The following table sets forth our
proved reserves, including changes, and proved developed reserves at the end of
October 31, 2011.

| |                                  |  |           |   |  | Natural |   |  | Crude Oil   |  
| | -------------------------------- |  | --------- | - |  | ------- | - |  | ----------- | -
| |                                  |  | Crude Oil |   |  | Gas     |   |  | Equivalents |  
| |                                  |  | (MBbls)   |   |  | (MMcf)  |   |  | (MBbls)     |  
| | Proved reserves:                 |  |           |   |  |         |   |  |             |  
| | Beginning of the year reserve    |  | 125.64    |   |  | -       |   |  | 125.64      |  
| | Adjustments of reserves in place |  | 41.65     |   |  | 3.22    |   |  | 42.19       |  
| | Productions                      |  | (11.54    | ) |  | (3.22   | ) |  | (12.04      | )
| | End of year reserves             |  | 155.79    |   |  | -       |   |  | 155.79      |  
| |                                  |  |           |   |  |         |   |  |             |  
| | Proved developed reserves:       |  |           |   |  |         |   |  |             |  
| | Beginning of the year reserve    |  | 57.33     |   |  | -       |   |  | 57.33       |  
| | End of year reserves             |  | 68.07     |   |  | -       |   |  | 68.07       |  

---

Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure

There were no disagreements related to accounting principles or
practices, financial statement disclosure, internal controls or auditing scope
or procedure during the two fiscal years and interim periods, including the
interim period up through the date the relationship ended.

Item 9A. Controls and Procedures

Managements Report on Disclosure Controls and
Procedures

We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our management, including our president and
chief executive officer (also our principal executive officer) and our chief
financial officer (also our principal financial and accounting officer) to allow
for timely decisions regarding required disclosure.

As of October 31, 2011, the end of our fiscal year covered by
this report, we carried out an evaluation, under the supervision and with the
participation of our president and chief executive officer (also our principal
executive officer) and our chief financial officer (also our principal financial
and accounting officer), of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the foregoing, our president and
chief executive officer (also our principal executive officer) and our chief
financial officer (also our principal financial and accounting officer)
concluded that our disclosure controls and procedures were effective as of the
end of the period covered by this annual report.

Managements Report on Internal Control over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting. Responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of control procedures. The objectives of internal control include
providing management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with managements authorization and
recorded properly to permit the preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United
States. Our management assessed the effectiveness of our internal control over
financial reporting as of October 31, 2011. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework. Our management has concluded that, as of
October 31, 2011, our internal control over financial reporting is effective in
providing reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with US generally accepted accounting principles. Our management reviewed the
results of their assessment with our Board of Directors.

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

Inherent limitations on effectiveness of controls

Internal control over financial reporting has inherent
limitations which include but is not limited to the use of independent
professionals for advice and guidance, interpretation of existing and/or
changing rules and principles, segregation of management duties, scale of
organization, and personnel factors. Internal control over financial reporting
is a process which involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human failures. Internal
control over financial reporting also can be circumvented by collusion or improper management override. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements on a timely basis, however these inherent limitations
are known features of the financial reporting process and it is possible to
design into the process safeguards to reduce, though not eliminate, this risk.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.

---

Changes in Internal Control over Financial
Reporting

There have been no changes in our internal controls over
financial reporting that occurred during the year ended October 31, 2011 that
have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate
Governance

All directors of our company hold office until the next annual
meeting of the security holders or until their successors have been elected and
qualified. The officers of our company are appointed by our board of directors
and hold office until their death, resignation or removal from office. Our
directors and executive officers, their ages, positions held, and duration as
such, are as follows:

Name
    Position Held with our
      Company
    Age
    Date First Elected
      Or AppointedChristopher Bunka
    Chairman, Director and Chief Executive
    49
    October 26, 2006Officer
    
    February 14, 2007Bal Bhullar
    Chief Financial Officer and
      Director
    41
    May 12, 2009David DeMartini
    Director
    68
    September 8, 2009Dustin Elford
    Director
    64
    July 8, 2011Nicholas Baxter
    Director
    57
    July 8, 2011Tom Ihrke
    Vice President, Business Development
    44
    August 5, 2011


Business Experience

The following is a brief account of the education and business
experience of each director and executive officer during the past five years,
indicating each person's principal occupation during the period, and the name
and principal business of the organization by which he was employed.

Mr. Christopher Bunka  Chairman, Chief Executive Officer
and Director

Mr. Bunka has served as our director, chairman, president and
chief executive officer since October 26, 2006. From February 14, 2007 until May
12, 2009 he was the chief financial officer of our company. Since October 26,
2006 Mr. Bunka has successfully completed both equity and debt financings for
our company, completed the acquisition of additional oil & gas assets,
disposed of other oil & gas assets, and restructured our company. He has
refocused our company from one of natural gas exploration to that of development
of existing oil reserves, and has engaged additional geophysical expertise in an
attempt to better understand its exploration and development opportunities. Mr.
Bunka has privately evaluated numerous oil and gas properties and investment
opportunities for his private investments during the past 10 years.

---

Since 1988, Mr. Bunka has been the CEO of CAB Financial Services Ltd., a private holding company located in Kelowna, Canada. He is a venture capitalist and corporate consultant.

From 1999 to 2002, Mr. Bunka was the President and CEO of Secure Enterprise Solutions (symbol SETP-OTC) (formerly Newsgurus.com, symbol NGUR-OTC). The Company subsequently changed its name to Edgetech Services and traded on the OTC with the symbol
EDGH. Newsgurus.com was a web-based media company. Secure Enterprise Solutions moved into Internet-based computer security products and services and was subsequently purchased by Edgetech Services. Mr Bunka is also Chairman/CEO of Enertopia Corp,
(symbol ENRT-OTC) a clean energy company. Mr. Bunka is a director of Defiance Capital Corp., (symbol DEF-TSXV) a Canadian resource company.

Ms. Bal Bhullar - Chief Financial Officer and Director

Ms. Bhullar brings over 18 years of diversified financial and risk management experience in both private and public companies, in the industries of high-tech, film, mining, marine, oil & gas, energy, transport, and spa industries.

Among some of the areas of experience, Ms. Bhullar brings expertise in financial & strategic planning, operational & risk management, regulatory compliance reporting, business expansion, start-up operations, financial modeling, program
development, corporate financing, and corporate governance/internal controls.

Previously, Ms. Bhullar has held various positions as President of BC Risk Management Association of BC, and served as Director and CFO of private and public companies. Currently, Ms. Bhullar serves as a Director and CFO for Bare Elegance Medspa,
CFO for public company Enertopia Corp (symbol ENRT-OTC) and former CFO for ISEE3D Inc. (symbol ICT-TSXV).

Ms. Bhullar is a Certified General Accountant and as well holds a CRM designation from Simon Fraser University and a diploma in Financial Management from British Columbia Institute of Technology.

Mr. David DeMartini - Director

Dr. DeMartini received a B.S. Physics cum laude at the University of Notre Dame in 1963; and a PhD Physics at Ohio State University in 1969. He is the author of 19 public technical publications and 78 publications that are proprietary to Shell Oil
Company. He has served as a Research Advisor at Shell Development Company at the Bellaire Research Center in Houston; a Senior Staff Supervisor; and a Senior Staff Geophysicist. He has belonged to the Society of Exploration Geophysicists from 1970
to present and was inducted to the Offshore Energy Center Hall of Fame as a Technology Pioneer on September 30, 2006. He has made significant contributions in the fields of rock physics theory and applications; seismic amplitude interpretation,
borehole geophysics, and more. Dr. DeMartini was professionally engaged by the Company in 2007 as a consulting geophysicist to assist in interpretations of seismic data at its Mississippi properties, and has been a director of the Company since
September 9, 2009.

Mr. Dustin Elford - Director

Mr. Elford has been in the oil & gas and mineral exploration businesses for 30 years. He has extensive experience in the development and financing of projects in many areas of North America, South America and Africa. Mr. Elford is currently
President of AMI Resources Inc; President of Midasco Capital Corp; and a former President of Dejour Enterprises Ltd.

Mr. Nicholas Baxter - Director

Mr. Baxter has been in the oil & gas business for 30 years. Mr. Baxter received a Bachelor of Science (Honors) from the University of Liverpool in 1975. Mr. Baxter has worked on geophysical survey and exploration projects in the U.K., Europe,
Africa and the Middle East. From 1981 to 1985, Mr. Baxter worked for Resource Technology plc, a geophysical equipment sales/services company that went public on the USM in London in 1983 and graduated to the London Stock Exchange in 1984. Mr. Baxter
established his own company in 1985 as a co-founder of Addison & Baxter Limited, a private geophysical/geological sales and
services company which was acquired by A&B Geoscience Corporation in 1992.
Mr. Baxter was Chief Operating Officer and a director of A&B Geoscience
Corporation from 1992 to 2002. Mr. Baxter worked as an independent upstream oil
and gas consultant from 2002 to 2004. He joined Eurasia Energy Ltd in 2005,
where he is currently President and Chief Executive Officer.

---

Mr. Tom Ihrke  Vice President, Business Development

Tom Ihrke recently sold his General Partner interest in
Commissum Capital Management, a capital management and advisory firm which he
co-founded in 2001. During his tenure at Commissum, Tom served as portfolio
manager and trader of the firm's investment fund, while also being retained as a
consultant by several companies, including Lexaria, to advise on such matters as
capital structure, accessing the capital markets, and mergers and acquisitions.
Between 1993 and 2001 Tom worked for Morgan Keegan and Company as Senior
Investment Banker in the firm's Financial Institution's Group, and prior to that
as Senior Trader and Market Maker, overseeing the firm's proprietary trading of
financial and energy shares. From 1990 to 1991 Tom traded commodities for his
own account as a floor trader on the Chicago Board of Trade, owning a seat on
the Mid-America Commodities Exchange. Tom earned his Bachelor of Science at
Texas Christian University in 1989, and received his Masters of Business
Administration at the University of Tennessee in 1993.

Family Relationships

There are no family relationships between any of our directors,
executive officers and proposed directors or executive officers.

Involvement in Certain Legal Proceedings

None of our directors, executive officers, promoters or control
persons has been involved in any of the following events during the past five
years:

1. A petition under the Federal bankruptcy laws or any state
insolvency law was filed by or against, or a receiver, fiscal agent or similar
officer was appointed by a court for the business or property of such person, or
any partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of which he
was an executive officer at or within two years before the time of such
filing;

2. Such person was convicted in a criminal proceeding or is a
named subject of a pending criminal proceeding (excluding traffic violations and
other minor offenses);

3. Such person was the subject of any order, judgment, or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:

| | i.   | Acting as a futures commission merchant, introducing
      broker, commodity trading advisor, commodity pool operator, floor broker,
      leverage transaction merchant, any other person regulated by the Commodity
      Futures Trading Commission, or an associated person of any of the
      foregoing, or as an investment adviser, underwriter, broker or dealer in
      securities, or as an affiliated person, director or employee of any
      investment company, bank, savings and loan association or insurance
      company, or engaging in or continuing any conduct or practice in
      connection with such activity
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ii.  | Engaging in any type of business practice; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | iii. | Engaging in any activity in connection with the purchase
      or sale of any security or commodity or in connection with any violation
      of Federal or State securities laws or Federal commodities
  laws;                                                                                                                                                                                                                                                                                                                                                                                                                           

4. Such person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any Federal or State
authority barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described in paragraph
(f)(3)(i) of this section, or to be associated with persons engaged in any such
activity;

---

5. Such person was found by a court of competent jurisdiction
in a civil action or by the Commission to have violated any Federal or State
securities law, and the judgment in such civil action or finding by the
Commission has not been subsequently reversed, suspended, or vacated;

6. Such person was found by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such civil action or
finding by the Commodity Futures Trading Commission has not been subsequently
reversed, suspended or vacated;

7. Such person was the subject of, or a party to, any Federal
or State judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged violation
of:

| | i.   | Any Federal or State securities or commodities law or
      regulation; or                                                                                                                                                                                                                                                
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                           
| | ii.  | Any law or regulation respecting financial institutions
      or insurance companies including, but not limited to, a temporary or
      permanent injunction, order of disgorgement or restitution, civil money
      penalty or temporary or permanent cease-and-desist order, or removal or
      prohibition order; or
| |      |                                                                                                                                                                                                                                                                                                                           
| | iii. | Any law or regulation prohibiting mail or wire fraud or
      fraud in connection with any business entity; or                                                                                                                                                                                                            

8. Such person was the subject of, or a party to, any sanction
or order, not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act
(15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29)
of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange,
association, entity or organization that has disciplinary authority over its
members or persons associated with a member.

Compliance with Section 16(a) of the Securities Exchange Act
of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires
our executive officers and directors and persons who own more than 10% of our
common stock to file with the Securities and Exchange Commission initial
statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our common stock and other equity
securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and
greater than 10% shareholders are required by the SEC regulations to furnish us
with copies of all Section 16(a) reports that they file.

Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe
that during fiscal year ended October 31, 2010, all filing requirements
applicable to our officers, directors and greater than 10% percent beneficial
owners were complied with.

Code of Ethics

We adopted a Code of Ethics applicable to our senior financial
officers and certain other finance executives, which is a "code of ethics" as
defined by applicable rules of the SEC. Our Code of Ethics is attached as an
exhibit to our Form SB-2 filed on September 20, 2007. If we make any amendments
to our Code of Ethics other than technical, administrative, or other
non-substantive amendments, or grant any waivers, including implicit waivers,
from a provision of our Code of Ethics to our chief executive officer, chief
financial officer, or certain other finance executives, we will disclose the
nature of the amendment or waiver, its effective date and to whom it applies in
a Current Report on Form 8-K filed with the SEC.

---

Board and Committee Meetings

Our board of directors held no formal meetings during the year ended October 31, 2011. All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings
  of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had
  been passed at a meeting of the directors duly called and held.

Nomination Process

As of October 31, 2011, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. Our board of directors does not have a policy with regards to the consideration of any
director candidates recommended by our shareholders. Our board of directors has determined that it is in the best position to evaluate our companys requirements as well as the qualifications of each candidate when the board considers a nominee
for a position on our board of directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the president of our Company at the address on the cover of this annual report.

Audit Committee and Audit Committee Financial Expert

Currently our audit committee consists of our entire board of directors. We currently do not have nominating, compensation committees or committees performing similar functions. There has not been any defined policy or procedure requirements
for shareholders to submit recommendations or nomination for directors.

Our board of directors has determined that it does not have a member of its board of directors (audit committee) that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the
term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent
director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material
revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our board of directors does
not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors.

---

Item 11. Executive Compensation

The particulars of the compensation paid to the following
persons:

- our principal executive officer;
- each of our two most highly compensated executive officers who were serving
  as executive officers at the end of the years ended October 31, 2011 and 2010;
  and
- up to two additional individuals for whom disclosure would have been
  provided under (b) but for the fact that the individual was not serving as our
  executive officer at the end of the years ended October 31, 2011 and 2010,

who we will collectively refer to as the named executive
officers of our Company, are set out in the following summary compensation
table, except that no disclosure is provided for any named executive officer,
other than our principal executive officers, whose total compensation did not
exceed $100,000 for the respective fiscal year:

SUMMARY COMPENSATION
      TABLEName
      and Principal Position
    Year
    Salary ($)
    Bonus ($)
    Stock
      Awards ($)
    OptionAwards ($)(4)
    Non- Equity
      IncentivePlan
      **Compensa**tion ($)
    Nonqualifi
      ed **Deferred** Compensation Earnings ($)
    **All
      Other** Compensa - tion ($)
    Total ($)Christopher
      Bunka(1), President, Chief Executive Officer,
      &
    2011 2010
    96,000 97,200
    Nil Nil
    Nil Nil
    51,360 71,308
    Nil Nil
    Nil Nil
    Nil Nil
    147,360 168,508Bal Bhullar(2),
      Chief Financial Officer
    2011 2010
    64,890 52,636
    Nil Nil
    Nil Nil
    25,680 42,785
    Nil Nil
    Nil Nil
    Nil Nil
    90,570 95,421Tom Ihrke(3)Sr. Vice President, Business Development
    2011 2010
    34,375 8,557
    Nil Nil
    Nil Nil
    Nil 25,881
    Nil Nil
    Nil Nil
    Nil Nil
    34,375 34,438


| | (1) | Mr. Bunka was appointed president and chief executive
      officer on October 26, 2006, and was chief financial officer of our
      company from February 14, 2007 until May 12, 2009.                                                                        
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                 
| | (2) | Ms. Bhullar was appointed Chief Financial Officer on May
      12, 2009                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                 
| | (3) | Mr. Ihrke was appointed Senior Vice President, Business
      Development on August 5, 2010.                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                 
| | (4) | The fair value of the option award was estimated using
      the Black-Scholes pricing model with the following assumptions: expected
      volatility of 145.85%, riskfree interest rate of 2.46%, expected life of
      5 years, and dividend yield of 0.0%.

Our company is currently paying our resident $8,000 per month
as consulting fees and is paying our Chief Financial Officer CAD$5,500 per month
in consulting fees.

---

Employment/Consulting Agreements

On May 12, 2009, we entered into a consulting agreement with
BKB Management Ltd, a corporation organized under the laws of the Province of
British Columbia and controlled by ourchief financial officer. A consulting fee
of CAD$4,675 including applicable taxes is paid per month. We may terminate this
agreement without prior notice based on a number of conditions. BKB Management
Ltd. may terminate the agreement at any time by giving 30 days written notice of
his intention to do so. On January 1, 2011, the compensation was increased to
CAD$5,500 per month plus applicable taxes.

On August 5, 2010 we entered into a three-month Management
agreement with Tom Ihrke, whereby Mr. Irkhe will act as the Senior
Vice-President, Business Development of our company for consideration of $3,125
per month. Subsequent to our entering in the agreement, we signed a revised
agreement for services to be provided on a continuing basis.

Other than as set out in this annual report on Form 10-K we
have not entered into any employment or consulting agreements with any of our
current officers, directors or employees.

Grants of Plan-Based Awards Table

We did not grant any awards to our named executive officers in
the during our fiscal year ended October 31, 2011.

Outstanding Equity Awards at Fiscal Year End

The particulars of unexercised options, stock that has not
vested and equity incentive plan awards for our named executive officers are set
out in the following table:

OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOPTION
      AWARDS
    STOCK
      AWARDSName (a)
    Number of Securities
      Underlying Unexercised Options (#) Exercisable (b)
    Number of
      Securities Underlying Unexercised Options (#)
      Unexercisable (c)
    Equity Incentive Plan
      Awards: Number of Securities Underlying Unexercised
      Unearned Options (#) (d)
    Option Exercise Price
      ($) (e)
    Option Expiration
      Date (f)
    Number of Shares
      or Units of Stock That Have Not Vested (#)
      (g)
    Market
      Value of Shares or Units of Stock That Have
      Not Vested ($) (h)
    Equity Incentive Plan
      Awards: Number of Unearned Shares, Units or Other
      Rights That Have Not Vested (#) (i)
    Equity Incentive Plan
      Awards: Market or Payout Value of Unearned Shares,
      Units or Other Rights That Have Not Vested (#) (j)Christopher Bunka
    500,000 200,000
    - -
    - -
    $0.20 $0.35
    2015/01/20 2016/07/11
    - -
    - -
    - -
    - -Bal Bhullar
    300,000 100,000
    - -
    - -
    $0.20 $0.35
    2015/01/20 2016/07/11
    - -
    - -
    - -
    - -David DeMartini
    100,000
    - -
    - -
    $0.35
    2016/07/11
    - -
    - -
    - -
    - -Tom Ihrke
    25,000 150,000
    -
    - -
    $0.20 $0.20
    2015/01/20 2015/08/16
    - -
    - -
    - -
    - -


Option Exercises

During our fiscal year ended October 31, 2011, 225,000 options
were exercised by our named officers.

---

Compensation of Directors

We do not have any agreements for compensating our directors
for their services in their capacity as directors, although such directors are
expected in the future to receive stock options to purchase shares of our common
stock as awarded by our board of directors.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers. We have no
material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of the board of directors or
a committee thereof.

Indebtedness of Directors, Senior Officers, Executive
Officers and Other Management

None of our directors or executive officers or any associate or
affiliate of our company during the last two fiscal years is or has been
indebted to our company by way of guarantee, support agreement, letter of credit
or other similar agreement or understanding currently outstanding.

Compensation Committee Interlocks and Insider Participation

During 2011, we did not have a compensation committee or
another committee of the board of directors performing equivalent functions.
Instead the entire board of directors performed the function of compensation
committee. Our board of directors approved the executive compensation, however,
there were no deliberations relating to executive officer compensation during
2011.

Compensation Committee Report

None.

Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters

The following table sets forth, as of January 25, 2012, certain
information with respect to the beneficial ownership of our common shares by
each shareholder known by us to be the beneficial owner of more than 5% of our
common shares, as well as by each of our current directors and executive
officers as a group. Each person has sole voting and investment power with
respect to the shares of common stock, except as otherwise indicated. Beneficial
ownership consists of a direct interest in the shares of common stock, except as
otherwise indicated.

Name and Address of Beneficial
      Owner
    Amount and Nature of
      Beneficial Ownership
    Percentage of
      ClassChristopher Bunka Kelowna BC Canada
    5,656,911 (1)
    27.4%Bal Bhullar Vancouver, BC
    441,250 (2)
    2.1%David DeMartini, Texas, Houston
    4,152,679(3)
    20.1%Tom Ihrke South Carolina
    522,178(4)
    3.0%Dustin Elford Vancouver, BC
    150,000(5)
    1%Nicholas Baxter Aberdeenshire, UK
    150,000(6)
    1%


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Directors and Executive Officers as a Group (6 persons) (4)
    10,773,018
    52.2%


* Less than 1%.

(1) Includes 3,211,836 shares held in the name of C.A.B.
Financial Services and 1,459,361 shares held directly by Chris Bunka. Includes
285,714 convertible debt warrants held in the name of C.A.B. Financial Services.
Includes 700,000 options which are exercisable at $0.20 and $0.35 within 60 days
of January 12, 2012.

(2) Includes 400,000 options which are exercisable at $0.20 and
$0.35 within 60 days January 12, 2012.

(3) Includes 771,429 in convertible debt warrants and 100,000
options which are exercisable at $0.20 and $0.35 within 60 days of January 12,
2012.

(4) Includes 175,000 options which are exercisable at $0.20
within 60 days of January 12, 2012.

(5) Includes 150,000 options which are exercisable at $0.35
within 60 days of January 12, 2012.

(6) Includes 150,000 options which are exercisable at $0.35
within 60 days of January 12, 2012.

(7) Under Rule 13d-3, a beneficial owner of a security includes
any person who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i) voting power, which
includes the power to vote, or to direct the voting of shares; and (ii)
investment power, which includes the power to dispose or direct the disposition
of shares. Certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the power to
dispose of the shares). In addition, shares are deemed to be beneficially owned
by a person if the person has the right to acquire the shares (for example, upon
exercise of an option) within 60 days of the date as of which the information is
provided. In computing the percentage ownership of any person, the amount of
shares outstanding is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these acquisition rights. As
a result, the percentage of outstanding shares of any person as shown in this
table does not necessarily reflect the persons actual ownership or voting power
with respect to the number of shares of common stock actually outstanding on
January 25, 2012. As of January 25, 2011, there were 16,431,452 shares of our
common stock issued and outstanding.

Changes in Control

We are unaware of any contract or other arrangement the
operation of which may at a subsequent date result in a change in control of our
company.

Item 13. Certain Relationships and Related Transactions, and
Director Independence

Except as disclosed herein, no director, executive officer,
shareholder holding at least 5% of shares of our common stock, or any family
member thereof, had any material interest, direct or indirect, in any
transaction, or proposed transaction since the year ended October 31, 2011, in
which the amount involved in the transaction exceeded or exceeds the lesser of
$120,000 or one percent of the average of our total assets at the year end for
the last three completed fiscal years.

Director Independence

We currently act with five (5) directors, consisting of
Christopher Bunka, Bal Bhullar, David DeMartini, Dustin Elford and Nicholas
Baxter. We have determined that Dustin Elford and Nicholas Baxter are each an
independent director as defined in NASDAQ Marketplace Rule 4200(a)(15).

Currently our audit committee consists of our entire board of
directors. We currently do not have nominating, compensation committees or
committees performing similar functions. There has not been any defined policy
or procedure requirements for shareholders to submit recommendations or
nomination for directors.

---

Our board of directors has determined that it does not have a
member of its audit committee who qualifies as an audit committee financial
expert as defined in as defined in Item 407(d)(5)(ii) of Regulation S-K.

From inception to present date, we believe that the members of
our audit committee and the board of directors have been and are collectively
capable of analyzing and evaluating our financial statements and understanding
internal controls and procedures for financial reporting.

We do not have a standing compensation or nominating committee,
but our entire board of directors act in such capacity. We believe that our
directors are capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. Our
directors do not believe that it is necessary to have an audit committee because
we believe that the functions of an audit committee can be adequately performed
by the board of directors. In addition, we believe that retaining additional
independent directors who would qualify as an audit committee financial expert
would be overly costly and burdensome and is not warranted in our circumstances
given the early stages of our development.

Item 14. Principal Accounting Fees and Services

The aggregate fees billed for the most recently completed
fiscal year ended October 31, 2011 and for fiscal year ended October 31, 2010
for professional services rendered by the principal accountant for the audit of
our annual financial statements and review of the financial statements included
in our quarterly reports on Form 10-Q and services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for these fiscal periods were as follows:

Year EndedOctober 31, 2011
    October 31, 2010Audit Fees
    17,941
    16,202Audit Related Fees
    14,492
    8,952Tax Fees
    Nil
    NilAll Other Fees
    Nil
    NilTotal
    32,433
    27,154


Audit Fees. Audit fees consist of fees billed for
professional services rendered for the audits of our financial statements,
reviews of our interim financial statements included in quarterly reports,
services performed in connection with filings with the Securities and Exchange
Commission and related comfort letters and other services that are normally
provided by MNP LLP and Chang Lee LLP for the fiscal years ended October 31,
2011 and October 31, 2010 in connection with statutory and regulatory filings or
engagements.

Audit related Fees. There were $14,492 audit related
fees paid toMNP LLP and Chang Lee LLP for the fiscal year ended October 31, 2011
and $8,952 for the fiscal year ended October 31, 2010.

Tax Fees. Tax fees consist of fees billed for
professional services for tax compliance, tax advice and tax planning. These
services include assistance regarding federal, state and local tax compliance
and consultation in connection with various transactions and acquisitions. For
the fiscal years ended October 31, 2011 and October 31, 2011, we did not use MNP
LLP or Chang Lee LLP for non-audit professional services or preparation of
corporate tax returns.

We do not use MNP LLP or Chang Lee LLP, for financial
information system design and implementation. These services, which include
designing or implementing a system that aggregates source data underlying the
financial

---

statements or generates information that is significant to our
financial statements, are provided internally or by other service providers. We
do not engage MNP LLP or Chang Lee LLP to provide compliance outsourcing
services.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before our independent auditors are engaged by
us to render any auditing or permitted non-audit related service, the engagement
be:

- approved by our audit committee (which consists of our entire board of
  directors); or
- entered into pursuant to pre-approval policies and procedures established
  by the board of directors, provided the policies and procedures are detailed
  as to the particular service, the board of directors is informed of each
  service, and such policies and procedures do not include delegation of the
  board of directors' responsibilities to management.

Our board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.

Our board of directors has considered the nature and amount of
fees billed by our independent auditors and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
our independent auditors independence.

PART IV

Item 15. Exhibits, Financial Statement Schedules

|(a) | Financial Statements
|--- | --------------------
|    |                     
|    | (1)                 
|    |                     
|    | (2)                 
|    |                     
|(b) | Exhibits            

|Exhibit No. | Document Description                                                                                                                      
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------
|(3)         | Articles of Incorporation
      and By-laws                                                                                               
|3.1(1)      | Articles of Incorporation (Incorporated by
      reference from Form SB-2 Registration Statement filed on March 1, 2006)                  
|3.2(1)      | Bylaws (Incorporated by
      reference from Form SB-2 Registration Statement filed on March 1, 2006)                                     
|3.3 (9)     | Amendments to Articles of Incorporation
      (Incorporated by reference from our current report on Form 8-K filed on
      June 23, 2009)
|3.4 (10)    | Amended and restated Bylaws
      (Incorporated by reference from our current report on Form 8-K filed on
      December 22, 2009)        
|            |                                                                                                                                           
|(10)        | Material Contracts                                                                                                                        

---

|10.2(1)   | Griffin Model Form Operating
      Agreement (Incorporated by reference from Form SB-2 Registration Statement
      filed on March 1, 2006)                   
|--------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.3(1)   | Griffin Drilling Program Agreement
      (Incorporated by reference from Form SB-2 Registration Statement filed on
      March 1, 2006)                       
|10.5(3)   | Consulting Agreement with CAB
      Financial Services Ltd. (Incorporated by reference from our current report
      on Form 8-K filed)                       
|10.6(4)   | Agreement with Brink Resources (Incorporated by
  reference from our current report on Form 8-K filed on June 21, 2007)                                       
|10.7(4)   | Agreement with 0743608 BC Ltd.                                                                                                                                
|10.8(5)   | Amended Agreement and Promissory Notes
      (Incorporated by reference from our current report on Form 8-K filed on
      October 22, 2010)                  
|10.9(6)   | Consulting Agreement with CAB
      Financial Services Ltd. (Incorporated by reference from our current report
      on Form 8-K filed on December 1, 2008)   
|10.10(7)  | Agreement with Delta Oil & Gas, Inc. and
      The Stallion Group (Incorporated by reference from our current report on
      Form 8-K filed on April 7, 2009)
|10.11(8)  | Agreement with BKB Management
      Ltd. (Incorporated by reference from our current report on Form 8-K filed
      on May 19, 2009)                          
|10.12(11) | Equity Compensation Plan 2007 (Incorporated by
      reference from our current report on Form S8 filed on May 7, 2007)                                       
|10.17(17) | Assignment Agreements and Loan
      Agreement (Incorporated by reference from our current report on Form 8-K
      filed on September 13, 2010)              
|10.18(18) | Consulting Agreement with Tom Ihrke
      (Incorporated by reference from our current report on Form 8-K filed on
      August 6, 2010)                       
|10.19(19) | Equity Compensation Plan 2010
      (Incorporated by reference from our current report on Form 8-K filed on
      January 21, 2010)                           
|10.20(20) | Form of Convertible Debenture (Incorporated by
      reference from our current report on Form 8-K filed on November December
      1, 2010)                  
|10.21*    | Consulting Agreement with Tom
      Ihrke                                                                                                                     
|(14)      | Code of Ethics                                                                                                                                                
|14.1(14)  | Code of Business Conduct and
      Ethics (Incorporated by reference from Form SB-2 Registration Statement
      filed on September 20, 2007)                 
|(23)      | Consents of experts and Counsel                                                                                                                               
|23.1      | Consent of MNP LLP Chartered Accountants                                                                                                                      
|(31)      | Rule 13a-14(a)/15d-14(a)                                                                                                                                      
|31.1*     | Section 302 Certifications
      under Sarbanes-Oxley Act of 2002 of Principal Executive Officer                                                              
|31.2*     | Section 302 Certifications under Sarbanes-Oxley
      Act of 2002 of Principal Financial Officer                                                              
|(32)      | Section 1350
      Certifications                                                                                                                             
|32.1*     | Section 906 Certification under Sarbanes Oxley
      Act of 2002 of Principal Executive Officer                                                               
|32.2*     | Section 906 Certification under
Sarbanes Oxley Act of 2002 of Principal Financial Officer                                                                     

---

|(99)     | Exhibit No.                                                                                                                                              
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|99.1(15) | Haas Reserve Reports
      (Incorporated by reference from our current report on Form 8-K filed on
      July 17, 2007)                                  
|99.2(16) | Veazey Reserve Report (Incorporated by
      reference from our current report on Form 8-K filed on October 31, 2007)                                    
|101.INS  | XBRL Instance Document 
    (Incorporated by reference from our annual report on Form 10-K filed on
    January 26, 2012)                                
|101.SCH  | XBRL Taxonomy Extension Schema Document
    (Incorporated by reference from our annual report on Form 10-K filed on
    January 26, 2012)                
|101. CAL | XBRL Taxonomy Extension
      Calculation Linkbase Document (Incorporated by reference from our annual
    report on Form 10-K filed on January 26, 2012)
|101.DEF  | XBRL Taxonomy Extension Definition Linkbase
    Document (Incorporated by reference from our annual report on Form 10-K
    filed on January 26, 2012)   
|101.LAB  | XBRL Taxonomy Extension Label
      Linkbase Document (Incorporated by reference from our annual report on
    Form 10-K filed on January 26, 2012)      
|101.PRE  | XBRL Taxonomy Extension Presentation Linkbase
    Document (Incorporated by reference from our annual report on Form 10-K
    filed on January 26, 2012) 

* Filed herewith.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

LEXARIA CORP.

|By: /s/ Christopher Bunka                                           
|--------------------------------------------------------------------
|Christopher Bunka                                                   
|President, Chief Executive Officer, Chairman and Director           
|(Principal Executive Officer)                                       
|                                                                    
|                                                                    
|Date: March 14, 2012                                                
|                                                                    
|By: /s/ Bal Bhullar                                                 
|Bal Bhullar                                                         
|Chief Financial Officer and Director                                
|(Principal Financial Officer and Principal Accounting
      Officer)
|                                                                    
|                                                                    
|Date: March 14, 2012                                                

In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|By: /s/ Christopher Bunka                                           
|--------------------------------------------------------------------
|Christopher Bunka                                                   
|President, Chief Executive Officer, Chairman and Director           
|(Principal Executive Officer)                                       
|                                                                    
|Date: March 14, 2012                                                
|                                                                    
|By: /s/ Bal Bhullar                                                 
|Bal Bhullar                                                         
|Chief Financial Officer and Director                                
|(Principal Financial Officer and Principal Accounting
      Officer)
|                                                                    
|Date: March 14, 2012                                                
|                                                                    
|By: /s/ David DeMartini                                             
|David DeMartini                                                     
|Director                                                            

---